The ’s Dark Matter: The Role of Contraband in the Iberian Atlantic, 1579-1625

by Patrick Funiciello

B.A. in English Literature, May 1992, The University of North Texas M.A. Latin American Studies, May 2005, The George Washington University

A Dissertation submitted to

The Faculty of The Columbian College of Arts and Sciences of The George Washington University in partial fulfillment of the requirements for the degree of Doctor of Philosophy

August 31, 2016

Dissertation directed by

Marcy Norton Associate Professor of History

The Columbian College of Arts and Sciences of The George Washington University certifies that Patrick Funiciello has passed the Final Examination for the degree of Doctor of Philosophy as of June 27, 2016. This is the final and approved form of the dissertation.

The Spanish Empire’s Dark Matter: The Role of Contraband in the Iberian Atlantic, 1579-1625

Patrick Funiciello

Dissertation Research Committee:

Marcy Norton, Associate Professor of History, Dissertation Director

Peter Klaren, Professor of History and International Affairs, Committee Member

William Becker, Professor of History and International Affairs, Committee Member

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© Copyright 2016 by Patrick Funiciello. All rights reserved

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Acknowledgments

This dissertation would not have been possible without the support of funding from the Fulbright Foundation, the John Carter Brown Library, the Harvard University

Atlantic History Seminar, and the Luso-American Foundation.

I made my first acquaintance with the topic of in a previous master’s thesis on U.S.–Colombian relations. This introduction to the material provided me with a crucial mix of courage and naiveté that guided me in research trips to archives and libraries in , Portugal, Italy, and Providence, RI. Throughout this period of research,

I gained new insights into the oft-neglected role of the Spanish Empire in the growth of global and discovered the formidable role that black and grey market commerce played in this narrative.

The list of people who assisted me in shepherding this project along toward its conclusion is long. I owe a debt of deep gratitude to the most committed and patient of partners, my wife, Silvia Tucci. Coming from an academic family herself she well understood the challenges and the frustratingly glacial pace of the necessary research and was there to encourage me every step of the way. There is no way I would have finished without her constant support. I also wish to thank my advisor, Marcy Norton, for both her patience and incisive technical support. And lastly, I would like to thank my mother, who passed long before I was able to bring this project to its conclusion.

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Abstract of Dissertation

The Spanish Empires’s Dark Matter: The Role of Contraband in The Iberian Atlantic (1579-1625)

This dissertation analyses the impact of contraband trade—the selling of unlicensed or illegal goods—upon economic policy, economic growth, political stability, and merchant communities and institutions of the Spanish Empire between roughly 1579 and 1625, a period that includes both the apex of Spanish America’s exports and the start of its military, demographic, political, and economic decline in the metropole.

By examining the phenomenon of illicit trade, this study highlights several aspects of mid-colonial phenomena such as the emergence of commercial institutions (consulados de comercio or trade guilds), growing administrative complexity, the discovery and acceptance of bureaucratic limitations, and the proliferation of sophisticated theories of moral, market, and political economy. It asserts that contraband, imperial Spain’s dark matter, a substance both hard to detect and nearly impossible to measure, comprised most of the actual ballast of Spanish commerce, a fact that was recognized by much of Spanish society, from consumers and petty traders to high-level functionaries and theorists.

Unlike previous literature that has addressed illicit trade, this work dwells upon neither the criminality of contraband nor does it accept, unchallenged, the presumption that it necessarily had a crippling effect upon the Spanish Empire’s fiscal health; rather, it focuses on the wide berth and high level of tolerance granted contraband traders on the part of commissars, powerful merchants, functionaries of the Crown, and kings Philip II,

Philip III, and Philip IV. This dissertation makes the case that illicit (black market, gray market, coerced, and fraudulent) commerce was the economic norm throughout the

v empire and that early recognition of the logistical limits of enforcement and the necessity of contraband goods forged a status quo where much of this commerce, when discovered, was either lightly punished, papered over through bribery or post-facto legal instruments called composiciones, or ignored completely. Further to this point, many contrabandistas were ostensible model subjects who broke the law with full awareness that in an overstretched empire and within a poorly designed and difficult to control network of legal trade, an active, high level of contraband commerce was essential to knit buyers, sellers, and distributors together in a thin but far-reaching network of traders to reduce tensions arising from seasonal and chronic scarcities, gluts, and price fluctuations that often led to political unrest.

The primary geographical and thematic foci of this study are the trade fairs of

Nombre de Dios and Portobelo ( ports in modern-day Panama) and the activities of New Christian Portuguese merchants and their ecclesiastical and government enablers in . These key nodes in the official trade circuit were established to assure steady seasonal shipments of silver to settle the accounts of Sevillan and foreign merchants and to provide the Quinto Real (the king’s “fifth” tax on silver and established in 1504) to the Crown. The geographical contours of licensed imperial trade were a product of institutional and pioneer settlement imperative and timing rather than a purposefully devised geo-political program or efficient revenue-generating strategy.

Where Spanish ships first arrived to build ports, churches, city halls, customs houses, and, eventually, consulados de comercio and where they stored and exchanged goods and specie at the first trade fairs—locations like Panama, Cartagena, Lima, and

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Buenos Aires—typically determined patterns of activity and commitments that would last for centuries. In economic terms, vested interests and sunk costs commonly trumped innovation and profit maximization despite the obvious logistical superiority of, say, the southern Potosi-Buenos Aires- route over the Potosi--Panama--

Seville route in channeling silver, slaves, and lucrative commodities from the metropole to checkpoints in the Caribbean, , and back.

These focal points of inquiry contribute to and respond to challenges posed by theoretical literature on the of early modern Europe, the rise of capitalism, business practices, communication technology, information exchange, and the

Spanish Empire’s role as both a pioneer and an anachronistic laggard within this broader economic narrative. How did medieval trade fairs like Nombre de Dios and Portobelo function? What explains their persistence in Spain into the eighteenth century? What impact did monopoly licensing and exclusionary institutions have upon economic development and the Spanish Crown’s geo-political position in Europe? Did Spain’s commercial metropole (Seville), ever truly control the empire’s periphery? And how does one do effective economic history about a pre-statistical age given Spanish trade’s extreme degree of informality and its formidable reach and depth? This dissertation will address all of the above questions in an effort to better explain theories of Spanish rise and decline.

The primary sources for this study come mainly from colonial archives in Seville and , which house documents relating to Iberian-American trade. Other important sources of colonial-era documents, contemporaneous economic treatises, travel accounts,

vii and key secondary sources were located in London, Washington, DC, and at the John

Carter Brown Library in Providence. More specifically, Audiencia documents from the

Panama, Lima, Charcas, Santa Fe, Santo Domingo, and Buenos Aires collections, and those from Indiferente, Consulado, and Contratación, provide most of the administrative perspective on Iberian commerce. Economic theorists and chroniclers such as Luis Ortiz,

Hevía Bolaños, Veitia Linage, Tomas de Mercado, and Sancho de Moncada, among others, provide a theoretical framework upon which to reconstruct contemporary theories of economic activity and licit and illicit trade. And non-Spanish travel accounts and merchant guidebooks from writers such as Thomas Gage, Samuel Champlain, Richard

Hakluyt, and others will provide a foreign counterpoint to official Spanish reports. Since contraband was (and still is) in the eye of the beholder, a conditional product of its time and place, source material that clarifies the mentalité of theorists, Crown functionaries, and traders themselves will be heavily privileged and mined for guidance.

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Table of Contents

Acknowledgments ...... iv

Abstract of Dissertation ...... v

List of Figures ...... x

Chapter 1: Introduction ...... 1

Chapter 2: From Salamanca to Arbitrismo and Beyond: The Moral Architecture of Castile’s Commercial Empire ...... 51

Chapter 3: Portobelo, Porto-malo: The Clearinghouse of Global Trade ...... 113

Chapter 4: “Como un cuerpo sin brazos”: Policing Commerce and Heresy in Buenos Aires and the Via Contrabando of Potosí ...... 189

Chapter 5: Epilogue: Laws, Institutions, and Multi-Polarity: Theorizing Spain’s Commercial Empire ...... 235

Bibliography ...... 257

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List of Figures

Figure 1: Map of Transisthmian Routes Across Panama…………………………………………130

Figure 2: Map of Panama from Portobelo to Darien……...... ……………………………….131

Figure 3: Map of The Fleet and the Tierra Firme ...... 136

Figure 4: Sixteenth Century Portuguese and Spanish Trading Routes……………………………139

Figure 5: Route from to Manila……………………………………….141

Figure 6: Paraguay, Tucumán, and the Río de la Plata……………………………………………214

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The Spanish Empire’s Dark Matter: The Role of Contraband in the Iberian Atlantic (1579-1625)

INTRODUCTION

Black market commerce and have been common news items of late.

Beyond the line in international waters off the coast of Somalia, pirates often disguised as fishermen have taken captive a number of slow-moving, unarmed vessels loaded with petroleum, nuclear materiel, and—the most highly sought and lucrative prize—human cargo, which can be ransomed for profit.1 This type of kidnapping racket on the high seas doesn’t differ much from the sort that plagued the sixteenth-century Arabian and

Mediterranean Seas, when Miguel de Cervantes, perhaps the most famous of these kidnapping victims, had to be rescued from the in 1579.2 His captors well knew that either the Spanish Crown or, more likely some Mercedarians (an order that specialized in liberating Catholic captives) would deliver his ransom eventually, just as company executives might wire money to free their employees and agents today.3

1 “Beyond the line” is a shorthand legal term for international waters that lie beyond the jurisdiction of any specific state. A topic hotly debated by Iberian powers Spain and Portugal and rising naval powers, and The United Provinces, by the eighteenth century, the line came to be loosely drawn at around a nautical league (roughly three miles) from sovereign coastlines. For more on this decidedly partisan debate, see Hugo Grotius, Mare Liberum (Leiden, 1609) Richard Hakluyt, William Welwood, and David Armitage, The Free Sea. Natural Law and Enlightenment Classics (Indianapolis, Ind: Liberty Fund, 2004); John Selden, Of the Dominion: Or, Ownership of the Sea (New York: Arno, 1652); and Cornelis Bijnkershoek, and Ponceau P. S. Du. A Treatise on the Law of War: Translated from the Original Latin of Cornelius Van Bynkershoek: Being the First Book of His Quaestiones Juris Publici: with Notes (Philadelphia: Farrand & Nicholas, 1810). While the debate has largely been characterized along partisan lines, which pitted Hugo Grotius and Van Bynkershoek as advocates of freer or open seas and against John Selden and the Iberian monopolists, all participants were akin to lobbyists willing to draw up arguments based on convenience. In Selden’s case, the topical issue was Dutch poaching in Britain’s rich fisheries. Grotius was an agent of the , which wanted access to Indian Ocean shipping lanes and production centers.

2 Kris E. Lane, Pillaging the Empire: Piracy in the , 1500-1750 (New York: M. E. Sharpe, 1998), 17.

3 For a thorough account of the historical role of the Mercedarians in rescuing Christian captives, from the order’s thirteenth-century founding to its specific role in defending captives against theft and violence, see

1 In , for decades beginning in the 1970s, foreign earned from the sale of illicit drugs entered the economy through what was referred to as the ventanilla siniestra (the left window) at banks around the country.4 While the rest of

Latin America suffered from an unfavorable and debilitating debt crises in the 1980s and 1990s, Colombia escaped the region-wide financial crisis and remained a paragon of fiscal solvency.5 Illicit gains, like all other gains, became licit cash and investment capital as it seeped into Colombian society, getting cleaner and less traceable with every new transaction and making any sort of quest for its idol of origins pointless.6 This state of affairs kept the Colombian economy buoyant and few

Colombians complained, notwithstanding the protestations of a string of U.S. ambassadors who were conditioned to obsess over the ill-gotten gains of this contraband exchange.7 Foreign exchange, after all, was foreign exchange no matter its provenance.

Earlier this year, Peruvian authorities in Callao, Lima’s indispensable Pacific

Coast port since the sixteenth century, seized 8 million dried seahorses, highly sought

James Brodman, Ransoming Captives in Crusader Spain: The Order of Merced on the Christian-Islamic Frontier (Philadelphia: University of Pennsylvania Press, 1986). An informative discussion of the role of ransom during the Crusades can be found in Yvonne Friedman, Captivity and Ransom in the Latin Kingdom of Jerusalem (Leiden: Brill, 2002).

4 Specifically, the ventanilla siniestra allowed customers to exchange Colombian at the Banco de la República, the state-run central bank of the Republic of Colombia, without leaving a paper trail.

5 For large countries such as Brazil, , and , which had become heavily indebted during the 1970s, the 1980s were often referred to as “The Lost Decade,” due to the crisis caused by the rising costs of servicing that debt.

6 Marc L. B. Bloch, The Historian's Craft (New York: Knopf, 1953), 24.

7 One such Ambassador, Viron Vaky, after initially claiming that the drug trade was “not a central element of [U.S.] policy [nor] an integral part of the bilateral relationship” would acknowledge by 1978 that Colombian drug syndicates had grown too powerful. Robert W. Drexler, Colombia and the : Narcotics Traffic and a Failed Foreign Policy (Jefferson, NC: McFarland, 1997), 96.

2 contraband among practitioners of traditional East Asian medicine, who grind them into powder to be used as an aphrodisiac.8 This bust followed a similar 2012 seizure of 16,000 dried seahorses that had been abandoned on the street in Lima.9 In both instances, despite a ban on seahorse fishing in Peruvian waters due to their endangered status,10 the high prices that this charismatic product11 fetched led a Chinese ship captain to risk their export from Peru to China. Direct contraband commerce between Peru and China goes back centuries, to at least the first decade of the trade in the 1570s, when silk and other luxury goods were exchanged for Potosí silver to the chagrin of Spain’s silk merchants and Crown treasurers.

Sixteenth-century Spain would construct much of its emerging empire upon two heavily regulated pillars, slaves and silver, both of which would prove problematic units of account to regulate.12 The former unit, human cargo, after being kidnapped and

8 Jani Actman, “Dried Seahorses Seized—All Eight Million,” National Geographic July 3 2016, http://news.nationalgeographic.com/2016/07/seahorses--eight-million-peru-smuggling-crime-blotter/

9 “Peru police seize thousands of dried seahorses,” BBC News 24 August 2012, http://www.bbc.com/news/world-latin-america-19364702

10 On the establishment of the Manila Galleons the inter-colonial trade between New Spain and Peru, see Woodrow Wilson Borah, Early Colonial Trade and Navigation between Mexico and Peru (Berkeley: University of California Press, 1954), especially 63-95.

11 Charismatic products are products that are thought to have transformative or restorative qualities. Contemporary products such as aphrodisiacs, cosmetics, ornamental or otherwise aesthetically distinctive products would fit the category. Early modern charismatic products might have included , silks, , chocolate, cinchona (quinine), caña fistula, incense, amber, or even dyestuffs. On charismatic products, see C. A. Bayly, The Birth of the Modern World, 1780-1914: Global Connections and Comparisons (Malden, MA: Blackwell Pub, 2004), 30-32.

12 Stanley J. Stein and Barbara H. Stein, Silver, Trade, and War: Spain and America in the Making of Early Modern Europe (Baltimore, Md: Johns Hopkins University Press, 2000). Murdo J. Macleod, Spanish Central America; A Socioeconomic History, 1520-1720 (Berkeley: University of California Press, 1973), especially 46-64.

3 purchased in West Africa would pour into Spanish America to replace coerced

Amerindian labor in plantation production and in a variety of other brutal tasks, from diving and placer mining to urban workshop and artisanal production.13 The phrase,

“piezas de negro,” first appearing in archival documents in 1543, would describe standard slave units and attest to their thorough commodification as typical components of accounting.14 Slave-trading merchants, often foreign subjects who had won asientos15

(monopoly contracts or licenses) after the official establishment of the in 1595, were notorious for stuffing their slaving ships with strictly prohibited items and under-reporting the items they were permitted to trade.16 Silver, after providing the royal

13 Amerindians were victim to a number of un-free labor systems established by early Spanish settlers, from outright chattel slavery in the Caribbean and Central America, to the mita system, which resembled corvee labor in the mines of Potosí, to the de facto serfdom that accompanied the encomendero system. On the earliest stage of indigenous chattel slavery, see Erin Woodruff Stone, “Indian Harvest: The Rise of the Indigenous Slave Trade and Diaspora from Española to the Circum-Caribbean, 1492-1542” PhD Diss., Vanderbilt University, 2014. A good overview of the mita system can be found in Jeffrey A. Cole The Potosí Mita, 1573-1700: Compulsory Indian Labor in the (Stanford, Calif: Stanford University Press, 1985). Timothy J. Yeager examines the subtle differences between labor and slavery in "Encomienda or Slavery? The Spanish Crown's Choice of Labor Organization in Sixteenth-Century Spanish America" The Journal of Economic History 55, no. 4 (1995): 842-859.

14 “Reál Cédula,” 23 August 1543, AGI Santo Domingo, 868, L.2, F.198. On the variations of pieza standardization, see David Wheat, Atlantic Africa and the Spanish Caribbean, 1570-1640 (Chapel Hill: Published for the Omohundro Institute of Early American History and Culture, Williamsburg, Virginia, by the University of Press, 2016), 102.

15 Asientos were contracts or exclusive trading monopolies granted by the Spanish Crown to an individual or a group of merchants to trade specific commodities such as tobacco, salt, or slaves in Spanish imperial territory. Portuguese merchants and financiers, because of their closeness to Spanish officials as quasi- subjects during the period of the composite monarchy (1580-1640) and dominant position in slave markets in West Africa following a century of coastal exploration, held slave asientos throughout the first half of the seventeenth century. Another form of asiento was the written contract that scheduled and laid out the terms of short- and medium-term loans by bankers and the Crown. J. H. Elliott, Imperial Spain, 1469-1716 (Hammondsworth: Penguin, 1970), 197-198.

16 The first Asiento de Negros, established in 1595, was granted to Portuguese merchant, Pedro Gomes Reynel, who was licensed to import into Buenos Aires up to 600 slaves per year. Systematic smuggling on asiento slave ships is thought to have reached its apogee after the exclusive privilege was granted to English merchants of the South Sea Company according to the terms of the Treaty of Utrecht in 1713. For an overview of the Asiento de Negros and Spanish American slave trade, see David Marley, Reales asientos y licencias para la introducción de esclavos negros a la America Espagnola (1676-1789). 4 treasury a needful infusion of revenue throughout the sixteenth century, would end up wreaking havoc on the metropolitan economy by the century’s end. This havoc had manifold causes and consequences, but the simplified version was that the influx of silver was a major contributor of the price that began to appear by the 1550s.17

Imperial solvency was undermined when, in turns, both illicit (unstamped, untaxed, and largely undetected) and licit silver starved and flooded peninsular markets as seasonal fleets, their holds heavy laden with the specie of empire, arrived in Seville, discouraging investment in domestic manufacturing and funding political enemies and heretics who threatened Spain’s prerogatives at home and abroad. Piet Heyn and were, perhaps, the most famous heretics to plunder Spanish shipping. The former captured the entire fleet in Matanzas Bay, in 1628 while the latter laid siege to a number of Spanish trade hubs from Cádiz and Callao to Panama and Cartagena.18 Fraud often

(Windsor Canada, 1985). See Eufemio Lorenzo Sanz, Comercio de España con América en la época de Felipe II (Valladolid: Servicio de Publicaciones de la Diputación Provincial, 1979), 511-530 for specific details about the stages of licensing of the slave trade. Portuguese slave traders had turned a de facto monopoly of slave licenses in the 1570s into a longlasting de jure monopoly via the Asiento de Negros in 1595.

17 On price inflation, see Earl Hamilton, American Treasure and the in Spain, 1501-1650 (New York: Octagon Books, 1965). For the counter-argument that silver was probably only a minor contributor to price inflation, see Marjorie Grice-Hutchinson, The ; Readings in Spanish Monetary Theory, 1544-1605 (Oxford: Clarendon Press, 1952). The current consensus among scholars is that hoarding, declining agricultural and manufacturing production, and the immediate export of silver to pay soldiers and financiers meant that much of the silver imported from the Americas never entered into circulation on the Iberian Peninsula and was thus not a major factor in price inflation, contra Hamilton.

18 The literature of the Spanish declinologists, who tracked economic stagnation on the Peninsula, military defeats abroad, and the erosion of Spanish dominance at sea is extensive. J. H. Elliott, Imperial Spain, 1469-1716 (Hammondsworth: Penguin, 1970), Antonio Domínguez Ortiz, El Antiguo Régimen: Los Reyes Católicos y los Austrias (Madrid: Allianza, 1974), and his Crisis y decadencia de los Austrias (Barcelona: Ediciones Ariel, 1971) are classics of the genre. More recent works have complicated the low-hanging fruit of the declinology narrative by more sharply focusing on the geographically and socially uneven nature the Spanish decline. What was good or bad for the metropole was not necessarily good or bad for the periphery. See Borah, Trade and Navigation, 8-21 on the autonomous development of intercolonial trade in 5 began in the shipyards themselves, where ship capacities were under-reported, which provided captains and crewmembers ample space for contraband that might go undetected on inventories for the lifespan of the vessel, which could last for decades.19

Unregistered and unstamped silver and lucrative contraband commodities tucked away in slave ships made a mockery of official attempts to assess the volume and value of transatlantic trade for taxation purposes, and the futility of accurate measurement of this trade in official documents has only compounded the historian’s task.20

the mid-sixteenth century. Jonathan Israel Race, Class, and Politics in Colonial Mexico, 1610-1670 (London: Oxford University Press, 1975) and “The Decline of Spain: A Historical Myth?” Past and Present 91 (may 1981): 33-57 and Henry Kamen’s response “The Decline of Spain: A historical Myth?: A Rejoinder," Past and Present 91 (May, 1981): 181-185 provide a lively and provocative debate on the finer points of the decline historiography.

19 Carla R. Phillips, Los Tres Reyes, 1628-1634: The Short Life of an Unlucky Spanish Galleon (Minneapolis: University of Minnesota Press, 1990) and The Treasure of the San José: Death at Sea in the War of the Spanish Succession (Baltimore: Johns Hopkins University Press, 2007) go into great detail about how ships were built and shipping capacities measured in shipyards throughout Spain and Latin America. On the formulas for calculating tonnage, Phillips writes, “On average, the volume omitted was thought to add about 20 percent to a vessel’s carrying capacity” (Phillips, San José, 9). The tonelada, 1.42 cubic meters, was the standard unit of measurement for Spanish capacity during this time. Just to give an idea of scale, a royal ordinance of 1624 set the maximum size of Indies ships at 624 toneladas, thus allowing for, perhaps, some 100 toneladas of unaccounted for capacity. One the various capacities of vessels in the , see Phillips, “Trade in the Iberian Empires: 1450-1750,” in The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350-1750, ed. James D. Tracey (Cambridge: Cambridge University Press, 1990), 78 and San José, 7. On the specific market for fleet ships in Seville, which was comprised of mostly pre-built ships on the banks of the in Seville rather than of commissioned work to be completed elsewhere, see Sergio M. Rodríguez Lorenzo. "Sevilla Y La Carrera De Indias: Las Compraventas De Naos (1560-1622)," Anu. Estud. Am. Anuario De Estudios Americanos 73, no. 1 (2016): 65-97, 66, 74. Rodríguez confirms Phillips’s assertions about the lack of consistency or reliability in the reports of official ship capacities that appearing in notarized merchant contracts.

20 Much smuggling took place on slaving ships, which were notoriously overstuffed, and could be attributed to the fact that they tended to visit a number of unmonitored ports, as many of them sailed outside of Treasure Fleet schedules and directly to American and Caribbean ports such as Lisbon, the , Cape Verde, Guinea, São Tome, and Angola. See Lorenzo Sanz, Comercio de España, Tomo I, 537. On the role of the islands, especially in the context of Portuguese trade, see T. Bentley Duncan, Atlantic Islands: Madeira, the Azores, and the Cape Verdes in Seventeenth-Century Commerce and Navigation (Chicago: University of Chicago Press, 1972), 1-24 and 195-238. An informative chapter on the development of the Portuguese slave trade in West Africa from the fifteenth century that puts this trade in an international context is Timothy Grady’s “Contact and Conquest in Africa and the Americas,” in The Atlantic World, 1450-2000, eds. Toyin Falola and Kevin Roberts (Bloomington & Indianapolis: 6

None of this is to claim that the Spanish Empire was qualitatively or quantitatively exceptional when it came to the size of its contraband commerce in either absolute or relative terms. What the Spanish Habsburg Crown did seem to have was a stricter set of commercial rules in the sixteenth century than its competitors, who were far less systematic in their approach to overseas exploration. Unlike the Spanish case,

English colonies in North America took a variety of distinctive corporate and political forms. Virginia and Massachusetts, for example, began as joint corporate ventures and thus experience a greater degree of self-government. Spanish colonies, in contrast, were

Crown ventures and were governed as such, even if there was some local autonomy in the breach. The larger role of a unified Catholic Church in Spanish America provided another contrast to the increasingly complex religious landscape of the North American colonies.21 Then there was the simple matter of the pioneer’s curse—that is, the Spanish

Empire was the first European empire burdened with such sizeable gains to protect. By the 1560s, the convoy trade, with its attendant set of regulations, tax burdens, inspection protocols, and strict sailing schedules would create scarcity throughout Spain’s vast empire. Spanish contraband was thus a function and outcome of the Crown’s fetish for formal control over the commerce conducted within its realms, which defined smuggling

Indiana University Press, 2008), 27-47. Silver was problematic due to its differentiated forms. Registered and stamped silver bars were taxed in accordance with the royal quinto, typically at 20%. Wrought, unstamped, or personal silver, often concealed in closed shipping containers, served a double function for its owners, both for its use value and its exchange value on the black market. On the disappearance of silver via smuggling, see Stein and Stein, Silver, Trade, and War, 23-26.

21 For a comparison between the Spanish and English pattern of overseas expansion, see J. H. Elliott, Empires of the Atlantic World: Britain and Spain in America, 1492-1830 (New Haven: Yale University Press, 2006).

7 in broader terms than did English, Dutch, or French traders who were far more likely exchange goods without license to do so.

Examples of societies going through normative contraband conjunctures abound in historical accounts from East Asia to the Caribbean to the Southern Cone and beyond.22 Roman commander, (106-48 BC), built his power base after being granted dictatorial powers to deal with pirates off the coast of southern Italy and Sicily in the first century B.C. The Mediterranean itself was a cauldron of piracy from the ancient to the modern era, a fact that dictated settlement patterns in island and coastal communities throughout the region.23 The dreaded razzia, a style of violent lightening raids that “had long been a tactic in early capital accumulation in the Mediterranean,

North Africa, and in the Iberian Reconquista itself,” resurfaced in Caribbean waters throughout the sixteenth century before less violent and far more lucrative smuggling networks supplanted it.24 This last point is key, for on the wide spectrum of illicit trade, regular smuggling thrived when stable economies endured, which meant that hotheaded pirates were the natural enemies of the far more staid smuggling communities (more of which below). Japanese wako pirates troubled waters from the East China Sea to the Bay

22 Three examples of such contraband conjunctures are described in Jonathan Clements, Coxinga and the Fall of the Ming Dynasty (Stroud: Sutton Publishing, 2004), Hans Derks, History of the Opium Problem: The Assault on the East, Ca. 1600-1950 (Leiden: Brill, 2012), and Peter Andreas, Smuggler Nation: How Illicit Trade Made America (New York, NY: Oxford University Press, 2013).

23 David Abulafia highlights the religious contours of piracy in the Mediterranean, where Christians (The Knights of Santo, The Knights of Malta, and Croatian of ) battled Barbary (primarily Muslim) pirates throughout the region in The Great Sea: A Human History of the Mediterranean (New York: Oxford University Press, 2011), 452-457.

24 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), 5. 8 of Bengal in the 1550s after being shut out of much official Chinese and Portuguese trade. Piracy, according to political scientist, Janice E. Thomson, was notoriously difficult to suppress in the due to the fact that nonstate violence was more common and because there was a great deal of disagreement on how to define it.

With the rise of powerful states that could more effectively assert territorial control and sovereignty came a reduction in piracy in hotspots like the South China Sea and the

Mediterranean Sea.25 Illicit gains from forgotten epochs often provided the seed capital for later nation building—a process that Marx and scholars in his wake have come to refer to as primitive accumulation, a term which evokes the first expropriations of conquest and settlement in the Americas before bureaucrats, lawyers, and clergy arrived to supplant the first wave of settlers. J. H. Elliott brackets this transition from conquest and expropriation to systematic production and organization as the transformation of the

Empire from “the age of the to the age of the Civil Servant.”26 Vasco Núñez

25Mercenaries, Pirates, and Sovereigns: State Building and Extraterritorial Violence in Early Modern Europe (Princeton, N.J.: Princeton University Press, 1994), 4. On wako piracy and piracy in general in the South China Sea, see O. H. K. Spate, The Spanish Lake (Minneapolis: University of Minnesota Press, 1979), 151-157.

26 Elliott, Imperial Spain, 160. One of the more thorough and engaging recent discussions of primitive accumulation can be found in David Harvey, The Enigma of Capital: And the Crises of Capitalism (Oxford, England: Oxford University Press, 2010), 58 and 108. Rosa Luxemburg, the Accumulation of Capital (London: Routledge, 2003), 364 describes primitive accumulation as the first act of appropriation of non-capitalist capital by capitalists, a process that is largely ‘incidental’ or contingent. This process, described in Karl Marx, Samuel Moore, Edward B. Aveling, and Friedrich Engels, Capital: A Critique of Political Economy. Vol. I, Book One, Vol. I, Book One (London: Electric Book Co, 2001), 684 was typically accomplished with great violence, such as that which accompanied the seizure of textile or agricultural production in India by agents of the East India Tea Company (EIC) or precious metals seized by agents of the Spanish Crown. Philip D. Curtin, The Rise and Fall of the Plantation Complex: Essays in Atlantic History (Cambridge: Cambridge University Press, 1990), 57. Henry Kamen makes a similar point, referring to this mid-sixteenth century shift from predation to administration as “institutionalization and consolidation,” in Empire: How Spain Became a World Power, 1492-1763 (New York: HarperCollins, 2003), xxvi. 9 de Balboa, in an early letter to King Ferdinand, epitomized this suspicion and resentment of letrados (lawyers in particular), when he wrote:

There is one great favor that I pray your Royal Highness to do me, since it is of great importance to your service. It is for your Royal Highness to issue an order that no bachelor of Laws (or anything else except of Medicine) shall come to these parts of Tierra Firme…because no Bachelor ever comes here who is not a devil, and they all live like devils, and not only are they themselves bad, but they make others bad, having always contrivances to bring about litigations and villainies.27

And while many historians have included, or at least mentioned, the vastness and importance of black and grey market commerce,28 the assumption that a close reading of the official trade records and statistics can provide an adequate basis for describing

Spain’s imperial economy persists. Grey market goods refer to licit goods that are traded without a license. The distinction between grey and black-market goods is often

One specific incidence of primitive accumulation is described in Kenneth Pomeranz and Steven Topik. The World That Trade Created: Society, Culture, and the World Economy, 1400-the Present (Armonk, N.Y: M.E. Sharpe, 1999), 23-25. Pomeranz and Topik cite French Huguenot’s communications with Tupi traders in Brazil in the 1550s. Since there was no formal mode of production to collect pau Brasil (Brazilwood) in quantities that would satisfy French merchants, they resorted to violence and slavery to force Tupi tribesmen to produce more. See Jean Lery and Janet Whatley, History of a Voyage to the Land of Brazil, Otherwise Called America (Berkeley: University of California Press, 1990), 27, 100-102 for original description.

27 John Easter Minter and William Wellons. The Chagres: River of Westward Passage. New York: Rinehart, 1948), 63. See also John Merriman, who writes, “The conquistador is therefore relegated to second place; he is largely supplanted by the hardworking, reliable crown official, whose pole star was the establishment of the royal authority. There are, consequently, few innovations.” The Rise of the Spanish Empire in the Old World and in the New, vol. 4 (Cooper Square, 1969), 200.

28 John Lynch, Spain Under the Habsburgs. Vol. 2 (Oxford, 1969), 174-211, Stein and Stein, Silver, 78-94, Eufemio Lorenzo Sanz, Comercio de España con América en la época de Felipe II, Tomo II (Valladolid: Servicio de Publicaciones de la Diputación Provincial, 1979), Chapter 14, Woodrow Borah, Early Colonial Trade and Navigation between Mexico and Peru (Berkeley and Los Angeles: University of California Press, 1954), 97-127 Clarence Haring, A. Domínguez Ortiz, Orto y ocaso de Sevilla: Estudio sobre la prosperidad y decadencia de la ciudad durante los siglos xvi y xvii (Sevilla: Junta de Patronato de la Sección de Publicaciones de la Excma. Diputación Provincial, 1946), 118-150.

10 contingent upon rapidly changing regulations. Goods such as salt, tobacco, or textiles, while ostensibly legal, would be considered grey market goods if the seller or transporter of said goods were not licensed to trade them or were found to be trading them with an enemy. Slaves and prohibited books, in contrast, were black market goods in much of

Spanish America. In this dissertation, both grey and black-market goods will be placed under the rubric of contraband. Castile’s dark matter—that is, its vast black and grey market commerce29—has typically been dismissed as something not much worth mentioning at all, or more commonly, shrugged off as not worth the trouble.30

By the turn of the seventeenth century in Spanish America, the pattern of plunder and extraction that dominated the first generations of conquest had given way to systematic exploitation—specifically, the mining of precious metals, the farming of pearl beds, and the plantation production of valuable raw commodities such as dye-stuffs, tobacco, cacao, and .31 The barriers to entry of this more orderly trade were

29 Examples of black market products in sixteenth-century Spanish America would be books from the Index Librorum Prohibitorum, the Church’s List of Prohibited Books or, during certain periods, Chinese silks. The gray market, in contrast, refers to any product distributed or exchanged through unofficial channels, without license or official permission, or with prohibited trade partners. Contrabando (smuggling), comercio ilícito (illicit trade), rescate (extortion or illicit trade), and fraude (fraud) were terms that were used interchangeably among contemporaries for both black and gray market commerce.

30 There is, as well, the problem that the period under consideration was a decidedly pre-statistical age, even beyond Spain in classical proto-capitalist realms like England and Holland, which makes accurate accounting difficult. Writes historian Trevor Davies, governments of this era “were more often guided by guesswork than by scientifically gathered statistics in the matter of social and economic affairs.” The Golden Century of Spain, 1501-1621 (London: Macmillan and Co, 1937), 263.

31 A number of commodity histories have captured this transition from primitive to systematic exploitation. A few standouts include, Marcy Norton, Sacred Gifts, Profane, Pleasures: A History of Tobacco and Chocolate in the Atlantic World (Ithaca: Cornell University Press, 2008), Kris Lane, Colour of Paradise: The Emerald in the Age of Gunpowder Empires (New Haven: Yale University Press, 2010), Philip Curtin, The Rise and Fall of the Plantation Complex: Essays in Atlantic History (Cambridge England: Cambridge University Press, 1990), Enrique Otte, Las Perlas Del Caribe: Nueva Cádiz De Cubagua (Caracas: Fundación John Boulton, 1977), B. Dahlgren de Jordán, La Grana Cochinilla (México: Universidad Nacional Autónoma de México, 1990). 11 formidable. High information, transaction, and transportation costs and the need to secure royal licenses meant that many merchants were either priced out or legally shut out of the

Spanish Crown’s transatlantic galleon trade.32 The gran comerciantes (wholesalers) positioned to take advantage of scale and the royal asientistas (monopoly license holders), could effectively corner markets in the largest ports and settlements.33 This strict and often inflexible trading system left yawning gaps in both time and space that were quickly filled by opportunists who supplied goods to neglected settlements, places like Florida, the Mosquito Coast, and Buenos Aires, which were largely left to their own devices in the first century of this unresponsive colonial scheme. But while this study will make occasional references to the purely illicit commerce of pirates and rescates (forced transactions and outright extortionate dealings) in more remote ports and settlements, its emphasis will be on the commonplace contraband transactions at the nerve centers of empire, typically conducted under the watchful eyes and with the cooperation of merchants, administrators, and clergy whose official task it was to protect merchant and

32 Transaction costs, broadly construed, especially by NIE (New Institutional Economics) scholars, typically include information costs (the cost of gaining access to the most up-to-date information about markets, fairs, prices, and exchange rates) and transportation costs, which is self-explanatory. Merchant organizations such as official guilds, bourses, and stock exchanges or less formal networks and coffeehouses could defray such costs considerably. See J. R. Commons, "Institutional Economics," American Economic Review 21 (1931): 648–657 for an explanation of transaction costs. For an account of how business and financial newspapers in commercial and financial centers in the sixteenth and seventeenth centuries reduced information costs in places like Venice, , London, and Amsterdam for merchants and bankers. see James McCusker, “The Demise of Distance: The Business Press and the Origins of the Early Modern Atlantic World,” The American Historical Review 110, no. 2 (April 2005): 295-321, especially 295-299.

33 The Spanish Crown granted exclusive licenses to trade in commodities that were deemed to be of high public utility throughout the sixteenth and seventeenth centuries. The most important and instructive of these, the slave asiento, provided non-Spanish smugglers the means by which to introduce contraband goods. Portuguese slavers dominated the transatlantic slave trade during the period under consideration. 12 royal prerogative.

How was it that Castile by the 1560s opted to establish a rigid seasonal convoy system that from its inception up to the of the late eighteenth century thought it acceptable to turn its back on so many of its settlements? Why did an organic network of individually licensed ships that responded more directly to supply and demand regardless of season give way to a system that would make legal dissipation and the flouting of rules a matter of necessity and survival? Spanish subjects in far-flung settlements such as Peru, Buenos Aires, and the , already forced to inhabit

“that other kind of time” which, in historian, Mariano Machado’s words, “carved a usurious disloyalty [and] iniquity,” would come to think nothing of seeking out and giving their business to proscribed producers and suppliers to meet their essential needs.34

Jeremy Baskes is only the most recent historian to point out that the Spanish Treasure

Fleet system was implemented as means to address problems of imperfect information, uncertainty, and risk management.35 Despite Baskes’s convincing claim that the system largely achieved its main aims of reducing risk and increasing security before the eighteenth century shift from Habsburg planning to Bourbon “free trade” ideology, the

Treasure Fleet, from the outset, served consumers and producers in smaller communities poorly, if at all. True, the flota system did reduce uncertainty and inefficiency for a

34 Alfonso W. Quiroz, Corrupt Circles: A History of Graft in Peru (Washington, DC.: Woodrow Wilson Center Press, 2008), 39.

35 Jeremy Baskes, Staying Afloat: Risk and Uncertainty in Spanish Atlantic World Trade, 1760-1820 (Stanford, California: Stanford University Press, 2013). Without perhaps intending to do so, Baskes echoes the New Institutional Economist (NIE) refrain about the raison d’être of economic institutions: to lower transaction costs. For a summary of NIE theory, see Douglass North, “Institutions,” The Journal of Economic Perspectives 5, no. 1 (Winter, 1991): 97-112.

13 privileged group of suppliers through the provision of “club goods”36 (cheaper transaction costs, guarantees of pricing and enforcement, and greater certainty), but one must not overstate the benefits for producers, consumers, and settlers outside of the empire’s major hubs. For these communities, the Treasure Fleet system was a constant, irritating reminder of the Crown’s neglect. In fact, the ever-present grievances in official colonial documents are explicit about the dangers of this sort of isolation, which eroded royal authority and encouraged local loyalties and autonomy.

This study doesn’t take on or question the claim that the convoy system and official commercial policy, which involved anachronistic trade fairs, circuitous maritime and overland routes in the name of surveillance and control, occasional arbitrary seizure of goods to balance royal books, and other royal habits reduced trust and encouraged law breaking. All of this is true up to a point. Instead, it focuses upon the fact that Crown agents made a habit out of stepping back from the brink when it had the opportunity to strictly enforce so many of its commercial rules and regulations. While I don’t disagree with historian, Zacharias Moutoukias’s general assertion about Argentina that “most

[historians] would agree that smuggling contributed to the weakening of Spain’s control over its overseas empire,”37 I do think that historians have too often ignored smuggling’s

36 Club goods existed in the gray area between private and public goods. Goods, such as efficient litigation provided by merchant courts, enforcement via collective punishment and retaliation, licensing regimes, and financial subscriptions reduced transaction costs for members of merchant guilds. While not available to non-members, club goods allowed for smoother commerce over longer distances and time schedules between non-familiar actors. See Oliver Volckart and Antje Mangels, “Are the Roots of the Modern Lex Mercatoria Really Medieval?” Southern Economic Journal 65, no. 3 (Jan., 1999): 427-450, 442. 37 Zacarias Moutoukias. “Power, Corruption, and Commerce: The Making of the Local Administrative Structure in Seventeenth-Century Buenos Aires,” The Hispanic American Historical Review 68, no. 4 (Nov. 1988): 771-801, 774.

14 constructive role, at least until the reign of Philip IV.38 Buenos Aires’s 1580 resettlement, to take one relevant example central to Moutoukias’ assessment, was a fragile affair, and

Crown agents well knew that it could have either security on its southern Atlantic colonial flank or effective commercial control, but they were unlikely to have both in the short or medium term. By granting suelto (individual) licenses to foreigners and accommodating Portuguese merchants and settlers, the Kings Philip I and Philip II were betting on tolerance and flexibility as the most effective strategy for control.39

Moutoukias himself rightly acknowledges that the Crown allowed for some forms of corruption as part of its imperial strategy.40

Contraband, like corruption more generally, was notoriously difficult to control in

Spain’s thinly stretched empire. Historian Stafford Poole addresses the issue in his 1981 article, “Institutionalized Corruption in the Letrado Bureaucracy: The Case of Pedro

Farfán.”41 Poole recounts the story of one particular oidor, Pedro Farfán, who was

38 Philip IV, who took the throne in 1621 after the death of Philip III, pursued an aggressive commercial policy of economic warfare against enemy traders, specifically the Dutch and English. The Almirantazgo de los Países Septentrionales (the Board of Trade), was tasked with “24 warships to protect trade with the Northern states such as the Hanseatic ports, the , and Denmark, which had been gravely weakened since the end of the Twelve Years’ Truce.” For a comprehensive treayment of Philip IV’s economic warfare strategy, see Ángel Juan Alloza Aparicio, “Portuguese Contraband and the Closure of the Iberian Markets, 1621-1640. The Economic Roots of an Anti-Habsburg Sentiment,” e-journal of Portuguese History 7, no. 2 (Winter 2009), 2-3 and Europa En El Mercado Español: Mercaderes, Represalias y Contrabando En El Siglo Xvii (Valladolid: Junta de Castilla y León, Consejería de Cultura y Turismo, 2006).

39 Suelto ships (loose ships) were not part of the official flota system. These were individual licenses granted to captains in order to address the needs of neglected colonial communities during lean seasonal shortages or simply to supply regions not on the official schedule.

40 Moutoukias, “Power, Corruption, and Commerce,” 778.

41 Stafford Poole, “Institutionalized Corruption in the Letrado Bureaucracy: The Case of Pedro Farfán,” The Americas 38, no. 2 (Oct., 1981): 149-171.

15 dispatched to Royal Audiencia of Mexico in 1567 with a royal cédula to implement a series of reforms at the Royal and Pontifical University of Mexico. The details of

Farfán’s specific case are less important than the habitual accumulation of titles and offices that characterized Farfán’s career and his effort to top up his inadequate salary through illegal land speculation and local marriage.42 He augmented his meager earnings in other ways, such as through the purchase and resale of luxury goods from the Manila

Galleons. One response to such activities, for archbishops, viceroys, oidores, and other colonial officials were all to some degree implicated, was the dreaded visita, an investigation by an official appointed in the metropole to look deeply into the affairs of colonial governance. Farfán, for his part, engaged in delaying tactics with other colonial officials, even going so far as to destroy potentially incriminating documents.43 What followed was a near decade of futile efforts at enforcement of a series of royal decrees and appointments. As Poole writes, “In another country a man like Farfán might well have gone to the block,”44 but imperial Spain was sui generis. The empire faced challenges in time and space, increasingly unified and self interested royal officials located the periphery of empire, and, most importantly for this writer’s purposes, a less- than-robust commitment to honesty and obedience in government.

If attempts to bring major officials to heel were so difficult in Mexico City, the de facto capital of Spain’s northern colonial realm, then it is obvious that merchants further

42 “Institutionalized Corruption in the Letrado Bureaucracy,” 156-159.

43 “Institutionalized Corruption in the Letrado Bureaucracy,” 165.

44 “Institutionalized Corruption in the Letrado Bureaucracy,” 171.

16 afield, so crucial to the functioning and security of the commercial and financial system, would find even wider berths to engage in illegal activities. Mexico City officials planned and manned expeditions like the one to Florida in 1599. Mexico City also came to have its own mint and controlled most of the traffic between the Philippines and Spanish

America. Other de facto regional centers of power emerged to control hinterlands such as

Asunción in the southern cone and Lima on the Pacific coast.45 Even if or when such merchants were formally charged with crimes, it might take years for a case to move forward. It wasn’t for lack desire that enforcement attempts foundered. Rather, the structure of empire and inadequate remuneration made strict enforcement counterproductive because it drove many functionaries and merchants to opt out of the official commercial system. Keeping those guilty of minor transgressions within the fold made sense when legal settlements could take years to conclude.

* * *

To tinker slightly with an old proverb, contraband is in the eye of the beholder. It is a category of trade whose existence depends upon the vicissitudes of time, space, war footing, and/or the particular whims and interests of individuals or groups—be they merchants, colonial bureaucrats, clergy, or heads of state. Aside from the recent global obsession with banning narcotics or items subject to religious, cultural, or political

45 R. B. Merriman, The Rise of the Spanish Empire in the Old World and in the New, vol. 4 (Cooper Square, 1969), 165; William L. Schurz, The Manila Galleon (Manila: Historical Conservation Society, 1985); and Woodrow Borah, Early Colonial Trade and Navigation between Mexico and Peru (Berkeley and Los Angeles: University of California Press, 1954) all address this phenomenon, the last of which focuses upon trade between these de facto metropoles far from Madrid and Seville. See chapter 4 for additional commentary on the multi-polar structure of the Spanish Empire.

17 taboos, commodities were only rarely considered illicit in their essence.46 The Spanish

Inquisition’s obsession with preventing prohibited books and infidels from being imported into Spanish America are notable exceptions that prove the general rule.47 But goods such as fine ruanes (fabrics from Rouen) or even raisins could be characterized as contraband if the merchants trading them did so without a license.

Distilled to its etymological roots, contraband (contrebande or contrabbando) refers simply to unlawful trade.48 By definition, then, the term bears the stigma of the illicit and during times of crisis or in the eyes of thinner-skinned royals could be considered a crime akin to lèse-majesté—that is, a personal insult or attack against the dignity or prerogative of the ruler.49 Identifiable contraband presumes that a legal framework exists for trade. In an early modern setting, by extension, this presumed a centralized authority and institutions that were tasked with enforcing the rules of the game despite the obvious challenges posed by both the vastness of the empire and zeal of

46 It is only in the twentieth century that the U.S. and the international community have made a unified effort to control trade in illicit drugs. In the United States, the first effort to control distribution of drugs was the Harrison Narcotic Act of 1914. For the United Nations, see the Convention for limiting the Manufacture and regulating the Distribution of Narcotic Drugs (Geneva, 9 July 1933), specifically, https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=VI-8-a&chapter=6&lang=en

47 The Tribunal of the Holy Office of the Inquisition, established in 1478 by The Catholic Monarchs, Ferdinand and Isabella, was founded to enforce religious orthodoxy, especially among conversos, Jews who had converted (usually by force) to Catholicism. Beginning in 1551, the Holy Tribunal of the would issue indices of prohibited books throughout the second half of the sixteenth century, the enforcement of which provided an opening for inspectors to search ships and ports throughout Spanish America.

48 "contraband, n. and adj," OED Online (Oxford University Press, 2016) http://www.oed.com/view/Entry/40314?rskey=7O2euB&result=1.

49 Crown debt to foreign and domestic investors could be crippling if certain revenue streams were choked off via fraud, evasion, and smuggling. Contraband, thus, could be seen as a betrayal of Crown policy and a personal attack upon the king.

18 imperial Spain’s competitors. Smuggling, then, is largely the product of a wave of rising commercial empires that deemed themselves capable of enforcing commercial imperatives in the fifteenth and sixteenth centuries.

When contraband goods changed hands, some law or rule was being broken, some institutional imperative violated. Despite this fact, those who engaged in this traffic were often the same monopolists and asiento signatories who were well positioned and prominent in the licit commercial circuits of the Spanish commerce. Frequently, in early modern Spain and its colonies, one found high-level administrators and clergy engaging in contraband trade for a variety of reasons ranging from the pecuniary, to the politically advantageous, and for reasons related to simple survival in communities of abject scarcity.50 Many scholars have cloaked this phenomenon in the sensationalist and anarchic élan of pirate chronicles, or inserted a chapter about contraband in nationalistic accounts of total and guerrilla warfare on the high seas.51 As a presumed harbinger or indicator of social or political breakdown, contraband fills the pages of what might aptly be referred to as law-and-order historiography, which accepts without—or at least, insufficient—interrogation, the presumed justness, normalcy, or desirability of lawful

50An example of clergy participation in illicit trade would be the bishop of Tucuman, Francisco de Victoria, who was the first to ply the officially closed route overland and downriver to Buenos Aires and eventually Brazil in 1587. See C. R. Boxer, Salvador De Sá and the Struggle for Brazil and Angola, 1602-1682 (London: Athlone Press, 1952), 75. An example of a high-level authority who engaged in smuggling occurred in 1706, when Philip V, writes historian Lance Grahn, “licensed the shipment of contraband goods worth nearly 2,200,000 pesos aboard the Tierra Firme galleon fleet, one-fifth of the entire cargo by value, in return for kickbacks from Cádiz merchants.” The Political Economy of Smuggling: Regional Informal Economies in Early Bourbon New Granada (Boulder, CO: Westview Press, 1997), 27.

51 William C. Davis, The Pirates Laffite: The Treacherous World of the Corsairs of the Gulf (Orlando, FL: Harcourt, 2005) and Peter Andreas. Smuggler Nation: How Illicit Trade Made America (New York: Oxford University Press, 2013).

19 commerce regimes. Contemporary observers knew better.52 Adam Smith and Benjamin

Franklin both shrugged off smuggling as a minor offense and ridiculed those who scrupled against it for their “pedantick pieces of hypocrisy.”53 Eighteenth-century

Spanish Crown intelligence agents Don Jorge Juan and Don were matter-of-fact about at least one reason for the widespread existence of contraband: “if there were no delays, there would be no time or reason to engage in illegal commerce.”54

But delays there were.

Throughout this dissertation, the word contraband will be construed broadly to include all forms of lawless trade and the fraudulent actions that make it possible.55 It will hew closely to the broadest etymological connotation of contrabbando—that is, commerce that violates the prevailing laws of an existing legal regime. Because the

Spanish system of finance and commerce rested heavily upon asiento contracts, which changed hands on a frequent basis, and due to the fact that the Spanish Empire was engaged in almost constant warfare, the category of contraband was a moving target from a legal perspective. The nature of the Crown’s relationship to competing imperial powers

52 Alan L. Karras. Smuggling: Contraband and Corruption in World History (Lanham, MD: Rowman & Littlefield, 2010).

53 See The Papers of Benjamin Franklin, ed. Leonard Labaree 14 (New Haven: Yale University Press, 1959): 315-316 and Wim Klooster, “Inter-Imperial Smuggling in the Americas, 1600-1800,” in Soundings in Atlantic History: Latent Structures and Intellectual Currents, 1500-1830, eds. Bernard Bailyn and Patricia L. Denault (Cambridge, Mass: Harvard University Press, 2009), 46.

54 Don Jorge Juan and Don Antonio de Ulloa, Discourse and Political Reflections on the Kingdoms of Peru (Norman, Oklahoma: University of Oklahoma Press, 1978), 46.

55 Seventeenth-century legal scholar, Pedro González de Salcedo, in his 1654 treatise on commerce, Tratado jurídico politico del contra-bando used the term in a broad sense to refer to any trade that was prohibited by and “contrary to the public good” in Lance R. Grahn, The Political Economy of Smuggling, 13-14.

20 determined patterns of commercial legality. On paper, the rules of trade were quite strict.

Inspectors were expected to check ship registers against cargoes at several stages of the transatlantic journey that is the central focus of this study. The de facto reality was that there was a vast field of black (strictly illegal) and gray (unlicensed or unregistered) trade that went on under the radar.

In Spain’s Empire in the : The Role of Ideas in Instiutional and Social

Change, Colin Machlachlan carefully traces the development and application of law in the Indies from its medieval origins in the Siete Partidas through the integration of natural law among Salamanca theologians in the sixteenth century.56 Distance and delays aside, he writes, “[n]ewly legislated law in the Indies…had a tentative quality that invited correction,” a “philosophical matrix” of resistence that is perfectly reflected in the famous phrase, obedezco, pero no cumplo (I obey, but I don’t comply or execute).57

Commercial laws, as was the case with laws in general, were thus enforced tentatively provided that scofflaws weren’t chronic abusers and displayed “an attitude that encouraged abuse.”58 There was, in general, a sizeable gap between the letter and the spirit of the law, especially in the peripheries of empire.

56 Spain's Empire in the New World: The Role of Ideas in Institutional and Social Change (Berkeley: University of California Press, 1988), 1-19.

57 Spain’s Empire in the New World, 22. See Regina Grafe, “Polycentric States: The Spanish Reigns and the ‘Failures’ of Mercantilism”, in Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire, eds. Philip J. Stern and Carl Wennerlind (Oxford: Oxford University Press, 2013), 241-262 and 252-257 on the specific longstanding strategies of colonial and other non-Castilian forms of resistance that were expressions of pase foral, a type of implicit veto of royal decrees.

58 Grafe, “Polycentric States,” 37. Regina Grafe expands upon Maclachlan’s explanation of how resistance and corruption came to be so prevalent.

21

Although piracy was a form of illicit transaction that often overlapped with smuggling, this study will emphasize transactions that were of an exclusively consensual nature. It will focus on the transactions of buyers and sellers who exchanged goods without the pall of mistrust or fear that accompanied the rescates (forced transactions) of pirates in many of the ports of Spanish America and the Caribbean. The only violence that accompanies the contraband transactions of this particular study will be the sort of juridical violence that is dispensed by the state for punitive reasons.59 And while pirates could and did become smugglers and vice versa, this study will focus largely on their role as smugglers.60

Another element of this de facto reality was that laws tended to be enforced only in cases wherein an illicit line had been repeatedly crossed, often after a series of explicit warnings. Contrabando, comercio ilicito, fraude, all obvious violations of the law could be ignored up to the point where it was determined that the perpetrators of such offenses were deemed to be guilty of excesos, a term whose English connotation is easily understood. This judgment of the seriousness of a crimes based on their chronic commission was a standard applied outside of the commercial realm, of course.

Churchmen, to take one other example, were often not harassed much for petty crimes or sins provided that they weren’t known chronic offenders. This sort of unequal and

59 Murdo Macleod highlights the mistrust between pirates and their would-be customers in Spanish Central America: A Socioeconomic History, 1520-1720 (Austin: University of Texas Press, 2008), 362.

60 On the movements between the spheres of illicit activity—that is, along the spectrum from smuggling to piracy—see Anne Pérotin-Dumon, “ and the Emperor: Power and the Law on the Seas, 1450- 1850,” in The Political Economy of Merchant Empires: State Power and World Trade, 1350-1750, ed. James D. Tracy (Cambridge: Cambridge University Press, 1991), 199.

22 eminently flexible application of the law meant that the Crown allowed plenty of space for maneuvering among its merchants, especially those who lived abroad. Whether this enforcement strategy was a matter of necessity or astute deliberation is a matter that this dissertation will examine throughout.

* * *

There is a tendency among scholars to inappropriately reify the legal regimes of the early modern Atlantic world. The Habsburg age, so aptly characterized in José

Maravall’s essential work on the culture of early modern Spain, The Age of the Baroque, was an era of lumpy, overlapping, and contradictory legal regimes. Maravall left no doubt that so many of the cultural and social elements of the baroque age—its “tendency toward immobility [and] toward directing the progressive forces that the had set underway” applied to the economic realm as well.61 Habsburg law was a moveable feast of competing juridical fora, both for those who wielded fueros in an effort to gain an advantage against lesser subjects and for those of lower social status as well. Two recent studies of early modern international law and sovereignty by historian Lauren Benton confirm many of Maravall’s claims.62 Obedezco pero no cumplo (I obey but I don’t comply or execute), the classic phrase which typifies colonial intransigence in the face of an overweening metropole, was more than a cliché in this baroque milieu; it was, rather, a

61 José A. Maravall Culture of the Baroque: Analysis of a Historical Structure (Minneapolis: University of Minnesota Press, 1986), 30.

62 Lauren A. Benton Law and Colonial Cultures: Legal Regimes in World History, 1400-1900 (Cambridge, UK: Cambridge University Press, 2002); idem, with and Richard Jeffrey Ross. Legal Pluralism and Empires, 1500-1850 (New York: New York University Press, 2013); idem, and A Search for Sovereignty: Law and Geography in European Empires, 1400--1900 (Cambridge: Cambridge University Press, 2010).

23 guiding paradigmatic survival strategy for subjects of the Spanish Crown who dwelt beyond the easy reach of Madrid and its major commercial hubs. German historian,

Arndt Brendecke points out how one’s “epistemological setting” is deeply impacted by such issues of time and space. It is not surprising that endless negotiation would characterize governance given how little metropolitan authorities could effectively know what was going on in peripheral colonies.63 Since the king’s Peninsula-bound secretaries and scribes could not possibly have the latest accurate details about realities on the ground in Spanish America given their reliance upon an interminably stretched communication network and the continent’s difficult geography, this passive-aggressive refusal to implement the Crown’s dicta bought valuable time and space in which norms could be negotiated and explanations carefully crafted.64 And it well suited colonials who, as historian John Lynch writes, “were masters of the political deal.”65

Yet all of this seemingly interminable maneuvering was not merely a cynical gambit, for a ship laden legally with goods, in the course of its transatlantic voyage, could be rendered a contraband vessel as situations on land and sea changed and not all

63 Arndt Brendecke, Imperio e información. Funciones del saber en el dominio colonial español (Tiempo Emulado) (Madrid/Frankfurt: Iberoamericana/Vervuert, 2012), 28. John Lynch’s “Institutional Framework of Colonial Spanish America” Journal of Latin American Studies 24 (1992): 69-91 highlights this dynamic as well. The foundation of colonial governance was less a matter of “consensus” than a series of compromises that arose from irreconcilable tensions and limited means of enforcement.

64 Francis Bacon, jokingly quoting Peru , Antonio de Mendoza, referred to both the physical and epistemological distance: “Mendoza, that was viceroy of Peru, was wont to say: That the government of Peru was the best place that the King of Spain gave, save that it was somewhat too near Madrid." See The Cambridge History of Latin America (Cambridge: Cambridge University Press, 1984), 291. Citation from The Works of Francis Bacon, ed. J. Spedding (London, 1859), VII, 130-1.

65 Lynch, “Institutional Framework,” 70.

24 communication circuits were synchronized.66 Kings Philip II and III understood that the strict enforcement of commercial laws especially after the Crown’s monopolistic control over the Caribbean islands began to fray at the edges and then come apart at the seams could be counterproductive.67 The response to such stalling could take two or more years to reach the eyes and ears of recalcitrant colonial administrators, many of whom, like their asientista counterparts, wished to make their limited terms profitable. Indeed, for some unfortunate appointees, royal salaries were inadequate to meet even the most basic costs of living in regions where price inflation constantly outstripped wage increases.

This yawning space between obedience and compliance, laws and broadly accepted social norms, is one of the central themes of this study.68 And this theme, by extension, will be used to explore how contraband could be a feature and not a bug of mid-colonial

(1550-1700) Spanish America.

* * *

This dissertation analyses the impact of contraband trade—the selling of unlicensed or illegal goods—upon economic policy, economic growth, political stability, and the development of merchant communities and institutions of the Spanish Empire

66 For an excellent account of the confusion created by changing war footing and lags in communication, see Joyce Elizabeth Harmon, Trade and Privateering in , 1732-1763 (Alabama: University of Alabama Press, 2005). See also Evan T. Jones, Inside the Illicit Economy: Reconstructing the Smugglers' Trade of Sixteenth Century Bristol (Farnham, Surrey, England: Burlington, VT, 2012), 1-5 for accounts of the risks taken by merchant John Smyth during the tense period following Henry VIII’s excommunication. Merchants docked in foreign ports when war was declared often saw their cargoes seized as prize without warning or explanation.

67 Dutch, English, and French could be found in the Caribbean by the 1540s, and Curacao, , and St. Domingue were, respectively, among the many official settlements that would further erode Spanish power in the seventeenth century.

68 I owe a debt of gratitude to Jack Greene for suggesting that I make more explicit the sizeable gap between laws and regulations as written in the Metropole and colonial norms, especially at the periphery. 25 between roughly 1579 and 1625, a period that includes the golden age of Spanish

America’s silver exports and the start of its demographic, political, and economic decline in the metropole. By examining the phenomenon of illicit trade, it casts into sharp relief several aspects of mid-colonial phenomena such as the rise of institutions (consulados de comercio and universidades de mercaderes or trade guilds), the strengthening of merchant prerogative, bureaucratic compromise, the sharp decline of trade fairs at

Medina del Campo and elsewhere in Europe, and the proliferation of sophisticated theories of moral, market, and political economy. It asserts that contraband, Imperial

Spain’s dark matter, a term used by astrophysicists to denote an essential substance both hard to detect and nearly impossible to measure, comprised most of the actual ballast of

Spanish commerce, a fact that was recognized by much of Spanish society, from consumers and petty traders to high-level functionaries.

The chronological parameters (1579-1625) highlight a number of distinctive characteristics of the roughly four decades bracketing the turn of the seventeenth century.

Following a royal decree of 1578, merchants were entitled to refuse the routine inspection of their cargo bales at intermediate ports and checkpoints. In the following year, there is archival evidence of the first merchant exercised this prerogative, when he refused to open a bale for inspectors.69 This heralded a period of robust merchant prerogative that would last well into the seventeenth century, when more explicit attempts to stop

69 “Pleitos Audiencia de Panama,” 1625 AGI Escribania 451B, N. 64. Real cédula a los oficiales reales de Tierra Firme, 22 September 1579 mentions the Cédula of 1579 and Pieza 2, No. 69, Letter from treasurer Juan Lopez de Canicares, Diego Lopez Guerra, contador, and Pedro Goncalez de Lupidana mentions the cedula prohibiting the opening of fardos “piccas.” This meant the arrival of unregistered merchandise hidden in ship packages. No one can know, then, whether the bales contained the same articles or amounts of goods that were registered in Sevilla before embarking.

26 contraband became the norm as the Caribbean and Atlantic coast of the Americas became contested sites of inter-imperial rivalry in the 1640s and . For a time, then, individual merchants were granted a great deal of freedom to pack bales and trunks and register their contents based on something approaching an honor system.

1579 also marked the end of a hot war between Panama’s cimarrones and their

English allies and Spanish authorities. For decades, escaped African slave communities throughout the Peninsula, often in close alliance with Amerindians, had built their own towns and organized raids on Spanish settlements near Nombre de Dios, the site of world’s most important trade fair until the 1590s. The ability to provide security for the trajines (mule trains) that held the entire commercial system together from Potosí to Madrid was at stake in Panama. It took a massive effort to destroy the main Cimarron communities in 1579 and convince them to settle into an allied pueblo.70

While the defeat of the cimarrones didn’t guarantee trajín security, it at least made some of the more obvious issues—weather, disease, healthy mules, and habitual threats from free-lance bandits—more manageable.

The 1580s through the 1610s also mark the high-water mark of silver imports to the Royal Treasury. Despite the lively polemics about actual numbers and data— traditional historians such as J.H. Elliott and Earl Hamilton point to a sharp drop in silver imports from the onward while Michel Morineau utilized evidence appearing in the Dutch Gazettes from the seventeenth century to reject the notion that there was a

70 María del Carmen Mena García, La sociedad de Panamá en el siglo XVI (Sevilla: Excma. Diputación Provincial de Sevilla, 1984), 402-405 and Ruth Pike, “Black Rebels: The Cimarrones of Sixteenth-Century Panama,”The Americas 64, no. 2 (Oct. 2007).

27 sharp drop in imports—the official data tells a narrative of a Royal Treasury becoming starved by its dwindling quinto portion after 1615.71 This would have a profound impact on how the Crown would tax and manage commerce after 1620.

1580 marks two key events—the official beginning of the composite monarchy with Portugal and the first permanent founding of Buenos Aires.72 Both events, as I will demonstrate, would have a profound impact on Spanish commerce. The admission of

Portuguese subjects, who were usually presumed to be of dubious religious orthodoxy and loyalty, added a wrinkle to Spanish commerce. One the one hand, they stitched together deep and far-reaching commercial links to Africa, Asia, and northern Europe and provided better access to finance, but they created obvious problems among the Catholic guardians of the souls of Spanish subjects. Buenos Aires, then, was doubly threatened, both materially and spiritually, by their presence.

Why conclude this study in 1625? The obvious answer is that Philip IV had been recently crowned and monarchical power transfers make for good chronological bookends. The less obvious answer is that the age of Philip IV ushered in an era of the more aggressive deployment of institutions to fight smuggling. The Junta de

71 J. H. Elliott, Imperial Spain, 175, Earl Hamilton, American Treasure, 34, and Michel Morineau, Incroyables Gazettes et fabuleux métaux: Les retours des trésors Américains d'après les gazettes Hollandaises (XVIe-XVIIIe Siècles) (London: Cambridge University Press, 1985).

72 J.H. Elliott, in an effort to sharply delineate the confederacy of personal monarchies that characterized the Iberian Peninsula, introduced the concept of the composite monarchy. Portugal, like Aragon and Navarre, existed as a somewhat autonomous region with its own fueros, laws, , and local governance. While Castile maintained a sort of first-among-equals status vis-à-vis foreign domains, it only occasionally intervened in the domestic affairs of the other composite kingdoms, and then, mainly for reasons of fiscal emergency. See "Europe of Composite Monarchies" Past and Present, no. 137 (Nov. 1992).

28

Almirantazgo (Admiralty Office) of Madrid was one such institution.73 The golden age of merchant prerogative was swept by the wayside in the 1620s in both the metropole and in the colonial periphery.74 Additionally, the end of the Spanish/Dutch truce in 1621 meant that whole categories of trade were re-classified as contraband over night. From 1609 to

1621, Spanish-Dutch trade had taken place above ground, in legal plain sight.75 After the truce ended, trade continued as it often did during this era among off-and-on belligerents, but it became dark matter and had to be hidden from officials. Finally, the 1620s generally saw a steep decline in the importance of a key medieval institution: the trade fair. Fernand Braudel considers 1622 as the year that commodity and trade fairs ceased to dominate commerce in Europe. While this date might seem arbitrary, the sharp rise of continuous markets for credit and commodities in cities such as Antwerp and Amsterdam seems to give credence to Braudel’s claims. Change was afoot and the decades that

73 Antonio Domínguez Ortiz, “Guerra Económica y comercio extranjero en el reinado de Felipe IV,’ Hispania, 23 (1963): 71-110 and John Lynch, Spain Under the Habsburgs: Vol. 2. (Oxford: Basil Blackwell, 1981), 168-171 describe the Almirantazgo, but Ángel Alloza offers perhaps the most painstakingly thorough examination and explanation of the nuances of economic warfare waged by Philip IV in Europa en el mercado Español: mercaderes, represalias y contrabando en el siglo XVII (Valladolid: Junta de Castilla y León, Consejería de Cultura y Turismo, 2006). The Junta de Almirantazgo existed from 1624-1643.

74 Philip IV’s more aggressive attempts to wage economic warfare by tightening some of the commercial reins, rather than putting an end to contraband, opened up a number of more explicit avenues for corruption. Selective enforcement by agents who were guaranteed a percentage of seized goods and bribery became the norm during this period, more of which in chapters below.

75 It is easy to overstate the impact of the truce by presuming that such an explicit legal agreement meant changes in norms, but in the realm of commerce, war footing mattered, notwithstanding Ambrose Bierce’s cynical definition of peace as “a period of cheating between two periods of fighting” in Paul C. Allen, Philip Iii and the Pax Hispanica, 1598-1621: The Failure of Grand Strategy (New Haven: Yale University Press, 2000), viii from The Devil’s Dictionary, 248. Allen’s book, in particular, is a good primer on geopolitical strategy under the reign of Philip III.

29 followed would see greater fluidity in markets than had been possible in the age of seasonal trade fairs.76

Unlike previous literature that has addressed illicit trade, which stretches back to the treatises of the theologians of Salamanca, who took up the challenge of developing a sufficiently moral framework to guide imperial Spain’s rising merchant class, this work dwells upon neither the criminality of contraband nor the presumed crippling effect it had upon the Empire’s health, a common trope of both contemporaries and later historians of

Spain’s seventeenth-century decline.77 Rather, it focuses on the wide berth and high level of tolerance granted contraband traders on the part of commissars, powerful merchants, functionaries of the Crown, and kings Philip II and Philip III. This dissertation makes the case that illicit (black market, gray market, coerced, and fraudulent) commerce was the

76 Fernand Braudel, The Wheels of Commerce (New York: Harper & Row, 1982), 92.

77 A note on the decline: this word will appear throughout the dissertation without much additional commentary. The term is shorthand for the decline of Spanish economic and political hegemony during the seventeenth century in continental Europe and in the Atlantic world. Historian R. A. Stradling refers to Spanish decline as “the most significant international phenomenon of the seventeenth century,” a contention with which I tend to agree. Stradling, R A. Europe and the Decline of Spain: A Study of the Spanish System, 1580-1720 (London: Allen & Unwin, 1981), 2-3. See also Jaime Vicens Vives, Historia Social y Económica de España y América (Barcelona: Editorial Teide, 1957), Carlo M. Cipolla, Historia Económica de la Europa Preindustrial (Madrid: Alianza, 1985), Earl J. Hamilton, American Treasure and the Price Revolution in Spain, 1501-1650 (New York: Octagon Books, 1965), Pierre Vilar, Crecimiento y Desarrollo: Economía e Historia, Reflexiones sobre el Caso Español (Barcelona: Ediciones Ariel, 1964), Huguette Chaunu, Pierre Chaunu, and Guy Arbellot. Séville et l’Atlantique, 1504-1650 (Paris: A. Colin, 1955), Fernand Braudel Civilization and Capitalism, 15th-18th Century. 3 vols. Trans. Siân Reynolds. Berkeley: University of California Press, 1992, Antonio Domínguez Ortiz, La Crisis del siglo XVII: la población, la economía, la sociedad (Madrid: Espasa-Calpe, 1989). Henry Kamen, “The Decline of Spain – A Historical Myth?” Past and Present 81 (1978): 24-81, and J. H. Elliott, Imperial Spain 1469- 1716 (London 1963). On the Spain’s tax system in the sixteenth century, see R. Carande, Carlos V y sus banqueros. Vol. 1, La Hacienda Real de Castilla (Madrid: Sociedad de Estudios y Publicaciones, 1949), Felipe Ruiz Martín, “Las Finanzas españoles durante el reinado de Felipe II,” Cuadernos de Historias, Revista Hispania, 2 (1968): 181-203, Modesto Ulloa, La hacienda real de Castilla en el reinado de Felipe II (Madrid: Fundación Universitaria Española, Seminario Cisneros, 1977), 93-305 and 707-709 and Mauricio Drelichman and Hans-Joachim Voth, Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (Princeton: Princeton University Press, 2014).

30 economic norm throughout the empire and that the early recognition of the logistical limits of enforcement and the necessity of contraband goods forged a status quo where much of this commerce, when discovered and seized, was either lightly punished, papered over through bribery or post-facto legal instruments called composiciones, sold back to offending merchants at a nominal markup, or ignored completely. Composiciones

(literally, legal determinations) were curious legal instruments that required mild financial penalties to be paid for crimes committed, typically for fraud or contraband.

Historians Barbara H. and Stanley Stein describe them as the means by which “powerful transgressors were legitimated or 'laundered' by ritualized settlements with the state.”78

Alongside some of the usual suspects—heretics and foreigners—well-connected Spanish comerciantes (wholesale merchants), Crown administrators, and members of the clergy79

78 See Silver, Trade, and War, 23. Adds Enriqueta Vila Vilar, the “‘composicion’ no suponía un permiso definitivo para comerciar. Era una solución transitoria que podía servir un cierto período de tiempo y a ella se acogieron la mayoría de los extranjeros residentes en la Indias” (It was not a definitive permit to trade but a temporary solution that could save time and was welcomed by foreigners trading in the Indies). Los Corzo y los Mañara: Tipos y Arquetipos del Mercader con Indias (Sevilla, 1991), 83. Colin Maclachlan described composiciones as a means by which the Crown could “give legal standing to an irregular situation” or “legalize any situation the government believed politically necessary.” Maclachlan, Spain’s Empire, 42-43. Specifically, composiciones included simple payments for those found to have been smuggling goods. Guillermo Cespedes describes one such instance of this: “Cuando eran descubiertos contrabandos importantes, se daba con frecuencia el caso de que el rey eximiese de la confiscación merecida según las leyes a los articulos por ella afectados si sus dueños daban una buena cantidad en compensación. Estas mercancias perdonadas; aunque se librasen de los impuestos pagaban la avería (When significant smuggling was discovered, it was often overlooked by the king if the goods exempted under the laws […] if the owners of such goods provided a proper amount in compensation. Such goods were forgiven; although the taxes were paid).” La Averia en el comercio de Indias (Sevilla: Consejo Superior de Investigaciones Cientificas, Escuela de Estudios Hispano-americanos de la UniverAnn Arbor, Mich, 1945), 550.

79 Clergy often managed production, finance, and credit institutions in settlements whichotherwise had thin institutional presence. It should be no surprise, then that clergymen like Francisco de Victoria, Archbishop of Tucuman, would end up running afoul of commercial rules with his importation of slaves in 1580s Buenos Aires, or that a group of nuns would be caught importing contraband snuff in 1670s Portugal. The Church was active in such decidedly secular concerns. On Victoria’s smuggling, see Boxer, Salvador de Sa. Examples of smuggling of snuff by Portuguese clergy can be found in Arquivo Nacional da Torre do Tombo ANTT Junta do Tobaco, Decretos maço, 50, November 28, 1684 and ANTT Consultas, maço 1, April 29, 1676 and September 23, 1676. For a broad treatment of the tobacco trade in the Luso-Atlantic 31 could often be found trading illicit goods in full view of conniving officials who were cognizant that in an overstretched empire and within a poorly designed and difficult to control network of legal trade, an active, high level of contraband commerce was essential to knit buyers, sellers, and distributors together to reduce tensions about scarcities, gluts, and price fluctuations that lead to political unrest.80

The geographical and thematic foci of this study are the trade fairs of Nombre de

Dios and Portobelo (modern-day Caribbean Panama) and the activities of New Christian

Portuguese merchants and their ecclesiastical, government, and foreign enablers in

Buenos Aires. These focal points represent key nodes in the official trade circuit that was established to assure steady seasonal shipments of silver to settle the accounts of

Sevillian and foreign merchants and to provide the standard Royal Quinto (20% tax on silver and gold) to the Crown. The geographical and maritime contours of licensed imperial trade were a product of timing and institutional and pioneer settlement imperative. Where Spanish ships first arrived to build ports, churches, city halls, customs houses, presidios and, eventually, consulados and where they supplied goods and specie for the first trade fairs—sites like Panama, Cartagena, , and Lima—typically determined preferences, patterns of activity, and commitments that would last for centuries. Put in economic terms, vested interests, sunk costs, and path dependency often

sphere, see Carl Hanson, “Monopoly and Contraband in the Portuguese Tobacco Trade, 1624-1702,” Luso- Brazilian Review 19, no. 2 (Winter, 1982): 149-168.

80 John Lynch points to several instances of violence that can likely be traced to the enforcement efforts of metropolitan authorities against recalcitrant settlers. From those, like Fray Francisco de la Cruz in Peru, charged with investigating the abuses of the Mita system, to Nestares Martín, a priest charged with investigating fraud in the Potosí mint, enthusiastic officials could place themselves in grave danger by hewing too closely to the letter of the law. Lynch, “Institutional Framework,” 71-73. 32 trumped innovation and profit maximization despite the obvious logistical superiority of, say, the southern Buenos Aires-Potosi route to the Cartagena-Panama-Lima-Potosi route in channeling silver, slaves, and lucrative commodities from the metropole to checkpoints in the Caribbean, Peru, and back.81 There is nothing particularly pre-modern or early modern about hewing to such patterns, notwithstanding the claims of historians that colonial Spain was an outlier of hidebound mercantilism in a sea of rising capitalist powers.82

The primary sources for this study come mainly from colonial archives and libraries in Seville and Madrid, which house documents from this period relating to

Iberian-American trade. Other important sources of colonial-era documents, contemporaneous economic treatises, travel accounts, and key secondary sources were located in London, Washington, DC, and at the John Carter Brown Library in

Providence. More specifically, Audiencia documents from the Panama, Lima, Charcas,

Santa Fe, Santo Domingo, and Buenos Aires collections, and those from Indiferente,

Consulado, and Contratación, provide most of the administrative perspective on Iberian commerce. Economic theorists and chroniclers such as Luis Ortiz, Hevía Bolaños, Veitia

81 “At the end of the seventeenth century the continuity of these commercial structures and the mentality of their supporters reflected and reinforced the metropole’s immobilism.” Stein and Stein, Silver, Trade, and War, 8. On the persistence of path dependency, historian Roger Merriman, writes, “[t]he old idea, that the political and economic centre of gravity of the Spanish domination in South America must necessarily reside in the mining regions on the Pacific slope, died hard.” The Rise of the Spanish Empire in the Old World and in the New, 199.

82 Cosimo Perrotta, “Early Spanish Mercantilism: The First Analysis of Underdevelopment” in Mercantilist Economics, ed. Lars Magnusson (Boston: Kluwer Academic Publishers, 1993), especially 17- 32 takes aim at historians who have mischaracterized early Spanish mercantilism as bullionism when it was, in fact, a form of sophisticated Import Substitution Industrialization.

33

Linage, Duarte Gomes Solis, Gonzalez de Cellorigo, Tomas de Mercado, and Sancho de

Moncada, among others, provide a theoretical framework upon which to explore contemporary theories of economic activity and trade.83 Since contraband was (and still is) in the eye of the beholder, a conditional product of its time and place, source material that highlights the mentalité of theorists, crown functionaries, and traders themselves will be heavily privileged and mined for guidance. The fact that economic historians tend to completely ignore the sophistication of sixteenth- and seventeenth-century Iberian theorists in discussing the broad trajectory global economic thought is a great oversight which I will work to correct herein. For this reason, in particular, such theorists will have pride of place.

In addition to the rich vein of source materials from the sixteenth, seventeenth, and eighteenth centuries, this study stands astride several generations of economic historians. Outside Iberia, first mercantilists and then Enlightenment philosophers interwove a number of conjectural histories with cautionary tales about backward

Spaniards. For Montesquieu, Spaniards were ingenues who, following the conquest,

“abandoned their natural riches, in pursuit of a representative wealth which daily

83 Luis Ortiz, Memorial del contador Luis Ortiz a Felipe Ii: Valladolid, 1 de Marzo 1558 (Madrid: Instituto de España, (1970), Juan de Hevia Bolaños, Labyrintho de comercio terrestre y naval. Donde breve y compendiosamente se trata de la mercancia y contratacion de tierra y mar ... Util y provechoso para mercaderes, negociadores, navegantes, y sus consulados, etc (Lima, 1617), Joseph de Veitia Linage, Norte de la contratacion de las Indias Occidentales (Sevilla: Juan Francisco de Blas, 1672), Duarte Gomes Solis, Discursos sobre los comercios de las dos Indias, Donde se tratan materias importantes de estado, y guerra. (carta Que D.g. escrivio al Duque de Lerma, Etc.) (Madrid: 1622), Martín González de Cellorigo and José Luis Pérez de Ayala, Memorial De La Política Necesaria Y Útil Restauración a La República De España Y Estados De Ella Y Del Desempeño Universal De Estos Reinos (1600) (Madrid: Instituto de Cooperación Iberoamericana, 1991), Tomás de Mercado, Suma De Tratos Y Contratos (Madrid: Editora Nacional, 1975), Sancho Moncada, Restauración Política De España Y Deseos Públicos Que Escrivió En Ocho Discursos El Dr Sancho De Moncada (Madrid: por J. de Zuñiga, 1746).

34 degraded itself,” a clear reference to the price inflation that led Spain to cease much of its home production and buy cheaper goods from abroad.84 For Gerard Malynes, Spain’s

“treasure passeth from them as if it were conueyed by a channel” due to the vellon devaluations of the Crown.85 David Hume was perhaps, more sympathetic to Spain’s quandary, comparing the influx of silver to a liquid that, “beyond its proper level” naturally breached the borders and in the process swept away what was left of Spain’s diminishing manufacturing base.86 Adam Smith would later add his famous chapters against the sort of monopoly colonies Spain had established, pointing out that the flood of hard currency had given “more real encouragement to the industry of other countries than to that of Spain.”87

The traditional historiography of imperial Spanish economic history has followed well-hewn Black Legend lines.88 In this narrative, Spain’s hidebound fiscalism, tied to a

84 Charles de Secondat Montesquieu, The Spirit of Laws Translated from the French of M. De Secondat, Baron De Montesquieu. In Two Volumes. (Edinburgh: Printed for Alexander Donaldson, 1778) , 75.

85 Consuetudo, Vel, Lex Mercatoria, or, The Ancient Law-Merchant Diuided into Three Parts: According to the Essential Parts of Trafficke (London: Printed by Adam Islip, 1622), 83, chapter 8.

86 http://www.econlib.org/library/LFBooks/Hume/hmMPL28.html#Part II, Essay V, Of the Balance of Trade II.V.12-13.

87 Wealth of Nations, IV.7.168 http://www.econlib.org/cgi- bin/searchbooks.pl?searchtype=BookSearchPara&id=smWN&query=Spain

88 Black Legend historiography is extensive and has always had political and religious modalities. The short version of the trajectory is that Bartolome de las Casas provided the substance that underscored the concept in the 1550s with the publication of his Very Brief Account of the Destruction of the Indies. In this classic work, las Casas argued that early Spanish settlers were especially cruel and intolerant in their treatment of the Indians. His accounts influenced generations of Protestant and other continental peoples who suffered under the yoke of Spanish rule or military intervention, from Italy to Germany and the Netherlands. The term was first coined with the publication of Julian Juderías, La Leyenda Negra y la verdad histórica (Madrid: Tip. de la "Rev. de Arch., Bibl. y Museos 1914). 35 steadily shrinking tax base, was ill suited for an aggressively expanding empire. The systemic infusion of silver specie, which followed the discovery of mines in Potosí and

Zacatecas in the 1540s and 1550s, rather than easing Spain’s expansion, distorted its economy, causing inflationary cycles and making local manufacturing noncompetitive abroad. To make matters worse, currency devaluations, periodic bankruptcies, constant military adventurism, and the arbitrary seizure of silver ships by the Crown, led to stagnation, insolvency, and unease among foreign and domestic financiers and merchants. Spanish silver, in this version, led to an outbreak of Dutch disease—that is, a narrow fixation on one commodity to the detriment of broader investment strategies and development—rather than an economic takeoff.89

Why didn’t the Spanish Crown or its merchants invest its silver more wisely?

Again, following traditional historiography, Spain’s elite, composed of mostly

Churchmen, an expanding order of rent-seeking, tax-exempt nobility (hidalgos, or hijos d’algo), and letrados (lettered administrators and ministers), neither understood how an economy functioned nor wished to address their ignorance.90 Fiscal and monetary policy

Historian Benjamin Keen makes a case that black legend soul-searching spawned a defensive reaction (a white legend), in the works of Lewis Hanke and Hubert Herring, who over-emphasized the “altruism and tolerance” of the early conquerors and settlers. This dissertation will focus on an economic modality of black legend thinking. See Benjamin Keen, Essays in the Intellectual History of Colonial Latin America (Boulder: Westview Press, 1998), 84, especially 70-86 for an overview and Margaret Rich Greer, Walter Mignolo, and Maureen Quilligan, Rereading the Black Legend The Discourses of Religious and Racial Difference in the Renaissance Empires (Chicago: University of Chicago Press, 2007), on its racist and religious modalities.

89 The reference here is to W. W. Rostow’s Stages of Economic Growth: A Non-Communist Manifesto (New York: Cambridge University Press, 1960). For Rostow, three factors needed to figure prominently if economic takeoff was to take place: growing rates of productive investment, growing manufacturing, and a supportive institutional framework.

90 Stanley G. Payne, Spanish Catholicism: An Historical Overview (Madison, Wis: University of Wisconsin Press, 1984), 67 acknowledges that this is true up to the middle of the seventeenth century. Richard Kagan, 36 was in the hands of foreigners and, worse, New Christians and Crypto-Jews of dubious loyalty.91 It stood to reason, then, that by outsourcing the management of its fisc to non-

Spaniards out of necessity, Spain could little expect to keep the Peninsular economy from hemorrhaging silver. And once the broad contours of trade deficits, royal debt, and price inflation had become manifest, the host of unfavorable outcomes that followed was hard to reverse.

Contemporaneous theorists such as French jurist and political philosopher, Jean

Bodin, without (perhaps) knowing of the works of Salamanca jurist, Martín de

Azpilcueta, who preceded him by nearly a decade, offered an early standard account on the impact of the infusion of specie from Potosí upon the money supply. The simple version of Bodin’s account was that the infusion of silver had increased the currency supply relative to the supply of goods, which caused price inflation. Azpilcueta had taken this idea further by developing mathematical models that projected specific changes in the value of money over time. This would, of course, have ramifications for the

Spain in America: The Origins of Hispanism in the United States (Urbana: University of Illinois Press, 2002), 38 cites this as a tendency of Protestant scholars to exaggerate the number of priests in Spain. For a discussion about the excessive number of priests and their role as rent seekers, see James Casey, Early Modern Spain: A Social History (London: Routledge, 2002), especially 222-237. There was, as well, a great deal of tension unleashed with the sale of hildaguías (effectively, titles of nobility), which annoyed both the highborn nobility and the excluded pecheros (tax-payers). Elliott, Imperial Spain, 104-105.

91 The historiography of anti-Semitism and religious “tolerance” in medieval and early modern Spain is extensive. Some stand out works include Stuart B. Schwartz, All Can Be Saved Religious Tolerance and Salvation in the Iberian Atlantic World (New Haven: Yale University Press, 2008), David Nirenberg, Communities of Violence: Persecution of Minorities in the Middle Ages (Princeton, N.J.: Princeton University Press, 1996), Jonathan I. Israel, European Jewry in the Age of Mercantilism, 1550-1750 (Oxford: Clarendon Press, 1985), Henry Kamen, The Spanish Inquisition: A Historical Revision (New Haven: Yale University Press, 1998), and Maria Rosa Menocal, The Ornament of the World: How Muslims, Jews, and Christians Created a Culture of Tolerance in Medieval Spain (Boston: Little, Brown and Company, 2002).

37 development of actuarial science and the calculation of interest rates and quantification of risk more generally. All of this is to say that, starting with Azpilcueta and his contemporary Schoolmen, there was a wealth of advanced economic theory to draw upon.92 It wasn’t for lack of expertise, then, that the Spanish economy began to turn stagnant around the turn of the seventeenth century; rather, writes Earl Hamilton,

“[history] records few instances of either such able diagnosis of fatal social ills by any group of moral philosophers or of such utter disregard by statesmen of sound advice.”93

The more relevant question to ask is why were the Spanish leaders so unwilling to heed such sound advice.

Among contemporary theorists, then, flowed a seemingly endless current of sound advice in the form of treatises or arbitrios. This enthusiasm for state intervention projects raises additional questions about the period under discussion, which this dissertation will attempt to answer in the first chapter. Namely, how had a gun-shy merchant and financial class, which had long hidden the details of its transactions through abstruse instruments such as straw sales and spurious claims of lucrum cessans (opportunity cost) and damnums emergens (emergent risk) in order to get around proscriptions against usury, wrested control of economic discourse by the early decades of the seventeenth century

92There has been renewed interest in the School of Salamanca recently, spurred by a number of Libertarian and Neo-Austrian scholars. Some works include, André Azevedo Alves, The Salamanca School (Major Conservative and Libertarian Thinkers), ed. John Meadowcroft (Continuum International Publishing, 2010), Alejandro A. Chaufen, "Scholastics/School of Salamanca," in The Encyclopedia of Libertarianism, ed. Ronald Hamowy (Thousand Oaks, CA: SAGE; Cato Institute, 2008), 450–2. Murray Rothbard, New Light on the Prehistory of the Austrian School (Kansas City: Sheed and Ward, 1976), 52–74, Joseph Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954).

93 Earl J. Hamilton, “Revisions in Economic History: VIII.-The Decline of Spain,” The Economic History Review 8, No. 2 (May, 1938): 168-179.

38 from the theocratic scolds who had so long made economic issues their sole provenance.

And what, for that matter, was the real nature and impact of all of this increased economic activity? Can one clearly witness the erosion of the moral economy during this period as so many economic historians would have us believe or were the upheavals in commerce and finance merely changes in degree? All of this is to ask, what specific philosophical understanding had Spanish economic actors reached about contraband and how did it fit into theories and practices of political economy? The first chapter will address these philosophical issues and provide a summary of contemporaneous Iberian economic thought on this topic, from the Theologians of Salamanca, to the arbistrismo of the turn of the seventeenth century, to the fiscal mercantilists who followed them. Its aim will be to provide as much detail as possible about the intellectual universe of international comerciantes and their alter egos and nemeses, the contrabandistas.

Chapter two, “Portobelo, Porto-malo: The Clearinghouse of Global Trade,” will provide a description of early modern commerce in the Caribbean. The aim is to reconstruct the early sixteenth-century Spanish commercial system and explain the importance of Portobelo despite its obvious inefficiencies and shortcomings. Due to its central place as the of Spain’s South American Empire, Portobelo was both a material and informational hub par excellence. Travel accounts from Thomas Gage,

William Dampier, and Juan and Ulloa will be augmented by archival material from the

Archivo General de Indias to explore how issues of timing and chain of command were frustrated by both foreign and domestic contraband. It will conclude with a discussion of

39 the problems with maintaining this monopoly beginning in the late sixteenth century and the reasons for the decline of the centrality of Portobelo.

Trade fairs, in Fernand Braudel’s characterization, owed more to the limitations of medieval markets than to capitalism’s ascendancy.94 In an era of scarce specie, limited communication, and unreliable transport networks, trade fairs such as those at Besançon,

Medina del Campo, and Portobelo were necessary as clearinghouses for merchants who lacked ways of exchanging different currencies and settling accounts. As commercial towns such as Antwerp, London, and Amsterdam came to serve as continuous sites of exchange—of currencies, goods, and information—seasonal and periodic fairs faded in importance. Despite this broader trend toward truly open and global markets, Portobelo would persist as the clearinghouse for Spanish American silver and continue to send noticeable ripples as far as Ming China, even if trade fairs had become an anachronistic novelty elsewhere. This chapter will closely examine how the Spanish Crown lost control of the silver trade via the Portobelo trade fair and created immense opportunities for those who chose not to respect the rules of the game, on how even the best laid plans for control could be undercut given the high stakes of Portobelo trade. Here, it turns out, geography and Spain’s increasingly precarious geopolitical position would make

Portobelo a natural target for those who were willing to violate the laws and schedule of

94 Regina Grafe, Herni Pirenne, and Max Weber, as well, have pointed out how trade fairs indicated that commercial systems were inadequate to the task of reducing transaction costs or information asymmetry. The need to pool resources for transportation and security indicated that towns and local markets were unable to meet the needs of broader catchment areas. New Institutional Economics scholars, Douglass North et al. have emphasized that trade fairs arose as an effort to lower transaction costs much in the same way as trade guilds and caravans arose before them. Regina Grafe, “Fairs” in History of World Trade since 1450, ed. John J. McCusker (Farmington Hills, MI: Thompson Gale, 2006), 281-283.

40 official ships.

The third chapter, “‘Como un cuerpo sin brazos’: Policing Commerce and Heresy in Buenos Aires and the Via Contrabando of Potosí,” will focus on the largely unsuccessful attempt to enforce merchant and Crown prerogative in the Southern Cone.

Where Portobelo represents a grand convergence of southern Atlantic trade (Veracruz was the official terminus of the northern trunk line of Flota trade), the thinly populated and extremely remote settlement of Buenos Aires presented more fundamental challenges to enforcement. The first challenge was demographic: there were so few settlers in the first decades of Buenos Aires that the region became a de facto outpost of Portuguese settlement. Lacking royal commissars and inspectors in sufficient numbers to police the capacious littoral of the Plate River estuary, the Crown turned to the Holy Office of the

Inquisition to remove meddlesome merchants.95 While the nominal charges for most merchants were for heresy, apostasy and, more specifically, Crypto-Judaism and

Judaizing, the accompanying sin was often the violation of merchant prerogative. Aside from the few suelto licenses that were permitted for the introduction of slaves and other essential goods, the Spanish Crown had typically prohibited ships plying the southern

Atlantic route, perhaps as much for the illicit news this southern route provided as for the

95 Before the turn of the seventeenth century, it is difficult to tease out an explicit effort on the part of the Inquisition to prosecute commercial crimes. This would change when cities and institutions (Medina del Campo and the Consulado del Estado in 1606 and 1625 respectively) began to call for the Inquisition to prosecute smuggling and counterfeiting. Sancho de Moncada also suggested a larger role for the Inquisition in prosecuting crimes in 1619. By 1627, the Crown transferred both crimes to the jurisdiction of the Inquisition, signaling a shift in how those crimes would be conceived going forward. See Joaquín Pérez Villanueva and Bartolomé Escandell Bonet, Historia de la Inquisición en España y América. III, III. (Madrid: Biblioteca de autores cristianos, 2000), 43.

41 goods themselves. As a result, Buenos Aires spent its first half-century as a decidedly contraband-riddled society.

While it’s true that Porteño society was factional, the first settlers who came to be referred to as the Beneméritos looked askance at the arriviste Confederados, who appeared on the scene in the 1590s to take control of illicit trade, there is ample evidence that most of the population Buenos Aires and its surrounding region, regardless of factional affiliation, was deeply implicated in contraband. Given the absurd costs and challenges of the northern route, it could hardly have been otherwise. Tapping the wealth of Potosí was a simple matter of accessing its back door through the Platine delta. This was largely the province of the Confederados, whose superior connections drew them toward the Atlantic. The tertiary economy that supplied the mining sector of Potosí—its mules, carts, foodstuffs, tallow, clothing, and other factors of production and consumption—was largely controlled by the Beneméritos, at least in the initial decades following the rising production after amalgamation was introduced in the 1570s.

The point is that contraband would drive the Buenos Aires economy for decades due to the inadequacy of enforcement given the demographic and geographic challenges facing the Crown.

If, then, Portobelo’s failure to exclude dark matter from its official economy pointed to political problems and the double-edged sword of vulnerable choke points,

Buenos Aires highlights enforcement issues of religious and economic orthodoxy at the margins. Castile simply lacked the manpower and resources to establish both security and compliance simultaneously and was thus forced to address enforcement via alternative

42 means, such as through the Inquisition and ad hoc licensing.

The recent response to the traditional literature of Spanish decline, works such as

Jonathan Israel’s Race, Class, and Politics in Colonial Mexico, 1610-1670 and Jeremy

Adelman’s Sovereignty and Revolution in the Iberian Atlantic have flipped the narrative of the metropolitan decline by pointing out that what was occurring in Castile—famine, declining agricultural production and manufacturing, monetary scarcity, and depopulation of the countryside—did not resemble what was happening in the colonies.96 By the early seventeenth century, in fact, local manufacturing, silver production, and demographic recovery were the reality in Peru and Mexico. Keeping this in mind, this chapter addresses what role institutions and institutional capture played in the southern flank of the flota and its terminus, the Viceroy of Peru. This chapter takes an institutionalist approach to transaction costs, club goods, exclusivity, and rising merchant power that owes a profound debt to historians such as Avner Greif, Paul Milgrom, Barry R

Weingast, Robert Smith, Regina Grafe, Sheilagh Ogilvie, Douglass North, Frédéric

Mauro, Frederic Lane, and Fernand Braudel.97 It involves, as well, a foray into the

96 Adelman’s contribution to the metropolitian/periphery dichotomy is to point out how colonial subjects carved out their own loyalties in accordance not with the metropole but based on local interests. See Sovereignty and Revolution in the Iberian Atlantic (Princeton: Princeton University Press, 2006). Israel’s focus is narrower: the conflict between Mexicna creoles and the largely Peninsular bureaucracy of the seventeenth century. See Race, Class, and Politics in Colonial Mexico, 1610-1670 (London: Oxford University Press, 1975).

97 Roberta Dessi and Sheilagh Ogilvie, “Social Capital and Collusion: The Case of Merchant Guilds,” Cambridge Working Papers in Economics, no. 417 (Cambridge, 2004); Avner Greif, Paul Milgrom, and Barry R Weingast, “Coordination, Commitment, and Enforcement: The Case of Merchant Guilds,” Journal of Political Economy, CII (1994): 745–776; Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (New York, 2006); Frédéric Mauro, “Merchant Communities, 1350–1750,” in The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350–1750, ed. James D. Tracy (New York, 1990), 255–286; Greif, “The Fundamental Problem of Exchange: A Research Agenda in Historical Institutional Analysis,” European Review of Economic History IV (2000): 251–284; 43 theories of A.O. Hirschman who saw participation in organizations as a matter of exit, loyalty, or voice.98

The epilogue, “Contraband and the Decline” takes aim at the assumption that contraband belongs in the same category as other sins typically mentioned, such as economic mismanagement, royal incompetence, corruption, and imperial overstretch in explaining Spain’s seventeenth-century decline. After making the case that a tolerance for contraband effectively rendered unto Caesar what was Caesar’s so that metropolitan and colonial officials could concentrate on security, political coherence, and orthodoxy, I will return to contemporary literature and administrative evidence to make specific point about the Crown’s essential dark matter. This chapter aims to dispense with breezy claims about the damage of contraband and gray market activity to suggest an alternative interpretation: that Castile accepted many forms of commercial law breaking in the realization that its broader aims could best be preserved through lax enforcement.

Contemporary observers and functionaries were, of course, not naïve. There were, to be sure, experiments in strict enforcement—the depopulation of communities in Santo

Domingo and , two vicious pogroms in Lima and Mexico City in the 1630s and 1640s to punish “Judaizers,” the establishment of a voracious Admiralty court in

Madrid to shake down merchants in violation of wartime prohibitions on trade only to re-

Douglass C. North, Structure and Change in Economic History (New York, 1981); Daron Acemoglu and Simon Johnson, “Unbundling Institutions,” Journal of Political Economy 113 (2005): 949–995.

98 Albert O. Hirschman, The Passions and the Interests: Political Arguments for Capitalism Before Its Triumph (Princeton, N.J: Princeton University Press, 1977) and Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, Mass: Harvard University Press, 1970). 44 sell seized goods at a premium—but by and large, the Crown largely lacked enthusiasm for the unrest and flood of grievances that enforcement entailed.

The narrative of the decline, then, needs an addendum. Contraband was not the most important crippling force that drained the fisc (although it would do some of that in the second half of the seventeenth century); it was, rather, the essential dark matter that allowed the licit state to flourish. Imperial Spain could not afford to stamp out contraband, nor did it really want to. As the main funding source of the Vatican’s counter-reformation shock troops and the recruiting ground of Europe’s most grasping territorial force, imperial Spain had a full plate of issues to contend with. So long as at least some of America’s silver arrived in a timely fashion and colonials weren’t in open revolt, the Crown seemed content to run the Americas on the cheap. Contraband, an imperfect solution to chronic problems at Spain’s commercial center, can hardly be blamed for the empire’s decline. This chapter contends that one must acknowledge this nuance and seek other scapegoats to explain how mighty was eventually brought to its knees.

This work, of course, owes a steep debt to a number of writers who have addressed the topic of contraband and its significance in the Atlantic World. First and foremost, is Daviken Studnicki-Gizbert’s recent look at the Portuguese diaspora, A

Nation Upon the Open Sea, one of the best accounts of how a merchant community maintained a sense of cohesion and coherent identity despite centripetal political and geographic forces that sought to tear it apart. If this study has anything to add to what to

Studnicki-Gizbert has already said, it is that the Portuguese community rendered a

45 service to the Spanish Crown and that it exerted a powerful influence on the development of global theories of doux commerce.99

Other debts are due to Lance Grahn, Wim Klooster, and Kenneth Andrews, all of whom have expanded the discussion of smuggling to include its inter-imperial nature and its continued role, which extended into the late colonial period. I have assiduously tried to avoid retreading the ground that they have all covered. While they have done an effective job of addressing the substance of smuggling, I am more concerned with the striking degree of acceptance and acknowledgment. Where Grahn, Klooster, Studnicki-Gizbert, and Andrews have pointed out the existence and significance of this vast black market, I am pointing out exactly how willing the Crown was to ignore so much of it. This, to this writer’s mind, provides evidence for a different sort of narrative that places contraband outside the traditional narratives of the Spanish decline, at least until the latter half of the seventeenth century and through the War of the Spanish Succession, which did indeed see major ruptures in the commercial system.

There has been a recent fluorescence of literature on smuggling and black market activity that has largely focused on the eighteenth and nineteenth centuries. Rather than appearing as a sidelight in economic histories that primarily emphasize official government statistics, many of these recent works have placed illicit economies at the center of analyses that seek to broaden narratives about globalization and the rise of

99 Doux commerce refers to the softening or domesticating impact of trade as a vocation, which came to supplant warfare among the nobility.

46 global capitalism to include forgotten agents who broke commercial rules and even, at time, resorted to violence.

Michael Kwass’s, Contraband: Louis Mandrin and the Making of a Global

Underground100 examines the how a violent gang of largely tobacco smugglers led by

Louis Mandrin undercut a powerful monopoly in pre-revolutionary France known as The

Farm. At the heart of Kwass’s analysis lies the ability of the French state to enforce its commercial rules and the multiclass coalition of smugglers who found creative ways to meet consumer demand for tobacco, a key source of state revenue. Like the Spanish

Crown inspectors and port officials of this dissertation, Kwass’s customs officials found it impossible to “thoroughly search the mountains of merchandise and thousands of people who entered Paris [and other cities] each day...without completely choking the local economy.”101 There are also parallels in how smuggling in both eighteenth-century

France and Habsburg Spanish America transcended class (or in the Spanish case, orders): peasants, urban dealers, nobles, and clergy all participated quite willingly102 Unlike

Mandrin and his smugglers, there is little evidence of Spanish smugglers engaging in political violence against the fiscal state.

Closer geographically and chronologically to this study is Linda Rupert’s

Creolization and Contraband Curaçao in the Early Modern Atlantic World.103 Three foci

100 Micheal Kwaas, Contraband: Louis Mandrin and the Making of a Global Underground (Cambridge, Massachusetts : Harvard University Press, 2014).

101 Contraband: Louis Mandrin, 110.

102 Contraband: Louis Mandrin, 89.

103 An important theme in Rupert’s study is the racial and ethnic composition of the contrabandistas in Curaçao. The parallel movement of creolization (mesticization in a Spanish America context) and 47 of Rupert’s work, the inter-imperial nature of smuggling in Curacao, smuggling as part and parcel of the “extra-official” exchanges that dominated colonial trade, and how such activity was an expression of colonial agency, all ring quite true in the Spanish example as well. Rather than dwell upon the violent and transgressive nature of smuggling, Rupert explores how such transactions often complemented rather than substituted for officially sanctioned commerce.104 For the regions and periods under discussion in this dissertation, the responses to such an assertion would certainly depend on whether one asked colonial consumers or licensed merchants. As factors of production and exchange, silver and slaves held immense value for licit and illicit transactions but were jealously guarded by powerful merchants and Crown agents.

Eric Tagliocozzo’s Secret Trades, Porous Borders: Smuggling and States Along a

Southeast Asian Frontier, 1865-1915,105 Kris Lane’s Colour of Paradise The Emerald in the Age of Gunpowder Empires,106 and Alan Karras’s Smuggling: Contraband and

Corruption in World History107 are other recent attempts to re-center smuggling in inter-

contraband took place within a broad filed of transgression against, or at least outside the control and management of the Dutch metropole. These twin processed were ground level responses and attempts by “subordinate classes to carve out their own spaces within a wider imperial project” to dictate social and economic relations. Linda Rupert, Creolization and Contraband Curaçao in the Early Modern Atlantic World (Athens: University of Georgia Press, 2012), 306. On the ethnic contours of chocolate and taobacco commodification, see Marcy Norton, Sacred Gifts, Profane Pleasures, 149-150. Amerindian and Cimarron participation in illicit commerce will be discussed in greater detail in chapter 2.

104 Creolization and Contraband Curaçao, 3-4.

105 Eric Tagliacozzo, Secret Trades, Porous Borders: Smuggling and States Along a Southeast Asian Frontier, 1865-1915 (New Haven: Yale University Press, 2005).

106 Kris Lane, Colour of Paradise The Emerald in the Age of Gunpowder Empires, (New Haven: Yale University Press, 2010).

107 Alan Karras, Smuggling: Contraband and Corruption in World History (Lanham, Md: Rowman & Littlefield, 2010).

48 imperial and global economic history. Tagliocozzo’s book addresses the boundary transgressions of smugglers on the Anglo/Dutch frontier in (modern-day) Malaysia and

Sumatra and the vastness of the “undertrading that went on between peoples who were motivated to ignore imperial boundaries to trade a variety of illicit goods, from narcotics, to counterfeit currency, to humans trafficked against their will.108 Both Lane and Karras provide global perspectives on smuggling—Lane through the prism of the emerald trade which spanned from the Americas and Asia in both directions and Karras through a market lens to explore how in many places smuggling was a “perfect compromise” that allowed high demand goods to move unimpeded across borders.

While all of these recent works provide food for thought on how smugglers resisted the growing thicket of laws and regulations and faced an increasingly violent and capable state enforcement apparatuses, this study will examine smuggling during a far more inchoate phase of global capitalism. Tagliacozzo’s term, “undertrading” is an especially useful term for describing the contraband of the period under discussion, most of which lacked the explicit non-state violence of Kwass’s or Rupert’s study, or the necessary emphasis on charismatic products like narcotics, tobacco, or emeralds.

The essential question, then, goes back to Albert Hirschman’s scheme for understanding the three categories of choices merchants faced: exit, loyalty, and voice.109

It’s not obvious whether contraband traders who dabbled in smuggling as a sideline were exercising exit rather than voice. Outside of piracy and the extortionate demands of

108 Tagliacozzo, 3-9. 109 A. O. Hirschman, Exit, Voice, and Loyalty.

49 rescates, merchants who engaged in contraband were not asking out of the official system but rather making adjustments within. This is especially true of those members of the consulado system who came to exert a degree of control from the metropole. The evidence seems to back up Henry Kamen’s claim that “The incapacity of the official

Spanish trade system to minister to the needs of the empire was both flagrant and notorious. Without smuggling the Spanish colonies would have collapsed.”110

Contraband traders were not cousins germane to pirates, who tended to be indifferent if not outright hostile to the health of Spanish commerce. On the contrary, most contraband traders seemed to be useful agents of consumers and producers alike. They kept goods moving. While many powerful merchants warehoused goods or lobbied for skipping flota shipments in less profitable years, smugglers kept people supplied.111

Like dark matter, contraband cannot be (nor should it ever have been) relegated to secondary status. It isn’t a simply matter to be shrugged off as an intriguing but all-too- difficult to measure phenomenon. It stands at the heart of what made the Spanish empire function. In the end, it made not a whit of difference to neglected settlers whether a bale of ruan fabric, a box of iron ingots, or barrel of olives was legal or licensed. Producers of tertiary products like mules and boat rigging might have cared about the fiscal health of the Crown or the regularity of the flota system in a broad sense, but by availing themselves of black and gray market goods as they became available, they could protect

110 Henry Kamen, Empire: How Spain Became a World Power, 1492-1763 (New York: HarperCollins, 2003), 472.

111 George Robertson Dilg, “The Collapse of the Portobelo Fairs a Study in Spanish Commercial Reform, 1720-1740” (PhD Dissertation, Indian University, 1975) highlights this sort of stalling. 50 their livelihoods and at least achieve a semblance of autonomy. This study aims to erase the troublesome line economic historians of the Spanish Empire tend to draw between the official measurable trade system and the secondary informal one. In doing so, it should provide a corrective by placing smuggling in the Spanish imperial realm back at the center of the narrative of economic growth and development in wider Atlantic and Pacific realms where it rightly belongs.

51

Chapter 1: From Natural Philosophy to Economy: The Moral Architecture of

Castile’s Commercial Empire

¡Por Dios, que es lindo amigo el dinero! Gasta, cobra amigos, da, Sé liberal, noble, honrado; Quien da sólo es estimado, Cercado de amigos va, Estos son mayor riqueza Que el dinero.112

Castile’s imperial expansion across the Atlantic is marked by a set of familiar dates and geographical markers. takes precedence among navigators for deciphering the deep-water code of Atlantic winds and currents west of the

Canary Islands and establishing the first outposts in Castile’s overseas empire, yet his initial voyage was a mere footnote in the annals of 1492, Imperial Spain’s Annus

Mirabilis.113 More noteworthy events included the Ferdinand and Isabella’s Edict of

Expulsion, which ordered remaining Jews to convert to Christianity or leave Castile;114 the Catholic Monarchs’ successful siege of Granada and Sultan Boabdil’s subsequent formal capitulation to the Christian invaders, which unified the Peninsula under a

112 “By God, what a lovely friend is money! It spends, wins friends, offers, Is liberal, noble, honest; He who spends is only esteemed, Surrounded by friends he goes, for these are greater wealth, Than money.” Félix Lope de Vega y Carpio, Prueba de los amigos (Madrid: M. Rivadeneyra, 1873), 13.

113 Conquest of the Canary Islands began in earnest in 1402, when a French expedition to the island chain went ashore. From 1478-1483, Ferdinand and Isabella undertook an aggressive campaign of conquest of the last islands. Alfred Crosby, “An Ecohistory of the Canary Islands: A Precursor of European Colonialization in the New World and Australasia,” Environmental Review 8, no. 3 (Autumn, 1984): 219- 220.

114 The Alhambra Decree, issued on March 31, 1492, gave Jews in the kingdoms of Castile and Aragon three months to convert to Christianity or leave the Kingdoms of Castile and Aragon.

52

Catholic banner for the first time in centuries;115 and Antonio de Nebrija’s publication of a Grammar of the Castilian Language.116 Columbus’s return to Spain and his follow-up voyage in 1494 required a series of political and legal extemporizations to clear the way for Spanish hegemony in the middle and south Atlantic, a state of affairs more plausibly attributed to the lack of organized naval competition than any other factor.117 It’s worth noting that the north Atlantic would continue to be Europe’s “beyond-the-line” cod and herring fishery, a legal “free space in which to pursue free competition and free exploitation.”118 Pope Alexander VI’s negotiation of the ratified an

115 The terms of the Treaty of Granada were quite favorable to the conquered Muslims of Granada and allowed for a great deal of local autonomy. Within a year, however, saw an acrimonious debate over whether or not Muslims remaining in Granada should be forcibly converted. This pitted Hernando de Talavera, Archbishop of Granada and a proponent of moderation and suasion in conversion against firebrand, Francisco de Jiménez Cisneros, whose campaigns of forced conversion created social unrest.

116 Nebrija’s Gramática de la lengua castellana was the first grammar of a modern European language.

117 This was especially true of Spain’s navy and merchant marine, which throughout the sixteenth century was more formidable than those of the Dutch and English, Spain’s two closest competitors. See A. P. Usher for specific estimates of shipping tonnage for merchant fleets before 1570. Drawing from Dutch and Spanish sources, “the peninsula as a whole must have had a fleet of 250,000 to 300,000 tons,” while the Netherlands had around 232,000 tons. By the 1580s, the Netherlands began to surpass Spanish and Portuguese merchant shipping. “Spanish Shipping,” in Facts and Factors in Economic History, ed. Edwin F. Gay (New York: A.M. Kelley, 1967), 212-213. Historian Antonio Domínguez Ortiz lists a number of preoccupations among would-be competitors in the Atlantic realm from “political weakness” in Italy, to the Wars of Religion in France, to Holland’s lack of manpower. The Golden Age of Spain, 1516-1659 (New York: Basic Books, 1971), 279.

118 On the division of the ocean sea and the establishment of amity lines and lawless spaces, see Carl Schmitt. The Nomos of the Earth in the International Law of the Jus Publicum Europaeum. Transl. G. L. Ulmen (New York: Telos Press, Ltd., 2003), 92-99 and 178-181. Schmitt’s conception of changes in the global order from 1500-1700 is especially relevant to this study’s discussions of how economic laws and norms developed. He places Spain at the cusp of transformations in legal thinking on the topic of just war. Francisco de Vitoria suggested that a violation of the principle of liberum commercium in goods, specie, and ideas (missionary propaganda) provided a sufficient pretext for waging a just war. There is, as well, in Schmitt, the notion that the creation of rayas and amity lines meant a profound reconsideration of where and when positive laws obtained and were enforceable. Dutch jurist and Dutch East India Company man, Hugo Grotius, would adopt many of Vitoria’s arguments in his main work, Mare Liberum, to argue against the rayas created with Pope Alexander VI’s edict Inter Caetara Divinae and subsequent clarifications in the Treaties of Tordesillas (June 7, 1494) and Saragossa (1526). Of central concern, then, was how Francisco de Vitoria’s argument in favor of just war against indigenous Americans demanded the establishment of a realm of ostensibly free commerce (broadly construed to include missionary 53

Iberian division of the heathen globe that same year.119 We hear of Cortés’ shocking military triumph in Mesoamerica (1519-21), Pizarro’s similarly implausible victories in

Peru in (1532-33), the of 1542, which banned (almost universally ignored or violently opposed by New World encomenderos), the discovery of the rich silver veins of the Cerro Potosí and their exploitation from 1545 onward, and the establishment of the Flota de Indias (the Spanish Treasure Fleet) in 1561, all of which attest to at least nominal control over most of the Caribbean and the American landmass from California in the Pacific and Florida in North America to the tip of the Southern

Cone (Brazil excepted).120

The Spanish Treasure Fleet, established definitively in 1565,121 loosely knitted together this commercial network of settlements through the dispatch of seasonal

propaganda, free movement, and free trade) that would later divide religious and political partisans in a war to control the seas. Vitoria’s Las relectiones de ‘Indis y de Jure Belli', pace Ernest Nys, was the first shot in a “‘hundred-year book war’ over the freedom of the sea” that would establish the rules of engagement into the twentieth century (referenced in Schmitt, 178). Other contributors in this book war would include John Selden’s and the works of Sir Philip Meadows, Samuel Pufendorf and Cornelius van Bynkershoek as well as the wave of Spanish theorists such as Tomas de Mercado, Luis de Molina, Ortiz, and those who were less philosophical and more technocratically inclined like Hevia Bolaños, Veitia Linaje, and Pellicer Ossau. On the mixed provenance of fishing boats in the North Atlantic, see Regina Grafe, Distant Tyranny Markets, Power, and Backwardness in Spain, 1650-1800 (Princeton; Oxford: Princeton University Press, 2012), 52-79 and Brian M. Fagan, Fish on Friday: Feasting, Fasting, and the Discovery of the New World (New York: Basic Books, 2006).

119 English, Dutch, and French mariners would vehemently ignore this Papal Bull. Hugo Grotius’s Free Sea (1609) would lay out a compelling argument for freedom of the seas, though privateers and pirates had been waging war upon Spanish and Portuguese shipping within decades of the first Columbian voyage. See Hugo Grotius, Richard Hakluyt, William Welwood, and David Armitage. The Free Sea. Natural Law and Enlightenment Classics. (Indianapolis, Ind: Liberty Fund, 2004).

120 Encomiendas were royal grants to colonists that entitled them to the use of indigenous land and labor in exchange for providing protection and instruction in the Christian faith. The Flota system, a response to security threats, followed decades of debates after individual ships were banned from traveling to the Indies in 1526, Spain. Recopilacion de leyes de los reynos de las Indias (Madrid: A. Ortega, 1774), Libro IX, Título 30, ley 55.

121 A detailed accounting of the development of the Treasure Fleet will be offered in Chapter 2.

54 convoys that ran from Seville to Veracruz and modern-day Panama with stops at secondary ports such as Cartagena and refreshment and refueling outposts like Havana and Las Palmas (the Canary Islands) along the way. Fleet galleons carried mostly semi- perishable foodstuffs and manufactured goods and sent explorers, royal administrators, and (mostly) Dominican and Franciscan missionaries westward to provide a veneer of

Crown and Church authority in strategic settlements that peppered the vast expanse of

Spanish realms. Perhaps most importantly of all, fleet ships returned with gold, silver, and other high value goods, which undercut the competitiveness of Castile’s longstanding transhumant wool, agricultural, manufacturing sectors, and injecting massive amounts of specie. This new money raised disturbances among the estamentos122 of Old Castile, as a rising class of merchants and financiers, flush with astronomical profits from the New

World, began to challenge the power of the nobility. With the frantic establishment of the material and political foundation for this new Imperial Spain came the need to renovate its moral and intellectual architecture.

This chapter traces the development of economic discourse from the theologians and jurists of Salamanca (hereafter, Salamancistas) in early sixteenth-century to the

122 The estamentos or estates (classes, orders) of Old Castile were the clergy, nobility, and the peasantry.

55 arbitristas (projectors or reformers)123 and fiscal mercantilists124 of the seventeenth century. The division (and sequencing) of these three major groupings is heuristic rather than strictly chronological—that is, it explains the drift from the largely individual, moral, and spiritual concerns of the Salamancistas, to the more secular and systemic focus of the arbitristas, and concludes with an exploration of the technical legalism of the fiscal mercantilists. This configuration of groups of theorists reveals important distinctions between the groups in two additional ways. From a legal perspective, it highlights the Thomistic blend of divine and natural law125 that informed the thinking of the Salamancistas, the interventionist elán of the arbitristas, and the calls by fiscal mercantilists for the stricter the enforcement of positive laws that had accumulated with the first century of transatlantic expansion. It also points out a subtle shift in the categorization of commercial transactions, from the Salamancista emphasis on the sins

123 Marjorie Grice-Hutchinson, The School of Salamanca. See also, André Alves Azevedo and J. M. Moreira The Salamanca School (London: Continuum, 2010). The literature on the arbitristas is extensive in both original Spanish and in English. An excellent starting point on the general tensions that existed between those who claimed that economy and society were capable of reform or technocratic management and those who rejected such “novedades” or novelties is J.H. Elliott’s “Self-Perception and Decline in Early Seventeenth-Century Spain” Past & Present, no. 74 (Feb. 1977): 41-61.The third broad and yet more amorphous group than either the Schoolmen or abristristas, were the mercantilists, who tended to eschew both the spiritual emphasis of the Schoolmen and the maximalist reformism of the arbitristas in favor of a program of efficient revenue generation and taxation. See Angél García Sanz, “Economic crisis and the policy of reform” in The Castilian Crisis of the Seventeenth Century: New Perspectives on the Economic and Social History of Seventeenth-Century Spain, eds. I. A. A. Thompson and Bartolomé Yun Casalilla (Cambridge, UK: Cambridge University Press, 1994), 28-31.

124 The term fiscal mercantilists will be used to characterize the jurists and office holders who combined general advocacy of positive balance of trade policies with fine-grained analyses of extant commercial policies. Figures such as José Veitia Linaje, Duarte Gomes Solis, and Juan de Solórzano Pereira fall within this category for their practical and technical knowledge, which differentiates them from many of the arbitristas.

125 Thomas Aquinas (1225-1274) blended divine and natural law to explain the benefits of basic economic institutions like private property, which deeply influenced many of the Salamancistas.

56 committed by individual usurers and cambistas (money changers) in the context of contracts and commutative justice and their impact on the common good, to the more systemic approach of the arbitristas and fiscal mercantilists, who considered the effectiveness of commercial laws and regulations in the context of economic recession and their impact upon the common wealth.126 This analysis will contribute to a better framework for understanding what illicit transactions and, more specifically, illicit transactions meant to the empire’s administrators and merchants from a theoretical perspective.

* * *

Before delving into a discussion of the discourse of some of Spain’s major theorists, a few brief definitions are in order. Marjorie Grice-Hutchinson ushered the terms School of Salamanca and Schoolmen into broad English usage in her 1952 work on the subject, The School of Salamanca; Readings in Spanish Monetary Theory, 1544-

1605.127 The terms have since been used to loosely describe Dominican theologian

Francisco de Vitoria (1483-1546) and his followers, a group of jurists and theologians who grappled with a range of contentious issues in the political and legal realms while offering pointed commercial advice to both merchants and confessors throughout the

126 I owe a debt of gratitude to Elvira Vilches for her insightful suggestions about how to frame the development of the discourse in this chapter.

127 The School of Salamanca; Readings in Spanish Monetary Theory, 1544-1605 (Oxford: Clarendon Press, 1952). Grice-Hutchinson, a student of Friedrich Hayek at the London School of Economics in the late 1940s, focused on the history of Iberian economic thought throughout her career. Her other works on the topic include, Early Economic Thought in Spain, 1177-1740 (London: G. Allen & Unwin, 1978), Aproximación al pensamiento económico en Andalucía: de Séneca a finales del siglo XVIII (Málaga: Editorial Librería Agora, 1990), and, with Laurence S. Moss, and Christopher K. Ryan, Economic Thought in Spain: Selected Essays (Aldershot, Hants, England: E. Elgar, 1993).

57 sixteenth century, when Iberian economic discourse took a decidedly secular and practical turn. Grice-Hutchinson’s Salamancistas are best remembered for their advancements in the realms of law and politics rather than for their developments in economics, but interest in the latter field has risen sharply in recent decades.128

In the sphere of economic transactions, Vitoria and his followers took many of their cues from the work of twelfth-century Dominican theologian, Thomas Aquinas, who emphasized the central importance of natural law as a guide for human behavior and extolled the virtues of private property and the profit motive.129 The Salamancistas concerned themselves primarily with issues related to commutative justice130—that is, the world of contracts and fair dealing between individual economic agents—and its impact upon the common good. Their intellectual burden involved trying to unpack and make sense of complex financial phenomena such as the price inflation and skyrocketing

128 Francisco Suarez (1548-1617) is specifically credited with advancements in the field of positive law, especially for his articulation of the social rights of people to make their own laws and determine their own political order, an implicit rejection of the divine right of kings. An excellent introduction to the thought of Suarez is Quentin Skinner, The Foundations of Modern Political Thought Volume 2 (Cambridge: Cambridge University Press, 1978), 149-154, 155-161, 181-184. Francisco de Vitoria repurposed the Roman law theory of ius gentium, the natural law rights that were common to everyone, to apply to international law. André Azevedo Alves and J. M. Moreira, The Salamanca School (New York: Continuum, 2010), 59-61. Neglect of the Salamancistas in the economic field largely reflects the neglect by historians of economic thought writing in English, who tended to almost exclusively focus on English mercantilists, Smithian classicists, French Physiocrats, and other non-Iberian theorists.

129 Natural law, quite simply, was derived from natural phenomena and their observable laws and patterns, which were supposed to serve as a guide for human conduct. Aquinas’s emphasis on natural law meant that discussions of economic activity would focus largely on its practical impact upon the common good.

130 Commutative justice is a general framework for determining whether or not things are being exchanged fairly based on principles such as equity, fair returns for labor, and customary standards of potential benefits. It becomes especially pronounced with when powerful pricemakers enter into transactions and make transactions unequal. See C. B. Macpherson, The Rise and Fall of Economic Justice, and Other Papers (Oxford: Oxford University Press, 1985), 7-8, and Ángel Poncela González, La Escuela de Salamanca: filosofía y humanismo ante el mundo moderno (Madrid: Editorial Verbum, 2015), 199.

58 profits that had been unleashed by import of American gold and silver.131 With the discovery of overseas possessions came the deep encroachment of market forces into traditional structures of society and moral economy along with a concomitant rise of the political and social power of merchants.132 The Salamancistas did not provide a cohesive body of work on economy or economic affairs; rather, they approached economic questions by addressing spiritual concerns such as whether it was moral to work for profit, engross private property holdings, or charge interest on money loaned. To these concerns, Vitoria and his followers provided assurances that, on balance and as a general rule, the free circulation of goods and ideas was a value that protected the common good provided that such activities were undertaken in good faith.

In contrast to the Salamancista emphasis on commutative justice and the common good, at the heart of the concept of arbitrismo lay the secular notion of systemic

“projecting” or market intervention by kings and their ministers into the workings of a providential universe to solve practical problems. Etymologically speaking, the term derives from the Latin term arbitrium, a juridical concept that originally referred to an authoritative dictum or legally binding decision. Arbitrio came into later use to mean an

131 Cossimo Perrotta, “Early Spanish Mercantilism: The First Analysis of Underdevelopment,” in Mercantilist Economics, Lars Magnusson ed. (Boston: Kluwer Academic Publishers, 1993), 21.

132 Two examples of such traditional structures would be the Mesta, a sheep owners guild that directed transhumant commerce in raw wool to the north of the Peninsula, and the complex of seasonal trade fairs centered around Medina del Campo, both of which were threatened by a sharp uptick of imports from the transatlantic trade centered in Seville. Henry Kamen provides some brief comments on the waning of Mesta and Medina del Campo prominence in Henry Kamen, Spain, 1469-1714: A Society of Conflict (London: Longman, 1983), 44-47 and 113-114.

59 expedient or a freely offered opinion.133 Again, from both chronological and heuristic perspectives arbitrismo existed alongside and often overlapped with the work of the

Salamancistas from the middle of the sixteenth century onward. Figures like Tomas de

Mercado and Luis Ortiz, who discussed the common good and the impact of international trade upon economic development, are thus transitional figures for which either exclusive label is a poor fit at best.134 Arbitrismo represented a general drift toward more active management of not only the common good (the community), but also the commonwealth

(the nation), a subtle distinction that tended to relegate issues of propriety and common action to the sidelines while advancing a broader, macroeconomic case for state action to generate and preserve the wealth of society at large.135 While both the Salamancistas and arbitristas would be in general agreement about the desired ends of economic activity—to promote and protect the common good—the means to achieving that aim diverged:

Salamancistas generally focused on the personal economic agent’s role in the creation of a moral society, the impact of their individual transactions and contracts; arbitristas

133 Jean Vilar Berrogain, Literatura y economía: la figura satírica del arbitrista en el Siglo de Oro (Madrid: Revista de Occidente, 1973), 23-31 and 47. At the pejorative end of the spectrum, the term arbitrio came to connote trick, scheme, or gimmick.

134 Mercado and Ortiz will be discussed in greater depth later in this chapter.

135 Common good and common wealth can be distinguished in a number of additional ways. The common good emphasizes the non-exclusive and communitarian nature of goods held in common and it is firmly rooted in the sphere of moral economy. The common wealth alludes to a political term of art, which evokes national security and development and the strategies that accompany it. Both of these terms will be discussed in greater depth below.

60 tended to see developmental conundrums through the eyes (to borrow a recent concept from political science and development) of an active interventionist state.136

Another way to approach the subtle differences between Salamancista and arbitrista discourse is to acknowledge the sharply different contexts in which both groups operated. The Salamancistas generated most of their theories amidst the embarrassment of riches that followed the early decades of discovery. Though cracks in imperial Spain’s financial architecture may have been present throughout this period, the surfeit of silver imports from , Potosí, and other colonial mining centers from the 1540s onward allowed the Crown to paper over many of these fissures. Arbitristas, in contrast, write against a backdrop of Crown bankruptcies (1557, 1560, 1576, and 1596), price inflation, a stagnant and shrinking manufacturing base, food famines,137 military defeats (the catastrophe of the in 1588 and the inability to quell the

(1568-1648), and a sharply increasing tax burden, especially among the Castilian peasantry.138 Toward the turn of the century, interest payments, in the form of annuity instruments, known as juros, began to gobble up an increasing percentage of silver imports and Philip III in 1599 began an ill-advised experiment with the issuance of pure vellón () currency in order to raise revenues in currency exchange.139 Arbitrismo,

136 James C. Scott, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed (New Haven: Yale University Press, 1998). Scott’s emphasis on top-down silver bullet development schemes and his focus on the failures of development would become common refrains of many arbistristas.

137 Jordi Nadal, La población española (Siglos XVI a XX) (Barcelona 1984) 24, 36, 24-37.

138 Henry Kamen, Spain, 1469-1714: A Society of Conflict (London: Longman, 1983), 156-157.

139 John Lynch. Spain under the Habsburgs (Oxford: B. Blackwell, 1969), 34. Juros were not strictly annuity payments but “rights (such as privileges and feudal titles, exemptions, tenders, the use of public property) granted by the king to individuals in exchange for cash loans,” which encouraged rent seeking 61 then, was a response to a far graver suite of circumstances and indicators than those that face the Salamancistas. Although individual failings such as idleness, the feminization of men,140 and rapacious rent seeking were included by some arbitristas (as these theorists were known) to explain Spain’s productive and demographic decline, their prescriptions tended to include policies and incentives that targeted systemic problems like price inflation, the unfavorable imbalance of international trade, underutilized natural endowments, and poor infrastructure.

Arbitristas would come in for frequent abuse for conjuring up unrealistic and self- serving schemes and scams in order to generate economic growth.141 One historian refers to arbitrismo as “almost a social calamity.”142 Jean Vilar’s essential study of the cultural and artistic deployment of the concept, Literatura y economía: la figura satírica del arbitrista en el Siglo de Oro,143 traces the term’s pejorative usage to embody stock character in the works of Cervantes, Quevedo, and a host of other authors and

and unproductive investments. Censos, mortgage income on properties and loans, was another common debt instrument that encouraged land engrossment and rent seeking. Perrotta, “Early Spanish Mercantilism,” 29. On the inflationary chaos unleashed by vellon currency, see Elliott, Imperial Spain, 299, 328-330.

140 Vilches, New World Gold, 273, 281 and 293.

141 For an excellent run down of the social and artistic life of the term, see Luis Perdices de Blas and John Reeder, "Quixotes, Don Juans, Rogues and Arbitristas in Seventeenth Century Castile" OEconomia, no. 4 (2013): 561-591. The standard classic analysis of the satirical uses of the term is Jean Vilar Berrogain, Literatura y economía: la figura satírica del arbitrista en el Siglo de Oro (Madrid: Revista de Occidente, 1973).

142 Perrotta, “Early Spanish Mercantilism,” 25. Elliott referred to turn-of-the-century arbitrismo as “an orgy of national introspection” Imperial Spain, 294-295.

143 Vilar, Literatura y economía.

62 playwrights in the sixteenth and seventeenth centuries.144 Ironic, comic, or other dismissive uses of the term notwithstanding, for a sober and competent arbitrista, matters of systemic failure (inflation, unfavorable trade terms, arbitrary licensing and regulation, and debt financing) could and should be corrected largely through policy changes.

I use the term fiscal mercantilist to describe seventeenth-century jurists and functionaries who contributed works on trade and its regulation of a more technical nature in addition to analyses and theories based on their experiences. While aforementioned transitional figures like Tomas de Mercado approached the generation of wealth and the common good as a matter of state prerogative, the theorists that fall under the rubric of fiscal mercantilism give full expression to an outlook that emphasizes the importance of the growing commonwealth through better resources extraction strategies

(fiscalism) and trade protectionism (mercantilism).145 The approach of the fiscal mercantilists was to marshal legal arguments to protect licensed commerce and safeguard the extractive functionality of the empire’s longstanding institutions. Figures like José

Veitia Linaje (1620-1688), Pedro Gonzalez de Salcedo (ca.1600-1684), Juan de Hevia y

Bolaños (1570-1623), and Alberto Struzzi looked backward to see at least some of the material and legal wreckage of empire and offered technical solutions that stayed well within the bounds of mild reformism. Like the arbitristas, they were focused on the creation and protection of national wealth. Unlike the arbitristas, the Spanish

144 His point of departure in his comprehensive study is Cervante’s Coloquio de los perros and Quevedo’s El buscón and Hora de todos. Vilar, Literatura y economía, 13.

145 See Immanuel Wallerstein on the distinction between fiscalism, or precocious mercantilism and full- scale mercantilism, The Modern World System I: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century (San Diego: Academic Press, 1974), 309.

63 mercantilists could lean upon a century’s worth of data on Spain’s first century in the

Americas and promote and critique the specific codes and regulations that accrued over that time. The modifier, fiscal, emphasizes a specific connotation of the Spanish term, fiscal, which refers to a public prosecutor and, by extension, a person who takes an accusatorial or prosecutorial approach to analyzing imperial commerce.

Mercantilism itself is a term that describes a loose body of theory that ties together strategies for the creation and protection of national wealth, which often include but are not limited to bullionism, a zero-sum game theory of bilateral trade, protectionism, and the robust and aggressive defense of economic imperatives abroad.146

Even the subcategory of bullionism implied a broad range of connotations along a spectrum from chrysohedonism, a concept which refers to the fetishism of the money

146 The standard of the genre is Eli Filip Hecksher, Mercantilism (London: Allen & Unwin, 1935). See also, Earl J. Hamilton, "Spanish Mercantilism Before 1700," in Facts and Factors in Economic History: Articles by Former Students of Edwin Francis Gay (Cambridge: Harvard University Press), 214-239, Lars Magnusson, Mercantilist Economics (Boston: Kluwer Academic Publishers, 1993), and Mercantilism: The Shaping of an Economic Language (London: Routledge, 1994), Joyce Oldham Appleby, Economic Thought and Ideology in Seventeenth Century England (Princeton, N.J.: Princeton University Press, 1978), Jose Larraz López, La época del mercantilismo en Castilla, 1500-1700 (Madrid: Aguilar, 1963), Stern, Philip J., and Carl Wennerlind. Mercantilism Reimagined: Political Economy in Early Modern Britain and Its Empire. (Oxford: Oxford University Press, 2013), and The Political Economy of Merchant Empires ed. James Tracy (New York: Cambridge University Press, 1991), the last of which is an excellent edited volume that contains essays about the growth of institutions, the role of the state, and other aspects of premodern trade from a global perspective. Jan de Vries draws a sharp distinction between Spanish mercantilism, which focused on “territorial and administrative” exclusivity and English, Dutch, and French mercantilist economies, which were “designed for the competitive exploitation of economic opportunities” and built “leaner operations” by reducing transaction costs and promoting specialization and technological innovation. See Jan De Vries Economy of Europe in an Age of Crisis, 1600-1750 (Cambridge: Cambridge University Press, 1976), 236-250. Some authors have used the concept of mercantilism as a chronological marker without further explanation. See Jonathan Israel, European Jewry in the Age of Mercantilism, 1550- 1750 (Oxford: Clarendon Press, 1985) and Richard Kagan and Philip D. Morgan. Atlantic Diasporas: Jews, Conversos, and Crypto-Jews in the Age of Mercantilism, 1500-1800 (Baltimore: Johns Hopkins University Press, 2009). Lars Magnusson, Mercantilist Economics (Boston: Kluwer Academic Publishers, 1993), especially, 17-58, Cosimo Perrotta’s essay, “Early Spanish Mercantilism: The First Analysis of Underdevelopment,” restores Spanish theorists to their central position in the broader history of economic thought.

64 hoarder, to import substitution, a term first used in 1687 by royal chronicler and genealogist, Luis de Salazar y Castro, that describes a development strategy based on trade protection and state-led capital investment in targeted industries.147 Mercantilism will be deployed in a more modest sense: to highlight the development of a more technical, economistic discourse that stood in contrast with the philosophical ruminations of the arbitristas, notwithstanding the great deal of overlap between the two groups. If the arbitristas deployed a raft of concepts aimed at restoring or recovering the lost glory of an imagined Golden age of economic vigor, the fiscal mercantilists had fewer delusions about the empire’s chronic underdevelopment. Their theoretical contributions came in the form of jealous trade protection and the maintenance of the empire’s fiscal solvency.

Mercantilists looked for what had gone wrong with Spain’s development model in its labyrinth of its laws.

* * *

The Moral Economy of the Salamancistas

At the time of Columbus’s first encounters in the New World there was no discrete discipline or “ontologically separate entity” called economics of which to speak, nor was there necessarily any reason to disentangle the economy from the social and moral fabric in which it was embedded.148 The Medieval order, which was composed of a privileged gentry, growing clergy, and obligation-ridden peasantry, seemed to more or

147 Perrotta, Early Spanish Mercantilism,” 23. 148 Daviken Studnicki-Gizbert, A Nation upon the Ocean Sea: Portugal's Atlantic Diaspora and the Crisis of the Spanish Empire, 1492-1640 (Oxford: Oxford University Press, 2007), 149. Like the Ancient Greeks, the Spanish Schoolmen treated economic issues within a framework of moral philosophy.

65 less hold steady until a sharp increase of American gold and silver imports in the 1530s raised the profile of Iberia’s merchants and financiers.149 Economy, derived from ancient

Greek terms, oikos and oeconomia, in the works of Xenophon (430-354 BC)150 and

Aristotle (384-322 BC) especially, connoted the realm of household management.

Aristotle contrasted oikos specifically with the polis, the political community outside the household, despite his lack of rigor in clearly distinguishing the two realms.151

Transactions and modes of production within the household or estate were thus not of particular concern for ancient and medieval theologians for the simple reason that the ends of such transactions were thought to be individual sustenance or, at the most, for the purpose of sustaining a prosperous estate that was likely to come with a retinue of dependents. Another way of conceiving the difference between the two realms is to emphasize how the oikos was concerned primarily with basic forms of self-sufficient

149 Earl Hamilton, Price Revolution, 34. An additional occupational group, the letrados, a rising group of administrator-lawyers, who had completed ten years of education in law, would highlight the rise of educational opportunities for a growing middle class, but this phenomenon preceded the early returns from the New World. See Henry Kamen on the state of Spanish social orders at the turn of the sixteenth century. Spain, 1469-174: A Society of Conflict (New York: Routledge, 2014), especially 21-28.

150 Xenophon’s, Oeconomicus, a Socratic dialogue about the wise management of one’s household written in the first half of the fourth century BC, was a best practices guidebook for the head of a Greek estate. Xenophon, J. Thompson, and B. J. Hayes. Oeconomicus (London: W.B. Clive, 1895). In German literature, oeconomy was synonymous with and the aim of cameralism, whose central fixation was good order and discipline. Historian Keith Tribe contrasts oeconomical management of the household with capital accumulation, “Cameralism and the Science of Government” The Journal of Modern History 56, no. 2 (Jun., 1984): 263-284, 270.Aristotle discusses oikos and polis in the first book of Politics. See, Peter Simpson, The Politics of Aristotle: Translation, Analysis, and Notes (Chapel Hill: University of North Carolina Press, 1997).

151 In a sense, the distinction between oikos and polis can be envisioned as one of degree rather than category. Political theorist and geographer, Stuart Elden, characterizes them as associations of increasing size. If there is a qualitative difference at all, a polis should be autarkic in fact if not in aspiration. The reasoning of the Schoolmen and arbitristas would focus upon how individual behavior impacted both the local community and the individual soul. The Birth of Territory (University of Chicago Press: Chicago, 2013), 42.

66 reproduction, whereas the polis was the province of more advanced forms of production and exchange.152

The Salamancistas faced the genuine prospect of major social upheaval as early returns from the New World meant that well-positioned individual merchants and financiers gained de facto monopoly power over local and regional markets and, indeed, to some degree, royal finances.153 There was also the troubling issue of how to value currency as the influx of specie wreaked havoc with international exchange rates. This meant the erasure of divisions between spheres of the oikos and polis as the global linkage of production, supply, and currency networks created rampant price inflation throughout Spanish society. All of this new activity required a more sophisticated moral framework for it impacted all of spheres of economic activity, from local exchanges, to regional markets, to high finance.154 Salmancista jurists examined how and whether this market activity could be reigned in to serve and advance the public good, but they did so by focusing not on the systemic dislocations it caused but on fraud, price gouging, engrossing, and usury, all of which were thought to be linked to deadly sins like pride,

152 In some recent development literature, the oikos has been equated with local communitarianism and house economies. Such a formulation would have jibed well with Salmancistas, who used the common good and moral economy as their points of departure, following Aristotle and Thomas Aquinas. On the anthropological deployment of the oikos/polis distinction, see Stephen F. Gudeman and C. M. Hann, “Introduction: Self-sufficiency as Reality and as Myth,” in Oikos and Market: Explorations in Self- Sufficiency After Socialism (New York: Berghahn Books, 2015), 1-23.

153 An excellent recent account of the power of Crown financiers to forced the hand of Philip II and extract favorable terms during debt renegotiations is Mauricio Drelichman and Hans-Joachim Voth, Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (Princeton: Princeton University Press, 2014). See also, Ildefonso Pulido Bueno, La corte, las cortes y los mercaderes: política imperial y desempeño de la hacienda real en la España de los Austrias (Huelva: [publisher not identified], 2002).

154 See Fernand Braudel’s tripartite capitalist framework in The Wheels of Commerce (New York: Harper & Row, 1982), 229-230. 67 gluttony, and greed. These matters were of concern to the jurists and theologians of

Salamanca, for all were connected to this crucial link between private activity and public consequences.

Perhaps the matter that drew the most attention throughout the sixteenth century among Salamancistas was usury. Much of their guidance on the licitness of transactions would target the activities of merchants, moneychangers, and bankers in the use and exchange of money. Two early examples of such guidance came in the form of merchant guidebooks in the 1540s, Cristóbal de Villalon’s Provechoso tratado de cambios y contrataciones de mercaderes and Luis Saravia de la Calle’s Instrucción de mercaderes.155 The aim of such tracts was to make accessible to merchants, bankers, financiers, and their confessors the rules of the complicated world of money and money markets. With the infusion of silver following the discovery of silver in 1540s in both

Zacatecas and Potosí and its impact on the trade fairs, such as the annual fairs of Medina del Campo, the primary focus of the Salamancistas when it came to the licitness of transactions was upon the exploding realm of monetary exchange.156 For Saravia especially, commerce and exchange were largely “unsuitable occupations” for many of the new entrants because they encouraged greed.157 Villalon, for his part, took a more

155 Both treatises are published and discussed in Michael Thomas D’Emic, Justice in the Marketplace in Early Modern Spain: Saravia, Villalón and the Religious Origins of Economic Analysis (Lanham: Lexington Books, 2014). Both treatises were reissued several times throughout the 1540s.

156 Grice Hutchison describes “a whole crop of handbooks” from the 1540s onward, which in addition to Saravia and Villalon, included Luis de Alcalá, Tratado de los préstamos que passan entre mercaderes y tractantes, 1542 and a later treatise by Tomás de Mercado, Tratos y contratos de de mercaderes, Salamanca, 1569. School of Salamanca, 4.

157 School of Salamanca, 120.

68 pragmatic approach to the commercial expansion that was then taking place and acknowledged its importance for the health of the empire.158 Regardless of Saravia’s cynicism and general disdain for commerce, merchants would have to somehow be better integrated into society rather than scolded into fair dealing.

Dominican theologian, Francisco de Vitoria (1492-1544), considered the founder of the School of Salamanca, was one of the first theorists to specifically address merchant concerns about profits and just market prices, which he asserted should be based not on valor impositus (nominal prices decreed by monarchs) but socially determined through aestimatio comunis (common estimation).159 Despite the fact that Aquinas and scholastics who followed him continued to harbor the view that there was “something base” about commerce, the necessity of commerce to the health of society and its positive moral and material consequences were beginning to override concerns about its sinful nature.160

Specifically, international commerce for Vitoria was not only advantageous to subjects and princes alike, but the free movement of knowledge, goods, and people encouraged charity and mutual benefit, provided that such interchange were carried out through either straight barter or via common estimation after considering agreed upon rates of currency exchange.161 Vitoria’s price theories were heavily subjective in this sense. Just price was

158 School of Salamanca, 8.

159 Louis Baeck, “Spanish economic thought: the school of Salamanca and the arbitristas,” History of Political Economy 20, no.3 (1988): 381-408, especially 381 and 384.

160 Along with Grice-Hutchinson, Joseph Schumpeter was a key figure in restoring the Salamancistas to their central place in the history of economic thought. See History of Economic Analysis (Oxford University Press, 1954), 91, especially 82-106.

161 Chafuen 74-75. 69 not something that should be decreed; rather, it should be based on estimation between buyers and sellers.

Francisco Gómez Camacho offers a thorough exegesis of Salamancista theory on the ethics lending money at interest, time, and the role of the state in determining the value of currency in his introduction to Luis de Molina’s “Treatise on Money.” It wasn’t, then, that the Salamancistas could be counted upon to reject the taking of interest, tout court, rather, many of their objections lay in the sorts of open-ended and limitless potential of compound interest and the conception of the market as an impersonal landscape where homo economicus dwelt and was wholly unresponsible for market forces. In an odd bit of prescience, Molina, according to Gomez Camacho, was one of the first great skeptics to point out how imperfect information and uncertainty required that individual economic actors finely tool their moral sensibilities and default in their behavior toward the public good.162

In addition to an emphasis on the sinful nature of some transactions, the

Salamancistas took a more personal and psychological approach to economic behavior, which targeted microeconomic rather than macroeconomic concerns. Supply, demand, resource endowments, consumer behavior, and externalities were the main focus of the

Salamancistas because the proto-economists of Salamanca largely lacked the statistical tools to address macroeconomic topics such as fiscal policy, inflation, price indices, and international trade, the knowledge of which might have informed some of their views of

162 Journal of Markets & Morality 8, no. 1 (Spring 2005): 161-323, especially 171-175. See also, Gomez Camacho in Sourcebook in Late-Scholastic Monetary Theory: The Contributions of Martin Azpilcueta, Luis de Molina, and Juan de Mariana, ed. Stephen John Grabill, (Lanham: Lexington Books, 2007), 109-135.

70 systemic pathologies that were then undermining the Spanish commercial system. It was not so much that the infusion of specie led directly to inflation, to take one example, but that the presence of more specie led to distortions in food and factor pricing which undermined the competitiveness of producers of traditional manufactures like silk and steel. While Salamancistas (for example, Luis de Molina (1535-1600) and Martín de

Azpilcueta (1491-1586)) commented on the possible link between silver importation and price inflation,163 neither offered a comprehensive view of how a number of other factors

(hoarding, demographic collapse on the Peninsula, rising demand in Spanish America, etc.) might have created rising prices. Thus, they lacked a macroeconomic scheme for more effectively addressing the economic stagnation of this period.

The theorists of the School of Salamanca confronted the moral challenges of empire in the university lecture halls of Salamanca, Coimbra, and Alcalá and published treatises framed in the standard disputatio format of scholastic argument—that is, they made appeals first to authority, followed by reason, and (albeit less often) eventually called upon experience as a guide to right action, just as generations of theologians and natural philosophers had done before them.164 Divine law (as it had tended to be interpreted by Aquinas) had made it clear that there should be free circulation of goods and wealth provided that excesses were avoided and that such activity contributed to the

163 Alexander Gallardo. Spanish Economics in the Sixteenth Century: Theory, Policy, and Practice (New York: Writers Club Press, 2002), 11-15.

164 The arbitristas and fiscal mercantilists that followed them would lean far more heavily on practice and experience. While it’s true that figures like Tomas de Mercado and José Veitia Linaje had extensive experience with commerce, the early Schoolmen dwelt primarily in the realm of pure theory, something that would become a bug rather than a feature as the Crown’s management of its finances came under criticism.

71 common good by incentivizing work and acquisition. There could, then, be scarce objection to expanded trade and increased production in principle, so long as it did not lead to a dearth in necessities of life or unseemly hoarding. Provided that merchants avoided excessive profits or fraud and refrained from treating profit as an end in itself, they weren’t likely to run afoul of either secular or spiritual authorities.165 In judging economic behavior, the Salamancistas would repeatedly refer to commercial activity as either licit or illicit.

Those who took the risk to expand and supply the empire with goods and specie were an essential part of a corpus mysticum, the sacred community of prince and subjects who, from the Siete partidas166 to the Salamancistas, worked together to ensure members to live dutiful sociable lives according to their station, governed by a benevolent monarch who followed the precepts of natural and divine law.167 As a rising group jostling its way into power among the traditional orders of Castile (the martial nobility, the productive peasantry and artisans, and the clergy) merchants had to convincingly make the argument that enterprise and capital could work alongside spiritual and royal prerogative, but they did so amidst a growing group of advocates and fellow travelers.168 Private enterprise, it

165 The fixation on excesos in archival sources is extensive. Friars, bishops, merchants, and administrators were often brought to court to face charges only after, it would seem, behavior was determined to be recurring and chronic. This jibes well with the theories of balance and moderation that natural law jurists and theologians held in such high esteem. “Autos de Oficio-Criminales, sobre excesos, muertes, y sodomía,” 1606, AGI Contratación, 72, R. 2 places excesos alongside other specific capital crimes.

166 S.P. Scott, Robert I. Burns, and Alfonso. Las siete partidas. (Philadelphia: University of Pennsylvania Press, 2001).

167 J. H. Elliott, Spain, Europe, and the Wider World, 1500-1800 (New Haven and London: Yale University Press, 2009), 180.

168 Tomás de Mercado (1525-1575) is one such fellow traveler. His career combined both the lecture circuits in Mexico City and Salamanca with extensive transatlantic travels and formative experience 72 should be obvious, would require recompense for its risk-taking and efforts to establish overseas markets. Historians Henry Kamen, Enrique Otte, Robert Smith, and Ruth Pike make it clear that Spanish capital wasn’t sufficient for the funding of Philip II’s ambitious imperial designs. It would also take Genoese, Fugger, Welser, and (later) Portuguese capital to fund both expansion overseas while maintaining Spain’s influence on the

Continent.169 If the empire was a corpus mysticum, early merchants argued, commercial goods and specie was the blood that coursed through its body. Scholastic theorists were quite fond of blood metaphors. Maintaining a healthful blood flow struck at the heart of moral economy, regardless of its provenance. The flipside to the healthful flow argument was that foreigners often drained off such blood. Both the Genoese and Portuguese, especially, were often accused of doing so when they exported silver.170

working in the exchange house of Seville. See Louis Baeck, “Spanish Economic Thought: The School of Salamanca and the Arbitristas,” History of Political Economy 20, no. 3 (1988): 391-392.

169 An excellent recent work on the role of Genoese merchants and bankers is Céline Dauverd, Imperial Ambition in the Early Modern Mediterranean: Genoese Merchants and the Spanish Crown (New York: Cambridge University Press, 2015). On the shift that took place in the sixteenth century in attitudes among nobles toward engaging in commerce, see Ruth Pike, “The Sevillian Nobility and Trade with the New World in the Sixteenth Century” The Business History Review 39, no. 4 (Winter, 1965): 439-465 and Enterprise and Adventure: The Genoese in Seville and the Opening of the New World (Ithaca, N.Y: Cornell University Press, 1966); Mauricio Drelichman and Hans-Joachim Voth, Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip Ii (Princeton; Oxford : Princeton University Press, 2014); Enrique Otte, Antonio-Miguel Bernal, and de T. S. A. Collantes, Sevilla y sus mercaderes a fines de la Edad Media (Sevilla: Vicerrectorado de Relaciones Institucionales y Extensión Cultural, 1996); Robert S. Smith, The Spanish Guild Merchant: A History of the Consulado, 1250-1700 (New York: Octagon Books, 1972). Kamen makes the convincing assertion that at no point was Castile’s anything but an international enterprise and thus, the shift from Mediterranean to Atlantic commerce was naturally dominated by the same players. Henry Kamen, Empire: How Spain Became a World Power, 1492-1763 (New York: HarperCollins, 2003), 293-298. On the foreigners residing in Seville, see Antonio Domínguez Ortiz, Orto y Acaso de Sevilla, estudio sobre la prosperidad y decadencia de la ciudad durante los siglos XVI y XVII (Sevilla: Imprenta de la Diputación Provincial, 1946), 41-48.

170 Daviken Studnicki-Gizbert would focus, specifically, on the deployment of body and blood metaphors against the Portuguese New Christian population in A Nation upon the Open Sea, 142-3, 162. Elvira Vilches cites Martinez de Mata, who compared Genoese financiers to leeches, in the broad turn against foreign interlopers who sapped the strength of the corpus mysticum. New World Gold 205, 230, 282. 73

The discoveries in the Caribbean and Tierra Firma at the turn of the sixteenth century and the conquests that followed created both moral and material challenges to the

Crown. Seemingly overnight, the Iberian Peninsula had become a currency clearinghouse and point of convergence for hordes of international merchants and financiers.171 The relatively quaint trade fair of Medina del Campo, which had centered on the seasonal

Merino wool trade, faded in importance as more lucrative commerce and financial exchange moved south to frenzied . Historian Alberto Marcos Martin traces the development and decline of the Medina del Campo, which was victimized by a combination of royal defaults, loss of faith among international financiers, devastating tax policies, and the decision to move the capital from Valladolid to Madrid in the second half of the sixteenth century.172 Medieval Burgos, once the commercial nucleus of transhumant Castile that had for centuries directed Castile’s gaze northward to ports in

English merchant and East India Company governor, Josiah Child, suggested that English, Dutch, Italian, Jewish merchants and bankers, and other foreigners who worked to drain off silver were, “to [the Spanish] in effect, but as leeches, who suck their blood and vital spirits,” though he was skeptical about bullionist arguments against the export of hard currency. A New Discourse of Trade Wherein Is Recommended Several Weighty Points Relating to Companies of Merchants. The Act of Navigation. Naturalization of Strangers. And Our Woollen Manufactures. The Ballance of Trade. And the Nature of Plantations, and Their Consequences in Relation to the Kingdom, Are Seriously Discussed (Glasgow: R. and A. Foulis, 1751), 9-10.

171 On trade fairs, see Fernand Braudel, The Wheels of Commerce (New York: Harper & Row, 1982), 82- 94, George Robertson Dilg, “The Collapse of the Portobelo Fairs: A Study in Spanish Commercial Reform, 1720-1740” (PhD dissertation, Indiana University, 1975), Regina Grafe, “Fairs” in History of World Trade since 1450, eds. John J. McCusker et al. (2006), 281-283 and O. Verlinden, “Markets and Fairs” in M. M. Postan, Economic Organization and Policies in the Middle Ages, eds. E. E. Rich, and (Cambridge: University Press, 1963).

172 Alberto Marcos Martín, “Medina del Campo,” in The Castilian crisis of the seventeenth century: new perspectives on the economic and social history of seventeenth-century Spain, eds. I.A.A. Thompson and Bartolomé Yun Casalilla (Cambridge: Cambridge University Press, 1994), 220-248. Philip II moved the capital from Valladolid and Madrid in 1561, which created transport challenges for the region surrounding Medina del Campo, which had supplied the previously capital with greater ease.

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Basque country, would be replaced as a commercial transshipment center by Seville,

Sanlúcar de Barrameda, and Cadíz after gold and silver were discovered in the

Americas.173 With these changes came new questions. How would the Castilian elite integrate this new sort of merchant and financier? What sorts of duties and obligations did they have to Crown and kingdom? Were the astronomical profits a global commerce dangerous to the soul?

The theologians who grappled with these questions were both de facto and de jure gatekeepers of a moral economy who emphasized the bién común (common good) and the spiritual health of the individual.174 Bién común thinking ordered a merchant’s obligations, in descending order of priority, first to kingdom, then to community, and finally to one’s household before one focused on individual gain. The neglect of these more important spheres endangered the souls of those engaging in commerce by encouraging avarice. St. Augustine had made the topic an explicit part of his theory of social man.175 Economic theory in sense the was less economistic in outlook and viewed

173 Robert Sidney Smith, The Spanish Guild Merchant: A History of the Consulado, 1250-1700 (Durham, NC: Duke University Press, 1940), Regina Grafe and Oscar Gelderblom, “The Rise and Fall of the Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe…on trade guilds in Iberia” Journal of Interdisciplinary History, xl: 4 (Spring, 2010), 477–511. Ruth Pike, Aristocrats and Traders: Sevillian Society in the Sixteenth Century (Ithaca, NY: Cornell University Press, 1972) and Enrique Otte, Antonio-Miguel Bernal, and de T. S. A. Collantes, Sevilla y sus mercaderes a fines de la Edad Media (Sevilla: Vicerrectorado de Relaciones Institucionales y Extensión Cultural, 1996). See Ruth Pike and Enrique Otte on the rise of Seville and its merchants. Burgos was not only the hub of Castile’s wool-export complex but also the inspiration for consulados to follow and would provide a template for the Casa de Contratación (1503). Elliott, Imperial Spain, 109-111.

174 Studnicki-Gizbert addresses the philosophical foundations of common good theory in A Nation upon the Ocean Sea: Portugal’s Atlantic Diaspora and the Crisis of the Spanish Empire, 1492-1640 (New York, New York: Oxford University Press, 2007), 69-70. Specifically, he traces the rejection of modern theories of homo clausum in favor of a theory of the permeability of man and his two-way investment in the communities of which he is a part.

175 St. Augustine was one of the first theologians to make explicit reference to the common good. City of God, Volume II: 219-232. 75 the economy as “an appendix to ethics and law.”176 Within this cultural and political conception of the moral economy were a set of worrying concerns from the social challenges of a rising merchant class, to the control of prices and supply of grains and other staples, to the constant fixation upon usury.

The Schoolmen closely engaged with the work of Dominican Friar Thomas

Aquinas (1225-1274) in their discussions about the political economy of the expanding empire.177 One matter of central concern according to Thomist doctrine was the value and social utility of labor, which encouraged both material and spiritual improvement and rested upon the ownership of private property.178This framework called for judgments about economic behavior to be based on recta ratio (right reasoning or thinking), which followed the principle of natural law, defined by Aquinas as “the rational creature’s participation in eternal law.”179 Simply put, natural law was inferred from the observation

176 De Roover, Raymond, “Scholastic Economics: Survival and Lasting Influence from the Sixteenth Century to Adam Smith” The Quarterly Journal of Economics, Vol. 69, no. 2 (May 1955), 162. Source on economistic (Tony Judt?)

177 André Azevedo Alves and J. M. Moreira, The Salamanca School (New York: Continuum, 2010), 30-34; Joseph Schumpeter, History of Economic Analysis (New York: Oxford University Press, 1954), 90-94; and Marjorie Grice-Hutchinson, The School of Salamanca: Readings in Spanish Monetary Theory, 1544-1605 (Oxford: Clarendon Press, 1952), 37-41.

178 A version of this argument appears in Aquinas’s chapter on property in Thomas Aquinas, William P. Baumgarth, and Richard J. Regan, On Law, Morality, and Politics (Indianapolis: Hackett, 1988), chapter 4, especially 133. In essence, Aquinas makes a tragedy-of-the-commons argument that people “content with their own property [are more likely] to live in a condition of peace” than those who hold property in common.

179 Thomas D. D’Andrea, drawn from Summa Theologica, 3 vols. (New York: Benziger Brothers, 1947), Summa I-II, Q. 91, a. 2, http://www.nlnrac.org/classical/aquinas#_ednref10.James Muldoon offers a definition from the Justinian Digest of Roman law: “that which nature has taught all animals….From this law springs the union of male and female, which we call matrimony, the procreation and of children and their education.” He goes on to point out that natural law represents a pre-lapsarian, idealized state that is followed by the more practical ius gentium, the positive law that dealt with the world as it was. The 76 of which behaviors were most useful and suitable for the spiritual and material health of individuals and, of course, the Crown. Salamancista cleric and tutor of future King Philip

II, García de Loaysa, tied natural law to the concept of conscientia, which he defined as the “innate and irrepressible natural knowledge of what is good.” For Loaysa, then, natural law should guide one’s actions.180 Historian Alejandro Chafuen, citing Karl

Popper, offers a narrower category to describe this strand of Schoolmen thought, which emphasized the laws of nature (or analytical natural law), a focus that would occupy a wave of later thinkers.181

Like Aquinas, Vitoria took a sanguine view of private property and the social benefits that its protection facilitated, for the owner of private property not only became a better steward of said property but was thought to be more inclined to maintain the social order as well. Aquinas divided justice into two categories: distributive, which described how well essential goods and services were spread throughout a society and commutative, which defined the terms of fair dealing between individuals transacting goods and services. Within these two categories fell all manner of issues and activities

Americas in the Spanish World Order: The Justification for Conquest in the Seventeenth Century (Philadelphia: University of Pennsylvania Press, 1994), 78.

180 Edward Vallance and Harald Braun, Contexts of Conscience in Early Modern Europe, 1500-1700 (New York: Palgrave Macmillan, 2004), 59.

181 Alejandro Antonio Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics. (Lanham, Md: Lexington Books, 2003). Martín de Azpilcueta (1491-1586) was an Augustinian theologian, canonical jurist, and professor credited with first accurately describing the time value of money. Money’s value, for Azpilcueta, was at its highest rate in the present for it could be used immediately for a variety of purposes. Discounting money’s value in the future could be justified based on a variety of reasons, from potential risk to the denial of its use. This would be important in determining whether or not it could be lent at interest. In fact, despite the fact that Azpilcueta avoided making a particular case for the positive benefits of lending at interest, he was making a sophisticated case for how rates of return might be calculated going forward.

77 from pricing, usury, taxation, debt, insurance, monopoly, and foreign exchange, to all sorts of commercial partnerships. Of central importance and a topic that drew

Salmancistas into the realm of personal transactions was usury and the laws and rules that accompanied them. This aspect of Thomist philosophy drew heavily from Aristotle’s views of oeconomia.

Vitoria’s updating of Aquinas would go a long way toward closing the gap between moral and market economy but leave plenty of space for continued confusion.

Francisco Gomez Camacho offers an incisive take on this project in his essay on another

Schoolman, Jesuit Luis de Molina (1535-1600). Whereas classical political economists, such as Adam Smith, David Ricardo, posited as their fundamental economic agent an impersonal, price-taking, objective actor engaging in behavior that was not agentically immoral, the Schoolmen took as their fundamental protagonist a personal, price-making, subjective actor whose free will activities had both moral and spiritual consequences. If an impersonal agent was divested of responsibility for the impact of his behavior based on scientific reasoning, the scholastic agent bore the cross of recta ratio, moral reasoning, and was thus adjudged for the consequences of his sinful actions. Even with Vitoria’s imprimatur, then, scholastic agents would still have to toe the line between profit maximization and nurturing their society and, by extension, the Crown.182

For Molina, determining whether or not interest was usurious depended upon a fair and accurate assessment of value, which in turn required that all factors be brought to

182 Azpilcueta, Martín De, Luis De Molina, Juan De Mariana, and Stephen John Grabill, Sourcebook in Late-scholastic Monetary Theory: The Contributions of Martín De Azpilcueta, Luis De Molina, S.J., and Juan De Mariana, S.J. (Lanham, MD: Lexington Books, 2007), 113-117.

78 bear, including damnums emergens (emergent risk) and lucrum cessans (opportunity cost). Interest is usurious if the lender receives back in exchange something worth more than the thing lent. Among the Schoolmen, it was becoming increasingly evident that the value of money changed as time passed, therefore, an accurate assessment of value which discounted future rates could allow for the taking of a reasonable rate of interest to make up the shortfall for the lender, who was denied the use of said money during the period of the loan. Calculations of interest based on this sort of utilitarian principles were wholly licit in the eyes of Molina.

Molina also took issue with the establishment of monopolies, which he saw as an impulse tied to collusion and price-fixing.183 This sort of approach to commercial activity, for Molina, amounted to hidden taxes and injurious revenue collection by hidden means, which violated the consent of the governed despite the legitimate need of governments to raise revenues with the sale of monopoly licenses.184 Monopoly pricing interfered with the common estimation that was required for an agreement on the just price. Manipulations like “monopoly and other frauds” created unnatural excesses or scarcities in markets and were thus mortal sins.185 Monopolies were acceptable, in

Molina’s eyes, but only if they were established by consent and were based upon sound principles of bien comun and sound distributive justice.

183 Diego Alonso-Lasheras, Luis De Molina's De Iustitiae Et Iure Justice As Virtue in an Economic Context (Leiden: Brill, 2011), 157.

184 Alonso-Lasheras, 157-158.

185 Luis de Molina, Jeannine Emery, and Luis De Molina, “A Treatise on Money,” Journal of Markets & Morality 8, no. 1 (Spring 2005): 316-317. 79

Molina’s determination about the potential of the sinfulness of monopoly, then, rests upon the notion that economic transactions and regulatory arrangements were to be judged according to degree to which they followed sound principles of distributive justice. Some minor distortions on price based on common estimation were acceptable, but not if such distortions were the result of hoarding or collusion in times of scarcity, and certainly not if such actions harmed broader society. One example of collusion in sixteenth century Castile was the oligopoly control established in Cuenca’s wool trade.

This market dominance resulted in de facto price-fixing on the part of a handful of

Genoese merchants and created credit arrangements that were akin to usury. Producers, short of cash, sold futures at discounted rates before the shearing season, which Molina considered to be a form of disguised usury.186

Following Aquinas’s sociological assessments on the impact of commerce, the subjectivity of value, and the positive benefits of private property, usury remained a somewhat intractable issue for both the Medieval Scholastics and the Schoolmen.

Loaning money at interest, for Aquinas, was contrary to natural law, for money was thought (pace Aristotle) to be sterile. But throughout the period under discussion, those who wished to loan money at interest engaged in any number of workaround strategies, from differential currency exchange, to dry exchange, to collecting fees for carrying out routine transactions. While it would a misrepresentation to claim that the de jure minefield of laws had no impact upon lending and time-bound transactions more generally, the sharpening of rhetorical skills that came with lending at interest meant that

186 Molina, A Treatise on Money, 157-160. 80 the de facto realm of credit and debt thrived regardless. If anything, it forced the realm of routine loans to become more abstruse and difficult to detect.

Another Salmancista, Augustinian canon scholar, Martín de Azpilcueta (1491-

1586) focused in his work upon the extrinsic arguments for licit gains in lending money.

To other justifications for loan compensation such as damnum emergens and lucrum cessans he added periculum sortis, which amounted to a claim that lenders were entitled to a fee for the obvious risks that came with handing over money to be used by a borrower. Lucrum cessans corresponds to the contemporary concept of opportunity cost—that is, the obvious loss of the use of money on potentially more profitable activities while it was being lent.187 Perhaps the least convincing category of argument, periculum sortis, amounted to a more general fee for risks taken.

Most arguments against usury targeted the sinful motivations and intentions of the lender. Extrinsic arguments were more acceptable than philosophical arguments that either monetized time (which was the exclusive provenance of God) or asserted that money had anything other than the sterile quality described by Aristotle. The moral dimension, Azpilcueta’s main stumbling block to the acceptance of the licitness of loan compensation, that fate could be tempted by monetizing time, faded in importance when extrinsic factors, such as damages, risks, work done, expenses, or opportunity costs were brought up. Without remuneration, after all, money would likely lie fallow and not be put

187 N. J. G. Pounds, An Economic History of Medieval Europe (New York: Longman Group Limited, 1974), 407. Luis de Molina, Treatise on Money Journal of Markets & Morality 8, no.1 (Spring 2005): 161– 323. 189-190. Saravia de la Calle and Odd Langholm, The Legacy of Scholasticism in Economic Thought. New York: Cambridge University Press, 1998), 91.

81 to any of the Ciceronian188 usages championed by both Azpilcueta and Luis de Molina.189

And reconciling Aquinas with the transformations that begun to take place in the early sixteenth century following the wave of trans-Atlantic discoveries was doubtlessly essential to the growing empire.

With the turn of the seventeenth century and the experience of severe economic dislocations in agriculture, manufacturing, and in crises of royal finance, critiques of the

Crown become sharper. On particular Salamancista, Jesuit Juan de Mariana (1536-1624), among his extensive histories of the Spanish empire and the rights of the monarchy, contributed a sophisticated treatise on the debasement of currency that targeted the vellon policies of Philip III, De monetae mutatione, Treatise on the Alteration of Money

(1609).190 In this controversial work, which ran afoul of the Inquisition for its insubordinate tone, Mariana rejected the notion that princes should have the authority to tamper with purity of currency or that nominal price could be considered a stand-in for the just price. Mariana’s foes, currency-devaluing princes (theoretical and actual), were singled out for their decision to debase currency based on short-term liquidity needs.

Mariana, fond of body and blood metaphors, saw these devaluations as a form of wasteful and cruel bloodletting upon an already enervated body politic. No Prince could remove

188 Ciceronian principles in a business or commercial context meant that trade, banking, etc. would be encouraged so long as it served greater society in the pursuit of profits. Engrossing, fraud, monopoly, or conspiracy would thus all be frowned upon behaviors that subverted Ciceronian aims.

189 Both Azpilcueta and Luis Molina agreed that “the foregoing of profit...provides an objective ground for the counting of an interest payment.” Barry Gordan, Economic Analysis before Adam Smith: Hesiod to Lessius (New York: Barnes & Noble Books, 1975), 203. 190 The full treatise appears in translation and with commentary in “A Treatise on the Alteration of Money,” Journal of Markets & Morality 5, no. 2 (Fall 2002)

82 profits in such a zero-sum game “without the suffering and groans of his subjects.”

Despite the short-term increases in revenues, this body would in the long run become

“debilitated and wasted.”191 This critique left a mark in vellon-riddled Spain and it’s no surprise that Mariana was imprisoned for his efforts, had his possessions confiscated, and was further threatened by the Inquisition.192

Flemish Jesuit, Leonard Lessius (1554-1623) offered one of the most sophisticated analyses of the morality of monopoly (and monopsony). Lessius’s work foregrounds the secular turn that the arbistristas and fiscal mercantilists would take during the same period. In his assessment of types of monopoly he offers a number of theories on how exclusionary privilege impacts just price. Because monopoly pricing tended to interfere with common estimation, it often negatively impacted the common good by forcing buyers (and sellers in the case of monopsony) to pay more for goods.

Two types of monopoly that Lessius explicitly condemns are those based on conspiracies of buyers and sellers to set prices above the just price, and those established by coercion or fraud. While he doesn’t specifically address transatlantic trade, the carefully managed and exclusive nature of Treasure Fleet trade, according to Lessius’s theories about collusion, would very well have seemed conspiratorial to excluded merchants. Two types of monopoly that Lessius lists as at least acceptable were the

191 Mariana, “A Treatise on the Alteration of Money,” 544.

192 Mariana, “A Treatise on the Alteration of Money,” 544, 530.

83 concessions granted to merchants by princes for the common good and those created because profit margins were likely to be small or profit horizons far off.193

Lessius saves his most cogent assessment of monopoly’s place within the corpus mysticum when he addresses what monopoly means for commutative and distributive justice.194 In making decisions about transactions, monopolists who buy or sell products at prevailing prices, which have been reached in accordance with common estimation, are not sinning against any individuals. In the context of commutative justice, no harm can be adduced. But when one considers how the actions of merchants or bankers impact society at large—that is, the role that they have taken on as price makers via their success and how it has created genuine harm in the form of shortages, gluts, and (by extension) erratic prices—one is forced to acknowledge the aggregative and impersonal qualities of transactions at the center of macroeconomic analysis.195 As such, those who participate in propitious lending, borrowing, purchasing, selling climates and gain dominant market positions might not be sinning in a theological sense but rather in a secular sense against the common good.

The Salamancistas had as their central aim to bring moral consciousness into line with the practical, worldly transformations that were then causing so much social upheaval in Spain. Across the border in Portugal, a similar institution was established to address some of the same questions, the Mesa da Consciência (“Board of Conscience”), a

193 Gordon, Economic Analysis before Adam Smith, 266-268.

194 Economic Analysis before Adam Smith, 268-272.

195 Economic Analysis before Adam Smith, 269-271. 84 royal council of theologians devoted to issues like war, commerce, conversion, and slavery established in 1532. For the decades leading up to the formation of the composite monarchy in 1580, the Board of Conscience would grapple with tensions along a number of fault lines: between the hidebound moralists of the Church and Royal ministers; local merchants (in peripheral settlements) and jealous monopolists of the Indian Ocean trade, and Portuguese prelates and those in Rome. The central issue, how to apply Thomism to address deep transformations in the imperial economy, then, would occupy theologians in both Spain and Portugal. But as the century wore on and the market forces unleashed by the Transatlantic trade came to overshadow and undercut so many of the traditional manufacturing sectors of Medieval Spain, such as wool, silk, and steel, there arose a wave of thinkers who clamored for a more sharply interventionist approach to addressing

Spain’s inflation and unfavorable trade imbalance. The following section will examine of the work of this group of intervention advocates, who were known as the arbitristas.

The Arbitristas

The half-century that saw the Schoolmen dominate economic discourse had little practical impact upon the economic policies of Charles V or Philip II. Neither was interested in curbing monarchical prerogative if it meant clashing with far-flung encomenderos or powerful financiers. The encomenderos, a particularly volatile and violent group far beyond the reach of the Crown had, after all, rendered the New Laws

(1542) a dead letter by revolting and killing Blasco de Nuñez Vela, the first Viceroy in

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Peru who had deigned to try to enforce them.196 Financiers, for that matter, could be a fickle bunch, less interested in prerogatives of the Crown in Europe and abroad than in the solvency of its treasury. While it would be an overstatement to claim that

Salamancistas began to recede from economic affairs toward the end of the seventeenth century, one sees an unmistakable shift in the tenor of economic discourse among the arbistristas, who increasingly came to publish and promote their ideas in the latter half of the sixteenth century. If souls had been of central concern for the Salamancistas, the health and growth of society was the aim of arbistristas. Economic discourse in their hands would take on a more secular, technical, and practical business valence.197

There is, admittedly no coherent philosophy that holds together arbitrismo, it was, rather, something more like a praxis, a critical spirit that by the 1550s could be seen even among unknown subjects, who submitted petitions to a young Philip II on all manner of topics, including but hardly limited to, increasing the availability of credit, putting wastelands into production by selling them off, improving agriculture, establishing price controls, the wisdom of sumptuary laws, the lack of bread and wheat, the sale of offices, minting, metallic ratios of coins, capital flight. Historian Margarita Cuartas Rivero references around 200 subjects who submitted suggestions to the Crown from 1555-1598.

196 Inspired by the Bartolome de las Casa’s advocacy on behalf of the Indians, the New Laws represented an attempt to explicitly prohibit the enslavement of Indians and to gradually abolish the encomienda by making it illegal for encomenderos to demand Indian labor tribute.

197 Julius Klein writes of a long withdrawal of craft gilds from their previously intermingled religious and trade functions. This decidedly secular turn would naturally disturb religious leaders and the Crown, who would, in turn, begin to prohibit the founding of strictly secular voluntary organizations. “Medieval Spanish Gilds” in Edwin F. Gay, Facts and factors in economic history (New York: A.M. Kelley, 1967), 173-178.

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198 Yet arbitrismo itself, this faith in projecting or developing improvement schemes came to be the object of satirists. Francisco de Quevedo’s traveling soldier from his satire, El Buscón (The Swindler), written in 1604, who had plans for pacifying the Turks and the rebellious Dutch, was portrayed as a stock clown. His plan to drain the seas around Ostend by sucking up the waters with sponges sounded familiar amidst the host of real projects.199 J. H. Elliott describes the typical arbitrista of Quevedo and Cervantes as

“a crook and more frequently a crank, [who] might recommend anything from a secret alchemical formula infallibly guaranteed to refill the king’s depleted coffers, to the most grandiose political and military projects.”200

Despite finding themselves the objects of scorn and satire, arbitristas continued to produce treatises, according to Elliott, “united by their shared belief that something had gone seriously wrong with the society to which they owed allegiance.”201 While they offered sincere prescriptions for fixing the ailments of Spain’s imperial malaise, many who looked upon them with contempt blamed the corruption of national character rather than flaws in political policy. If things went poorly, the standard accusation went, this was evidence that Providence had frowned upon Spain. The crisis of virtues for the critics

198 Margarita Cuartas Rivero, Arbitristas del Siglo XVI: Catologo de Escritos y Memoriales Existentes en el Archivo General de Simancas (Madrid: Instituto de Estudios Fiscales, 1981). Cuartas Rivero’s emphasis in this annotated list is modest arbitrios that address domestic Castilian issues, many of them less than a page in length. The presence of these petitions attests to the levels of engagement across a broad swath of Castilian society by the middle of the sixteenth century.

199 Francisco Quevedo, Lazarillo De Tormes: And, the Swindler (el Buscón) (London, England: Penguin Books, 2003), 103-104.

200 “Self-Perception and Decline in Early Seventeenth-Century Spain,” Past and Present, no. 74 (Feb., 1977), 43.

201 “Self-Perception and Decline,” 45

87 of the arbitristas had internal origins. Some arbitristas pointed out the moral failings of a society that had grown effete and unwilling to perform manual labor. A common trope in this declension narrative was that men had become effeminate due to as they lost focus on martial values, in part due to their excesses in dress, in food, drink, etc. Rather than fixate upon the failings of individuals, however, most arbitristas trained their sights on how to address such failings with wise policy initiatives.

Luis Ortiz is another noteworthy figure that combined theory and practice in his work that was almost completely neglected as a serious thinker on economic matters and for the fact that he anticipated the mercantilists of the seventeenth century. At the time in which he penned his Memorial del Contador Luis Ortiz a Felipe II (1558), a proto-Import

Substitution (ISI) tract that contains an inchoate version of what might today be described as dependency theory, the power of kings scarcely broached economic topics from the developmentalist perspective of Ortíz. His Memorial contained ambitious proposals to prod the Crown into thinking beyond the narrow medieval concerns that had previously occupied the king and his ministers: the administration of justice, minting currency, military funding, and castle expenses.202 Ortíz urged the Crown to take control over (of at least some) matters of economic, social, and cultural production that had previously been the ken and responsibility of Aristocrats, guilds, councils, and clergy to adopt a broad strategy of infant industry protection and better exploitation of Castile’s natural endowments. He offers a national development plan that addresses the nuisance of

202Jose Larraz, “Introduction,” in Memorial del Contador Luis Ortiz a Felipe II: Valladolid, 1 de Marzo de 1558. Biblioteca nacíonal-Ms. 6.487 (Madrid, 1970), 7.

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“puertos secos” (dry customs tolls) between kingdoms, the fostering of improvements in agriculture, forestry, raising livestock, and manufacturing.203 Like the mercantilists and dependency theorists who followed him, he had no explanation for how prohibiting the export of goods (to earn hard currency) or banning hard currency exports would do anything to solve price inflation, but then that quandary has continued to frustrate theorists of economic development to this day.

Ortíz stood witness to a series of famines that had struck Castile in 1548, a catastrophe that ministers meeting in the Cortes of Castile in the decade that followed were quick to blame on the sharp spike in exports of wine, grain, and olive oil to the rapacious consumers of Spanish settlements in the New World.204 In his Memorial he offers a province-by-province development plan that blends the scolding tone of the moralizing Salmancistas with an emphasis on the need for systemic interventions.

Beginning with a brief tour of societies from a vague and conjectural past—Greek,

Roman, early Christian—Ortíz provides examples of the ills that had brought down

203 Luis Ortiz, Memorial del Contador Luis Ortiz a Felipe II: Valladolid, 1 de Marzo de 1558. Biblioteca nacíonal-Ms. 6.487 (Madrid, 1970). One promoter of dependency theory and ISI, Argentine economist, Raúl Prebisch, developed a hypothesis that producers of primary goods in less developed country were “peripheral” and would find it difficult to gain comparative advantage against countries that produced value-added goods. Much of Ortiz’s theories on the need to invest in local agriculture and manufacturing resemble this systemic thinking. Ortiz has, in effect, identified the fact that the Spanish metropole is hardly the center of anything; rather, by Ortiz’s time, it had become a clearinghouse and way station for other centers of production in France, England, the Low Countries, Italy, and elsewhere. For this reason, it would continue to hemorrhage hard currency. ISI policy, in its various forms, recommended trade protections for infant industries until they could produce goods competitively internationally. It also involved taxation and redistribution of revenue from primary commodity producing sectors to value-added manufacturing sectors. Chapter 4 will address dependency theory in greater detail.

204 Larraz, Introduction, 9. Elliot describes this as Castile’s “first severe crisis [that] found the country groping in the dark” for a solution. On the inflation conundrum and the contributions of Salamancista, Martín de Azpilcueta in 1556, see Elliott, Imperial Spain, 182-183 and Grice-Hutchinson, The School of Salamanca, 91-96.

89 previous societies, such as greed, idleness, and pleasure seeking but then quickly pivots to an examination of the systemic problems facing King Philip II.

His first six chapters address variations on the issue of currency drainage and the efforts the Crown might take to prevent it. In chapter one he addresses the drainage occurs due to Castile’s unfavorable balance of trade. The raw wool exported at 15 reales per piece is reimported after being finished in Flanders for eleven times its export value at 15 ducats. Items such as pig iron and steel, exported at the lower value end of production chains are returned through importation as scissors, tweezers, hammers, guns, swords, and daggers at sizeable mark ups. The differences, of course, are bridged through the export of specie, which was then arriving from the Indies in large amounts. In this unfavorable exchange, writes Ortíz, foreigners “nos tratan peor que Indios” (they treat us worse than Indians), a tortured comparison at best, but an indication of the sharp resentments of the dependency trap into which Castile had fallen vis-à-vis its trade partners in Flanders, Italy, and other manufacturing centers of Europe.205

Ortíz emphasized the need for Philip II to better direct and protect investment as wealth creation strategies, but he did so in a way that bore no resemblance to the sort of bullionist claims that are often lodged against the Spanish theorists by mercantilists who followed. Figures such as Mun, Misselden, Monchretien, and Botero would place similar emphasis on the importance on labor and output as measures of genuine wealth. This was a national development plan, not a scheme for hoarding bullion. The protectionist

205 Ortiz, 29-30. On currency exchange values, see Martín de Azpilcueta, Luis de Molina, Juan de Mariana, and Stephen John Grabill.Sourcebook in Late-Scholastic Monetary Theory: The Contributions of Martín De Azpilcueta, Luis De Molina, S.J., and Juan De Mariana, S.J. (Lanham, MD: Lexington Books, 2007), 162.

90 measures he supported involved bans on the export of raw fabrics,206 stricter controls on the primary production and home use of factors such as flax seeds for the production of linen,207 and efforts to reduced internal trade barriers through the abolition of aduanas secas between kingdoms within the peninsula and the better policing at the French and

Portuguese borders.208 And his chapter, “Que bajen los precios,” contains several recommendations for the construction of better canals (akin to those that exist in Flanders and Italy) and programs for making already navigable rivers easier to navigate.209

There are elements of a Salamancista focus in Ortíz upon the moral standing of economic agents—that is, an emphasis on the nefarious impact that infidels are having upon the common good, but his analyses rarely stray from his broader developmentalist focus. He does mention that books and printers should be closely monitored to see to it that harmful works are not published and distributed, but only by way of a comparison to works that foster industry and technological development, which should be distributed throughout the kingdoms. Provided that there were prohibitions against the printing of profane books of chivalry, literature that promoted economic growth should be encouraged.210 He does, as well, in an interesting aside, point out the great irony in the fact that the poor management of the aforementioned flax seeds and oil and their export

206 Ortiz, 44.

207 Ortiz, 45.

208 Larraz, Introduction, 16.

209 Ortiz, 75-77.

210 Ortiz, 49. Full quote “Que no se impriman libros profanos de caballerias ni se otras suertes sin nueva licencia de los dichos.”

91 have provided the ink for heretics such as Martin Luther to print their scandalous tracts, but such commentary on religious orthodoxy is quite muted throughout. Ortíz makes these comments to assure the reader that while information is crucial to Spain’s development, certain types of information should remain illicit. In a rare other instance, he chides the rising class of merchants for getting rich through speculation on interest payments and specious fees for damages (damnum emergens) in a curious brief section entitled, “Remedio para que no se alcen los mercaderes,” but again, he writes, that is all a matter better addressed by the Inquisition.211 Ortiz even contributes a section on the benefits of beekeeping for the wax and honey that it produces.212 The Memorial is very much an archetypal mix of ambitious projecting, which raises more questions than answers.

Ortiz’s neglected Memorial precociously urges the Spanish Crown toward a

Ciceronian developmental path without embracing the improved social stature of merchants tout court. It is doubtless that merchants will play a key role on the development of the commonwealth provided that they are strictly controlled and prevented from speculation and spiriting away the New World profits then pouring into the Peninsula. Ortíz’s program provides elements of mercantilist protectionism with caveats, and it is remarkable for its ambitious take on how to better develop the economy

211 Ortiz 34-35.

212 Ortiz goes so far as to chide forest dwellers for cutting down aging trees, which provide the best sites for beehives, in effect, a sophisticated defense of old-growth forests for their economic value. Ortiz, 52.

92 and infrastructure of the Peninsula, but one must turn to another precocious thinker for the story from the periphery, transatlantic traveller, Tomas de Mercado.

Unlike Ortiz and the Salamancistas, Dominican Friar, Mercado, lived and worked much of his life in Mexico City and gained first-hand knowledge of international currency flows while working in the exchange house of Seville. He ran in commercial circles and had direct contact with circuits of Peninsular and transatlantic trade.213 His major work, Suma de Tratos y Contratos (1568), published a decade after Ortiz’s

Memorial, followed a stint in Mexico City where he maintained close contact with merchants and witnessed the import of slaves into the capital of Spain’s northern viceroyalty. In the Suma, Mercado lays out a framework for merchants and clergy members and contains instructions informed by actual commercial practices in the New

World with the primary aim of pursuing the common good.214

Mercado’s treatise covered similar ground as Ortiz’s, but with a sharper focus on the international contours of trade, especially the activities of foreigners who had gained an upper hand in both Spain’s productive capacity and its monetary health. The problem, when it came to price inflation, and Spain’s lagging manufacturing and agricultural sectors, which had been described by Ortiz in endogenous terms, was more of an exogenous phenomenon for Mercado. International forces had unleashed domestic forces that couldn’t be blamed on the actions of individual Spanish merchants. Mercado offered

213 Grice-Hutchinson, The School of Salamanca, 4-5.

214 Tomás de Mercado and Nicolás Sánchez-Albornoz Suma de tratos y contratos (Madrid: Instituto De Estudios Fiscales, Ministerio De Hacienda, 1977).

93 both a confessional guidebook that addressed spiritual concerns for clergy, merchants and administrators and a practical guidebook for those who were forced to grapple with increasingly complex financial and commercial networks that had come to connect all corners of the globe.215 Interwoven throughout this remarkable document are ruminations about licit and illicit behaviors, although it is not at all clear that his usage of the terms can be mapped onto our contemporary usages. Much of this disjuncture is due to the difficulty of squaring means versus ends rationalization. To take one example, for

Mercado, whether or not a business transaction is just or unjust “consiste en haber en ellos igualdad [...] que iquale lo que se trata en estima y precio, y el ser ilícitos, en ser desigual y no ajustarse.”216 If outcomes are to determine whether or not a behavior is licit or illicit, then one is on shaky ground when developing a framework for business ethics.

What is interesting about Mercado is that his movable definition fits perfectly into moveable feast of Habsburg laws, which were designed as much with flexibility in mind than anything else.

Another complicating factor in Mercado’s style of argument is that he almost seamlessly shifts between analyses of different spheres of law and their interaction. In this sense, he is an orthodox Thomist. Like Aquinas, Mercado assesses behaviors through the lens of divine, natural, and positive laws and does so in a surprisingly breezy fashion.

On the chaos created by currency drainage, for example, he takes a pragmatic view: “no

215 Unlike the previously cited work of Saravia de la Calle and Villalon, Mercado’s guidance was informed by colonial practice based on his extensive experience in Mexico.

216 Just business transactions “consist in having things equally [...] that match in price and esteem (or estimation), and things being illegal, in being unequal and not fixed.” Mercado, Suma, 34.

94 soy tan pertinaz o tenaz de mi opinión y sentencia que crea en ella como en evangelio

(I'm not so stubborn and tenacious in my opinion and judgment that believes in it as gospel).”217 There is an acute awareness in Mercado that the best laid plans would likely come to nothing, as kings, their ministers, and powerful merchants would ignore the most meticulous development program if it suited their interests. Mercado and others could offer their case for intervention to check the runaway inflation and exploitation in the colonies, but European interventions were costly, and domestic development programs that fostered agricultural innovation or the return of manufacturing would come to nothing. In his words, such policies “bien entendido que no vará, ni aun de burlas.”218

Divine law, it goes without saying, would right wrongs eventually. Those who sinned against the common good, who harmed the corpus mysticum, would have their just deserts in the afterlife. Natural law simply takes actions and consequences together in order to assess the damage or benefits and provides ways of making amends. The merchant who has committed a crime or harmed a stable market in goods or currencies could (and was expected to) pay damages or return ill-gotten gains. Positive law is the strict de jure realm of means-oriented rules. This was the best realm in which to address smuggling and specific commercial rule breaking.

In their incisive take on Philip II’s creditworthiness and the soundness of

Habsburg finances, Mauricio Drelichman and Hans-Joachim Voth provide a powerful revision to the widespread notion that the Habsburg fiscal foundation stood on shifting

217 Suma, 209.

218 “They would understandably not be implemented, not even in jest.” Mercado, Suma, 55.

95 ground.219 Contracts and rules were meant to be renegotiated periodically when real world circumstances intervened. Short-term crises in liquidity were a good reason to default and creditors well understood that salad days and high returns meant occasional

“haircuts” and defaults. Most lenders ended up converting their debts into other instruments and were no worse for the wear. And the atmosphere created no genuine crises of confidence; bankers and financiers returned to offer the sovereign generous terms soon enough. The emphasis, in typical Habsburg fashion was to make amends eventually. In this respect, Philip’s defaults and renegotiations resemble a form of composición for the Crown: a legal instrument that allowed it to perform an act of penance, in this case, simply renegotiate terms to absolve one of venial sins. If such defaulters and lawbreakers, then, were from Hell, the theologians and bankers who covered for them didn’t see their damnation as a permanent state.

In chapter 7 of Mercado’s Suma, “Cual es el justo precio donde hay tasa, y de los monopodios y ventas ilicitas,” he addresses the transactions of the marketplace in great detail.220 He, like so many other contemporary theorists, condemns the actions of monopodios (colluders or conspirators). The obligation to assure that goods are being exchanged based on the principle of equality and just price rests with both the buyer and seller. Faults, injuries, faulty construction, counterfeit, fraud, etc. could all, if not revealed

219 Mauricio Drelichman and Hans-Joachim Voth, Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (Princeton: Princeton University Press, 2014).

220 Mercado, Suma, 74.

96 honestly at the point of transaction, were abhorrent to God.221 Those who covered up such faults in order to sell defective goods at full price were committing a mortal sin.222

Mercado, it should be said, still operated within a commercial sphere that was personal—that is, all (or most) transactions took place among fellow travelers or neighbors. Financiers, bankers, merchants, agents, and members of the crews that staffed the Treasure Fleets and merchant guilds were a tight-knit group. From Lima to Seville, merchants would thus be remembered for their rectitude or fair dealing. Those merchants who overpriced defective merchandise or otherwise cheated customers via sleight of hand through fraudulent weights and measures were responsible for undercutting the common good and for sowing discord. This was sinful behavior according to divine law and ran counter to natural law, which clearly (in Mercado’s mind) upset the natural order. But something would be different about the Spanish line of thinkers from the beginning: they would face acute challenges that were sui generis. Unlike their English and Dutch competitors, they were forced to making sense of the geographic discoveries during the reigns of the Catholic Monarchs and Charles V and the windfall of specie from abroad without a blueprint. Nothing at all came close to the infusion of precious metals that came with the discovery of silver at Zacatecas and Potosí and the havoc it seemed wreaked upon the prices and the development of Castile. Earl Hamilton’s classic work on the impact of silver upon the Spanish economy, American Treasure and the Price Revolution in Spain, 1501-1650, drew a direct correlation between rising prices and the money

221 Mercado, Suma, 64.

222 “[...]si la encubre, peca mortalmente y está obligado a deshacer el contrato y a satisfacerle el daño que le viniere, pues sin ninguna justicia le fue causa de ello […],” Mercado, Suma, 65. 97 supply.223 While scholars since have corrected his argument by suggesting that contraband, hoarding, and other fiscal issues might have mitigated the impact of silver, the general argument continues to resonate.224 Few scholars are willing to dismiss the inflationary impact of Spanish silver out of hand.

Some arbitristas found more specific scapegoats for Spain’s decline in the early seventeenth century. In 1621, Jose Pellicer y Tovar, an Aragonese jurist who spent time in Perú and served as a chronicler of Castile and Aragon contributed a short arbitrio,

Causas de estar tan arruinada españa al tiempo que entro en el gobierno el rey nuestro señor. In Pellicer y Tovar’s work we get an almost obsessive fixation on goods being moved legally or illegally in and out of the country and how this commerce harms the

Spain by driving workshops to ruin, especially those that work in woolens, silks, iron and steel. What is worse, such commerce benefits the Turks and other enemies of the Church.

It is not clear that there are specific prohibitions against many of the goods listed by

Pellicer, but his general complaint is that laws that already exist on the books are not being enforced sufficiently. Another matter of concern for Pellicer, as it was for the

Church more generally was the entry of potentially heretical books “en los que venían de herejes, con notas y puntuaciones hebreas algunos.”225 The sort of protectionist strain

223 Earl Hamilton, American Treasure and the Price Revolution in Spain, 1501-1650 (New York: Octagon Books, 1965).

224 Michel Morineau offers perhaps the sharpest critique of Hamilton’s emphasis on price inflation and the general assertion that the silver decline by cross-checking reported silver receipts against receipts appearing in Dutch trade gazettes. See Michel Morineau, Incroyable gazettes et fabuleux métaux: les rétours des trésors américains d'après les gazettes hollandaises (XVIe-XVIIIe siècles) (Cambridge: Cambridge University Press, 1985).

225 “For those [books] arriving with heresies come with Hebrew notes and punctuation.” Pellicer, in José María Sánchez Molledo, Arbitristas aragoneses de los siglos XVI y XVII (Zaragoza, 2009), 175. 98 that is on display with Pellicer blends both moral and material concerns and diagnoses the many ills without offering many specific prescriptions.

His 1639 Memorial, Comercio impedido por los enemigos de esta Monarquía offers a more pointed critique of Portuguese merchants who, he laments, had since being invited to participate in Spanish commerce, had turned the medicine of wealth into a a poisin that had done great damage.226 From 1580 to 1640, Portugal and Spain formed a composite monarchy. While foreign policy decisions would be made on behalf of

Portuguese subjects by Spanish authorities in Seville or Madrid, Portuguese merchants were allowed a great deal of commercial autonomy. On one level, this meant greater freedom of movement within the Spanish realms both on the Iberian Peninsula and in

Spanish America, but these same subjects would endure accusations for being Judaizers or Crypto-Jews (this topic will be addressed in chapter 3). Spanish subjects, in Peru,

Argentina, and Mexico, especially, called into question the political and confessional loyalties of Portuguese subjects and, as a result, they were often the special targets of

Inquisitorial harassment and, worse, even victims of autos da fe.227 Pellicer tapped into this anti-Portuguese sentiment by blaming the merchants and bankers of Portugal for draining Spain’s wealth and directing it, instead, to the treasuries of her enemies. This, for Pellicer, was a double ingratitude: not only did Portuguese gain the shelter and

226 “…convirtio la medicina en veneno, y lo que se tuvo por remedio ha redundado en mayor dano.” Pellicer, Arbitristas aragoneses, 93.

227 On the Inquisition crackdowns in Peru and Mexico in the 1630s and 1640s, see Irene Silverblatt, Modern Inquisitions: Peru and the Colonial Origins of the Civilized World (Durham: Duke University Press, 2004), Günter Böhm, Nuevos antecedentes para una historia de los judíos en Chile colonial (, Chile: Editorial Universitaria, 1963), and Miriam Bodian, Dying in the Law of Moses: Crypto- Jewish Martyrdom in the Iberian World (Bloomington, IN: Indiana University Press, 2007). 99 protection in Spanish ports, but also they made off with the fruits of Conquest, which rightfully belonged to Spain.

The Fiscal Mercantilists: Contraband and the Pathologies of Empire

This chapter, thus far, has offered little on the specific topic of contraband and how the matter should be enforced or adjudicated. The Salamancistas, occupied with the uneasy interplay between moral and market economies, only scratched the surface when it came to illicit transactions, and then primarily only to condemn usury, monopoly practices, and currency devaluation. Their concerns revolved around how best to construct a moral framework to make economic activities licit, both in a spiritual and material sense. The arbitristas, perhaps satisfied with the advances made by their forebears on matters of just price, quantitative theories, and the benefits of the ownership of private property, dispensed with most of this spiritual project to focus on the interplay between development and the government policy. Ortiz, Mercado, Pellicer, et al. were secure in the notion that, indeed, wise policy could guide Spain back to productivity and greater solvency. The following section deals with a group of theorists who took a further technical step and for the first time began to systematically address the secular sins of smugglers and fraudsters who knowingly broke the rules of trade.

By the third decade of the seventeenth century, with Philip IV firmly ensconced on the throne behind his favorite, Gaspar de Guzmán, Count-Duke of Olivares, there was a sharpening sense that the empire was losing control over its transatlantic commerce.228

228 For a comprehensive treatment of the life and times of Olivares, see J. H. Elliott, The Count-Duke of Olivares: The Statesman in an Age of Decline (New Haven: Yale University Press, 1986). 100

While Imperial Spain had always been a transnational enterprise that depended on the willing (and coerced) contributions of participants from all corners of Europe and the

Americas, simmering wars with England, Holland, France and the explosion of violence that came to be known as the Thirty Year’s War finally began to strain the Crown’s productive, military, and fiscal capabilities to a breaking point. The end of the Dutch truce in 1621 meant the onset of commercial warfare dominated by represalias (state- sponsored retaliations against enemy ships that included the seizure and liquidation of goods) led to a proliferation of privateers deployed on never-ending quests to settle old scores and respond to perceived slights. A new generation of experienced fiscal mercantilists stepped into the fray to offer a more technical accounting of licit and illicit transactions based on legal precedents established by the Crown and commercial practice.

Portuguese New Christian merchant, Duarte Gomes Solis (1562-1632), was one such figure. His Discursos sobre los comercios de las dos Indias, a wide ranging commentary on Spanish decline, includes ruminations on differential arbitrage rates in silver and gold between Spain with China, sharp criticism of the Acapulco-Manila trade, and suggestions for better shipbuilding strategies. Citation and frame better Gomes’s discourse is interwoven throughout with bold praise for the Ciceronian benefits of widespread merchant trade and harsh words for administrators who are ignorant of such matters. He offers is a full-throated defense of the superiority of commercial empires over their martial counterparts, for the true power behind any army is the power to pay the

101 men who do the fighting which, in turn, rests upon a kingdom’s productive capacity and its ability to attract wealth.

Historian Nathan Wachtel has dubbed Gomes Solis’s approach, Marrano

Mercantilism, in reference to his role as experienced advisor and uneasy status as a New

Christian.229 It is unclear exactly how, from a technical perspective, Gomes Solis differs from other mercantilists of the era in which he wrote, but the Marrano qualifier works, perhaps, as a way to clarify how his more universalist, free-trade prescriptions for declining revenues and economic stagnation. Show this It is likely that his vast experience crossing borders and confessional lines to trade and manage Portuguese monopolies had imbued him with the perspective on an internationalist. Such a liminal existence would doubtless have impressed upon him the need to argue for a more flexible commercial system, both on the Iberian Peninsula itself and at colonial outposts in both the East and West Indies.

Jose Veitia Linaje’s Norte de la Contratación de las Indias Occidentales (1672) went beyond prescriptive or even market analysis to compile specific trade regulations and point out how such a large parallel illicit economy came to be. Born in Burgos,

Castile’s faded medieval economic nerve center, Veitia climbed the administrative ladder working, in turns, as a minor assistant to the contador (accountant) in the Almorifazgo de

Indias and as the treasurer of the Casa de Contratación, was later able to purchase a

229 Nathan Wachtel, “The ‘Marrano’ Mercantilist Theory of Duarte Gomes Solis,” Jewish Quarterly Review 101, no. 2 (Spring 2011). For a general study on the role of Marranos in the Spanish empire, see Cecil Roth, A History of the Marranos (Philadelphia: Jewish Publication Society of America, 1932), especially 271-295 on Marranos in the New World.

102 number of offices touching upon various aspects of transatlantic trade, from the management of the avería tax to the treasury. His near half-century as a favored Crown functionary provided him with a fine-grained knowledge of the statutes and practices of

Spanish merchants and financiers during a period of special difficulty.230

As historians Barbara and Stanley Stein point out, much of Veitia’s career path, characterized by his “broad oversight responsibilities,” perfectly prepared him for the analysis of Spanish overseas commerce he would pen toward the end of his career.231 In addition to his specific tasks, he became a privileged merchant who had been granted the privilege of a nao de privilegio (licensed merchant vessel) to move goods to New Spain, most likely directed toward the warehouses of his well-placed nephews in Mexico City and Puebla.232 Combining both technical expertise and personal motivation to favor associates and family members, Veitia Linaje’s career typified that of many other patrimonial beneficiaries of the Habsburg’s commercial empire. His Norte de la contratación identifies how policy led to fiscal chaos and a loss of control, for it was while Veitia Linaje built his legacy that the periphery flourished to the detriment of the metropole, a dynamic so well explained in Jonathan Israel’s, Race, Class and Politics in

Colonial Mexico, 1610-1670. Largely compiled from correspondence between the Casa de Contratación and the Consulado de Indias, it stands as perhaps the best source of transatlantic trade from the period. Veitia Linaje’s main refrain in his work is that despite

230 Barbara and Stanley Stein, Silver, Trade, and War: Spain and America in the Making of Early Modern Europe (Baltimore, Md: Johns Hopkins University Press, 2000), 88-90.

231 Silver, Trade, and War, 91.

232 Silver, Trade, and War, 44-46. 103 the laws on the books, few of them were being enforced. Merchants could largely ignore inspectors and evade checkpoints, and even if they were caught, they could expect the cost of doing illicit business to be low enough to make smuggling worthwhile.

In the introduction of this dissertation, I offered a basic definition of contraband that could be easily parsed in accordance with the term’s etymological origins: contra

(against) bando (law). Smuggling was a straightforward matter of law breaking.

Depending on the context, contraband could be seen as a somewhat minor offense, to be quickly and efficiently adjudicated by merchant courts.233 For the skilled smuggler, penalties were likely to amount to little more than a fine, the cost of doing business, a gamble could easily be paid off. Though smuggling might occasionally rise to the level of lèse majesté, a crime against the very person or sovereign imperative of the king, especially during times of war, smugglers were often dispatched with a simple fine.

Seventeenth-century jurist, Pedro Gonzaléz de Salcedo, in his widely read and repeatedly published juridical treatise, Tratado jurídico político del contra-bando

(1654),234 provides perhaps the most thorough archeological excavations of the term.

Gonzalez’s hyphenation of the term is purposeful, and provides a semiotic unpacking of the root, bando, which in Gonzalez’s active imaginary, wends through codes and connotations from the constitutional mandates of emporers past, to the German term,

233 This access to fast and efficient adjudication was one of the “club goods” that existed for members of merchant guilds.

234 This study will cite from the following 1729 edition: Pedro González de Salcedo, Tratado juridico politico del contra-bando (Madrid: Por Juan Muñoz, 1729). https://babel.hathitrust.org/cgi/pt?id=ucm.5325299586;view=1up;seq=23

104 bann, through the priestly rites of Leviticus.235 He arrives at a working definition for the term that means “a mandate with penalty.”236 The primary targets of Gonzalez’s mandate are princes, for whom bandos, or decrees, which become laws through their application, are a pure expression of their will and not to be lightly abrogated.

Chapter 2 is a Ciceronian disquisition on the rights of princes and their vassals in the realm of commerce. While Gonzalez in accordance with natural law adopts a free trade stance as a point of departure, much of this chapter will argue that the prince and authorities more generally should heed some of the hard learned lessons on, presumably,

Spanish decline during the period of its maximum wealth. After defining the term and clarifying the concept, he makes the argument that to engage in smuggling was to toy with the sovereign, against the will of the prince, a serious crime.237 It was indeed, for

Gonzaléz de Salcedo, a crime of lèse-majesté. Because commerce played a large role in the preservation of republics, it was necessary to treat smuggling as a serious crime. The type of relationship Spain has with the kingdom or republic in question determined what sort of trade is to be considered contraband. The flow of goods, information, communication, etc. is licit between two friendly countries barring any specific laws against such exchanges.238 Some goods produced in enemy countries are clearly contraband. Gonzaléz de Salcedo includes chapters on various permutations of

235 González de Salcedo, Tratado juridico, Chapt. 1, para. 1-9, pp. 1-3.

236 Ibid., Chapt. 1, Para. 10, pp. 3. Full quote: “Bando, pues, ajustandonos á la nuestra, que significa mandato con pena, á los que violaren, por obligar, como Ordenanza, y Estatuto Superior.”

237 Salcedo mentions lesa magestad. Tratado Juridico, 64-65.

238 Tratado Juridico, 112-113.

105 contraband goods, including goods produced in friendly countries but made from primary products produced by enemy countries, which are contraband; goods sent to enemy countries to be seasoned, bleached, or dyed, considered contraband as well; and licensed goods from enemy countries could be legal provided that the license was obtained legally.239

González de Salcedo reserves special opprobrium for the Portuguese traders who increasingly came to trade with Spain’s enemies. This, during the difficult decades before the original publication of his work in 1654, was not a matter of simple law breaking but rather an act of treason or lese majestie. Writes, González de Salcedo,"the introduction or extraction of goods and trading to enrich the enemy does harm to the public, the prince, and the motherland. Those who commit such grave crimes should be qualified as traitors who, lacking faith, harm their monarch."240 To read Gonzaléz de Salcedo’s detailed exposition of not only the contemporary laws but also their deep antecedents in ancient history is to understand that mid-seventeenth-century Spain was a realm of near paralyzing complexity. In the decades following Gonzaléz de Salcedo’s treatise on contraband, Antonio de León Pinelo and Juan de Solórzano Pereira would begin compiling laws the Indies laws into what would eventually become the Recopilación de leyes de los reynos de las Indias (1680). This would by no means stanch the creation of

239 Tratado Juridico, 122-145.

240 Tratado Juridico, 41. Original quote: “"la introducción o extraccion de mercadurias y la ejecucion del comercio prohibido con el enemigo del señor es enriquecer al contrario (...) con que siendo esto de conocido daño de la causa publica, deberá ser tenido este delito por de aquellos que obran en detrimento del príncipe, destruccion y menoscabo de la patria." Los que cometían tan gravisimo delito sólo podian recibir el calificativo de traidores. "faltando a la fe (...) en daño y perjuicio de su principe." 106 new laws, but at the least, those seeking out clarification (merchants, administrators, clergy, etc.) would be able to consult them in a central location.

Juan de Hevia Bolaños (1570-1623) is another fiscal mercantilist who anticipated the mercantilist turn that would become de riguer by the mid-seventeenth century, especially in England. His Curia philippica (1603) was a meticulous treatise that contained a large section on mercantile law that included extensive sections on contraband. Hevia Bolaños, like Gomes Solis, and Gonzaléz de Salcedo, was, for centuries, an obscure figure in the annals of Spanish juridical history.241 The second part of the Curia contains a business guidebook for an audience of merchants, navigators, administrators, and judges and is one of the most heavily edited treatises of its time.

Hevia Bolaños addresses contrabando in earnest in Book 3, Comercio naval.

To make the case for prohibitions on the export of hard currency, he cites the actions of France and England, both of which have strict prohibitions on the export of silver and gold bars, the punishment of which crime is “la pena de cortar la mano del extractor.”242 This penalty extends, in France, to the smuggling of animal hides.243 Given

241 G. Lohmann Villena, “En torno de Juan de Hevia Bolaño. La incógnita de su personalidad y los enigmas de sus libros,” Anuario de Historia del Derecho Español, XXXI, (1961) 121-161. In this article, Lohmann Villena casts doubts upon Hevia Bolaño’s authorship of the Curia and another important work, his Labyrinth de Comercio Terrestre y Naval (1617) and suggests that his works are glosses upon the work of Juan de Solórzano Pereira (1575-1655), a jurist and oidor (judge) in Perú who would have run in the same circles as Hevia Bolaños.

242 “[…] the penalty of cutting off the hand of the smuggler […]” in José Manuél Dominquez Vicente, Ilustración, y continuación a la Curia philipica, y corrección de las citas que en ella se hallan erradas: dividido en las mismas cinco partes (Madrid: en la oficina de los Herederos de Juan Garcia Infanzon, 1736), 170 and 180.

243 “[…] because the public damage that it gives rise to in the commission of the crime doesn’t only consist in the bare act of introducing or exporting prohibited items, but in the damage it recreates in the city […]” in Curia philipica, 80.

107 the severity of the punishment, one might expect that the burden of proof would be high, but Hevia Bolaños explains that the seizure of such goods is not required; evidence of smuggling, perhaps in the form of inconsistent books or registers or witness testimony, would be admissible and sufficient in court. Such severity is necessary, he continues,

“porque el daño se ocasiona á la causa pública en la ejecución de la transgresión, no sólo consiste en el acto nudo de introducir ó sacar cosas prohibidas, sino en el perjuicio se recrece a la Ciudad.” (because the harm that it causes the public in the commission of the crime doesn’t only consist in the naked act of introducing or exporting banned things but in the damage that causes in the city).244 He doesn’t specify exactly what this damage or injury is, but there is a strong implication that it is the sellers of licensed goods that suffer.

Hevia Bolaños, and the host of jurists and administrators who followed him and heavily edited and updated his work, faced a fateful decision by the 1620s over what to do about precipitously declining silver revenues. There was a sharp disparity between production, especially in Potosí and in Mexico, and the amount the Royal Treasury received in the form of the quinto tax, which was to be applied to all silver, both registered and otherwise.245 Given the seriousness of such a revenue crunch, and the

Crown’s increasing military obligations in the rebellious Low Countries, in the Germanic kingdoms, in Italy and against old foes England and France, Philip IV, especially, began

244 Curia Philipica, 189.

245 In addition to falling tax revenues, Cadiz was in the process of replacing Seville as the main entrepôt for Indies trade and France, in particular was threatening military retaliation for interference with French merchants there. Silver, Trade, and War, 8 and 20.

108 to reconsider how to enforce the crime of contraband.246 The standard ship inspections would no longer suffice. Through the creation of the Almirantazgo de Madrid, and through more aggressive confiscation regulations that created a growth industry in surveillance, especially in port towns and cities, Hevia Bolaños, Vietia Linaje, and

Salcedo wrote against the backdrop of a militarized war on smuggling in and around the

Iberian Peninsula.

Perhaps the sharpest critique of the Spanish commercial system emanated in 1624 from the pen of a Parma-born merchant, Alberto Struzzi. His Dialogo sobre el comercio247 stands as one of the most strident broadsides against the labyrinth and exclusivity of Philip IV’s represalia wars and the sheer accretion of Spanish commercial regulations.248 Struzzi was a theorist who spent his formative years in Brussels, where he worked in the court of the Duke of Parma, Alexander Farnese, during his successful recovery of southern Belgium during the Dutch Revolt from 1578-1592.249 Struzzi remained in Brussels until 1614 and then moved to Madrid until his death in 1638.250 The

246 Geoffrey Parker has written extensively on Spain’s increasing military obligations abroad. For more on the topic, see The Dutch Revolt (Ithaca, N.Y.: Cornell University Press, 1977), The and the (Cambridge: University Press, 1972), and with Lesley M. Smith, The General Crisis of the Seventeenth Century (London: Routledge & Kegan Paul, 1978).

247 Robert Smith’s “Spanish Antimercantilism in the Seventeenth Century” contains a complete translation of Struzzi’s dialogue. Hereafter, Struzzi, Dialogo.

248 Of Struzzi’s motivation in writing the Dialogo, historian Jose Larraz López writes, “the dialogue is a reaction against the wordy and unfortunate scholarship of Fernández de Navarrete and against the prohibitionist rigor of Sancho de Moncada.” La época del mercantilismo en Castilla, 1500-1700 (Madrid: Aguilar, 1963), 94.

249 Details of Alexander Farnese’s military campaigns can be found in Geoffrey Parker, The Dutch Revolt (Ithaca, N.Y.: Cornell University Press, 1977), 208-230.

250 Biographical details of Struzzi’s early life and career can be found in Miguel Angel Echevarría Bacigalupe, Alberto Struzzi: un precursor barroco del capitalismo liberal (Leuven: Leuven University Press, 1995), 13-23. 109

Dialogo contains a series of 26 posed questions and answers about commerce that largely focus on how Spain can increase its trade through a combination of measures. It reads, on many points, like a through-the-looking-glass version of Luis Ortiz’s Memorial, sharing many of the same points but militating against many of Ortiz’s prohibitions and the elevated taxes adopted by the Crown to exclude foreigners. Struzzi is the closest thing to a free trader or, as one historian describes him, and anti-mercantilist to be found among friendly counselors.

A lot of what Struzzi poses in the Dialogo is familiar in its approach to many of the theorists covered in this chapter but different in its conclusions. Struzzi reminds readers that it was providence that granted different natural endowments to different nations and therefore it is necessary to allow to the free exchange of goods between nations to allow humankind to live comfortably.251 Such an assertion evokes Francisco de

Victoria’s appeal to natural law in his insistence that “native princes cannot prevent their subjects from trading with the Spaniards.”252 For Struzzi, however, such variations go deeper; because certain techniques and even traditions lead to different outcomes commerce and correspondence are essential for creating some semblance of equity.253

What contributed to the commonwealth in a republic, for Struzzi, are not only the natural

251 God created a world which “was divided with/into different dispositions, and what was lacking in one country abounded in the other” (está repartido con diferentes disposiciones, y lo que falta en un país suple el otro). Struzzi, Dialogo, 90.

252 Francisco de Vitoria, Relecciones Sobre los Indios, in Restituto Sierra Bravo, El pensamiento social y economico de la escolastica (Madrid: Consejo Superior de Investigaciones Cientificas, 1975), vol. 2, 622. Cited in Chafuen, Faith and Liberty, 77.

253 Struzzi, Dialogo, 90-91.

110 endowments or the manufactured goods, but the talents—that is, the human capital—as well. For this reason, facilitating the cultivation of such talents by any means necessary is the responsibility of kings and other members of the government. Ortiz’s vilification of foreigners was anathema to the cosmopolitan approach being offered by Struzzi.

He notes that despite an almost complete de jure exclusion of foreigners in the

Indies trade foreigners trading under Spanish agents originate most of the trade. What makes it even easier for this trade to be concealed is the privilege granted to Spanish merchants of refusing to open their cargo bales. Add to these fraudulent practices are the composiciones (after-the-fact fines) that smugglers are allowed to pay once they have been discovered to be violating commercial laws. Through a combination of heavy- handed fiscal policies, overly strict exclusionary commercial regulations, and light penalties, the Crown has reduced its revenues. Struzzi articulates no specific program for improving the situation save for simplifying the labyrinth of complicated laws and allowing foreigners into the commercial sphere by extending them privileges.254 In this particular case, the zeal with which the Crown adopts such prohibitions is exceeded by the difficulty of enforcing them (Prohíbanse las mercancías es cosa fácil, más las execuciones, come en este caso, son muy dificultosas).255

The Dialogo provides its sharpest critique for Spain’s fiscal policy, which encourages widespread contraband through the smuggling of unregistered goods.256

254 The irony of Struzzi’s call to lure foreign expertise into Spain is that it was not a new proposal at all. Ferdinand and Isabella had enacted such a policy at the turn of the fifteenth century by granting a ten-year tax exemption to Flemish and Italian artisans wishing to settle in Castile. Eliott, Imperial Spain, 100.

255 Struzzi, Dialogo, 98.

256 Ibid., 92-93. 111

Struzzi takes no specific issue with moderate taxes on goods either foreign or domestic but correctly sees the rising taxes in 1620s Spain as so excessive that they create all sorts of damage to the rest of Spain’s economy. Rather than the further interventions, higher taxes, and yet another layer of regulations, Struzzi offered the closest thing to liberalized trade than any of his contemporaries dared to offer, but like so many theorists that have come before him, the program undertaken by Philip IV and his favorite, the Archduke of

Olivares, would ramp up the policies of their predecessors.

* * *

This chapter has made the case that Iberian economic discourse, rather than lagging behind other economic discourse traditions, such as mercantilism, political arithmetic, and political economy in Britain and Physiocracy in France, anticipated the general drift of economic theory toward a more technical emphasis on monetary phenomenon by nearly a century. While it remains unclear why the Salamancistas and most arbitristas have been typically ignored or dismissed in the global economic narrative, the generally dismissive tone fits within broader Black Legend claims about

Spain’s political and cultural backwardness.257 As the pioneer imperial power in the middle and south Atlantic, Spain made the mistakes of an overachiever and remained, in many instances, jealously path dependent in order to protect its gains.258 One sees this in

257 Black legend biases aside, one obvious explanation for the neglect of Spanish thinkers is a lack of good translations into English of most of the works discussed in this chapter.

258 This path dependency is on display in Spain’s exclusive licensing and the Flota de Indias, its continued reliance upon the Portobelo fairs, and its undermanned and inadequate inspection and enforcement institutions. On the general phenomenon of path dependence, see Douglass North, “Institutions, 112 the cooperation of both powerful merchant groups and Crown administrators. Smaller merchants, producers, and consumers would suffer under this regime of managed scarcity for centuries.

While many of the biggest concerns of Spain’s moral arbiters of oeconomia revolved around rising profits, complicated credit and interest strategies, and protecting the bien comun, their diagnoses and prescriptions indicated a great deal more than just emerging theory. One sees incipient theories of political arithmetic and Import

Substitution Industrialization programs that would have resonated with twentieth-century

Latin American economists. Raul Prebisch had little to add to the airtight advice of adviser Jorge Ortíz’s exhaustive plan for national rejuvenation. All of the elements are there, from prohibiting the export of raw materials, to heavily taxing manufactured imports, to comprehensive technical education to stimulate Spain’s productive economy.

The Salamancistas fixation on usury gained extra valence as massive exports of silver came to play in Spain’s moral and market economy. Silver was a commodity like any other whose value was pegged to the vicissitudes of international supply and demand.

While Spanish Reales were the globally preferred coinage throughout the sixteenth and seventeenth century, at home consumers and investors were forced to navigate the shoals of wildly fluctuating values and prices. Silver, perhaps the most important commodity of all, lay at the heart of Spain’s growing contraband trade. The early Salamancistas understood that contraband was a form of lese majeste, but many were sanguine about either the ability to stop smuggling or the desirability of eradicating it completely. Crown

Transaction Costs, and the Rise of Merchant Empires,” in The Political Economy of Merchant Empires, ed. James Tracey (Cambridge: Cambridge University Press, 1991), 36. 113 inspectors, Jorge Juan and Antonio de Ulloa (Chapter 2), loyal and dedicated Crown servants, knew that the whole system rested upon the pecuniary gain of illicit activities.

Harsh penalties discouraged legal ships from visiting ports. Because Castile had chosen to run its empire on the cheap, administrators had to find other forms of remuneration.

Salaries were inadequate given the high prices in an around silver producing centers.

This all too common refuge in illicit transactions was Castile’s dark matter.

Seemingly everyone was aware of its existence, most understood that the dead hand of the state could only do so much to provide licit products and pay its paltry salaries. Dark matter exerted a powerful force that compromised individuals and rewired the global network of trade. And this was not a parallel universe, for the same energy animated the licit economy. If anything, the dance between matter and dark matter was a tightly choreographed tango of inseparable gestures and actions. The following chapter will address how the struggle against this rising contraband trade played out in Panama.

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Chapter 2 Portobelo, Porto-malo: The Clearinghouse of Global Trade259

Then felt I like some watcher of the skies When a new planet swims into his ken; Or like stout Cortez when with eagle eyes He star'd at the Pacific—and all his men Look'd at each other with a wild surmise— Silent, upon a peak in Darien.260

Despite being one of the most difficult to traverse and disease-ridden stretches of the Spanish American mainland, Panama became the nucleus of global trade in the sixteenth and much of the seventeenth century. Why did the Spanish Crown establish trade fairs in Nombre de Dios and Portobelo (from 1598 onward) when a far more efficient supply route to and from Potosí’s silver mines was available via the South

Atlantic through the rivers and paths of the Southern Cone?261 And what sorts of structural problems did this path dependence262 on seasonal trade fairs create for the

259 Of Portobelo, English clergyman and travel writer, Thomas Gage, wrote the following in 1647: “I was there when about five hundred of the soldiers, merchants, and mariners, what with fevers, what with the flux caused by too much eating of fruit and drinking of water, what with other disorders lost their lives, finding it to be to them not Porto Bello, but Porto malo.” Thomas Gage and Arthur Percival Newton, The English-American: a New Survey of the West Indies (London: Routledge & Sons, 1648), 369.

260 Vasco Nuñéz de Balboa (and not Cortés) was the reputed “discoverer” (along with this men and indigenous allies) upon a peak in Darien, the region of modern-day Panama adjoining modern-day Colombia.

261 Christopher Ward refers to the commercial routes as “complex and burdensome” and the entire structure as “based on institutions and theories that grew out of the Iberian past” that hearkened back to the convoys of Venice and Genoa. Imperial Panama: Commerce and Conflict in Isthmian America, 1550-1800 (Albuquerque: University of New Mexico Press, 1993), 18.

262 Path dependence here connotes the inertia of Spanish imperial commerce and not its technological pathways. In this case, it refers to the sub-optimal equilibrium established by the convoy routes despite the availability of more efficient and broadly profitable routes and ports. Path dependence in the Spanish Caribbean is primarily an infrastructural and institutional phenomenon. On path dependence in a global context, see Dennis O. Flynn and Arturo Giraldez, “Path Dependence, Time Lags and the Birth of 115

Crown? This chapter will address these questions and trace the development of trade in contraband, which arose to fill the structural gaps in time and space left open by the sporadic visits of the official convoys and exacerbated by the Crown’s and powerful merchants’ insistence on exclusionary and inflexible trade patterns that would persist into the eighteenth century. In contrast to the previous chapter, which discussed theories of

Spanish trade and political economy, this assessment of the role of Portobelo’s licit and illicit commerce will explore the structural and systemic problems and limitations of a system that depended on carefully managed seasonal fairs and convoys amidst a crowded global realm of increasingly open trade.263

As a contribution to previous literature on the conundrum of Portobelo’s outsized importance in global trade, such as the works contributed by Enriqueta Vilar Vilar,

Castillero Calvo, William Borah, and Christopher Ward, this chapter will focus more sharply on the strength of merchant prerogative, administrative incoherence and weakness, and the Crown’s reticence to focus on broader development strategies as the most important factors that encouraged smuggling. It will focus on travel accounts and

Globalization: A Critique of O’Rourke and Williamson,” European Review of Economic History 8 (2004): 81-108.

263 This increasing openness would not become a matter of ideology until the seventeenth century; rather, lower shipping costs, greater accessibility to commercial and financial information, increasingly crowded sea lanes, a rising number colonial aspirants—both licit and illicit—were all factors that contributed to freer and more open trade. Even as mercantilists such as Thomas Mun, England's Treasure by Forraign Trade (New York: Macmillan and Co, 1895) and Gerard de Malynes, The Maintenance of Free Trade, According to the Three Essentiall Parts of Traffique; Namely Commodities, Moneys and Exchange of Moneys, by Bills of Exchanges for other Countries. Or answer to a Treatise of Free Trade, or the meanes to make Trade flourish, lately Published (1622) made the case for state prerogative in the exclusion of foreign ships from certain routes and regions and maintaining through state policy a positive balance of trade, open centers of commerce such as Amsterdam and London made acquiring financial and commercial information easier.

116 administrative reports to demonstrate that the enforcement of prohibitions on smuggling during this period was not a top priority of either metropolitan or colonial authorities.

Panama among the Conquests

In all fairness, it should be rather easy to forgive John Keats’ misattribution of the

European “discovery” of the Pacific Ocean in his 1816 poem, Upon First Looking into

Chapman’s Homer. Hernán Cortés’s 1521 triumph at Tenochtitlán (modern-day Mexico

City) had been recounted as heroic epic for centuries among historians of the .264 In their telling, an insubordinate Cortés, in full defiance of his superiors but possessed of preternatural resolve, led a fearless march across Mexico surrounded by hostile tribes of Indians and took into his possession the still beating heart of the numerically superior and expanding Aztec Empire.265 The conquest of Tenochtitlán cast a

264 Sixteenth-century historian, Francisco López de Gómara (c.1511 - c.1566), was perhaps Cortés’s most noteworthy early hagiographer. Despite sharp critiques of Gómara’s glorification of Cortés by actual participants in conquests, Bernal Díaz de Castillo and conquistador-turned Dominican friar Bartolomé de las Casas, Gómara’s work would endure as an influential source that was used by other early historians such as Garcilaso de la Vega. Fracisco López de Gómara and Jorge Gurría Lacroix, Historia general de las Indias y Vida de Hernán Cortés (Caracas, Venezuela: Biblioteca Ayacucho, 1979). See nineteenth-century historian, William Hickling Prescott, The History of the Conquest of Mexico (Chicago: University of Chicago Press, 1966) and twentieth-century biographer, Salvador de Madariaga, Hernán Cortés, Conqueror of Mexico (Coral Gables, Fla: University of Miami Press, 1967) for hagiographic takes on Cortés’s accomplishments.

265 Cortés himself referred to the “still beating heart” torn from the chests of sacrificial victims by Aztec priests in his second letter to King Charles V in 1519. Anthony Pagden and J. H. Elliott, Hernan Cortes - Letters from Mexico (New Haven: Yale University Press, 2001), 107. Perhaps the best systematic corrective to conquest myths can be found in Matthew Restall, Seven Myths of the Spanish conquest (New York: Oxford University Press, 2003). Inga Clendinnen, provides details of the dramatic fall of the and the betrayal of the trust extended to the Spanish invaders invited into Tenochtitlán in 1519 by both Montezuma and Cuauhtemoc, who was then tortured and killed for not providing sufficient information on the whereabouts of valuable booty. See Aztecs: An Interpretation (Cambridge; New York: Cambridge University Press, 1991), 267-273 and Ambivalent Conquests: Maya and Spaniard in Yucatan, 1517-1570 (Cambridge Cambridgeshire: Cambridge University Press, 1987). Laura Matthews, Memories of Conquest: Becoming Mexicano in Colonial Guatemala (Chapel Hill: University of North Carolina Press, 2012) 70-131, emphasizes the complicated alliances formed between 117 long shadow that reached Cajamarca, obscuring many of the Spanish military and ecclesiastical triumphs from Nueva España (which included modern-day Mexico) 266 to

Peru—vice-royal and administrative seats of Spanish America. The next equally unlikely coup, which reached its denouement with ’s capture, betrayal, and brutal execution of Inca ruler, Atahualpa, in 1533, exacerbated a roiling civil war among rival Inca claimants in what would become the and provided the bookend to Cortés’s victory. Keats channeled this narrative, a heady blend of Church and imperial propaganda according to which the righteous saw with “eagle eyes” and communities (read Indians) “[swum] into [their] ken.” Vasco Nuñez de Balboa, the slighted conquistador of the Isthmus of Panamá, and Cortés thus appeared as interchangeable characters.

Panamá was to the Spanish authorities for a time liminal terrain. An ocean- splitting isthmus wedged halfway between Mexico City and Lima—politically, geographically, and ethnographically267—it was largely neglected, “a cave of thieves and

various groups of Nahua, Oaxacan, and Spanish in the conquest of Guatemala. All of the foregoing texts point out that primary sources were initially quite in awe of indigenous cultures. Even Cortés himself, wrote in a message to the king of “the magnificence, the strange and marvelous things” of the city of Tenochtitlán. He continued, “I cannot describe one hundredth part of all the things which could be mentioned, but, as best I can, I will describe some of those I have seen which, although badly described, will, I well know, be so remarkable as not to be believed, for we who saw them with our own eyes could not grasp them with our understanding.” See Pagden and Elliott, Hernan Cortes - Letters from Mexico, 100-101. For a collection of Mexica and other Amerindian responses to the Spanish conquest in Tenochtitlan, see Miguel Leon-Portilla, The Broken Spears (Boston: Beacon, 1992). Another reconceptualization of exactly how and why the conquest went as it did can be found in Tzvetan Todorov’s The Conquest of America: The Question of the Other (New York: Harper & Row, 1984).

266 Cortés had begun referring to Mexico as Nueva España as early as 1520 in his second letter to the king. Elliott and Pagden, “The Second Letter,” 158. It would, for a time, include the American landmass northwest of Panamá.

267 Panamanian ethnic groupings, the Kuna Yala, Guaymi, and Ngöbe Buglé among them, existed outside Mayan and Andean spheres of influence. Many spoke mutually incomprehensible dialects and languages 118 a grave for travellers” (una cueva de ladrones y un sepultura de peregrinos) according to archbishop of Panamá, Tomás de Berlanga,268 until the discovery of silver at Potosí in

1545. Exploration and settlement of the Isthmus, however, at first little more than due diligence in the vaster project to map and settle the province of Tierra Firme, the landmass that included much of modern-day Venezuela and Colombia and the southwestern edge of the Caribbean, would make it a crucial staging ground for those who sought access to rumored wealthier and more advanced societies to the south. The conquest of Aztec lands would end up leaving a more lasting impression in the conquest historiography than Balboa’s journey across the Isthmus in 1513, but there were nonetheless striking parallels.

On a reduced scale, Balboa deployed a divide-and-conquer strategy that would become de rigueur among subsequent mainland conquistadors.269 If Cortés had his

within the Chibcha language family. The discovery of silver deposits in Zacatecas in 1546 would draw some attention away (north-westward and southward) from the development of Panama after the 1540s.

268 “Fray Tomás de Berlanga, obispo Panamá: descripción, etc.,” 22 February, 1535, AGI Patronato, 194, R.27, N.109V.

269 Kathleen Romoli’s biography of Balboa, Balboa of Darién: Discoverer of the Pacific (Garden City, New York: Doubleday & Company, 1953) traces Balboa’s career from his first voyage with Captain Rodrigo de Bastidas to his death at the hands of Pedro de Arias. Romoli heavily cites Gonzalo Fernández de Oviedo y Valdés’s La historia general de las Indias (1557), Bk. XXIX, chapter 3; Peter Martyr’s The Decades of the Newe Worlde (1555) III, Bks. 1, 10; Bartolome de las Casas, Bk. III, chapters 47 and 48; Fuero Real, Libro II, Título ix, Ley 2 for information about Balboa’s march to the Pacific. See also Angel Rubio, La ruta de Balboa y el descubrimiento del Oceano Pacífico (Mexico City: Instituto Pan-Americano de Geográfica e Historia, 1965). A colorful (if problematic for its heavy reliance upon fictionalization) recounting of Balboa’s march across the Isthmus can be found in John E. Minter and William Wellons, The Chagres: River of Westward Passage (New York: Rinehart, 1948). Minter traces Balboa’s string of alliances with chieftain Careta in Nombre de Dios, great interior chief, Camogre and his son Ponca, and the coastal king, Tubanama. In each instance, Balboa deployed a combination of bribery, coercion, duplicity, and/or violence. Such was the the case of the unfortunate Tubanama, who on Balboa’s orders, was torn to shreds by Spanish war mastiffs to secure Spanish passage and access to gold. See Minter, 53-73. For an account that focuses on Pedrarias de Avila, see Pascual de Andagoya and Clements R. Markham, Narrative of the Proceedings of Pedrarias Davila in the Provinces of Tierra Firme or Castilla Del Oro: And of the Discovery of the South Sea and the Coasts of Peru and Nicaragua (London: Printed for the Hakluyt 119

Malinche, his indispensible go-between and translator, Balboa had his loyal consort,

Fulvia, who helped him make sense of the incomprehensible patchwork of peoples living on the Isthmus.270 Nothing much could happen without the support of indigenous allies.

As Cortés leaned on his Tlaxcalan allies to do the heavy lifting and the most dangerous fighting on the final march to Tenochtitlán, Balboa had similarly paid off or violently forced smaller tribes to do his bidding in his march southward across the Isthmus.271 In both cases, local and regional indigenous allies made themselves indispensable by contributing soldiers, providing intelligence, and feeding and housing Spanish conquerors and their agents. Both groups of conquistadors were also able to regroup and call upon indigenous and Spanish reinforcements from elsewhere when fortunes turned sour.

Cortés would also unleash war mastiffs on recalcitrant enemies just as Balboa had done, to tear apart his victims.272

Society, 1865). See also “Informaciones: Andrés Criado de Castilla y Solórzano,” 1651, AGI Lima, 244, N.7. On the divide-and-conquer strategy, see, Matthew Restall, Seven Myths of the Spanish Conquest (New York: Oxford University Press, 2003), 23.

270 Romoli, Balboa of Darién 156; Charles L. G. Anderson, Old Panama and Castilla Del Oro: A Narrative History of the Discovery, Conquest and Settlement by the Spaniards of Panama, Darien, Veragua, Santo Domingo, Santa Marta, Cartagena, Nicaragua, and Peru (Boston: Page Co, 1914), 166; and Life and Letters of Vasco Núñez De Balboa, Including the Conquest and Settlement of Darien and Panama, the Odyssey of the Discovery of the South Sea, a Description of the Splendid Armada to Castilla Del Oro, and the Execution of the Adelantado at Acla: A History of the First Years of the Introduction of Christian Civilization on the Continent of America (Westport, Conn: Greenwood Press, 1970), 94-108.

271 From the moment his men landed at Careta, on the northwest of the Gulf of Uraba, Balboa had a large supporting cast of indigenous allies. After a two-day march, they waited in Ponca to convince the chief of Ponca of their intentions. It was he who first assisted Balboa on his trek into the interior and the land of his enemies, the Quarecas. Balboa would continue making strategic alliances over the next month. Romoli, Balboa of Darién, 156-157.

272 Leon-Portilla, Broken Spears, 46, Minter, The Chagres River, 53-73, and Romoli, Balboa of Darién, 133.

120

The conditions of conquest in Panama, however, were in many ways the obverse of those in Mexico. Unlike the highlands of Mexico, much of Panama was a buggy, low- lying maelstrom of disease and a slough for Spanish soldiers and their pack animals.

Absent were the broad causeways and bridges of Mexico City that served as an easy conduit for Spanish horses. Some pre-contact paths in Panama that had been carved through the forests had impressed early surveyors, but their narrowness only allowed for single file passage of mule trains, something that would alter create a bottleneck for

Spanish goods and migrants.273 While it is true that the indigenous peoples of Panama and Mexico were equally prone to unfamiliar crowd diseases,274 the Spanish were far more likely to be laid low by tropical diseases and parasites on their march to the South

Sea than in their march to seize the Aztec capital, for such diseases and parasites were far more ecumenically virulent in Panama.275 And in addition to justifiably hostile

273 Minter, The Chagres River, 87.

274 On crowd diseases, see Alfred Crosby, The Columbian Exchange: Biological and Cultural Consequences of 1492 (Westport, Conn: Greenwood Press, 1972).

275 In addition to vague references to calentura (tropical fever) were diseases such as yellow fever, malaria, cholera, leprosy, dysentery and rabies. See Minter, The Chagres River, 92. Explorer and slave trader, Francesco Carletti wrote with horror about the vampire bats that would bite and bleed unwitting sleepers in Portobelo’s windowless rooms. Francesco Carletti, My Voyage around the World (New York: Pantheon Books, 1964), 27. Three excellent sources on mortality and morbidity among European explorers in the Americas are David Noble Cook, Born to Die: Disease and New World Conquest, 1492-1650 (Cambridge: Cambridge University Press, 1998), John R. McNeill, Mosquito Empires: Ecology and War in the Greater Caribbean, 1620-1914 (New York: Cambridge University Press, 2010), and Philip Curtin, “Europe and the Atlantic World,” in Colonial Legacies: The Problem of Persistence in Latin American History, ed. Jeremy Adelman (New York: Routledge, 1999), 15-27. Jorge Juan and Antonio Ulloa, in the early eighteenth century, would allude to differences in morbidity and mortality rates among populations moving through and settling in Panama. Newly arrived Europeans, “not seasoned to the climate,” were more prone to diseases, while “natives, and those who have lived some time [in Panama],” were less or not all impacted by diseases such as “distempers” and “vomito prieto.” Jorge Juan, Antonio De Ulloa, and John Adam A Voyage to South America: Describing at Large the Spanish Cities, Towns, Provinces, &c. on That Extensive Continent (London, 1808), 43-47. 121 indigenous communities, the Isthmus from the first decades of the sixteenth century was flecked with settlements of cimarrons (escaped slaves).276 A threat throughout the sixteenth century to attack Spanish settlements and form alliances with indigenous communities and English and French interlopers who had made contact on Tierra Firme, cimarron communities made security far more precarious in Panama for far longer than it had been in newly conquered Mexico. According to Ruth Pike, the first archival reports of a rebellion on the isthmus date to 1525. The height of Cimarron violence lasted from

1549-1582.277 The Cimarron problem is extensively catalogued in archival documents.

As late as 1582, Oidor Alonso Criado de Castilla describes a powerful alliance between cimarrons led by King Bayano and English pirates.278 Despite all of these obstacles, by the 1540s Panama had settled into its steady role as the empire’s southern commercial

276 On the cimarrons more generally, see Ruth Pike, "Black Rebels: The Cimarrons of Sixteenth-Century Panama," The Americas 64, no. 2 (2007), 243-266 and Maria del Carmen Mena Garcia, La sociedad de Panama en el siglo XVI (Sevilla: Excma. Diputación Provincial de Sevilla, 1984), especially 82-91 and 300-302. For correspondence among merchants, sea captains, and royal officials on some of the more pressing security problems facing the Isthmus in the 1570s, see Irene Aloha Wright, Documents concerning English voyages to the , 1569-1580: I. Spanish documents selected from the archives of the Indies at Seville; II. English accounts: "Sir Francis Drake revived" and others, reprinted (London: Printed for the Hakluyt Society, 1932). The Cimarron problem is extensively catalogued in archival documents. See “Carta del oidor Alonso Criado de Castilla,” 4 April 1582, AGI Panama, 13, R. 21, N. 136.

277 While it is true that some Mexican palenques (runaway slave communities) existed into the seventeenth century, the threat they posed was mitigated due to the fact that they were far less likely to come into contact with and form alliances with foreign privateers and pirates. One notable exception was a Palenque outside of Veracruz, governed by Gaspar Yanga, a former slave from Gabon. On Cimarron communities more generally, see Jane G. Landers, “Cimarrón and Citizen: African Ethnicity, Corporate Identity, and the Evolution of Free Black Towns in the Spanish Circum-Caribbean,” in Slaves, Subjects, and Subversives: Blacks in Colonial Latin America, eds. Jane Lander and Barry Robinson (Albuquerque: University of New Mexico Press, 2006).

278 "Cartas y expedientes del presidente, oidores y fiscal de la Audiencia de Panamá" 20 April, 1582, AGI Panama, 13, R.21, N.137.

122 choke point, a role that it would play for roughly two centuries.279 For this reason,

Panama’s economic status would end up being anything but liminal.

The persistence of Cimarron communities and their alliances with foreign and

Amerindian groups raises an interesting question about the degree to which contraband might have been, in some instances, ethnically determined. Several historians280 have recently suggested that certain maritime or Caribbean contexts took on, to borrow a trope from a number of works on the history of the Atlantic World, a black or red cast in which smuggling was particularly widespread.281 In Sacred Gifts, Profane Pleasures, Marcy

Norton points out, in her discussion about the production zones of chocolate and tobacco, which were warehoused and distributed in Caribbean ports that were typically neglected by the Tierra Firme galleons, how Caribs, Arawaks, and Cimarrones tended to be well represented among producers nad distributers. For decades, then, the commercialization

279 While periodization is largely an arbitrary exercise, Panama serves as a good exemplar of imperial consolidation. Along with the discovery of Potosí and the rising concerns about establishing steady revenue flows through the Treasure Fleet System, the adoption of Panama as a southern entrepót meant a shift away from the adventurism of the early conquest period and toward greater administrative control. Additionally, channeling regular traffic across the Isthmus, at the least, encouraged some private surveillance of the strategic region.

280 Marcy Norton, Sacred Gifts, Profane, Pleasures: A History of Tobacco and Chocolate in the Atlantic World (Ithaca: Cornell University Press, 2008), Linda Rupert, Creolization and Contraband Curaçao in the Early Modern Atlantic World (Athens: University of Georgia Press, 2012), Marcus Rediker, Outlaws of the Atlantic: Sailors, Pirates, and Motley Crews in the Age of Sail (Boston: Beacon Press, 2014), Peter Linebaugh and Marcus Rediker, The Many-Headed Hydra: Sailors, Slaves, Commoners, and the Hidden History of the Revolutionary Atlantic (Boston: Beacon Press, 2000), and Lance Grahn, The Political Economy of Smuggling: Regional Informal Economies in Early Bourbon New Granada (Boulder, Colo: Westview Press, 1997).

281 Two examples include Paul Gilroy, The Black Atlantic: Modernity and Double Consciousness (Cambridge, Mass: Harvard University Press, 1993) and Jace Weaver, The Red Atlantic: American Indigenes and the Making of the Modern World, 1000-1927 (Chapel Hill: The University of North Carolina Press, 2014).

123 of both tobacco and chocolate was carried out in large part by non-Europeans. 282 In her book on contraband and creolization in Curaçao, Linda Rupert sees both phenomena as

“form[s] of transgression” against “the established imperial order.”283 Peter Linebaugh and Matthew Rediker have pointed out the degree to which the motley international deep- sea crews formed hydrarchies in which the spoils were more likely to be evenly distributed than they were among crewmembers on royal fleets.284 And historian Lance

Grahn, in his work on the “littoral of contraband” located on the Caribbean coast of

Colombia, emphasizes how smuggling becomes its own way of life from a cultural perspective—that is, the constant violation of economic norms encouraged sociopolitical transgressions and mixing among different ethnic groups.285 All of this is true, but outside of the Caribbean, smuggling was more likely to be identified with religious heterodoxy, for example, with conversos or Protestants. This will be especially true in Mexico City,

Lima, and in the Southern Cone. But overall, contraband throughout the empire was too widespread a phenomenon to attach to any particular ethnic group.

The Fairs, the Treasure Fleet, and the Trajín286: A Timeline

282 Norton, Sacred Gifts, 149-153.

283 Rupert, Creolization and Contraband, 4.

284 See Rediker, Outlaws of the Atlantic and Line baugh and Rediker, The Many-Headed Hydra.

285 Grahn, The Political Economy of Smuggling, especially 1-14 and 31-64.

286 Trajín, literally “coming and going,” refers to the organized mule trains that crossed the Isthmus. Though trajín mules were sometimes used to transport silver across the Isthmus, the most heavily trafficked stretch was the fifteen miles from the Caja de Cruces to Panama City.

124

By the second decade of the sixteenth century the Panamanian Isthmus was abuzz with scheming would-be conquerors.287 In 1510, Balboa founded a permanent Spanish settlement located just off the Caribbean Coast in modern-day Colombia, Santa María la

Antigua del Darién, the first of its kind on the mainland of the Americas. Darién’s first

Catholic mission was established in 1513. That same year, Balboa’s discovery of the

South Sea lured veterans and adventurers of the reconquista in Spain, men such as Pedro

Arias Davila, Balboa’s nemesis and eventual executioner, drawn to the gold he plundered from caciques (tribal leaders) along his march south and for his discovery of rich pearl fisheries around Isla Rica (modern-day Isla del Rey), an island that lay 30 miles south of modern-day Panama City that was settled and developed on the Pacific Coast in tandem with Darien. Pearl beds on both sides of the Isthmus would remain a steady source of wealth and watery grave for the slaves who dove for them.288 Darien gold mines, on the

287 Such figures included Francisco Pizarro, Diego Almagro, Pedro de Ursúa, and Lope de Aguirre. On early exploration of the Isthmus, see Gonzalo Fernández de Oviedo y Valdés, Natural history of the West Indies (Chapel Hill: University of North Carolina Press, 1959); Girolamo Benzoni and W. H. Smyth, History of the New World (London: Printed for Hakluyt Society, 1857); Pedro Simón, Noticias historiales de las conquistas de Tierra Firme en las Indias Occidentales, 5 vols. (Bogota, 1882-92); Joaquín Acósta, Compendio histórico del descubrimiento y colonización de la Nueva Granada en el siglo decimosexto (Bogota, 1901); "Establecimientos de los Mario Gongora” in Los grupos de conquistadores en Tierra Firme, 1509-1530. Fisonomia histórico-social de un tipo de conquista (1962).

288 For both a general history of pearl fishing and specific accounts of Balboa, Pedrarias, and other Isthmian explorers’ efforts to exploit the Isla del Rey, see Visitación López del Riego, El Darién y Sus Perlas: Historia de Vasco Núñez de Balboa (Madrid: Incipit Editores, 2006). The classic account of pearl fisheries in the Caribbean remains Enrique Otte, Las Perlas del Caribe: Nueva Cádiz de Cubagua (Caracas: Fundación John Boulton, 1977). The primary sources are extensive. Legajos addressing the pearl fisheries are numerous, especially for pearl fishing in the Caribbean. See “Registro de oficio y partes: Tierra Firme,” 22 January 1529, AGI Panama, 234, L.3, F.276V-279V; “Registro de oficio y partes: Tierra Firme,” 7 July 1550, AGI Panama, 235, L.8, F.276R-278R; “Registro de oficio y partes: Tierra Firme” 2 March 1567 AGI Panama, 236,L.10, F.94R-95V; “Cartas y expedientes de cabildos seculares: Panamá,” 15 April 1577, Panama, 30, N.16; and “Carta de Francisco de Narváez Alfaro, sargento mayor de Tierra Firme” 25 June 1619, AGI Panama, 17, R.3, N.37. On contraband trade in the Isla del Rey, see “Petición de los dueños de bergantines de la Isla del Rey,” 21 February 1614, AGI Panama, 237, L.14, F.32V-34R, which specifically blames free blacks and Portuguese for the illegal harvest and trading of pearls.

125 other hand, quite lucrative in the first decades, became quickly depleted.289 Beyond these early returns, however, there was little else of interest save for curiosity about the vast potential of the ocean and lands that lay to the south and west immortalized in John

Keats’s verse.290

Due north of Panama City about 40 miles as the crow flies along the narrowest part of the Isthmus lay the Caribbean port town of Nombre de Dios (near modern-day

Colón), founded almost simultaneously with Balboa’s Darien some 20 miles to the northeast. By the 1540s Nombre de Dios had become one of two major terminal ports for

Spanish Treasure ships (Veracruz, some 1,300 miles to the northwest in modern-day

Mexico, was the other). From this decade forward the primary sectors of the Panamanian economy would be those of the administrative, merchant and transport sectors, which included all types of production, which included shipbuilding, the raising of livestock, and the service and maintenance of infrastructure in the ports of Nombre de Dios,

Portobelo, and Panama City and the roads and paths that connected this Isthmian network.291 Panama’s reliance upon transport and seasonal commerce meant that it was especially prone to economic downturns and delays and, most importantly, the whims

289 Minter, The Chagres River, 81-82.

290 Magellan would rename the South Sea the Pacific for its seemingly calm waters in his circumnavigation of 1519.

291 Both Portobelo and Veracruz served as clearinghouses for silver and manufacturing goods. Both were connected via overland routes, in the case of both Veracruz and Portobelo. The delivery of Peruvian silver to Portobelo required a long sea voyage along the Pacific coast from Callao. María del Carmen Mena García, La sociedad de Panamá en el siglo XVI (Sevilla: Excma. Diputación Provincial de Sevilla, 1984), 239. Mena García and Castillero Calvo write extensively on the importance of other specific sectors such as the raising of livestock and shipbuilding, but these activities typically took place further afield, in Costa Rica and Nicaragua.

126 and prerogatives of powerful merchants in Lima and Seville. To make matters worse, much of the cattle raising and agricultural production that supported the mule trains and the African slaves who led them had to be produced on the Pacific side of the Isthmus and in Costa Rica and Nicaragua, for Nombre de Dios and its environs tended to be as unhealthy for pack animals as it was for human beings.292

Once in Nombre de Dios or Portobelo, goods had to be offloaded and warehoused while merchants, their agents, and the tertiary service population gathered around the port awaiting the arrival of silver from Peru, which meant waiting in a poorly appointed backwater town with nary a stone structure and an infrastructure woefully inadequate to house those who descended upon it during the brief trade season. Crewmembers and local settlers often had to improvise in the construction of shelters and storage facilities by using ship sails and rigging given the lack of permanent shelter. Even after fifty years of fairs in Nombre de Dios, Vila Vilar reports that, by 1595: “There was no stone or adobe house and the the church itself was a miserable hut. There were not town halls, jail, butcher shops, slaughterhouses, or any sanitation works, drains, or trash collectors.” (No había ninguna casa de piedra ni adobe y hasta la propia iglesia era un mísero bohío.

Carecía de casas de , cárcel, carnicerías, mataderos y de cualquier tipo de obra de saneamiento como desagües, basureros, etc).293 To compound problems, opportunistic

292 Roland Dennis Hussey, “Spanish Colonial Trails in Panama,” Revista de Historia de America, no. 6 (Aug., 1939), 55. Hussey specifically blames the lack of ventilation in both nombre de Dios and Portobelo for the fevers that affected cattle.

293 After fifty years of fairs in nombre de Dios, Villa Vilar reports that, by 1595: “No había ninguna casa de piedra ni adobe y hasta la propia iglesia era un mísero bohío. Carecía de casas de cabildo, cárcel, carnicerías, mataderos y de cualquier tipo de obra de saneamiento como desagües, basureros, etc.” (There was no stone or adobe house and the the church itself was a miserable hut. There were not town halls, jail, 127 landlords and store owners tended to gouge customers and clients in accordance with peak pricing schemes with the knowledge that both the surfeit of silver and the dire needs of merchants and their supporting staffs left the temporary guests enervated and willing to pay a ransom for a bit of comfort while they maneuvered to secure quick deals.

Waiting for these shipments also meant waiting for mules, upon whose backs the fortunes of empire were borne. Capable of carrying around 200 pounds of cargo on the difficult trip through the narrow and muddy paths of the Darien rainforest, these mules, bred and raised far afield, were often worked to death when forced to make multiple journeys back and forth without sufficient rest. Much of this overwork can perhaps be blamed on the fact that mules were more costly to rent in Panama than elsewhere in

Spanish America.294 Without mules, the journey across the Isthmus was exceedingly difficult.295

For a half century, Nombre de Dios remained the Tierra Firma terminus for northbound mule trains laden with mostly Potosí-mined silver and pearls on its way back to Spain and the westbound ships of Iberia, which brought, among other commodities, wine, flour, biscuit, oil, cloth, silk, and all manner of building materials.296 Aside from

butcher shops, slaughterhouses, or any sanitation works, drains, or trash collectors). Vila Vilar, Las ferias de Portobelo, 280-281.

294 Alfredo Castillero Calvo, Economía terciaria y sociedad: Panamá siglos XVI y XVII. Almojarifazgo de la Flota y tesoros transportados via Istmo de Panama por promedios quinquenales 1531-1665 (Panama: Universidad de Panama, 1980), 26-30 and 71.

295 It wasn’t enough for the Treasure Fleet to run smoothly, for a whole host of contingent exogenous factors could negatively impact the trade fair even when cargo and information arrived on schedule. If (mostly enslaved) muleteers and mules were not healthy and readily available, if the condition of river transport was unsuitable, or if disease outbreaks were a problem then key deadlines could be missed, which wreaked havoc with the pricing of goods and services. Economía terciaria,13.

296 Benzoni, 116. 128 the role it played in Spanish commerce and the transportation of subjects to Peru, swampy Nombre de Dios offered little in the way of protection from pirates and rebellious indigenous groups or fugitive slave communities, which had already come to proliferate in the region by mid-century. Beginning in 1586, formal plans to replace

Nombre de Dios by constructing a superior port began in earnest.297 As a clear acknowledgment of the need to strengthen defense and militarize trans-isthmian exchange and the trade fair, Italian military architect, Bautista Antonelli was chosen to begin drawing up plans to construct a heavily fortified town at the mouth of the Chagres

River.298 Antonelli had become a favored Crown architect for the fortifications he designed and built in Santo Domingo, Cartagena, and . This new location would orient its defense toward the sea (as opposed to focusing on threats from on land) and make it routine for at least part of the trans-isthmian crossing to be upriver, which was key to making lower value commodities profitable.299 After a decade of planning and construction, almost as if to provide a scripted coup de grâce for Nombre de Dios,

Francis Drake sacked and set fire to the town in 1596. It was, then, an external attack

297 “Bienes del difunto Martín de Zuazo,” 6 October 1571, AGI Panama, 236, L.10, N. 255-256. Prospective Viceroy, Francisco Toledo, had been consulted about Nombre de Dios in 1568. In his letter, he describes the poor health of the inhabitants of Nombre de Dios and how at little cost the transit port could be moved into neighboring territory. Another advocate for moving the fair to Portobelo was Panama fiscal, Diego de Villa nueva Zapata. See “Carta del Doctor Diego de Villanueva Zapata,” 1 April 1579, AGI Panama, 13, R.18, N.88.

298 On the official decision to instruct commissars and judges to facilitate the move of vecinos from Nombre de Dios, see “Carta de Diego de Villanueva Zapata y Francisco Valverde de Mercado,” 2 June 1594, AGI Panama, 14, R.10, N.56.

299 Freight charges were lower for riverine transport by shallops than they were for mules, which were limited to roughly 200 pounds per load. This meant that bulkier goods could travel part of the Isthmus on the Chagres River.

129 upon the nerve center of Spanish commerce that provided the final impetus for the Crown and its colonial administrators to move the fair to a port of greater natural protection and better access to Panama.

Map from Imperial Panama: Commerce and Conflict in Isthmian America, 1550-1800 (Albuquerque, N.M.: University of New Mexico Press, 1993), 59. Transisthmian Routes Across Panama

130

Map of Panama from Portobelo to Darién, c. 1600 AGI MP-PANAMA, 23.

Despite minor differences, which included Portobelo’s superiority as a wider, deeper, and better-protected harbor (all improvements for fair participants, to be sure),

Nombre de Dios and Portobelo had more in common with each other than with larger and more populous port towns like Veracruz, Panama, or Callao. Like Nombre De Dios,

Portobelo would continue to remain underdeveloped, underpopulated, and unhealthful into the twentieth century. And like Nombre de Dios, Portobelo would coexist in uneasy tension with Panama City, the seat of the Audiencia of Panama, the President and Captain

General of Tierra Firme, and a powerful cabildo (town council), which had consistently overruled the cabildos of Nombre de Dios and Portobelo. To add to these tensions, administrators throughout the Audiencia of Panama and in the Viceroy of Peru would have to contend with the authorities of the Casa de Contratacion and the Captains General

131 of the individual fleets. In fall of 1594, the fleet galleons stopped at Portobelo for the first time.300 In 1598, the arrival in Portobelo of the fleet led by Captain General

Francisco Villaviciosa to collect the royal portion of silver represented the permanent displacement of Nombre de Dios as the global clearinghouse for Potosí silver, manufactured goods from Spain, and illicit goods from every direction.301

In 1561, after a half-century of relatively flexible, individually licensed maritime commerce between Spain and its colonies in the Caribbean and mainland Latin America,

King Philip II (1527-1598), following years of close consultation with Asturian admiral and founder of St. Augustine (in modern-day Florida), Pedro Menéndes de Avilés (1519-

1574), decreed the creation of a new flota (fleet) system for transatlantic trade to be overseen by the Casa de la Contratación (Board of Trade).302 Founded in 1503, the Casa de Contratación was a royal organization established to regulate overseas trade and was responsible for organizing and licensing captains and their fleets by registering people, goods, and specie, collecting taxes, and enforcing commercial laws. The Casa de

Contratación, akin to the Portuguese Crown’s Casa da India,303 a Crown agency that was

300 Roland Dennis Hussey, “Spanish Colonial Trails in Panama,” Revista de Historia de America, no. 6 (Aug., 1939), 56.

301 A more in-depth treatment of the reasons for the move can be found in a letter written by Iñigo de Lecoya, the captain general of the Tierra Firme galleons in 1575. Iñigo wrote of the disadvantages, mainly the lack of upkeep of the Nombre de Dios and other ports, which were riddled with abandoned boats, many of which had bottomed out on reefs off the coast of Nombre de Dios. “Carta de Iñigo de Lecoya” 12 March 1575, Panama, 40, N.29 and 24 February 1578, AGI Panama, 41, N.44.Villaviciosa’s fleet collected silver in October 1598. A follow-up fleet departed Spain in November 1598 and arrived in March of 1599, when a full-fledged fair was held. Chaunus, vol. 4, 50-52.

302 The tipping point for Philip II, according to Timothy Walton, was the sacking of Havana by French privateers in 1555. The Spanish Treasure Fleets (Sarasota, Fla: Pineapple Press, 1994), 46.

303 The distinction between the Casa de Contratación and the Casa da India is subtle, given both agencies were responsible for the management of overseas territories, but the Casa da India was more insularly 132 formed to manage the Indian Ocean spice monopoly in 1500, played a less direct role in managing specific monopolies, a privilege it farmed out to individual license holders. In fact, it more closely resembled a Chamber of Commerce or a trade guild than a trading company. The decision to replace the lumbering and often lightly armed commercial vessels came after decades of predations by French and English pirates and privateers and was an effort to rationalize transatlantic commerce to keep better track of the movement of the Crown’s subjects, goods, and specie.304 The ocean had become crowded “beyond the line” and, lacking a multilateral agreement to establish a binding legal framework to address the predations of English and French privateers and pirates, organization and enforcement would be left to individual maritime powers.

Beyond the line, a phrase drawn from the longer phrase, “no peace beyond the line,” first appeared in the peace treaty of Cateau-Cambrésis (1559), which was signed by

Henry II of France and Philip II of Spain to determine the boundaries of effective

European governance and amity.305 In this specific case, the strict spatial boundaries of

monopolistic in its aims and operations, directly managing the collection of duties, taxes, and unilaterally setting the prices of the peppers and spices that were imported into Portugal from the Far East.

304 Roland D. Hussey, “Spanish Reaction to Foreign Aggression in The Caribbean to about 1680,” The Hispanic American Historical Review 9, no. 3 (Aug., 1929): 286-302 and Earl Sanders, “Counter- Contraband in Spanish America: Handicaps of the Governors in the Indies,” The Americas 34, no. 1 (Jul., 1977), 59-80 are excellent introductions to security issues in the Caribbean. Benzoni, a Milanese merchant active in the Caribbean in the 1540s and 1550s, wrote extensively of French predations in the 1530s and 1540s. French pirates attacked and burned Havana (1536 and 1554), captured a caravel laden with good outside San Domingo, and create a general nuisance for Spanish shipping throughout this period. Benzoni, 101-104. Even before the Caribbean became a nest of interlopers, the French, particularly, had wreaked havoc on eastbound treasure ships in the Canaries and just off the Spanish coast in the 1520s. Writes historian Timothy Walton, “In the five years after the defeat of the Aztecs, the French strategy bore considerable fruit, and only about 220,000 pesos’ worth of precious metals got through the swarms of privateers.” Walton, The Spanish Treasure Fleets, 19.

305 The Treaty of Cateau-Cambrésis concluded a 60-year conflict between France and Spain that had largely been fought on the Italian Peninsula. Its widespread land and sea battles took place in and among a patchwork of contested kingdoms and duchies, which gave rise to a more sophisticated discourse about the 133 this peace were to be the Tropic of Cancer and the meridian passing through the Canary

Islands. Beyond this somewhat narrow rectangular strip of the Atlantic was a vast sea of potential and actual enmity, strife, and lawlessness. The phrase came to have a number of literal, metaphorical, and legal connotations from the sixteenth century onward. In its strictest technical sense, it simply refers to the open sea beyond three or four miles from the coast of sovereign nations—that is, the part of the sea beyond which the positive laws of nations have any force. In the seventeenth and eighteenth centuries, beyond the line often came to refer to the ocean south of the equator. This interpretation provided cover for quasi-legal privateers who had based their right to predation upon letters of marque

(government licenses granted to specific ships for the purpose of retaliation against enemy vessels).306 The fleet system, fully operational by 1566, would keep its broad contours for more than two centuries. Needless to say, most of the Treasure Fleet’s transatlantic journey lay beyond the line in just about every meaningful sense and thus largely took place in a vast extralegal realm.

While Spanish ships had by this time been steadily plying the waters of the

Caribbean and South Atlantic since the voyages of Columbus, the new fleet system

nature of peace, distance, and authority. Cateau-Cambrésis, along with the Treaties of Vervins (1598) and Ryswick (1697) contained specific defenses of the right of reprisal. On the rise of collective reprisals, see Angel Alloza Aparicio, Europa en el Mercado Español: Mercaderes, Represalias, y Contrabando en el Siglo XVII (Valladolid: Junta de Castilla y León, 2006), 20 and 57-132.

306 See Michael Mann and Ineke Phaf-Rheinberger, Beyond the Line: Cultural Narratives of the Southern Oceans (Berlin: Neofelis Verlag, 2014) for a comprehensive study of this maritime concept. Letters of Marque were a form of collective punish against specific national or religious groups of merchants. The Spanish term, represalia, came to connote such retaliatory licenses against, primarily Dutch, English, or French vessels, especially during the 1620s, with the establishment of the Junta de Almirante (Admiralty Board of Madrid) in 1625.

134 would sail in accordance with a strict schedule of established licit routes and ports throughout the empire. According to royal decree, convoys were to leave from Seville twice a year and travel with a flagship and a vice-admiral ship, both of which were heavily armed and manned with thirty soldiers to defend against threats.307 Near

Hispañola (modern-day Dominican Republic and Haiti), the fleet divided into two fleets—one bound for Veracruz, Mexico in the north (the Flota) and the other for

Cartagena and, eventually, Panama in the south (the Galeones). News of ship movements, cargo, and personnel traveled in every direction on official navios de aviso

(royally licensed news, message, or warning ships) and through unofficial channels aboard cabotage (coastal) vessels to administrators, producers, merchants, and, much to their annoyance, foreign interlopers who were looking for up-to-day information about trade fairs in Panama.308 Even global currency flows closely tracked with the cargo and movements of the Spanish Treasure Fleet.309

307 The original Fleet System set regulations that dispatched two convoys from Seville in the months of January and August. In 1654, the regulations were changed and convoys were dispatched in April and August. By the middle of the sixteenth century, Seville remained the official point of embarkation, but the silting of the Guadalquivir meant that actual loading and offloading of goods and silver took place in deeper water ports such as Sanlucar de Barrameda and Cádiz, which would become the official point of departure by the turn of the eighteenth century.

308 On the cabotage trade, see Alejandro de la Fuente, Havana and the Atlantic in the Sixteenth Century (Chapel Hill: the University of North Carolina Press, 2009) and Anne Pérotin-Dumon, “Cabotage, Contraband, and Corsairs: The Port Cities of Guadeloupe and Their Inhabitants, 1650-1800” in Franklin W. Knight and Peggy K. Liss (eds.), Atlantic Port Cities: Economy, Culture, and Society in the Atlantic World, 1650-1850 (Knoxville: University of Tennessee Press, 1991) and “The pirate and the emperor: power and the law on the seas, 1450-1850” in The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350-1750. James D. Tracy (ed.) (New York: Cambridge University Press, 1990).

309 In addition to supplying specie to rising European economies, Spanish silver flowed to meet the insatiable demand of a monetizing Chinese economy. On this monetization, see Dennis O. Flynn and Arturo Giráldez, “Born with a ‘Silver Spoon’: The Origins of World Trade in 1571” Journal of World History 2, no. 2 (Fall 1995), 201-221; Dennis O. Flynn, “Comparing the Tokugawa Shogunate with Hapsburg Spain: Two silver-based empires in a global setting” in The Political Economy of Merchant Empires, ed. James Tracy (New York: Cambridge University Press, 1991), 333-359; and J. de Vries, 135

Map from Ward, Christopher. Imperial Panama: Commerce and Conflict in Isthmian America, 1550-1800 (Albuquerque, N.M.: University of New Mexico Press, 1993), 20. The New Spain Fleet and the Tierra Firme Galleons

Foreigners, it should be noted, were ostensibly prohibited from directly trading goods in the fleet system. According to a 1572 Decree issued by Philip II, foreigners were banned from the Pacific Ocean entirely.310 There were, however, a number of ways

‘Connecting Europe and Asia; a quantitative analysis of the Cape-route trade, 1497-1795’ and S. Pamuk, ‘Crisis and recovery: the Ottoman monetary system in the early modern era, 1550—1769’, both in D. O. Flynn, A. Giraldez and R. von Glahn Global connections and monetary history, 1470-1800 (London: Ashgate, 2003), 35-106 and 133-48. Silver reached China in from both the east and the west, on Manila Galeons via the Pacific and via the Indian Ocean trade. The currency itself, in this case Spanish Real after 1598, gained wide circulation throughout the Americas and were standard of commerce in the Far East into the nineteenth century On the circulation of Spanish coinage in Asia, see R. Marks, The Origins of the Modern World; A Global and Ecological Narrative. Lanham, MD: Rowman & Littlefield, 2002), 11.

310 While the decree might have prohibited foreigners from Pacific Ocean shipping, writes Borah, the use of “foreign-born sailors continued even after 1572.” The gap between the law as written and its execution 136 they could participate indirectly. A short-term solution to such prohibitions was to find

Spanish agents to take temporary possession of cargo and remit profits after transactions had taken place. What mattered was that Spanish subjects appeared on official documents such as ship registers and customs forms. Another longer-term option was to gain residencia (resident) status through marriage to a Spanish subject. This path to licit status was especially open to wealthier merchants, who were less likely to require large dowries or highborn status of their potential matches. Regardless of strategy and despite the strict laws against their direct participation, foreign merchants played a major role in all aspects of the transatlantic trade, from the initial financing of voyages in Seville to providing advances on goods in Peru through chains of agents that stretched down the Pacific

Coast. One example of foreign participation, in this particular case, from a Portuguese smuggler, Jorge Rodriguez, can be found in Irving Leonard’s, Colonial Travelers in Latin

America. Morquecho’s letter traces a complex smuggling chain from Jorge Rodriguez and his uncle, Simon Ruiz, both Portuguese subjects, to Lisbon, India, France, Italy,

Flanders, Morocco, and Lima. Leon Portocarrero, a resident of Lima from 1600-1615, describes the demographic composition of Lima, which would have been similar to that of Panama City, thusly: “There are representatives of the Portuguese, Gallicians,

Asturians, Basques, Navarrese, Aragonese, Valencians, natives of Murcia, French,

Italians, Germans, Flemish, Greeks, people from Ragusa, Corsicans, Genoese,

seems to have been quite vast. See Wilson Borah, Early Colonial Trade between Mexico and Peru,(Berkeley: University of California Press, 1954), 69.

137

Mallorquins, Canary Islanders, English, Moors, and immigrants from India and China,

[along with] a great many mixed elements.”311

All of these licensed vessels, including those that sailed with the fleet, those that sailed alone or in small groups having secured suelto (loose or individual) licenses, and aviso (news, information) ships tended to follow similar routes in the Atlantic, which had famously regular wind and water currents notwithstanding the fury of its hurricane season. The Portuguese had been the first to stage regular trips eastward in the early fifteenth century, gathering information and decoding the patterns of ocean gyres as they went. They discovered, with the support of a navigation school founded by Prince Henry the Navigator (1394-1460), the islands of Madeira (1418), the Azores (1427), and Cape

Verde (1456). The Spanish would gain control of the Canary Islands in 1479 and build upon these discoveries. All of these Atlantic islands, it turned out, could be easily reached from the Iberian Peninsula by catching reliable trade winds and provided key refueling and repair stations for further voyaging.

311 See “Carta del fiscal Bartolomé Morquecho,” 8 May 1609, AGI Panama, 16, R.1, N.3, which is referred to in Irving A. Leonard, Colonial Travelers in Latin America (New York: Knopf, 1972), 101 and “Carta del fiscal Bartolomé Morquecho,” 8 May 1609, AGI Panama, 16, R.1, N.3. 138

Map from NASA/JPL/NIMA and Uxbona, http://photojournal.jpl.nasa.gov/catalog/PIA03395 Sixteenth Century Portuguese and Spanish Trade Routes

Two other convoys that were linked to the fairs of Panama (as was all Tierra

Firme galleon and Pacific Coast traffic) would be established in the Pacific: The Manila

Galeon (1565) and the Armada del Mar del Sur (1581). The former was composed, in most years, of a single armed ship that departed from Acapulco to exchange silver for

Chinese luxury goods such as fine silk, lacquer ware, and porcelain. The Manila Galleons would sail regularly for 250 years and feed markets along the Pacific seaboard with mostly illicit products from the Far East.312 The Armada del Mar el Sur (Pacific Coast

312 On the history of the Manila Galleons, see Arturo Giráldez, The Age of Trade: The Manila Galleons and the Dawn of the Global Economy (Lanham, Maryland: Rowman & Littlefield, 2015), William L. Schurz The Manila Galleon (New York: E.P. Dutton, 1939), and Spate, The Spanish Lake (Minneapolis: University of Minnesota, 1979). There were brief periods during which Manila Galleon traffic was licit and licensed, but most of the traffic between Lima, Acapulco, and smaller Pacific ports such as Paita (northern Peru), Guayaquil (Ecuador), and Esmeraldas (northern Ecuador) was done in contravention of the strict 139

Guard), established by royal decree on April 17, 1581 in response to Francis Drake’s capture of the colorfully nicknamed Spanish treasure ship, the Cacafuego (Fire-shitter) outside of Esmeraldas, Ecuador in 1579, was composed of ships built in Pacific colonial shipyards such as Guayaquil, Ecuador and Realejo, Nicaragua, staffed by a creole navy, and funded by merchants in Lima and other colonial cities.313 Both convoys were ordered to work in concert with the official Treasure Fleet but, being based in the Pacific, were limited by seasonal weather patterns and currents and could be slow to respond to news and threats outside of this sphere.

trade rules. In this Pacific contraband, merchants in Seville were most concerned with the “ropa de China” (Chinese silks and other fine fabrics), which flooded markets and undercut Iberian silk (both locally produced and re-exported), and the Crown was most concerned with the export of silver. See Borah, Early Colonial Trade and Navigation between Mexico and Peru, 63-96 on the early development of trade between the viceroyalties.

313 For a general account on how the network of Pacific shipyards, ports, and refreshment stations were established, see Woodrow Wilson Borah, Early Colonial Trade and Navigation between Mexico and Peru (Berkeley: University of California Press, 1954), 22-36. It wasn’t until 1544, Borah suggests, that a dependable sailing schedule from Mexico to Peru was established that could take advantage of seasonal winds and currents. Bueno P. E. Pérez-Mallaína and Ramírez B. Torres, La Armada Del Mar Del Sur (Sevilla: Escuela de Estudios Hispano-Americanos de Sevilla, C.S.I.C, 1987), 1 and Peter T. Bradley, The Defence of Peru, 1579-1700: Royal Reluctance and Colonial Self-Reliance (Raleigh, N.C: Lulu.com, 2009), specifically 21- 28, addresses the Crown’s efforts to strengthen maritime security in the Pacific in the century following Drake’s surprise attacks.

140

The Origins of Spanish Settlement in the Philippines 33

Low-pressure rjsjion

North Pacthc htgh-pressure region

Northeast tradewi nds Hawaiian Mands

North equatorial current

Map from Arturo Giráldez, TheThe AgeManila of Trade: Calleons' The Route Manila Galleons and the Dawn of the Global Economy (Lanham, MD: Rowman and Littlefield, 2015), 33. Manila Galleon Route from Acapulco to Manila had close relationships with the Consulados of Mexico City and Lima, both establishedMuch toward of what the we end know of about the sixteenth aspects of century. the seasonal These trade institutions fairs that would repre sented merchants’ interests and acted as courts of law. The Consulado was only materialize semi-annually can be found in travel accounts of Francesco Carletti, Pedro established in Manila in 1769; before then, all important matters pertaining toCieza the de galleon’s Leon, Thomas business Gage, were Girolamo decided Benzoni, in the cabildo,Samuel Champlain, an assembly William of citizen- Dampier, merchants—“city and commerce.” Small business disputes were taken care of inand Manila Jorge Juanby lower and Antonio tribunals, de whileUlloa alonglarge lawsuitswith the reportswere the of purviewa long string of the of royalHigh Court of the Philippines. The Consejo de Indias () pre ministers on their way to posts in Peru.314 From its “pestiferous air" and the sided over all colonial institutions in both America and Asia and ruled on all matters pertaining to administration, legal dispositions, and church business. Domestic and foreign merchandise destined for the Americas accumu 314 Francesco Carletti, My Voyage around the World (New York: Pantheon Books, 1964); Pedro Cieza de latedLeón, Thein Seville Travels of while Pedro waitingde Cieza de for León, transport; AD 1532- 50,in Containedreturn, the in the city First received Part of His goods Chronicle of producedPeru, translated in by America, Clements R. like Markham dyes, (London: pearls, Hakluyt sugar, Society, and—the 1883); Thomas most Gage coveted and J.E.S. of Thompson, Thomas Gage's Travels in the New World (University of Oklahoma Press, Norman, 1958); all—bullion.Girolamo Benzoni, The and regulationsW. H. Smyth, Historyof 1564 of the mandated New World the(London: annual Printed dispatch for Hakluyt of Society, two fleets1857); protectedSamuel de Champlain, by armed Alice galleons. Wilmere, and The Norton first, Shaw, called Narrative the offlota a Voyage (fleet), to the sailedWest Indies and Mexico 1599–1602 (Farnham [England]: Ashgate, 2010); and Albert Gray, 1968, A toNew New Voyage Spain round and the world other (New Caribbean York: Dover destinations, Publications); and and Antonio the de second, Ulloa, Jorge with Juan, the and John nameAdams, of A Voyagegaleones to South (galleons), America (Newsailed York: for Knopf, Tierra 1964), Firme, especially Cartagena 43-47. de Indias, on the Caribbean coast of today’s Colombia141 and other ports of northern South America. The galeones would meet merchants coming from the Viceroyalty of Peru at Nombre de Dios or Portobelo in today’s Panama. Merchants from “uninhabitable deserts”315 surrounding it, the frogs that seemed to rain down from its biblically tempestuous skies, and its unpalatable “Turkish bread” (cornbread),316 Nombre de Dios and Portobelo appeared to travelers such as Thomas Gage as “an open grave ready to swallow” those who had to trade there and to Samuel Champlain as “the most evil and pitiful residence in the world.”317 These descriptions are all in general agreement about the trade fair that would periodically awaken this sleepy town from its torpor.

Historian Enriqueta Vila Vilar, in a monograph on the Portobelo fairs refers to it as a sort of “ghost city that would emerge with the arrival of the fleets.”318 But the town itself wasn’t the end of this difficult passage through the choke point of Spanish commerce.

After a successful fair in Portobelo, goods and travelers followed perhaps the most difficult part of their journey to Panama City. Despite the fact that this crossing took place along the narrowest part of the Isthmus, it was a complicated, difficult, and occasionally deadly affair.319 Ideally, goods from the viceroyalty of Peru via Panama City

(mostly silver and assorted commodities) arrived in Portobelo around the same time as the arrival of the Galleons from Spain. After taking stock of the available mules and

315 Carletti, My Voyage around the World, 25-27.

316 Benzoni History of the New World, 120-121.

317 Thomas Gage’s Travels, 369 and Champlain, Narrative of a Voyage to the West Indies and Mexico, 40- 41.

318 “Portobelo era una especie de ciudad fantasma que emergía con la llegada de las flotas,” in Vila Vilar, Las Ferias de Portobelo, 275.

319 See Roland D. Hussey, Spanish Colonial Trails in Panama (Mexico: Instituto Panamericano de Feografia e Historia, 1939) and Alfredo Castillero Calvo, Economía terciaria y sociedad: Panamá siglos XVI y XVII (Panamá: A. Castillero Calvo, 1980), 21-37 on the mortality rates of the trajín.

142 arrieros (muleteers), merchants in Portobelo negotiated prices to carry manufactured goods south to Panama. As with other aspects of this short-lived service economy, many muleteers, in full recognition of their de facto monopoly positions, were able to negotiate their rates aggressively upward.320 Loath to pay such high prices for a sixty-mile journey, which typically exceeded the freight charges for goods being transported from Seville to

Portobelo,321 it should be no surprise that merchants found alternative ways of making up for their losses.

From 1580 to 1587, on the initiative of the president of the Audiencia de Panama and the Contador (royal accountant), Juan de Vivero, shipments of silver and goods were carried from Panama City by mule train north to the Casa de Cruces, a station in the interior of the Isthmus on the bank of the Chagres River, which they then loaded onto shallops to float the rest of the journey to Nombre de Dios.322 At the Casa de Cruces, many travelers and merchants moving south after the fair arrived to face some of the same challenges as they had in Portobelo: skyrocketing prices, scarce accommodations, and very little opportunity for adequate refreshment. There were small warehouses where

320 On fees for arrieros, see “Tasa de las cargas desde Panamá a Nombre de Dios” 27 February 1591 AGI Panama, 229, L.1, F.104 and Contaduria, 1452, 1463, and 1468. The specific refrain was that the recuas were deemed too expensive for the short distance they were expected to travel.

321 Boleslao Lewin, Descripción del Virreinato del Perú: Crónica Inédita de Comienzos del Siglo Xvii (Rosario: Universidad Nacional del Litoral, Facultad de Filosofía, Letras y Ciencias de la Educación, 1958), 117. Borah cites a 1567 report from Licenciado Castro which estimates that four-fifths the cost of shipping goods from Seville to Peru was due to difficult transisthmian and Pacific crossing. Borah, Early Colonial Trade and Navigation between Mexico and Peru, 80-81.

322 Shallops (“chalupas”) were freight canoes. On regulations for crossing the Isthmus, see “Juan de Vivero,” 28 February 1581, AGI Panama, 42, N.24; “Caja de Panamá. Cuentas de Real Hacienda,” 16 May 1596, AGI Contaduria, 1468 for marqués de Cañete’s report on emergency measures in 1596; and Castillero Calvo, Economía terciaria y sociedad: Panamá siglos XVI y XVII, 27.

143 goods could be temporarily stored while additional mules could be procured, but it was hoped that the stays there wouldn’t last long. Once enough mules had been procured at

Casa de Cruces for the last fifteen miles to Panama, there remained what traveller

Francesco Carletti referred to as “A Hell of narrow, muddy suffocating paths through the forests.” Slaves who led the mules along this track were often “up to their bellies in mud.” Given the length of time and effort it took to cross the Isthmus, most basic commodities, such as wheat and other foodstuffs consumed in Panama City came from

Peru or New Spain rather than from the Caribbean.323

While the Treasure Fleets and fairs served elite merchants and administrators well in primary ports such as Havana, Santo Domingo, Cartagena, and Veracruz secondary and minor ports were frequently neglected and left to fend for themselves. Fairs in

Nombre de Dios and Portobelo achieve something approaching regularity in the 1550s, after the discovery and systematic exploitation of silver mines in Potosí (1545). During this decade, fairs were held at Nombre de Dios in all but one year, 1554. Silver production increased in the 1570s following the discovery of mercury in Huancavelica.

The use of mercury made it possible to increase output at Potosí through the , one form of mercury amalgamation.324 This discovery, which replaced less

323 Carletti, My Voyage around the World, 30. Another source on the trans-isthmian crossing was Boleslao Lewin, Descripción del Perú: Crónica Inédita de Comienzos del Siglo Xvii (Rosario: Universidad Nacional del Litoral, Facultad de Filosofía, Letras y Ciencias de la Educación, 1958).

324 One of the earliest asientos awarded for the production of mercury in Huancavelica between miners and the Spanish Crown is recorded in 1573. See, AGI Lima, 463, fol.61r. On silver transshipment through Panama, see Ward, Imperial Panama, 8-9. The patio process, invented in Mexico by Bartolomé de Medina, relied upon weeks of treatment in the sun in order to extract silver ore from a mix of copper sulfate, salt, and ore. Other variations of amalgamation, which speeded up the process, eventually replaced the patio process, depending on the local availability of fuel and labor. The key advantage that various forms of mercury amalgamation offered was that it allowed producers to take advantage of lower-grade ores, which, 144 energy-efficient smelting would create explosive growth in Spain’s silver production both in Potosí and at mines in Mexico and would fix Nombre de Dios as a key exchange center between South America and Seville. Previous supplies of mercury had to be imported from European sources, especially Almadén, Spain. Despite the fact that mercury shipments from Peru to Mexico were strictly controlled, there was ample opportunity for merchants along the sparsely monitored Pacific route to arrange to pick up or drop-off illicit goods at ports on the Pacific Coast.

During the last two decades of the sixteenth century, there was neither a Tierra

Firme fleet nor a Nombre de Dios fair in the years 1581, 1583, 1586, 1591, 1593, 1595, and 1597, despite the fact that silver production was reaching its peak.325 The most exhaustive source of the comings and goings of the Spanish Treasure Fleet remains

Huguette and Pierre Chaunu’s Séville et l'Atlantique, 1504-1650, a five volume study of a century and a half’s transatlantic ship traffic between Seville to Spanish America that includes four large volumes of statistics and a comprehensive methodological

in effect, expanded production overall for a time. On silver mining in Mexico and Peru, see Peter Bakewell, Silver Mining and Society in Colonial Mexico: Zacatecas, 1546-1700 (Cambridge [England]: University Press, 1971) and Miners of the Red Mountain: Indian Labor in Potosí, 1545-1650 (Albuquerque: University of New Mexico Press, 1984). On the discovery and development of mercury mines in Hunacavelica, see Guillermo Lohmann Villena, Las minas de Huancavelica en los siglos XVI y XVII (Lima: Pontificia Universidad Católica del Perú, Fondo Editorial, 1999) and “Enrique Garcés, descubridor del mercurio en el Peru, poeta y abritrista,” Anuario de Estudios Americanos (Escuela de estudios hispano- americanos de Sevilla), 5 (1948): 439-482. Kendall W. Brown offers a macabre account of the lethal toxicity of mercury in “Workers' Health and Colonial Mercury Mining at Huancavelica,” The Americas 57, no. 4, (Apr., 2001): 467-496. Toledo himself is reported to have claimed that the discovery of mercury meant the “matrimonio de más importancia del mundo entre el cerro de Potosí y el de Huancavelica (…that the marriage between the silver mountain of Potosí and Huancavelica was the most important in the world).” John Hemming, La Conquista de los Incas (Fondo de Cultura Económica, 1982), 454.

325 Ward, Imperial Panama, 104-105. Chaunu and Chaunu, Séville et l'Atlantique, Tome III, 290-569 and Tome IV, 8-49.

145 introduction. Compiled in the 1940s and 1950s, this remarkable study contains technical information about the fleet including lists of personnel, ship sizes, crossing times, ports visited, and cargo information and prices. The data, compiled from the Contaduria and ship registeres from the Casa de Contratación sections of the AGI, when paired with the price lists offered a decade by Earl Hamilton provided a statistical point of departure for generations of economic historians of both the Peninsula itself and the fleet that held together it’s overseas empire during a period of Spanish hegemony in the Atlantic.326

The guardacostas, navios de aviso, and some suelto ships visited Nombre de Dios even in years during which no fair was held, but they lacked the capacity or the authority to deliver manufactured goods to justify a fair. In 1588, for instance, galleon captain,

Alvaro de Quiñones, visited Nombre de Dios, but only to pick up the royal fifth in silver.327 While demand for manufactured goods continued to remain strong throughout the 1580s and 1590s, the Crown and merchants prioritized scarcity and high prices over consumer access, for it was the only way to maintain the profits and participation in official fleet commerce.328 This policy would, of course, encourage smuggling

326 Like Hamilton’s Price Revolution (1934) and Haring’s Trade and Navigation (1918) before it, the Chaunu and Chaunu study focused on official statistics and thus confirmed a decline narrative that showed falling silver receipts from the 1630s until the 1680s. One response to the work of Hamilton and Chaunu and Chaunu, which rejects the notion that there was a half-century decline, is Michel Morineau Incroyable gazettes et fabuleux métaux: les rétours des trésors américains d'après les gazettes hollandaises (XVIe- XVIIIe siècles) (Cambridge: Cambridge University Press, 1985). Morineau, who used ship cargo and price data published in Dutch gazettes, revised the silver receipts upward during this period and attributed the disparity between official statistics and gazette data to increased fraud and smuggling.

327 Ward, Imperial Panama, 106; Chaunu and Chaunu, Séville et l'Atlantique, Tome III, 412-413; and “Carta del oidor licenciado Salazar,” 4 June 1588, AGI Panama, 14, R.4, N.24.

328 Kenneth Andrew, The Spanish Caribbean: Trade and Plunder, 1530-1630 (New Haven: Yale University Press, 1978).

146 throughout the Caribbean and along the Pacific Coast by making contraband goods more competitive despite the risks involved.

Contraband Cargoes

Portobelo saw the Tierra Firme galleons visit almost every year in the first three decades of the seventeenth century, but fairs were only held roughly every other year. For the more well-heeled consumers in Panama City, Lima, Mexico City, and Potosí, such fair-less years were less of a factor, for illicit textiles like fine linens, ruanes (fine cottons and blended fabrics from Rouen), and “ropa de China” (fine cottons and silks from the

Far East) made their way to the Isthmus from all directions despite prohibitions. But for suppliers of mules, silver, and other products in the colonies years without fairs meant both an inability to access factors of production329 and collapsing prices for their services.

And for less wealthy consumers, such lost years were a disaster unless the necessities of life could be obtained from illicit sources, domestic or foreign. Already prostrate during the normal off-season for semi-perishable food items from the metropole, finished fabrics, building materials, and other manufactures, colonial subjects understandably looked in every direction for alternative suppliers.330 The open secret, even among contemporaries, was that merchants, especially the powerful merchants of the Lima

329 Items such as tools, pots, nails, other steel and iron goods, ponchos, blankets, and horse and mule rigging could often be procured locally from obrajes (workshops), through cabotage (coastal intercolonial) trade, or from rescate smugglers, but not without risks and costs.

330 Ward, Imperial Panama, 104-107.

147

Consulado, were to blame for less frequent fairs in order to maintain artificial scarcities of monopoly goods and thus to keep prices high.331

This was the case because in reducing the number of fairs, the major wholesale merchants became price makers and could expect voracious demand in Panama and

Portobelo. Less capitalized merchants tended to suffer in the shadow of their powerful counterparts. In normal years, many of these merchants borrowed money for the fairs at as much as 25% interest rates.332 Debt servicing thus became overwhelming for many merchants in periods of infrequent fairs.

In good years on the southern, Tierra Firme line, news of cargo ships from Seville traveled without major incident to the Canary Islands, Cartagena, Portobelo, across the isthmus at its narrowest point by river canoes and mule trains to Panama City, and then, again by ship, southward from Panama along the Pacific coast against unfavorable winds to Callao, Peru.333 When the inbound galleons had reached Cartagena, the signal was given to Lima merchants to commence loading ships with silver for the far easier northward journey to Panama and, eventually, the trade fair at Portobelo.334 If the official

331 George Dilg, “The Collapse of the Portobelo Fairs: A Study in Spanish Commercial Reform, 1720- 1740” (PhD dissertation: Indiana University, 1975), 14-15. Consulado merchants set prices and determined the mix of goods that would be sent to the Portobelo fairs. Holding back goods tended to raise prices in Portobelo and in Peru itself. While this sort of manipulation tended to harm less influential consumers and lower level merchants, it was a boon to the comerciantes of the consulado.

332 “The Collapse of the Portobelo Trade Fairs, 9.

333 Ward specifically mentions that official news was sent overland to Lima from Cartagena. Ward, Imperial Panama,19. Also, see footnote 26 on the estimate of Lima merchant calculations: 421 miles between Cartagena and Portobelo. Because the currents and winds slowed the ships heading south from Panama to Callao, many merchants and their factors chose to disembark in Paita to conclude the 550-mile journey overland to Callao.

334 Peter Bradley describes how chaotic the loading and shipping from Arica to Callao to Panama might be if interlopers were thought to be plying the Pacific coast. In March 1600, for instance, due to the sighting of 148 news was timely and accurate, the gran comercios (major wholesalers) of Lima would have a sense of the quantity, variation, and prices of goods on offer at the great Atlantic trade fair in Portobelo, where a frenzied tent-city made of ship sails would materialize for merchants and their agents to exchange silver for European goods.335 Coordination, however, remained difficult. There was simply no way in the age of wind and sail to achieve anything approaching perfect accuracy or timeliness of information that allowed enough time to make adjustments in cargo. Rigging, loading, and manning outbound ships in Seville was a risky endeavor and became a sunk cost especially once ships left the Canary Islands.

What this meant for smugglers was that there was, in fact, an official schedule both for information and goods that was restricted to the speed of royally sanctioned ships. No such rules applied to smugglers and their informants when it came to rumored fleets and the impatient demands of neglected colonists. What is clear (if not always clearly documented) is that versions of official news could (and did) outstrip the Tierra

Firme fleet along the south Atlantic route.336

Dutch ships off the Chilean Coast, Viceroy Luis de Velasco (1596-1604) sent the Armada del Mar del Sur south to search for the rumored Dutch vessels. These same ships were to carry that year’s silver from Arica to Portobelo. This left them with a narrow window in which to conduct their reconnaisance, as they were expected in Panama no later than May lest the Portobelo fair be delayed and return flota ships be forced to winter in Havana due to inclement weather. On Spanish defense of the South Sea, see Peter T. Bradley, The Defence of Peru, 1579-1700: Royal Reluctance and Colonial Self-Reliance (Raleigh, N.C: Lulu.com, 2009), 30-32.

335 Robert F. Marx, The Treasure Fleets of the Spanish Main (Cleveland: The World Publishing Company, 1968), 80. Contemporary descriptions of the Portobelo trade fair attest to its frenzied makeshift character. For good summaries of sources on colonial Portobelo, see Christopher Ward and Enriqueta Vila Vilar, Las Ferias De Portobelo.

336 Chapter 3 will provide a thorough exploration of this southern route.

149

The first stop after leaving the mouth of the Guadalquivir River at Sanlúcar de

Barrameda was the Canary Islands, for both officially licensed cargo and aviso ships.

This was, not surprisingly, a favored haunt of Dutch, English, and French interlopers, who stalked the archipelago in the shallows and shadows just off the coast. After 1580, with the nominal absorption of the Portuguese monarchy following the disappearance in

1578 of Portuguese king, Sebastian I, in the Battle of Alcácer Quibir in Morocco and the subsequent successful defense of Philip II’s claim to the Portuguese throne, the

Portuguese island-hopping route could be more easily accessed as a back-door communication line through Brazil, Argentina, and Potosí. The Portuguese route involved hewing more closely to the western coast of Africa on the Canary current and picking up the northeasterly trade winds after turning seaward near São Tome and the

Cape Verde Islands. The northeastern trade winds could take one as far southeast as

Brazil337 and, eventually, Buenos Aires. This created an intriguing and (for some) a disturbing alternative to the official channels of communication. Just as there were contraband trading networks in goods, one can easily trace the development of contraband networks of tips, rumors, and actionable information, which could send agreed upon price tables at the trade fairs like those at Portobelo and Veracruz into free fall, because the warehoused goods of Lima became worthless due to the flooding of products through back-channel supply lines.

337 Overshooting the trade winds was, in fact, how Pedro Álvares Cabral ended up “discovering” Brazil in 1500. On Cabral’s voyage to Brazil, see William Brooks Greenlee, The Voyage of Pedro Álvares Cabral to Brazil and India: From Contemporary Documents and Narratives (London: Printed for the Hakluyt Society, 1983).

150

Coordination for these fairs hung, then, by the thinnest of threads even in the best years, for the threats to such a long and complicated journey were legion. Weather was the first matter of concern.338 While ships would ideally leave from Seville well in advance of the hurricane season, there were many years when ship masters and captains pushed their luck and embarked far later than recommended departure dates for reasons ranging from delays in procuring goods with which to stock ships to exchange for silver, to problems manning ships with skilled sailors, to bureaucratic licensing delays. Once afloat, convoys had to negotiate pirate-infested waters from the moment they left the mouth of the Guadalquivir River.339 Even well planned and carefully navigated journeys could see provisions go rancid or diseases ravage crews. Arrival at the swampy environs of Portobelo meant not respite but additional threats from a whole host of unfamiliar diseases and parasites.340 On the Pacific side of the journey, El Niño events such as

338 Storms at the mouth of the Guadalquivir in 1587, in the Caribbean in 1590, 1601, and 1614, and off the Azores in 1591 meant the loss of silver and gold headed back to the royal fisc, much of which couldn’t be salvaged. Walton, The Spanish Treasure Fleets, 83.A recent wave of literature on the impact of climate and weather events in history might point toward the possibility of more fine-grained assessments of short-term and medium durée events that affected individual fairs. Recent noteworthy contributions to this historiography include Geoffrey Parker, Global Crisis: War, Climate Change and Catastrophe in the Seventeenth Century (New Haven, Conn.: Yale University Press, 2013); Brian Fagan, The Little Ice Age: How Climate Made History, 1300-1850 (New York, NY: Basic Books, 2000) and other titles; and Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (New York: Viking, 2005).

339 Cadiz and the Canary Islands were often targeted by pirates and English, Dutch, and French warships throughout the sixteenth and seventeenth centuries. Aside from the constant threat of pirate ships looking to take control of outbound manufactured goods were threats from well-armed allies, such as the Anglo-Dutch forces who sacked Cadiz in 1596. Following such devastating setbacks, the had to reassemble fleets to guarantee seasonal fleets in the ensuing years. For accounts of the sacking of Cadiz, see Cádiz, Documentos relativos á la toma y saco de Cádiz por los ingleses en julio de 1596 (Cadiz, 1860).

340 For an excellent overview of the disease climate and general sickness of most crews in the early phase of conquest and settlement, see David Noble Cook Born to die: disease and New World conquest, 1492- 1650 (Cambridge: Cambridge University Press, 1998). On mosquito vectors specifically, a problem that grew concomitantly with the rise of plantations and the raising of livestock, see McNeill, J. R. Mosquito Empires: Ecology and War in the Greater Caribbean, 1620-1914 (New York: Cambridge University Press, 2010). 151 warming and cooling phases in water temperature could wreak havoc on wind and water currents, significantly delaying the Callao to Portobelo journey or otherwise creating coordination chaos.341

Panama’s Fiscal and Administrative Baroque and the Strategies of of Contraband

The concept of the baroque, described by Spanish historian José Maravall in his foundational work, Culture of the Baroque: Analysis of a Historical Structure, was drawn from the Portuguese term barroco, which translates to uneven or imperfect pearl. A series of economic and social upheavals in Castile in the latter half of the sixteenth century, which included price inflation, famine, and crises in agriculture and traditional manufacturing led to a conservative backlash that saw styles of expression in the Iberian

Church, architecture, theater, and the arts drift towards increasing complexity.342 In addition to this increasingly ornate style in physical structures and artistic expression, the baroque had social, legal, economic, and administrative modalities that were just as salient as its traditional connotations. The fluid and complicated system of racial classification that came to be known as the system in Mexico is baroque in its extravagance and incongruities.343 The regional and hierarchical patchwork of fueros

341 Mike Davis, Late Victorian Holocausts: El Niño Famines and the Making of the Third World (London: Verso, 2001) traces global famines from Brazil to the South Pacific, many of which can be blamed on exploitative colonial policies but were exacerbated by climate events off the West coast of South America.

342 José Maravall, Culture of the Baroque: Analysis of a Historical Structure (Minneapolis: University of Minnesota Press, 1986), 19.

343 On the racial baroque of the Mexican casta system, see Ben Vinson, Before Mestizaje: Race, Mixture, and Caste in Mexico, forthcoming.

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(privileges) and legal forums presented another baroque context in which plaintiffs and defendants could embellished or transform their identities in an effort to achieve favorable outcomes. The licensing system of the Spanish Crown, with its asientos and tax farms, many of which were resold and traded on secondary markets and the seemingly arbitrary award of the passage permits and brokerage licenses required for transisthmian movement and participation in the fairs, was its own sort of baroque, inscrutable to the uninitiated but a feast of options for those who learned to read its contours and irregularities.344 Finally, the Spanish Empire’s flexible and overlapping system of governance demonstrated a sort of indecipherable baroque to those who were not privy to what went on its inner circles.

To understand why contraband flourished in Portobelo requires emphasizing key aspects of Panama’s place in the legal and institutional infrastructure of the commercial system. Panamanian authorities were, at best, junior partners in the governance and commerce that took place on their soil and dominated their ports. The President and

Captain General of Tierra Firme was ostensibly the highest authority of Panama, but only in the dead time between fairs or when the Viceroy of Peru and his officials hadn’t been given express instructions to intervene in local affairs (more of which below),345 in which case the authority of the Panamanian president and, by extension, the Audiencia of

344Panamanian officials issued both passage permits and brokerage licenses. Fees for such licenses were steep and priced out all but the wealthiest merchants. In 1580, a brokerage license cost 6,500 pesos, in 1607, 4,200. Haring, Trade and Navigation, 187.

345 The president of Panama not only executed laws, but was also the supreme legislative and judicial leader of the Isthmus. Although the president’s authority was somewhat mitigated by officials in Lima and Seville, distance and time allowed for a certain degree of autonomy. Ward, Imperial Panama, 48.

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Panama was superseded. When Fairs were being held in Nombre de Dios and Portobelo, the Captain General of the Tierra Firme galleons sat at the top of the chain of command.

Governance was a tangled web of competing interests in an almost constant competition for authority and supremacy. Local authorities ceaselessly petitioned Audiencia, Viceroy, and Metropolitan authorities for more help in funding and maintaining the fairs and for higher wages. While some of the taxes in the form of (sales taxes) and fines ended up in local coffers, the Panamanian local government was typically starved of important revenue streams. Finding alternative sources of revenue became the norm in

Panama, both as a private and public matter, for the Panamanian officials were some of the lowest paid officials in Spanish America.346

The first Audiencia of Panama was created by royal decree in 1538. [I think this early 16th c background shold be in earlier section on background history.it’s really time to be in your time period!] It was, for a brief period, a super-unit that included all mainland terrain south of the Gulf of Fonseca, which sits at the convergence of modern- day Honduras, El Salvador, and Nicaragua on the Pacific Coast, south to Cape Horn. The

Viceroyalty of Peru, established in 1542, would absorb this territory and come to include include most of South America outside of Brazil. From that point forward, Panama would remain part and parcel of the viceroyalty and be subject to the authority of the Viceroy of

Peru. The office of the Peruvian Viceroy would be consolidated and professionalized with the appointment of Francisco Alvarez de Toledo in 1569, who would set the

346 Annually, the president of Panama received some 3,750 pesos at the turn of the seventeenth century. The president of Chile, earned 5,000 pesos. Mena García, La sociedad de Panama, 217.

154 standard for Peruvian supremacy. Given this complicated arrangement, a great deal of administrative wrangling accompanied each trade fair. Prices were hammered out between the president of the Audiencia, largely on behalf of the powerful merchants of

Lima, and the Captain of the fleet, who represented the interests of the merchants in

Seville. This was done based on careful tabulation of the costs and volume of supplies and products aboard arriving ships, the burden of averia payments, and quinto obligations.347 None of these considerations meant any sort of perfect precision or guaranteed profits. In fact, being locked into prices before the fair begun represented a risk for merchants.

Below the level of the President of Panama were the cabildos (town councils), which along with the mayors were the offices of local governance. Within the audiencia of Panama itself, two competing cabildos from Panama City and Portobelo engaged in a tug-of-war for pre-eminence. Panama City interests were heavily influenced by administrative, military, and merchant authorities in Lima, while Portobelo interests were undercut by the prerogatives of both Panama City and prevailing captain general of the galleons. Thus it was that during the time between the fairs that de facto authority rested with the Audiencia in Panama City across the Isthmus. During the periods when the

Viceroy of Peru travelled through the Isthmus, either to take or leave a post in Peru or for a visita (inspection), authority, again, rested with the Viceroy.

347 The Quinto, or fifth, was a 20% tax levied on most stamped silver. During times of poor output or unproductive or remote mines, it could be as low as 10%. Hamilton, Price Revolution, 16.

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The system of visitas, if one can call it a system at all, only increased tensions among colonial authorities, as it often pitted regional authorities against one another.

Most of the visitadores, as they were called, had earned distinctions in administrative and ecclesiastical positions in other colonial regions. Visitas were a response to specific complaints against colonial institutions and individuals, such as the treasury, or against administrators or members of the clergy, but the fact that visitadores were unleashed without warning made them seem inquisitorial. Unlike residencias, which were normal inquiries that followed the end of an official’s term in office, visitadores seemed arbitrary.348 For Panamanian officials, in particular, visitas were a reminder that they were the lowest members of the hierarchy in which officials from Santo Domingo, to

Charcas, Chile, and Mexico were periodically deputized to discipline them.

Visitas were a response to a number of pressing issues. Panamanian authorities were, as mentioned above, typically underpaid but were responsible for taxing and regulating some of the largest revenue flows of the empire. They also resided in a region where basic commodities were at a premium, even when no fairs were in session.349

Matters related to tax collection, ship inspection, land engrossment, kickbacks, bribery, and other forms of illicit activity could become the subject of a visita. In 1585, for instance, visitador and oidor from the de Charcas (modern-day Bolivia),

Gonzalo Calderón, arrived in Panama to inspect the office of the royal treasury of

348 J. H. Elliott, “Spain and America in the Sixteenth and Seventeenth Centuries,” in The Cambridge History of Latin America: Volume I, Colonial Latin America, ed. Leslie Bethell (New York: Cambridge University Press, 1984), 287.

349 Ward, Imperial Panama, 70-71.

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Panama.350 In 1614, a judge from the audiencia of Mexico, Juan Suarez de Ovalle, was sent to Panama to look into charges against Panama treasurer, Cristobal de Balbas for allowing trafficking in unregistered goods.351 Tierra Firme royal accountant, Juan

Bautista de Nava similarly was subjected to a visita for irregularities in the registration of goods in 1604.352

In the case of visitas, which could take years to plan and carry out, the Casa de

Contratación first heard complaints and then determinations were made about the seriousness of the charges and whether or not they merited a formal visita. The problem, of course, with all of the surveillance and enforcement that this process required, was that on the Atlantic Coast of the Isthmus, there was inadequate institutional presence.

Portobelo, like Nombre de Dios before it, was undermanned and the institutions were no match for the frantic pace of the fairs themselves. Oversight was largely non-existent.

Goods, specie, and migrants passed through the Isthmus easily. Despite repeated reports on the need to build a formal customs house on the Isthmus, construction would only finally begin in 1630.353

350 "Carta del licenciado Calderón, visitador de la Audiencia de Panamá," 16 June 1585, AGI Panama, 14, R.1, N.13.

351 See “Visita de Juan Suarez de Ovalle, fiscal de la Audiencia de Mexico, a Cristobal de Balbas, tesorero de Panama,” 1614, AGI Escribania, 483A for the initial report of the visita and “Denuncias contra Cristóbal de Balbas,” 21 March 1626, AGI Panama, 1, N.346 for the specific charges against Balbas.

352 “Visitas Audiencia de Panama,” 1604, AGI Escribania, 483A. In this case, Panama judge, Alberto de Acuña did the honors.

353There were a number of stops and starts in discussions about the need for a customs house from the early seventeenth century. Vila Vilar, Las Ferias de Portobelo, 284-285.

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What should seem astonishing, given the intermittent crises of authority that such a baroque system of administration facilitated and the general lack of inspectors during fair times was that the trade fairs were able to take place successfully at all. Local authorities controlled little of the revenue raised by fleet commerce for Portobelo’s very expensive infrastructural and institutional needs. Neither the overworked inspectors nor the bare bones staff that stayed year-round were any match for opportunistic merchants and their agents, who had meticulously planned their transactions in advance.

The climate and conditions of the fair took a toll on everyone’s health, yet this chokepoint of global trade limped along every other year or so, after which time,

Portobelo was all but forgotten once again

Contraband in the Trans-Isthmian and Trans-Atlantic trade was a response to a variety of commercial regulations and restrictions including—but not limited to—rising tax rates, seasonal and chronic scarcities in essential goods, and foreclosed access to the club goods of licensed merchants (exclusive group privileges such as access to efficient and sympathetic courts, accurate information, and collective security). Contraband was also an opportunistic reaction to a commercial system whose routes and information networks had coalesced around the privileges of powerful merchants, producers, financiers, and administrators rather than meeting the needs of consumers in Panama and the regions it served. Panama, of course, was the main source of licit manufactured goods consumed in Lima and Potosí aside from the occasional individual licenses granted to goods sourced from Asia via the Manila galleons or the Southern Cone. It was a response, on the Isthmus itself, to the inadequate system of inspection and the lack of

158 official customs oversight. Moreover, and perhaps most importantly, the motivations of those who smuggled goods into the Spanish America and the Caribbean were irrelevant to the consumers who were neglected by the galleons, who were more concerned that their needs could be filled in times of absence and scarcity.

Taxation on goods that passed through Panama, it goes without saying, started with the registration and loading of goods onto the galleons. Aside from (or alongside) the desire to maximize profits, the matter of central importance for the Crown, its merchants, and the convoy itself was security. Private maritime insurance was a risky and speculative enterprise at best in the sixteenth century. It generally came in the form of the bottomry, an odd hybrid of insurance proper and high-interest loans divided among investors and participants in trans-Atlantic shipping. Bottomry securities were initially provided on a voyage-by-voyage basis by private merchants and their creditors before the convoy was established.354 Upon the conclusion of a successful voyage, lenders were repaid the principle along with the agreed-upon markup, which concluded the bottomry agreement between lender and merchant. Once the regular convoy system was established, instead of simply requiring participants to provide bottomry guarantees, the

Crown opted instead for a more strictly regulated system of shipping that required each

354 Bottomry loans were one of many financial practices that hid or obscured otherwise usurious loans that would otherwise have raised the ire of theologians (see previous chapter). Christopher Ebert, “Early Modern Atlantic Trade and the Development of Maritime Insurance to 1630*” Past and Present, no. 213 (Nov., 2011), 87-114, describes bottomry loans as a strategy for managing risk. Such loans generally involved cargo-backed loans in which the borrower would pay back the principal with interest upon the successful sale of cargo (103). Bottomry loans, or “créditos a risco” and “préstamos a la gruesa aventura,” were common in luxury trades at least as far back as ancient Greece. On the ancient history of bottomry, see Michael Kaplan and Ellen Kaplan, Chances Are--: Adventures in Probability (New York: Viking, 2006), 94-95. Bottomry functioned something like a futures agreement--that is, lenders essentially bought a stake of the eventual value and profits of a voyage.

159 ship to be armed and for each convoy to have two ships for defense. All of this was quite expensive and was paid for in the form of the avería tax.

The avería is thought to have deep etymological origins. A form of avería for overseas trade had been organized by Burgalés merchants to provide protection for wool and metal exports from Bilbao to Bruges in the first half of the sixteenth century.355

Seventeenth–century jurist Juan de Solorzano Pereira traced the origins of the term to its

Latin root, habere, which he took to connote the assets, holdings, or “dowry” of a particular person or ship according to which the amount of payment would calculated.356

Clarence Haring provided a different etymology to Arabic (awar), which negatively connotes harm, damage, or loss.357 This negative connotation seems to more snugly fit how the avería actually functioned in the flota trade, as it amounted to a tax or insurance charge upon the reported holdings of merchants and passengers that would be used to pay for all of the security costs associated with transport across the Atlantic. It was especially crucial for ships on the return journey, which were laden with the season’s silver bullion.

355 Stein and Stein. Silver, Trade, and War, 10. Cespedes cites a specific instance of merchants’ clamouring for greater security following a successful attack and seizure of a gold shipment in the Azores in 1523 by French privateers. The Crown response, the seizure of gold from ships that had evaded the attack would drive others to sail in secret to avoid future embargoes. What were needed were regular fleets with set fees. Guillermo Cespedes, La Averia En El Comercio De Indias, 28-29. This sent the avería into a vicious loop wherein more merchants, in an effort to avoid arbitrary seizures of specie, opted out of the official trade, which placed further burdens on those who had remained loyal. Ibid., 45. Another detailed study of the origins and role of the avería tax can be found in Chaunu and Chaunu, Séville et l'Atlantique, Tomo 1, 169- 200.

356 See Juan de Solórzano Pereira, Politica Indiana (Madrid: Por Diego Diaz de la Carrera, 1648), book 6, chapt. 9, 979. See also Rafauel Antunez y Acevedo, Memorias históricas sobre la legislación, y gobierno del comercio de los españoles con sus colonias en las Indias Occidentales (España: Imprenta de Sancha, 1797), 177-178.

357 Cited by Cespedes, 4 and in Haring, footnote 8, 67.

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The fact that the avería had to be paid in Panama meant that it would be subjected to contentious wrangling between administrators and ship-borne authorities throughout the period under discussion. Assessing the value of cargo created a vast field of opportunity for underpaid administrators and opportunistic captains and merchants.358

The tax itself originated as a charge assessed on the value of all trans-Atlantic cargo in order to defray the defense costs of the vessels of the armed escort ships and guardacostas (Coast Guards), which were sent to the Caribbean on a regular basis as early as the 1520s.359 While the guardacosta boats continued their regular rounds around the Caribbean littoral and along the Pacific Coast, the convoys themselves increasingly relied upon the collection of a tax that covered the costs associated with defense. The avería fluctuated erratically between one and six percent from 1521 to 1565.360 After the establishment of the official convoys, it became a steady source of funding for security costs associated with the journey.361 As the Spanish Empire became more deeply engaged in open hostilities against both English and Dutch ships and general threats at sea grew apace, the Crown, forced to increase manpower and shipping armaments, raised the

358 The most comprehensive study of the avería in transatlantic trade remains Céspedes del Castillo, Guillermo, La avería en el comercio de Indias (Sevilla: Consejo Superior de Investigaciones Cientificas, Escuela de Estudios Hispano-americanos, 1945). The topic is discussed in detail in Clarence Haring, Trade and Navigation between Spain and the Indies in the Time of the Habsburgs (Cambridge: Harvard University Press, 1919), 77-83. 359 Guillermo Cespedes de Castillo, La Avería En El Comercio De Indias, 142 Appendix. Haring, Trade and Navigation, 70-82.Vicens Vives reports the avería’s first assessment for a transatlantic voyage in 1518 and reports that it arose in part to replace the fraud-prone “betting insurance” that had become a problem among speculating merchants in Seville. Jaime Vicens Vives and Jordi Nadal, An Economic (Princeton, N.J.: Princeton University Press, 1969), 403-404.

360 Veitia Linaje mentions the avería as a time-honored method for covering the costs of a ship’s defense. Haring, 76 and Cespedes, 155-156.

361 Cespedes, La Avería, 116-118.

161 avería accordingly.362 Yet each time it did so, it created greater incentives and profit margins for contraband traders. By 1587, the averia had reached four percent, and it was assessed based on the value of goods at their much higher value in Panama rather than in

Sevilla.363 By 1595, it stood at eight percent and would stabilize around six percent, where it would remain into the 1620s. In 1629, it rose precipitously to seventeen percent.

In an effort to bring merchants back into the fold, Philip IV issued a cédula in 1644, which capped the avería at twelve percent. This, of course, did little to appease merchants who chafed at the continued high costs of the fleet trade leading many to pursue strategies for reducing their tax burden.364

Two other taxes had special relevance to Panamanian residents. One was the almojarifazgo, a customs duty whose name is thought to be of Arabic etymological origins that was partially collected in Panama.365 Given the thin institutional presence and

362English privateers such as John Hawkins, Francis Drake, , and Walter Raleigh (known as the ) were active from the 1560s until their deaths in the 1590s. Official hostilities between England and Spain reached a head in the Anglo-Spanish War (1585-1604), which erased the line between official navy ships and privateers. All English ships presented a threat to the Spanish Treasure Fleet during this period. The Dutch Sea Beggars, a group of privateers during the the Dutch Revolt that included men such as William de la Marck and Admiral Bossu waged war on Spanish shipping off and on from 1566-1648.

363 Ward, Imperial Panama, 25.

364 Haring, Trade and Navigation, 78.

365 This general import and export tax (from the Arabic word, al-musrif, the inspector) came to play an increasingly important role in Indies traffic. Gabriel Tortella and Francisco Comín, “Fiscal and Monetary Institutions in Spain,” in Transferring Wealth and Power from the Old to the New World: Monetary and Fiscal Institutions in the 17th Through the 19th Century, eds. Michael D. Bordo and Roberto Cortés (Cambridge, UK: Cambridge University Press, 2001), 140-186. See also, Modesto Ulloa, La hacienda real de Castilla en el reinado de Felipe II (Madrid: Fundación Universitaria Española, Seminario Cisneros, 1977), 263-305 and Chaunu and Chaunu, Vol. 1, 245-252, especially 249-252 for information about the collection of the tax in Nombre de Dios and Portobelo. The almojarifazgo was collected on goods shipped from Spain to the Indies, charged at roughly one-third of its total amount in Seville (5%) and two-thirds in Spanish America (10%). On Almojarifazgo amounts, see Diego de Encinas, Cedulario indiano, 4 vols. 162 the lack of an aduana or customs office outside of Panama City, cargos were easy to under-report, which would have reduced almojarifazgo payments, which went not to local coffers but into the Crown’s general defense fund. Because value had been added by the transatlantic journey to the colonies, the almojarifazgo tax was steeper on the colonial side of the journey. As a result, there was a great deal of pressure to evade assessment in Portobelo. A second significant tax was the , or sales tax, which was assessed on the sale and resale of property at the Portobelo fairs. It sat at roughly 2 percent from the 1570s-1630s, and doubled thereafter.366 Like the almojarifazgo, the alcabala could be evaded through unmonitored exchanges, a common phenomenon at

Portobelo’s poorly surveilled trade fairs, but local officials tended to more jealously assess and guard revenues collected from the alcabala because some of that revenue stayed in Panama to pay their salaries. From 1602 onward, the alcabala was farmed out to local cabildos and consulados, which created yet another field in which colonial authorities could “execute” royal policy.367

All of this taxation, specifically that of the rising avería, meant prohibitive costs for merchants who obeyed the rules of the Carrera trade, a “vicious circle” that historian

Peter Bradley blames for the increasing willingness of merchants to find ways around honest registry of silver and other cargo. The Crown responded to what it perceived as

(Madrid: Ediciones cultura hispánica, 1945-6), vol. 3: 445-449. The almojarifazgo was established for Indies traffic by Philip II in 1560. José de Veitia Linaje, lib. I, 74-75.

366 Ward, Imperial Panama, 26.

367 I. A. A. Thompson, War and Government in Hapsburg Spain, 1560-1620 (London: Athlone Press, 1976), 256-58.

163 increasing fraud and smuggling in the 1620s with “tomas de plata” (seizures of silver shipments), which further punished merchants who carried registered silver. This cycle of evasions and smuggling and enforcement of the rules contained within it several reinforcing gyres. Higher averia taxes meant under-registry, under-registry meant a reduced amount of taxable goods, which, in turn, meant resorting to tomas de plata, the final impact of which fell upon the shoulders of those who had been more honest in their registration practices and continued to pay rising averia rates.368 The punishment of fair dealing merchants meant an increasing tendency for such merchants to exercise what organizational historian, A. O. Hirschman referred to as the “exit” option by removing their goods from the official realms and transacting illegally.369 With the averia and the resort of arbitrary seizures of silver, the Spanish Crown had set up an increasingly contentious system of taxation.

Strategies for smuggling goods and specie stretched back to the shipyards of the

Basque country, where ship capacities were under-reported from the outset.370 The simple matter of successfully bribing shipbuilders could yield an extra 15-20% of unreported shipping capacity for the life of a transatlantic vessel, which could last decades.371

368 Peter Bradley, “The Loss of the Flagship of the Armada Del Mar Del Sur (1654) and Related Aspects of Viceregal Administration,” The Americas 45, no. 3 (Jan., 1989): 383-403: 401 in reference to a letter of Alba to Crown, 30 June 1655, AGI Lima, 57.

369 A. O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, Mass: Harvard University Press, 1970). In this particular case, merchants simply stopped registering their silver to avoid confiscation.

370 Northern towns such as Santander, Vigo, and Bilbao were famous shipyards tha provided many of the caravels and galleons for Spanish shipping.

371 Carla Rahn Phillips, The Treasure of the San José, 1-8.

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Similarly, royal officials could be successfully bribed to under-report the value of cargo when ships left Seville. The Canary Islands, the last refueling and refreshment stop before embarking on the longest stretch of deep sea sailing, became a gathering point for would-be smugglers and stowaways who lacked migration permits, especially foreigners.

Dispensations, which allowed Canarian wine merchants and slave traders to send ships directly to the Caribbean until stricter regulations were adopted in 1591, facilitated smuggling of other unregistered and unlicensed goods until stricter regulations were adopted in 1591.372 And in the Caribbean itself, there were numerous opportunities at islands such as Dominica, Santo Domingo, and Puerto Rico and the requisite penultimate stop at the port of Cartagena that presented occasions for buying or selling contraband.

How might a merchant specifically offset the increasing costs of the averia? In addition to the strategies mentioned above, since it was assessed based on the bulk value of goods reported on ship registers to determine costs for the defense of the fleet, the most common methods of evasion would have been under- and/or misreporting registered cargoes before embarking from Sevilla. Typical strategies for smuggling goods included falsifying ship registers, the taking on or concealment of unregistered cargo, and misattribution of consignments on bills of lading, all before the fleets had left the

Guadalquivir on their outward voyage.373 Liquids like wine or textiles like ruanes, to take just two examples, could simply be reported as vinegar or broadcloth, commodities of

372 Jaime Vicens Vives, Frances M. López-Morillas, and Jordi Nadal, An Economic History of Spain, 406- 408. 373 An Economic History of Spain, 404-405.

165 lower value.374 This sort of misreporting of higher value goods was widespread. One particular royal policy that facilitated such fraudulent reporting was the precedent-setting establishment of merchant prerogative in a royal decree of 1579, which allowed merchants to on all licensed Spanish ships to refuse to open fardos (cargo bales) when ships were inspected.375 Once cargoes were recorded in ship registers in Seville and secured in containers (bales, trunks, pipes: standard wine barrels containing 500-600 liters of liquid), merchants had the right to refuse to open them until they reached their final destination provided that there was no other incriminating evidence that they had misreported or engaged in otherwise illegal trade. One example of incriminating archival evidence appeared in a letter from Peruvian Viceroy Melchor de Lifian y Cisneros to the

King. In the letter, Melchor recounts how the inspector in Callao took note of a one-meter vara (slime-line) rising above the water—certain evidence that the ship had recently offloaded goods previous to stopping in Callao. This ship, the Populo, was a mercury ship returning south from Acapulco after delivering mercury for use in the Mexican silver mines for amalgamation. The ship had no legal right to offload goods before reaching

374 Treasurer of Lima, Juan López de Hernani, reported to the Crown that a boat arriving in Callao from Panama City contained pipes (large barrels) of wine that had been assessed as vinegar. See “Informaciones: Juan López de Hernani,” 28 April 1620, AGI Lima, 223, N. 7.

375 AGI Indiferente, 739, N.81 refers to the right of refusal to open cajas (trunks) and fardos as early as 1579. This right was affirmed in several cédulas issued on December 22, 1579 (Madrid), January 24, 1580 (Madrid), on February 22, 1580 (Madrid), and again on May 26, 1580 (Badajoz). Alfonso García-Gallo, Cedulario de Encinas: Estudio e indices de Alfonso García-Gallo. Vol. I (Madrid: Ediciones de Cultura Hispánica, 1990), 310-312.

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Callao, a policy that had stood for roughly a century. Such evidence could be used by inspectors to demand a quick search of all the goods on board, even sealed fardos.376

In addition to this sort of contraband strategy, which represented an abuse of the generous container rules, was the smuggling of goods aboard the armada ships, which were strictly prohibited from carrying cargo beyond that which was deemed to be for personal use. One of the more notorious examples of such smuggling aboard a warship was that of the San Cristóbal, a ship bringing up the rear of the 1579 Treasure Fleet, captained by Don Cristóbal de Eraso. Tipped off by informants about the overloaded ship, Philip II made an example of the ship by ordering a large group of inspectors to wait along the arrival route on the Guadalcanal River. Members of the crew, from the captain himself, to the clergy and those of the lowest rank were found to have been stuffing the ships containers and crevaces with all sorts of valuables. This particular instance of contraband aboard a warship seems particularly bold and excessive because it left a trace in archival documents, but the practice was likely widespread. The state, in this case, punished the crimes of the San Cristóbal quite lightly, such that, according to on historian, it would seem that it “favored many of these activities.” Since the state relied so much on the “private patrimonies” and initiative of its farflung generals to protect its territories and trade routes abroad, it would have to indulge them to a degree by only lightly punishing their abuses.377

376 AGI, Lima 76. Reference appeared in L. A. Clayton, “Trade and Navigation in the Seventeenth-Century Viceroyalty of Peru,” Journal of Latin American Studies 7, no. 1 (May, 1975): 1-21, 15.

377 Details of the bust of the San Cristóbal are taken from Pablo Emilio Pérez-Mallaína Bueno and Carla Rahn Phillips, Spain's Men of the Sea, 111-114, 113.

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Beyond the fact that merchants possessed considerable leeway in the reporting of goods in each fardo and the right to keep them concealed there was, as well, the common practice of bribery in the counting and taxation of fardos themselves. As the primary unit of account and measurement for mostly textile bundles, merchants had a number of options for concealing value in fardos, from stuffing them with excessive goods, to misreporting the mixture of goods contained therein, to lying about the quality of goods.

Additionally, a conniving administrator could simply mark down a specific number of fardos for taxation purposes and allow merchants to pocket the untaxed profits for uncounted fardos. Juan and Ulloa describe the routinization of such behavior in

Portobelo. In this case, a standard bribe of eight pesos could buy the good will and connivance of “men of good will who will harm no one.”378

What is remarkable about Juan and Ulloa’s account is the universality of illicit activity that they so blithely recount: fardos are packed with unreported or illicit goods, they are miscounted and spirited away with the full knowledge of administrators, and fees for such illicit activity are standardized and known by all. Even slaves, piezas de negro, are undercounted as standard units of account and like fardos and uncounted slaves were imported into the Isthmus for re-export to Lima and other Pacific Coast communities..379

All of this happened with the full knowledge of the king’s officials even when the prohibitions against such activity are clear to all involved. There seems even to have been

378 Jorge Juan, Antonio de Ulloa, and John J. TePaske, Discourse and political reflections on the Kingdoms of Peru, their government, special regimen of their inhabitants, and abuses which have been introduced into one and another, with special information on why they grew up and some means to avoid them. (Norman: University of Oklahoma Press, 1978), 50.

379 Juan and Ulloa, Discourse and Political Reflections, 49.

168 an open competition for smuggled goods among the administrators of ports.380 Port bosses were loath to be left out of smuggling networks lest they lose a chance to top up inadequate salaries. Ports neglected by the official convoy trade stood to be doubly marginalized if they drove off powerful smugglers. Largely ignored by the Treasure Fleet and receiving little sympathy from royal officials when requesting suelto licenses, such communities feared the further indignity of being shut out of the illicit markets as well.

Individual merchants and local residents who supported and serviced the transisthmian networks as innkeepers, shop-owners, muleteers, and grocers also drew smuggled silver to their towns and ports by offering discounts to customers who paid in unregistered silver.381 This silver was then used to either buy goods at the fair, or sent back on the returning galleons. Because unregistered silver was not prone to sequestration by the Crown, it could more safely make its way back to Seville and remain in the possession of those who transported it.382

For the more modest or careful smuggler, there was the simple matter of claiming goods or silver falsely as part of one’s pacotilla--that is, as the permissible amount of goods they were allowed to sell in ports along sailing routes. This sort of arrangement between agents of the Crown and individual sailors seems to perfectly encapsulate

Habsburg philosophy on how to manage its imperial budget and enforce commercial

380 Juan and Ulloa, Discourse and Political Reflections, 51.

381 Technically, the coinage of unregistered silver was a capital offense; therefore much of it would remain in bar form. Hamilton, Price Revolution, 17. On the specific penalties, which include confiscation and fines of up to four times the value of unregistered bullion, see Recopilación de Indias, lib. IV, tit. XXIII, ley VI and lib. IX, tit. XXXIII, ley LXIV. 382 María Encarnación Rodriguez Vicente, El Tribunal del Consulado de Lima en la Primera Mitad del Siglo Xvii (Madrid: Ediciones Cultura Hispanica, 1960), 262.

169 rules. Nominal wages for sailors, like wages for government officials, were meager and arrangements like the pacotilla represented an opportunity to augment them. Rather than pay sailors and officials higher wages, the Crown seemed to prefer to run its empire and its ports on the cheap. As could be expected, monitoring such transactions gave inspectors fits.383

Another factor that made monitoring difficult was the enervating conditions of the simple trip to Portobelo by royal inspectors from Panama City, which took between one and two weeks depending upon conditions. In order to avoid stifling heat, many would cover the Panama to Casa de Cruces route at night. Once in Portobelo, they were expected to check the paperwork of each ship, find out where the vessels had stopped along the journey and if they had encountered other boats, and identify any unlicensed foreigners who might be traveling with the fleet. This went on before they undertook what can only be described as a cursory check of the cargos against their registers by marking off the bulk containers in which they arrived. After 1579, merchants could (and did) reject attempts to open containers at sites throughout Spanish America and the

Caribbean. All of this they did without the necessary staff and without a customs house in Portobelo until 1630.

From the outset of the early settlement to the establishment of networks of

Isthmian trade and migration, the Audiencia of Panama and vice royal authorities in Peru found it difficult to control the authorities and merchants of the Atlantic ports. The abandonment of Nombre de Dios as the fleet terminus following its sacking by Francis

383 Woodrow Borah, Early Colonial Trade and Navigation between Mexico and Peru, 70.

170

Drake and the subsequent transfer of the fairs to Portobelo would mark a Crown pattern of depopulating settlements which would repeat itself many times over the ensuing decades. King Philip III would similarly order the depopulation of problematic regions throughout the Caribbean when they had become unmanageable or indefensible. The

Banda del Norte in Santo Domingo, a coastal strip in the northern Dominican Republic would meet this fate in 1603 for its population’s open willingness to participate in rescate, a form of captive contraband trade. The specific locations in the Banda del Norte that were targeted for depopulation were Puerto de la Plata, Bayajá y la Yaguana. As harsh as this punishment was, blanket pardons were issued to citizens who had engaged in rescates before they were forcibly removed. Rescate has a number of positive connotations, from ransom to rescue or relief, but in the commercial context, it referred to forced or captive transactions. Rescates were a form of mild or violent extortion often by pirate or privateer ships of port towns, the inhabitants of which were forced to buy the wares of rescatadores or pay them to leave in peace. 384 In the coastal city of Cumaná in

Nueva Galicia (modern-day Venezuela), governor Pedro Suarez Coronel carried out the

Crown’s demand that the city be depopulated as punishment for rescates and the growing contraband trade in tobacco with English, French, and Dutch privateers in 1606.385

384 See AGI Santo Domingo, 868, L.3, F.177R-179R and AGI Santo Domingo, 868, L.3, F168R-172V. On the many variations of rescate commerce and the social profile of many of the participants, see Kenneth Andrews, The Spanish Caribbean: Trade and Plunder, 1530-1630 (New Haven: Yale University Press, 1978), especially 70-80. He defines the phenomenon broadly but stresses the undercurrent of violence that always accompanied these transactions.

385 Santo Domingo, 869, L.5, F.59V-61R. See Marcy Norton, Sacred Gifts, Profane Pleasures: A History of Tobacco and Chocolate in the Atlantic World (Ithaca: Cornell University Press, 2008), 148-156 for a discussion of the international participation in production and distribution of tobacco in the Caribbean during this period and the Spanish Crown’s attempts to develop and protect its monopoly.

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Depopulation, however, was not the Crown’s only response to widespread law breaking. Blanket pardons were offered in a number of instances in an effort to re- establish commercial regulations and reiterate that the laws would be enforced more strictly going ward. Governor and captain General of Santo Domingo, Antonio Osorio, refers to general pardons issued by the Crown for communities in Cuba, Isla Margarita, and Puerto Rico in a letter to the Crown in 1605.386 It should be noted that claiming that rescate transactions took place as opposed to contraband left exactly how much of this smuggling was voluntary an open question. Reports of English, French, and Dutch vessels—armed to the teeth with cannon, harquebuses, and muskets—tended to garner sympathy for the victims of such confrontations among Crown officials, provided that said claims could be corroborated.387 This sort of defense based on the claim that one engaged in illicit commerce under duress was a common feature in the Caribbean and elsewhere. Other ship captains would engage in illicit trade under the guise of arribadas forzadas (forced arrivals).388 Given the more regular patterns of licit traffic along the fortified ports of Santo Domingo, Cartagena, Portobelo, and Havana such defenses for breaking commercial laws would find less sympathetic ears than they would in more sparsely sailed and settled seas like the coast of Buenos Aires (to be discussed in chapter

3).

386 Santo Domingo, 869, L.5, F74R-76R; Santo Domingo, 869, L.5, F.33R-34R; Santo Domingo, 868, L.3F.172V-174R; and Santo Domingo, 868, 168R-172V.

387 Santo Domingo, 869, L.5, 73R.

388 Arribadas forzadas were a common phenomenon especially of less trafficked sea routes such as the Atlantic coast of the Southern Cone and in Pacific ports. I will address arribadas forzadas in greater depth in Chapter 3.

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These less sympathetic ears tended to belong to local officials who had an immediate stake in local commercial activities. While Crown officials took a long view of smuggling and might shrug off specific transgressions, local administrators like Cuban governor, Pedro de Valdés were more inclined to crackdown on smuggling. In 1605, unable or perhaps lacking the resources to punish individual smugglers on the island, he collectively accused the entire colony of smuggling. King Philip III’s response was to issue a general pardon.389 In the hands of hotheaded local officials, accusations of smuggling were often wielded for revenge, and higher ups seemed to understand that such accusations were a means of settling scores, punishing those who violated not laws but illicit norms, or removing competitors. In many cases like these, Crown officials prioritized political stability over strict obedience in the commercial realm. The prospect of rebellion or open revolt was often met with a spirit of compromise and pardon.

The Crown was left with a conundrum when it came to striking the right balance between the strict enforcement of commercial rules, which was a clear effort to support powerful merchants mostly based in Seville and Lima, and a more sanguine approach to smuggling, a nod to the needs of smaller merchants and local port Contraband hurt the great merchants who paid their taxes and registered and warehoused their goods until fairs were held, but even they understood that more invasive measures and rigorous inspections were a drag on commerce for everyone. Allowing inspectors to open fardos

389 Wim Klooster, “Inter-Imperial Smuggling in the Americas, 1600-1800” in Soundings in Atlantic History: Latent Structures and Intellectual Currents, 1500-1830, Bernard Bailyn and Patricia L. Denault, eds. (Cambridge, Mass: Harvard University Press, 2009), 144-145.

173 could cause delays, which punished law-abiding merchants and smugglers alike.390 On the other hand, the sort of inadequate monitoring that took place on the Isthmus created incentives for smuggling, for in a period of increasing averia taxes contraband goods could always undercut the prices of taxed goods.

From the acceptance of pacotillas, to sealed fardos, trunks, and pipas from 1579 onward, to the inadequate official and institutional presence at Portobelo and in Pacific ports, and the general willingness of the metropolitan officials to seek compromise in the face of widespread lawbreaking, it would seem that smuggling was not a top priority for the Crown. The Crown’s insistence, as well, that Portobelo and Panama remain the choke point of imperial trade despite faster routes and more healthful options both to the north in Mexico and via the Platine river delta in the Southern Cone indicated that it was more concerned with the loyalties of powerful merchants, miners, and encomenderos who had a stake in the status quo than with the smaller merchants, consumers, and subjects in lesser ports. But with the end of the Dutch Truce in 1621, the increasing resort to the tomas de plata, and the sharp increases in the avería tax in the 1620s, this tolerance for law breaking was fading. With the rise of Philip IV, Spain would declare war on contraband on the Iberian Peninsula itself and abroad.

Portobelo remained the Crown’s choke point because the narrow waist of land between Portobelo and Panama City was, by the turn of the seventeenth century, the path of least resistance between oceans, which is to countenance at least some degree of

390 On the frantic pace of inspections, see “Carta Doctor Diego de Villanueva Zapata,” 1 April 1579, AGI Panama, 13, R. 18, N. 88. Villanueva simultaneously acknowledge both the need for more thorough inspection and the impossibility of ever making sure all goods are registered and taxed.

174 maritime and geographical determinism. Initial discussions about building an easily traversed route between oceans began in Mexico in the sixteenth century.391 Nicaragua was an early candidate due to its navigable rivers, which linked up with Lake Managua.

There would continue to be debates about alternative routes across Central America.

During the 1850s, Cornelius Vanderbilt’s Accessory Transit Company provided dependable passenger service across Nicaragua to travelers moving from the East Coast to the United States to the gold mines of California. Despite these other possibilities when it came to moving cargo, Portobelo would remain the location of the trade fairs.

Sunk costs and institutional imperative played a significant role in confirming

Portobelo’s central role in the Spanish commercial system. If the built environment of the town itself left little to commend it in this outsized commercial role, a series of fortifications, beginning with the construction of several military forts in 1597 would make it more secure. Fortification building would continue throughout the seventeenth century, a period during which England, France, and Holland would all become increasingly active in the Caribbean and South Atlantic. The widening of the Camino

Real, which served as the main overland route to Panama, would be another sunk cost that entrenched the Portobelo-Panama crossing. These investments in security and infrastructure, only further encouraged tertiary activities like mule and other livestock breeding, in Costa Rica and Nicaragua and the growth of sizeable administrative

391 By the 1560s, reports of the greater expense of sending goods across the led many to lobby for the movement of goods across Mexico instead. Borah, Early Colonial Trade and Navigation between Mexico and Peru, 81-82.

175 apparatus on the Pacific side of the Peninsula in Panama City. Portobelo, then, despite all of its unpleasantness, would remain the nucleus of Spain’s southern flank.

In addition to the government institutions such as the Casa de Contratacion and the Consejo de Indias that accompanied the routinization of the Tierra Firme convoy, the

Portobelo fairs, and the transisthmian crossing were the powerful Consulados de

Comercio (merchant guilds), which formed in Mexico City (1592) and Lima (1613) to join the consulado de Sevilla. The consulados would work tirelessly to protect the interests of the merchants wealthy enough to become members. This bundle of institutions arose, first and foremost, to reduce security risks. But while the first half- century of the convoy system’s existence (1560-1610) could by most fiscal measures be considered a resounding success, security came at a high cost. Once the smoothly functioning conduit of most of the global economy’s precious specie and the envy of

Spain’s competitors, the seasonal convoys, by the turn of the seventeenth century, suffered when the entry of other capable merchants and privateers rendered this rigid attempt to control the movement of goods, specie, and slaves quite ineffective.392 The

English and Dutch, especially, would become increasingly active in the Caribbean in the seventeenth century. In 1655, the English wrested and established control of Jamaica from Spain, while the made Curaçao its main port of Atlantic trade in 1662. Both islands became lodgments for seemingly endless forays into Spanish

392 J. H. Elliott and Jorge Cañizares Esguerra, especially, have written extensively on how the English strove to recreate the Spanish experience, from its conquest strategies to its discovery and control of mining centers. See Jorge Cañizares-Esguerra, Puritan Conquistadors: Iberianizing the Atlantic, 1550-1700 (Stanford, Calif: Stanford University Press, 2006) and J. H. Elliott, J. H., Empires of the Atlantic world: Britain and Spain in America, 1492-1830 (New Haven: Yale University Press, 2006).

176 territory, but then none of this was new to Spanish colonial authorities.

The establishment of the seasonal fairs at Portobelo came at an odd time in that it happened in the context of a general retreat of seasonal trade fairs elsewhere. In Castile,

Medina del Campo’s fair experienced a sharp decline during the second half of the sixteenth century. Along with the dwindling numbers at the fair itself, writes Angel

Garcia Sanz, the population of Medina del Campo “fell from 15,000 inhabitants in 1561 to a mere 5,373 in 1626."393 Madrid, the voracious new capital, it turns out, was far more easily supplied with goods that didn’t have to travel the difficult mountain routes an extra

200 kilometers to reach it. Medina del Campo was part of a more general European retreat of trade fairs. Sociologist Max Weber attributes this retreat to the rise of urban trading networks.394 Historian Regina Grafe points out that trade fairs had lost their purpose by the seventeenth century and no longer reduced transaction costs in any significant way. Along with Weber and Henri Pirenne, she seems to agree that once regular trade routes had been established and price and exchange information had become more widely (even publicly) available, there was less need for merchants to group together into convoys or caravans.395

393 Angel Garcia Sanz, “Economic Crisis and the Policy of Reform” in I. A. A. Thompson and Bartolomé Yun Casalilla, The Castilian Crisis of the Seventeenth Century: New Perspectives on the Economic and Social History of Seventeenth-century Spain. (Cambridge: Cambridge University Press 1994), 28.

394 Weber’s mentions several benefits of urban trading, namely that cities offered rational authority figures, equal enforcement of laws, class-based social groupings, and anonymity. See “The city (non-legitimate domination)” in Economy and Society: an Outline of Interpretive Sociology. Tr. E Fischoff, H. Gerth, A. M. Henderson, F. Kolegar, C.W. Mills, T. Parsons, M. Rheinstein, G. Roth, E. Shils and C. Wittich, eds. (Berkeley: University of California Press, 1978) Vol. 2, ch. XVI: 1212-372.

395 Economy and Society: an Outline of Interpretive Sociology and Henri Pirenne, Medieval Cities: Their Origins and the Revival of Trade (Garned City, NY: Doubleday, 1956).

177

This general retreat from seasonal or annual fairs meant a shift away from patterns of more personalized commodity and informational transactions and toward the impersonal commerce of commercial hubs such as Amsterdam and London, which were always, in a sense, open for business. While there remained spikes in supply and demand that could certainly rival the frenzied activity of Portobelo or Acapulco, for instance, when fleets arrived or departed with goods and specie, so much of the chaos of Portobelo was absent elsewhere. Merchants could secure lodging and warehouse space in communities that saw ongoing market activity of the sort that was common in any city.

There was, quite simply, something approaching an organic economy present in Antwerp,

Seville, Amsterdam, and London that didn’t really exist in stifling, disease-ridden

Portobelo.

Specific information about the Portobelo fairs, like information about trajín paths,

Pacific routes and ports, and even Spanish shipbuilding was a carefully guarded trade secret. Aside from well-connected merchants in Lima and their surrogates in Panama

City, few people knew about about when the fair might take place and exactly what sorts of goods would be available. Very little was written about the paths across the isthmus.

The Spanish Crown and its powerful merchants jealously guarded this sort of information.396 Needless to say, those engaging in illicit trade sought information where

396 There was a bit of a mania for secrecy on the part of Charles V and Philip II throughout the sixteenth century. Letters, maps, and shipping details were often classified. Philip II issued a cédula in 1592 in which he warned that news and mail ships guard classified information so that secrets would not end up in the wrong hands.” María Montáñez Matilla, El Correo en la España de los Austrias (Madrid: Consejo Superior de Investigaciones Cientificas, Escuela de Historia Moderna, 1953), 49.

178 they could and were far more responsive to the immediate needs of settlers on the isthmus and along the Pacific coast.

The Portobelo fairs, then, became somewhat of an anachronism just as Antonelli had put the finishing touches on the forts that would defend them. The machinery of empire had decreed that one branch of the treasure fleet terminate in Portobelo, and it remained thus into the Bourbon era of the eighteenth century. Security concerns, stability, predictability, ease of revenue collection, and administrative imperative guaranteed the fair's longevity, even if it spent its last century in a chronically weak state. The Spanish monarchy was an odd pioneer that stood out among the other regnant European powers then partaking in Caribbean commerce. The Spanish Crown, concerned with collecting its royal fifth in order to fund its wars and pay off its debts, seemed satisfied with the less-than-profitable returns guaranteed by strict adherence to the initial trade scheme established in 1565. The central problem, of course, remained that of timing. No matter how meticulous planning might have been, the merchants of the Caribbean were privy to market information that followed its own imperatives and sought its own outlets. Spanish merchants, tethered as they were to Habsburg constraints, could avail themselves of no such opportunism without breaking the law.

The Spanish Crown prioritized the security needs of the few nodes of this communication network over the political and commercial needs of its smaller settlements in a way that it similarly starved secondary ports and settlements of material necessities, so much so that it neglected all but its wealthiest wholesalers. It was one thing to endure a long tiempo muerte (dead time) without the necessities of life, a

179 situation that would create political crises for the Crown, but it was quite another to be awaiting news while production and storage decisions were pending.397 Goods of local provenance could be substituted for cherished goods from Iberia—maize for wheat, local cloth for Flemish cloth—but news from home could not. And for this reason, there was no shortage of unofficial couriers plying the waters of the Caribbean and the Atlantic seaboard of South America.398

By the 1620s, the Crown, it would appear, had had enough of the smuggling that had begun to more deeply cut into its revenue base. All signs point to dwindling tax revenues and widespread exit from the official commercial system on the part of both administrators and consumers, many of whom mere miles from the Portobelo fairs.

“Even,” writes John Minter, “years where their countries were at war with Spain,” one could count on English and French merchants plying the waters between San Lorenzo and San Felipe, itinerant merchant ships offering samples and sweetening the pot with satchels of gold coins.”399 Smuggling throughout the empire would come to be considered a serious crime akin to lèse-majesté with the start of the Thirty Years War and end of the Dutch Revolt in 1621. While it is not exactly clear how this might have changed impressions among the smugglers and consumers themselves, what is clear is

397 Pedro Pérez Herrero, Comercio y mercados en América latina colonial (Madrid: Fundación MAPRE, 1992), 93 reports that some ports were forced to wait seven years between fleet visits.

398 Beyond Morineau’s work, Woodruff D. Smith, “The Function of Commercial Centers in the Modernizations of European Capitalism: Amsterdam as an Information Exchange in the Seventeenth Century,” The Journal of Economic History 44, no. 4 (Dec., 1984), 985-1005 traces the rise of Amsterdam as Europe’s central information exchange and the place where channels of correspondence tended to culminate.

399 Minter, The Chagres River, 184.

180 that tolerance of the trade would wane in the coming years as Philip IV developed more robust enforcement institutions and waged wars of retaliation by seizing goods and collectively punishing Protestant interlopers.400

Conclusion: Silver, Fairs, and Mules and the “First Globalization”

This chapter has addressed taxation, geography, opportunism, and administrative incoherence and connivance as factors that encouraged high levels of contraband trade at the Portobelo trade fairs. One final but essential element of Spanish commerce that seemed almost to beg smugglers to enter into this jealously guarded system was coordination. Coordination, it turns out, came at a high cost. While there would be a mix of losses and gains at every fair, unless enough merchants came away from each fair with the general perception that there had been fair dealing and that there was a good chance that subsequent fairs would continue to offer a chance at fair profits, one could only expect participation to dwindle. In fact, it was the slow erosion of this sort of confidence that doomed the fairs in the end. By the turn of the eighteenth century, the once annual fairs had become so infrequent that the fair held in 1708 was the first of its kind in twelve years.401

Everything hinged upon the meeting of sellers and buyers at some state approaching equilibrium because Portobelo itself was unequipped to serve as a year-

400 Philip IV and his favorite, the Count-Duke of Olivares, did this by waging a war of reprisals with the establishment of the Almirantazgo de los Paised Septentrionales, an Admiralty located in Madrid, in 1624.

401 John R. Fisher, The Economic Aspects of Spanish Imperialism in America, 1492-1810 (Liverpool: Liverpool University Press, 1997), 115.

181 round warehousing or administrative center. It had neither a sufficient number of permanent settlers nor the infrastructure to serve that function. In this sense, the fair at

Portobelo was much like the medieval fairs that had so long tied together inter-regional commercial and financial networks in commercial centers such as Piacenza, Besançon, and Medina del Campo.402 Unlike the Portobelo fairs, however, Medieval fairs were at least to a certain extent sidereal—that is, the coming and going of transhumant flocks, the harvest of grains and oils, and the ripening of fruits and the maturation and conditioning of wine were among the processes that rendered the seasonal offerings that drew in

Medieval merchants and bankers. In Portobelo, muleteers, encomenderos, boat crews, and local merchants counted on no such seasonal guarantees. If they overproduced, say, corn to feed the mules that plied the trajín and no fair was held, they incurred a loss. If they held back the production of profitable colonial products like hides or dyes and fleets arrived unexpectedly, they missed an opportunity that might not appear again for 2-3 years. And waiting always meant a drain on capital and productive capacity. It’s no wonder, then, that nimbler suppliers who followed neither followed such strict schedules nor abided by Crown regulations thrived in such a commercial system.

Despite the clear threats presented by interlopers and the general tendency to look for scapegoats amongst Spain’s religious and political enemies, it was the internal threat posed by Spanish, Portuguese, and other colonial subjects that perhaps posed the biggest

402 While the fairs mentioned worked, for a time, in a complementary fashion as part of a Continent-wide network of commodity and financial exchange, each would have its heyday and compete with the others for pre-eminence. Piacenza, in 1579, would replace the fairs at Besançon and, eventually, Medina del Campo as the dominant exchange fair. And as such, it would put Genoese bankers in control of Spanish finance for the decades that followed. Hugh Thomas, World Without End: Spain, Philip II, and the First Global Empire (New York: Random House, 2015), 205.

182 threat to licit commerce. The smugglers that operated underneath the imperial umbrella would remain yet more troubling to the merchants and administrators who monitored the fairs. Historian Alfonso Quiroz, places much of the blame for corruption in colonial Peru on the delays that came with the insistence that trade be restricted and move at a glacial pace dictated by the flota regulations. He draws the following telling quote from Mariano eighteenth-century advisor to the Crown, Machado de Chaves, “[E]l tiempo traidor maligno de los establecimientos que lo relaja todo....[O]tra especie de tiempo... se ha hecho indulto de la malicia, desconocer al dueño del precepto, y de la misma confianza ha labrado la ambición una infidelidad de usuras, creciendo de lo inicuo a lo pésimo

(Time, that malign traitor of institutions that relaxes everything, the other kind of time…that pardons malice, ignores orders, and with the same confidence carves out usurious loyalty, which grows from the iniquitous to the abysmal).403 A late contributor to arbitrista debates on the decline, Machado de Chaves wrote eloquently about the attenuation of authority that came with the obsessive restrictions of the flota trade.404 For him, time turned erstwhile honorable subjects into disloyal opportunists.

Another telling way that norms and rituals came to coalesce around this “other kind of time” is on display in Alejandra Osorio’s perceptive article, “The King in Lima:

Simulacra, Ritual, and Rule in Seventeenth-Century Peru.” In it, she describes how the presence of the king and the timing of transfers of power were meticulously reproduced

403 “Estado político” (1747), f. 2 from Alfonso Quiroz, Corrupt Circles: A History of Unbound Graft in Peru (Washington, DC: Woodrow Wilson Center Press, 2008), 36. “[…] Time, that evil traitor of institutions that relaxes everyone…that other kind of time, which pardons malice, disregards its owner, and confidently carves into ambition a usurious disloyalty, increasing lawlessness to wickedness […].”

404 Quiroz, Corrupt Circles.

183 in order to keep colonial subjects close and engaged. “[R]oyal legitimacy was crafted” in the Americas by recreating the “presence” of the king through parades, rituals, and autos da fe.405 Such displays were a way to build “symbolic capital” among subjects who might otherwise become alienated.406 These sorts of baroque displays often took place several weeks after informal knowledge of the events (deaths, coronations, proclamations) had reached the ears and eyes of subjects in Lima, which lay at the outer edge (along with more distant colonies like the Philippines) of “formal” communication networks.407 Such a disjuncture between formal and informal communication channels would wreak havoc in the realm of commerce and create a legion of disloyal merchants who, rather than adhere to official news, sought out “the freshest advices” from foreign sources or, in the case of Lima, downriver via Buenos Aires.408

405 Alejandra B. Osorio, "The King in Lima: Simulacra, Ritual, and Rule in Seventeenth-Century Peru,"Hispanic American Historical Review 84, no. 3 (2004): 447-74, 449. See also, Alejandro Cañeque, The King's Living Image: The Culture and Politics of Viceregal Power in Colonial Mexico (New York, N.Y.: Routledge, 2004), 119-155 for an in-depth look into how rituals of power were translated to the viceroyalty of New Spain.

406 Osorio, “The King in Lima, 457. On how the king established presence over his subjects, Osorio cites Xavier Gil Pujol, “Una cultura cortesana provincial: Patria, comunicación y lenguaje en la monarquía hispánica de los Austrias,” in Monárquia, imperio y pueblos en la España moderna, ed. Pablo Fernández Albadalejo (Alicante: Univ. de Alicante, 1997), 225–58. This is also established in the Siete Partidas; see partida II, título I, ley V.

407 Osorio, 460. José de Buendía noted that the viceroy had learned of the king’s death from two newsletters dated Nov. 2 and 3, 1700, and that reached Lima on April 27, 1701; “Parentacion real al . . . Carlos II,” Lima, 1701, ff. 19–21, BNCh. Unofficial news of Charles III’s death circulated for several weeks before the formal announcement appeared in Lima. One would expect that communications a century before were at least as slow to arrive. News of Charles V’s death similarly reached different parts of the empire (Mexico and Peru) before it reached geographically closer locations like Panama, a fact that highlights the disjuncture between geographical and political distance. Borah, Trade and Navigation between Mexico and Peru, 63.

408 John J. McCusker, “The Demise of Distance: The Business Press and the Origins of the Early Modern Atlantic World,” The American Historical Review 110, no. 2 (April 2005): 295-321.

184

For black market merchants, Portobelo meant a unique convergence of manufactured goods from the all corners of Europe and specie from the Andes, which during the period under discussion was the world’s greatest source of silver. It also meant a maritime terrain “beyond the line” that was next to impossible to effectively police and surveill. If the fair itself remained more or less well protected, the “dead time” between fairs was a time of scarcity, disorder, and only the thinnest veneer of institutional presence. There was simply no way to defend the sparsely settled Tierra Firma coastline with willing men, and the Guardacostas often found itself outmanned and outgunned.

Portobelo effectively closed for business for most of the year leaving behind nothing but dark matter that evaded the eyes and ears of Spanish officials. But then, from a global perspective, Portobelo’s work had been accomplished. What issued forth across the

Isthmus greased the gears of economies as far away as those of East Asia.

In addition to Portobelo’s central role in the Spanish commercial system, there were global forces that shaped the transactions that took place there as well. From 1580 to 1585, some sixty-five percent of Spain’s registered silver passed across the isthmus.409

While Japan produced silver in large quantities throughout the seventeenth century, it remained in a secondary position to Potosí when it came to meeting the global demand for silver bullion.410 Ming China’s expanding economy is central to any discussion about

409 Mena García, La sociedad de Panama, 148.

410 For a general discussion of global bullion flows, see Ward Barrett, “World Bullion Flows, 1450-1800” in The Rise of Merchant Empires, 224-54. On South American production and export, see Harry E. Cross “South American Bullion Production and Export, 1550-1750” in Precious Metals in the Later Medieval and Early Modern Worlds, ed. J. F. Richards (Durham, NC: Carolina Academic Press, 1983), 397-424; Dennis Owen Flynn, Arturo Giráldez, and Richard Von Glahn, Global Connections and Monetary History, 1470-1800 (Burlington, VT: Ashgate, 2003); and Juan Gil, Hidalgos y samurai: España y Japón en los 185 what drove this global demand, for in 1436 the Ming Court began collecting part of its land tax in silver instead of grain. By the 1570s, just as production was spiking in Potosí and Zacatecas after the implementation of the mercury amalgamation process, the Wanli

Emperor’s decision to institute what came to be known as the “Single Whip” fiscal reforms, a taxation revolution that greatly simplified the tax code by consolidating tax payments into lump sums that could be paid in bullion.411 In response, bankers and financiers, from Portobelo, Acapulco, Amsterdam, Genoa, and elsewhere increasingly sought silver both as a means to purchase high quality goods from East Asia and to take advantage of the high profits available in gold-silver arbitrage.412 And Ming China, for its part, would become more closely drawn into a global network of maritime trade that would far exceed the volumes and profits of the Silk Road and Indian Ocean trade networks that had previously been so profitable.

siglos XVI y XVII (Madrid: Alianza Editorial, 1991). Charles Boxer, “Plata es Sangre: Sidelights on the Drain of Spanish-American in the Far East, 1550-1700” Philippine Studies 18, no. 3 (July 1970): 457-478, 458 provides excellent summary descriptions based on primary sources of the various silver flows out of the Iberian sphere. The two main maritime routes, Boxer recounts, were via the Manila Galeons from 1572 onward and through Portobelo and Veracruz to Seville. There were, of course additional tendrils in the global silver trade through which additional streams of licit and illicit silver moved. Much silver traveled from Lisbon to Goa and beyond; aboard the ships of the Dutch and English East India Companies to transhipment points in Indian Ocean ports such as Mumbai and Batavia; and through Ottoman and Safavid ports and cities via Aleppo, Basra, and the Persian Gulf, Ibid., 457-464.

411 Kendall W. Brown, “Workers' Health and Colonial Mercury Mining at Huancavelica, Peru,” The Americas 57, no. 4 (2001): 467–96; Guillermo Lohmann Villena, Las minas de Huancavelica en los siglos XVI y XVII (Lima: Pontificia Universidad Católica del Perú, Fondo Editorial, 1999), and Leonard John Goldwater, Mercury: a History of Quicksilver (Baltimore: York Press, 1972): 268-269.

412 Dennis O. Flynn and Arturo Giraldez, “Born with a ‘Silver Spoon’: The Origin of World Trade in 1571,” Journal of World History 6, no. 2 (Fall, 1995): 201-221, especially 7. Two earlier and more comprehensive works on the bimetallic ratio of gold to silver in the sixteenth and seventeenth centuries is J. Laurence Laughlin, A New Exposition of Money, Credit and Prices (Chicago: The University of Chicago Press, 1931) and Earl Hamilton, Price Revolution, 71.

186

What this meant for Portobelo was that its main transit item, silver, would rise to the fore among its other lucrative items, which included dyestuffs, pearls, sugar, and eventually, tobacco. Silver was at once an easy way to settle accounts and the commodity with the most stable demand, so long as the growing Ming Dynasty continued to accept its tax revenues in bullion form.413 Thus it was that licit Spanish silver, especially its unstamped and undetected versions, had become the global commodity par excellence by the 1570s, leading two historians, Dennis Flynn and Arturo Giraldez, to make the claim that globalization truly begins with the founding of the Philippines in 1571.414 Spanish reales were accepted, often in the form of piezas de ocho reales (pieces of eight), throughout the Indian Ocean and East Asia.415

Historian of the Portuguese Empire, C.R. Boxer uses the excavation of a 1656

Dutch to demonstrate the centrality of both Mexican and Peruvian coinage in

Asia’s increasingly monetized economies. From 1550-1585, he writes, pieces of eight from Mexico were in high demand in Asia. Mexican-minted coins reached Asia by following three general paths: aboard Manila Galleons to be exchanged for Chinese goods, via Lisbon after being exchanged with Portuguese slave merchants and eventually

413 Arturo Giraldez, The Age of Trade: The Manila Galleons and thee Dawn of the Global Economy (Lanham, Maryland: Rowman & Littlefield, 2015), 34-37, 36. Giraldez further bolsters the case for China’s central role in this early stage of globalization by pointing out how this fiscal reform was carried out amidst explosive population growth. China’s population grew from 255 million in 1500 to 268 million in 1650; thus, not only did the Single Whip reform substitute silver for payment in kind and increase demand in relative terms, but there were simply more subjects paying into Ming (and later, Qing) coffers, which increased silver payment in absolute terms. Giraldez cites F. W. Mote, Imperial China 900-1800 (Cambridge, MA: Harvard University Press, 1999), 743-745 for this population data.

414 Flynn and Giraldez, “Born with a "Silver Spoon," 201–221.

415 Boxer, Plata es Sangre, 457-463.

187 being sent to “Golden Goa,” and along old Ottoman silk trade routes to be traded for raw silk and, one would assume, eventually further eastward to the outer reaches of Persian cultural space in Moghul India. China, in the words of Portuguese historian, Vitorino

Magalhaes Godinho, was a tireless suction pump, or bomba aspirante. Portobelo, then, sent its own flow of silver to the Ming Dynasty’s bomba aspirante to pay for slaves upon

Portuguese ships, whether the Crown approved or not.416

The first globalization, then, was a double movement monetization that saw supply and demand for silver explode after the 1570s. Almost all of this silver was carried on the backs of slow-moving mule- (and llama) trains from Potosí to Arica,

Panama to Portobelo, Zacatecas to Veracruz, etc. Because it was a luxury item, it was rarely set floating on the Chagres when silver merchants sent it to Portobelo as exchange for manufactures from Seville. Loads from 200-250 pounds moved along the single file track carved out of the forests of the Isthmus of Panama. For historian Arturo Giraldez, this first globalization was bracketed by the inauguration of semi-regular Manila Galleon voyages in 1572 and the equilibration of gold and silver prices in Ming China in the

1640s.417 The most profitable period of gold-silver arbitrage commenced in the 1570s,

416 Boxer, Plata es Sangre, 457-458.

417 Giraldez, The Age of Trade, 31-34 and 91, 145-146. Richard von Glahn, Fountain of Fortune: Money and Monetary Policy in China, 1000-1700 (Berkeley, Calif: University of California Press, 1996), 214. “From 1592 to the early seventeenth century gold was exchanged for silver in canton at the rate of 1:5.5 to 1:7, while in Spain the exchange rate was 1:12.5-1:14, thus indicating that the value of silver was twice as high in China as in Spain.” Giraldez, 145. “Pedro de Baeza of Portugal, who served for three decades in the East Indies, actively promoted the trade of Chinese gold for silver from New Spain or Castile, stating in 1609 ‘that bringing gold from China means a gain for more than seventy-five or eighty percent.’ This price differential would continue for decades, until enough silver had accumulated in China for its value there would be equal to its value in the rest of the world. In the words of Legarda, ‘If one were dealing with foreign exchange, these would represent broken cross-rates. The opportunities for arbitrage profits were staggering.” Giraldez, 146.

188 when European traders rushed to exchange silver for gold in Ming China. By the 1640s, prices had stabilized and the bimetallic ratios had converged. From that period onward, global currency and financial markets were a genie that would never be forced back into its bottle. No matter its provenance, other things like taille, content, finish being equal, silver and gold specie rates had stabilized.

Portobelo had an influence on this first globalization that was incommensurate to its uneasy status as a seasonal town on the edge of Tierra Firme. It stands today as a sort of reliquary to a lost commercial system, when the jealous monopoly of the Spanish

Crown could, for a time, maintain a semblance of control over an exploding global market. Its forts, the most visible trace of Portobelo’s role within a commercial system that would become increasingly militarized throughout the seventeenth and eighteenth centuries, still stand, but the town remains as sleepy and stagnant as it was when military architect, Bautista Antonelli, first arrived to survey the town in 1586. It is with a touch of irony that Unesco status was granted to the city for its fortifications and not its other infrastructure.

It is unfair, perhaps, to blame Spanish authorities for their neglect of Portobelo, or to point out the inadequacy of their singular focus on militarization to the detriment of institutions development. Portobelo would be a developmental nightmare until the turn of the twentieth century. Centuries of attempts to cut a canal from Panama to Colón in the north of the isthmus, from Álvaro de Saveedra’s proposals to Charles V in 1529, to

Alessandro Malispina’s at the end of the eighteenth century, to French attempts in the

189

1880s and 1890s, which had foundered due to the high worker mortality rates.418 Only with the arrival in 1904 of U.S. engineers and sanitation officer, William Gorgas, would sufficient infrastructure finally get built and the threat of mosquito-borne illnesses finally be reduced. When it was finally completed in 1914, it was at the time the largest U.S. engineering project. Thus, it was likely both beyond the capacity and know-how of sixteenth- and seventeenth-century Spain to have addressed Portobelo’s chronic infrastructure and health problems.419

Portobelo’s dark matter, the illicit commerce that kept it and its surrounding region afloat, went very lightly punished for a time. Under the reign of Philip II, who expected flexibility when it came to his periodic need to default on loan repayment in order to renegotiate terms with his creditors, many contraband convictions could be settled through the payment of a fine. Severe penalties were still reserved for serial offenders, but the Crown tended to take a sanguine approach to illicit transactions provided that such crimes contained no evidence of aggravating factors like religious heresy or treason. Far more common were the general pardons of entire communities for illicit commerce, as happened in several locations in the Caribbean.420 These pardons

418Celestino Andrés Araúz and Patricia Pizzurno Gelós, El Panamá hispano (1501-1812) (Panamá: Comisión Nacional del V, Centenario-Encuentro de dos Mundos-de España, 1992), 76 provides a comprehensive list of sixteenth-century plans to build a canal through the isthmus.

419 An excellent work on the topic remains, David McCullough, The Path Between the Seas: The Creation of the Panama Canal, 1870–1914 (New York: Simon & Schuster, 1977).

420 On general pardons, see AGI Santo Domingo, 869,L.5, F74R-76R and F.33R-34R, which offered forgiveness for repentant vecinos in Cuba, 868, L.3, F.172V-174R, which offered similar pardons for vecinos in HIspañola, and 168R-172V, which pardoned subjects in the Puerto de la Plata, Bayajá, and la Yaguana, communities in northern Hispañola who were notorious for contraband trade. AGI Patronato, 293, N.25, R.5 offered pardons even for subjects who had traded with “enemies of the faith.”

190 were, however, appended with the threat of capital punishment for those who continued to participate in contraband. Little changed with the ascension of Philip III to the throne in 1598. If anything, the Dutch truce, which lasted from 1609-1921, would address much of the problem of smuggling by legalizing an entire category of trade by bringing Dutch traders into the fold.

In 1621, with the ascension of Philip IV and the end of the Dutch Truce, the

Spanish Empire would fully embrace a trade war paradigm and begin aggressively attacking its merchant enemies. This would create resentments throughout the empire, especially among Portuguese merchants, who had grown accustomed to trading with

Dutch, French, and English merchants. This war on Spain’s dark matter would undercut many of its political aims and result in the eventual loss of Portugal in 1640. But before addressing this more aggressive turn, the next chapter will address licit and illicit commerce in a far more peripheral settlement, both geographically and politically, that of

Buenos Aires.

191

Chapter 3

“Como un cuerpo sin brazos”421: Policing Commerce and Heresy in Buenos Aires and the Via Contrabando of Potosí

In June 1596, Francisco Suares, a Portuguese merchant based in Rio de Janeiro, sent his brother Diego, a Lisbon resident and his apparent senior trade partner, a glowing report on economic opportunities in the rivers that flowed into the Plate Delta, the vast riparian region that connects modern-day Argentina, Uruguay, Paraguay, and Bolivia to the Atlantic seaboard.422 His account, which read much like other standard merchant boosterism of its day, contained claims about the wild profits that could be expected from trade with the wealthy residents of Potosí.423 If the declared markups—1200% to 1500%

421 Establishing an Inquisition in Peru without sufficient commissars to enforce orthodoxy in the ports and cities throughout the viceroyalty was “like [creating] a body without arms,” according to Lima’s first inquisitor, Serván de Cerezuela. See Jose Toribio Medina, Historia del Tribunal del Santo Oficio de la Inquisición de Lima (1569-1820) (Santiago: Gutenberg, 1887), 42 and La Inquisición en el Rio de la Plata (Buenos Aires: Editorial Huarpes S. A., 1945), 113.

422 Much of the Río de la Plata river system, which includes tributary rivers such as the Salado, Paraná, Uruguay, and Paraguay is navigable and links together the north and northwest of Buenos Aires. This chapter will refer to the Río de la Plata in a broad sense to include its tributaries.

423 Potosí, by the 1590s, had become a globally renowned center of wealth, so much so that the phrase “tan rico como Potosí” (rich as a Potosí), had appeared in English dictionary translations as a term that described extreme opulence. Sheila S. Walker, Conocimiento desde adentro: los afrosudamericanos hablan de sus pueblos y sus historias (La Paz: Fundación Pedro Andavérez Peralta, 2010), 154. Suares’s account also typified the exaggerated numbers and hyperbolic optimism of much of the arbitrios that proliferated in the court and in works of literature at the turn of the seventeenth century, but the profits that were generated in direct trade upriver from Buenos Aires appear to be accurately described. A good source on the perception of arbitrismo is J.H. Elliott, “Self-Perception and Decline in Early Seventeenth- Century Spain” Past & Present, no. 74 (Feb. 1977), 41-61. Such theorists, writes Elliott, “were drawn from among certain groups in Spanish society—academics and clergymen, government officials, military men, members of the urban patriciate and the mercantile community.” (44-45). An excellent source of details of the journey upriver and overland to Potosí is Acarete du Biscay, An account of a voyage up the River de la Plata and thence over land to Peru (London, 1698).

192 in some instances—might have been exaggerated, Suares’s broader assertions contained verifiable refrains about the insatiable but unmet demand for goods on the part of struggling settlers in Potosí,424 friendly treatment and collusion among officials and clergy, and descriptions of numerous safe havens with ample space for the warehousing of goods. Manufactured goods and foodstuffs, from broad cloth, velvet, silks, hats, rapiers, bridles, and musk to wine, raisins, almonds, olives, olive oil, and vinegar, were all in high demand among the wealthy merchants and miners in and around Potosí, so there is little reason not to take Suares at his word about most of these details. All the basic trappings and conditions for profitable trade were present save, of course, for its legal standing and protection, but there is scant evidence in Suares’s correspondence that the illegality of this trade425 merited attention beyond a brief accounting of the costs and strategies it might have entailed.426

* * *

424 An excellent source on the day-to-day life in Potosí in the seventeenth century despite its flowery narrative approach is Bartolomé Arzáns de Orsúa y Vela, Tales of Potosí (Providence: Brown University Press, 1975).

425 The legality of Platine river trade was a constantly shifting category. This chapter will address the several phases of this trade. The Suares brothers’ exchange took place after the strict prohibition decreed by Philip II in 1594. See “Carta de Julio de 1596, del contador Hernando de Vargas al rey,” in Roberto Levillier, Correspondencia de los oficiales reales del Río de la Plata con los reyes de España (1540-1596), Tomo 1 (Madrid: Sucesores de Rivadeneyra, 1915), 508.

426 Suares’s letter is transcribed and translated in Richard Hakluyt, The Principal Navigations, Voyages, Traffiques and Discoveries of the English Nation: made by sea or over-land to the remote and farthest distant quarters of the earth at any time within the compasse of these 1600 yeeres (London: George Bishop, 1598), 706-707. Original version, “Carta de Francisco Suarez a su hermano Diego Suarez, desde Río de Janeiro, junio de 1596, relativa al exceso de riqueza comercial existente entre ese país y el Perú, vía Río de la Plata, con pequeñas embarcaciones de 30 a 40 toneladas,” is in Raul Molina, “Las primeras navegaciones del Río de la Plata, después de la fundación de Juan de Garay (1580-1602),” Historia, año 10. no. 40 (1965): 3-87, 82-83.

193

In 1582, Dominican bishop, Francisco de Victoria (1540-1592), the only known

Portuguese converso to ever attain the position of bishop in Iberian realms,427 took up his post as the bishop of the diocese of Tucumán, a vast district in northern Argentina at the midpoint between Potosí and Buenos Aires that once included Jujuy, Salta, Tucumán,

Santiago del Estero, Catamarca, La Rioja, and Córdoba.428 Tucumán was the linchpin of the productive economy south of Potosí that fueled the explosive growth of the silver mines by providing agricultural and livestock products like jerky and leather pelts, textiles, candling materials, and other foodstuffs, products which were collectively referred to as frutos de la tierra.429 Victoria’s appointment430 followed three previous unfulfilled bishopric appointments after the creation of the diocese in 1570, evidence that it was difficult to staff Church offices in this peripheral region.431 Almost immediately upon arrival, Victoria clashed with governor of Tucumán, Hernando de Lerma; a series of accusations and counter-accusations concerning abuses of power dominated his first year

427 Edgar Samuel, “Don Fray Francisco de Victoria OP (1540—92) Bishop of Tucumán,” Jewish Historical Studies 35 (1996), 15.

428 Modern-day Tucumán, the smallest province in Argentina, is but a shrunken version of the late- sixteenth-century diocese, which was a great deal larger.

429 Rodolfo A. González-Lebrero, La pequeña aldea: sociedad y economía en Buenos Aires (1580-1640) (Buenos Aires: Editorial Biblos, 2002), 85.

430 Victoria’s initial appointment took place in 1577. Ernesto Muñoz Moraleda, Francisco de Victoria: primer obispo y propulsor del Tucumán (Buenos Aires: Junta de Historia Eclesiástica Argentina, 1998), 19.

431 One obvious exception to the thin Church presence in the broader region was the missionary activity of the Society of Jesus (Jesuits) in Paraguay and the Misiones district in modern-day Argentina, Paraguay, and southern Brazil. At their peak, the Jesuit reducciones (communal townships) contained some 100,000 Guaraní residents, who produced agricultural and manufacturing goods for their own use and goods for export such as yierba mate and musical instruments. Richard Sacks, “Sword or the Word,” in Paraguay: A Country Study, eds. Dennis Michael Hanratty, Sandra W. Meditz, and Thomas E. Weil (Washington, D.C.: Federal Research Division, Library of Congress, 1990), 278.

194 as bishop. In 1587, Victoria was accused of contraband in slaves and silver when English

Pirate, Thomas Cavendish, captured one of his ships and was, in turn, captured himself, exposing Victoria’s plot.432 His story touches upon a number of issues that troubled

Spanish authorities throughout the empire: the prevalence of clergy in both the licit and illicit spheres of the imperial commercial system;433 the sharp tensions between Church and secular authorities; and the persistent paranoia about the presence of New Christians and, by extension, Portuguese within the Spanish imperial realm.

* * *

In 1592, in response to the grave threats posed by corsairs in the Río de la Plata region, Viceroy of Peru, Andrés Hurtado de Mendoza, appointed Fernando de Zárate as governor intendant of Buenos Aires. After raising 400 troops for the city’s defense, he arrived in Buenos Aires in February of 1594. From a military perspective, Zárate was a good choice, as he managed in short order to reconnoiter and secure the river and prevent the invasion of a fleet of English corsairs. He abandoned his post the following year, leaving behind a power vacuum that quickly filled with smugglers like Juan Diaz Ortiz,

432 “Real Cédula al licenciado Juan López de Cepeda, presidente de la Audiencia de la ciudad de la Plata, de la provincia de los Charcas," 18 January 1589, AGI Charcas, 415, L.2, F.57V-58R and "Carta de Santiago de Vera sobre el corsario inglés Cavendish y otros asuntos," 25 June 1588, AGI Filipinas, 34, N. 79.

433 Throughout the 1620s city governments, the Consejo de Estado, theorists such as Sancho de Moncada, and finally the Crown pushed for Inquisitorial jurisdiction in commercial cases, resulting in the issuance of the real Cédula of Feburary 9, 1627, which transferred smuggling and counterfeiting to the Inquisition. In practice, this meant the persecution of Portuguese merchants and bankers. Bernardo J. López Belinchón, “Olivares contra los Portugueses: Inquisición, Conversos y Guerra Económica,” in Historia de la Inquisición en España y América. III, III. Historia de la Inquisición en España y América, eds. Joaquín Pérez Villanueva and Bartolomé Escandell Bonet (Madrid: Biblioteca de autores cristianos, 2000), 499- 530, 519.

195 who undertook a number of transactions with slavers in Brazil and Angola.434 For his part, Zárate was later found at his home in Charcas, suspected of being in possession of gifts and bribes from said smugglers. He would, however, escape serious trouble, for his uncle, Juan Ortiz de Zárate, was the Supreme Judge of Charcas, which had jurisdiction over Buenos Aires.435 Zárate’s story highlights the importance of family connections in the thinly populated region, the fact of official connivance among officials in the existence of smuggling, and the difficulty of staffing and preventing the abandonment of official posts.436

* * *

In 1596, Hernando Arias de Saavedra (Hernandarias) took up the governorship of

Buenos Aires. He would serve on and off as the governor of the Asunción and Río de la

Plata region from his first term to his fourth term in 1617.437 Known as both a brilliant military tactician and an indefatigable administrator, Hernandarias was a central figure in the early configuration of commerce in the oft-neglected region. As an Asunción loyalist,

434 “La Audiencia de Charcas al rey, La Plata,” 9 June de 1599, AGI Charcas 17, r. 10, n, 64.

435 Philip II created the Audiencia of Charcas by royal decree on September 4, 1569. It was to have civil and criminal jurisdiction over the broad region of the southern cone, which included Buenos Aires. On the creation of the Audiencia, see Recopilación, Book II, Title, XV, Law X. 436 Despite its hagiographic slant, the definitive biographical study of the life and times of Hernandarias and his colleagues and enemies remains, Raúl A. Molina, Hernandarias, el hijo de la tierra (Buenos Aires: Editorial Lancestremere, 1948), 121-122.

437 Hernandarias held multiple governorships, sometimes simultaneously, Paraguay Asunción, Corrientes, and Santa Fe among them. He was often asked to serve in emergency situations as interregnum executive, given the high mortality and turnover rates in the administrative units of the Southern Cone and the generaly shallow pool of potential nominees for posts. Hernandarias’s final term in Buenos Aires ended in when the province of Río de la Plata and Paraguay was split between Paraguay and Buenos Aires. Molina’s biography on Hernandarias is divided chronologically into chapters that cover his specific postings and administrations. For a list of governors of Buenos Aires and Paraguay, see Ricardo Zorraquín Becú, “Autoridades Políticas,” in Academia Nacional de la Historia. Nueva historia de la nación argentina T. 3 T. 3 (Buenos Aires: Ed. Planeta Argentina, 1999), 426-429.

196 he held little sympathy for the arriviste faction of Portuguese settlers who had begun to sweep down from Brazil in the 1590s and even less for those who were found to have broken commercial laws to access the backdoor to Potosí consumers, figures such as

Zárate and the string of corrupt officials who followed in his wake. In a fashion similar to that of Caribbean and Panamanian officials who were, perhaps, excessively enthusiastic about enforcing strict rules and doling out severe punishment for illicit commerce,

Hernandarias often clashed with metropolitan authorities, who valued political stability over strict commercial rectitude, and corrupt local officials, who struggled to earn a living. In the contentious dance between the contrabandistas and licit merchants of

Buenos Aires (and its vast interior), Hernandarias played a key role enforcing the rules of trade, despite being without sufficient officials and commissars to enforce commercial orthodoxy in the region which, according to one royal official, was “like a body without arms.”438 Figures like Zárate and Victoria one on end and Hernandarias on the other would represent two poles of the commercial spectrum during what was, ostensibly, the strictest phase of Platine trade, the decade following the closure of the port by royal decree in 1594.439

438 Medina, Inquisición de Lima, 42.

439 Recopilacion de leyes de los reynos de las Indias, Tomo II, , Libro 4, Title 18, Law 5, 63. The exact prohibition was worded: “…que por el Río de la Plata no puedan entrar a las provincias del Perú gente ni mercaderías del Brasil, Angola, Guinea u otra cualquier parte de la corona de Portugal, si no fuere de Sevilla (…that people and goods from Brazil, Angola, Guinea or anywhere in the realms of Portugal cannot enter the provinces of Peru through the Rio de la Plata, unless they come from Seville).” On the asientos issued to Portuguese slavers from 1595 onward, see Eufemio Lorenzo Sanz, Comercio de España con América en la época de Felipe II. Tomo 1, Tomo 1 (Valladolid: Servicio de Publicaciones de la Diputación Provincial de Valladolid [for the Institucion Cultural Simancas], 1979), 511-530.

197

Buenos Aires, for the first half century following its permanent settlement in

1580, was a contraband society. Government officials, clergy, and most Platine settlers, lacking the means to earn a living by trading the products of the agriculturally rich Pampa region (modern-day Argentina’s fertile plains), had little choice but to participate in the farcical theater of port life, which involved arribadas forzosas (forced landings), the public auction of goods seized from forced landing ships and, for informants and administrators who officially confiscated the goods of wayward ships, an officially sanctioned division of the spoils.440 While much of this activity tended to make a mockery of official regulations, it allowed the settlement to survive during the first few lean decades of the settlement’s existence. And the Crown did little to interfere with the struggling port’s efforts to make ends meet, provided that this activity posed no direct threat to the merchants of Lima and silver miner of Potosí.

This chapter addresses how simple facts of demography, geography, individual personalities, and the limits of authority worked against the maintenance and protection of the inefficient trade system that the Spanish Crown had established for Indies traffic, a commercial network the centered on the north Atlantic and Caribbean and left Buenos

Aires under-populated and without commercial recourse at the turn of the seventeenth century. It explores the commingling of spiritual and secular imperative, a theme common in the examples listed above, in the enforcement of the rules of trade in a region with only a patina of law enforcement—the southeastern frontier of the Viceroyalty of

440 This sort of “legalized” smuggling—that is, smuggling, which took place within the broader legality of arribada seizure and auctioning rules—was ironically referred to as “contraband ejemplar” by its practitioners. See Raúl A. Molina, El primer banquero de Buenos Aires,” in Revista de Historia Americana y Argentina, no. 3-4 (1968-1969), 474-476 an Raúl A. Molina, Hijo de la Tierra, 195. 198

Peru, which historian Charles Boxer referred to as “one of the most extensive and cumbersome administrative units devised by man.”441 Buenos Aires provided a conduit for both merchants who were fortunate enough to procure individual licenses and contrabandistas, a southern path of least resistance that was quicker and cheaper than the route of the official royal fleets that passed through the Caribbean, across Panama, and down the Pacific coast to Perú to tap Potosí’s mineral wealth from the southeast. Given the official restrictions placed upon direct trade and travel to Southern Cone from the

Iberian Peninsula, Buenos Aires provides the purest example of a contraband society.

Peripheral even to the periphery, it presented a Sisyphean task for metropolitan policing, despite the occasional and largely halfhearted efforts of commercial enforcement agents and Inquisition commissars to bring it to heel.442

Despite a number of similarities between smuggling in the Panamanian Isthmus and in the Southern Cone, such as some of the techniques used, the participation (and more importantly, the connivance) of both Church and Crown officials, the presence of foreign interlopers and rebellious local communities,443 and the central importance of

441 Boxer additionally referred to the northern route through the Panamanian Isthmus as “one of the more patent absurdities of the Spanish colonial administrative system.” Salvador de Sá and the Struggle for Brazil and Angola (London: Athlone Press, 1952), 69 and 74.

442 Of the normalization of law breaking, wrote one historian,“[C]orruption was the rule in the southern Plata to the detriment of the Crown and its colonial defenders.” Mario Rodriguez, "The Genesis of Economic Attitudes in the Rio De La Plata," The Hispanic American Historical Review 36, no. 2 (1956): 171-89, specifically, 174.

443 A mix of mestizos and escaped slaves who fled the city and adopted the technologies of the plains Indians in the Pampa region were known as the “gente perdida” (lost people). While not as much of the direct threat as the cimarrones in Panama, they left Buenos Aires drained of labor and became a matter of concern for the local government and encomenderos. See Emilio A. Coni, El gaucho: Argentina, Brasil, Uruguay (Buenos Aires: Solar/Hachette, 1969), 56.

199 illicit markets to local settlers, this chapter will focus on several aspects of the development of Buenos Aires in the decades from 1580 to the1620s that made it unique.

Perhaps the most important factors were that there was neither a major fair there nor was

Buenos a routine stop or terminus for Treasure Fleet ships, which meant that the port was starved of the information and manufactured goods that accompanied fleet visits. On a positive note, unlike the European residents and visitors of Nombre de Dios and

Portobelo, the settler population of Buenos Aires lived without fear of some of the more virulent tropical diseases that had plagued the Isthmus of Panama.444 In contrast to other colonial centers including Lima, Potosí, Panama, and Mexico City, Buenos Aires was forced to limp along at Spanish America’s southeastern flank, well-placed geographically to trade directly with Brazil and Africa but locked out of a lucrative trade to its north and northeast due to the Spanish Crown’s stinginess in granting suelto (individual) commercial licenses and its insistence on continuing to route its Treasure Fleets through the Caribbean and down the Pacific Coast. And to add salt to the wounds of its residents, the greater Buenos Aires region was an agricultural, manufacturing, and port center that produced an ideal suite of goods for nurturing both the mining and plantation sectors of

Brazil—basic cotton textiles, wine, meat, hides, tallow, candles, jerky, and grain—but was largely prohibited from trading such goods. It also paid some of the highest prices for

444 This contrasts sharply with the experience of local indigenous populations and settlements upriver from Buenos Aires toward Asunción and the Jesuit Missions of Paraguay and Misiones. On mortality and morbidity rates, see Jackson, Robert H. Demographic Change and Ethnic Survival Among the Sedentary Populations on the Jesuit Mission Frontiers of Spanish South America, 1609-1803: The Formation and Persistence of Mission Communities in a Comparative Context (Leiden & Boston: Brill, 2015).

200 manufactured goods of Europe than anywhere in the Iberian sphere.445 Lastly, Buenos

Aires was so thinly populated that personalities like Hernandarias and Zárate had a profound impact on how laws would be enforced, which provides a sharp contrast to the crowded (but contentious) administrative landscape of the Treasure Fleets and fairs in

Panama. This chapter will examine how Buenos Aires coped with such unfavorable conditions and argue that contraband provided an essential lifeline for the fledgling settlement and its broader environs that, despite the dangers it represented to merchant prerogative in Lima and Seville, was just as often seen as a necessary evil among metropolitan Crown officials.

Buenos Aires: Settlement in Fits and Starts446

Early exploration of the Southern Cone region447 began in 1515, just a year after

445 See Borah, Trade between Mexico and Peru, 80-82 for a useful discussion on some of the factors that made prices in the Southern Cone region much higher than those in Mexico. These factors included the greater production of specie in Potosí, the smaller population of settlements in the Southern Cone relative to Mexico, and the difficulties moving goods along the official Tierra Firme route.

446 On the settlement development of Tucumán, see Ricardo Jaimes Freyre, El Tucumán colonial documentos y mapas del Archivo de Indias (Buenos Aires: Coni hermanos, 1915) and Ceferino Garzón Maceda, Economía del Tucumán: economía natural y economía monetaria siglos XVI, XVII, XVIII (Córdoba, Argentina: Dirección General de Publicaciones, 1968). On the settlement and development of the Río de la Plata regions, see Raul A. Molina, Las primeras experiencias comerciales del Plata; el comercio marítimo, 1580-1700 (Buenos Aire, 1966), Rodolfo A. González-Lebrero, La pequeña aldea: sociedad y economía en Buenos Aires (1580-1640) (Buenos Aires: Editorial Biblos, 2002), 39-60, Ricardo Zorraquín Becú, Orígenes del comercio rioplatense 1580-1620 (Buenos Aires, 1947), and Rodolfo Puiggrós, Historia económica del Río de la Plata (Buenos Aires: A. Peña Lillo, 1966), 9-39. Tucumán was situated centrally, such that it could provide supplies to both Potosí and downriver to Buenos Aires for local consumption and re-export in the Atlantic circuit. In addition to the products mentioned above, Tucumán produced corn, rice, and (eventually) sugar and minerals such as manganese, copper, tungsten, and lead.

447 Southern Cone is a political term that refers to the political region of Argentina, Chile and the south of modern-day Peru, Bolivia, Paraguay, and Brazil in South America. It can, as well, be more broadly applied to the social and economic sphere that takes in the southern reaches of the latter four countries listed above. 201

Balboa’s discovery of the Pacific. Conquistador, Juan Díaz de Solís (1470-1516), who had held previous jobs as a pilot on Portuguese ships in the Indian Ocean and as a privateer on French ships, named the river where he landed the Río de la Plata (river of silver) upon his arrival to the delta in 1516 based on mistaken information about the proximity of silver deposits along the river. The misnomer stuck but the sought after silver would only be found decades hence and far upriver, over the western ridge of the

Andes in Potosí, more than 1300 miles to the northwest. Díaz Solis’s expedition came to a violent end almost as soon as it started when he was killed in a deadly clash with a group of Querandí Indians who had grown tired of the invaders and their constant need of food and supplies.448

The desire to seek out and secure a route that connected the Atlantic and Pacific

Oceans would inspire a number of landings and expeditions in the decades that followed.

In this chapter, Southern Cone will be utilized in this broader sense to describe the trading networks and inter-related communities of the entire Río de la Plata region and the western reaches of the Andes.

448 An excellent recent account of the Díaz Solís expedition can be found in the introduction and first chapter of Gustavo Verdesio, Forgotten Conquests: Rereading New World History from the Margins (Philadelphia: Temple University Press, 2001), 14-38 and Eduardo Madero, Historia del puerto de Buenos Aires; descubrimiento del Río de la Plata y de sus principales afluentes, y fundación de las más antiguas ciudades en sus márgenes (Buenos Aires: Ediciones Buenos Aires, 1939), 12-29. On the early explorers, see Julián Maria Rubio, Exploración y conquista del Río de la Plata. Siglos XVI y XVII (Barcelona, Buenos Aires: Salvat, 1942) and Hugh Thomas, World Without End: Spain, Philip II, and the First Global Empire (New York: Random House, 2015), 166-171. In response to Portuguese claims upon the Platine region, Charles V in 1534 had issued a “capitulación to adelantado Pedro de Mendoza to settle the area.” Mendoza would spend five years there before abandoning the settlement, a macabre comedy of errors that involved cannibalism of corpses, a Royal Cedula forgiving those who had resorted to it, and a quixotic quest for a rumored Silver mountain. Campatella, 39-42. A combination of indigenous resistance and food insecurity doomed Buenos Aires’ first settlement. A good primary source on the failure of the first settlement and the harassment of the initially friendly Querandíes, who formed an alliance with Charrúas and Timbúes and eventually burned down the settlement, is Ulderico Schmidl and Hernandez, Pero, The Conquest of the River Plate (1535–1555) ed. Luis L. Dominguez (The Hakluyt Society, 1891). On the indigenous groups of the plains, see Rodolfo A. González-Lebrero, La pequeña aldea: sociedad y economía en Buenos Aires (1580-1640) (Buenos Aires: Editorial Biblos, 2002), esp. 19-61 and González Lebrero, Pequeña Aldea, 24-66.

202

Reports about the river and the southern landmass circulated and fired imaginations after visits by both (1521) and Sebastian Cabot (1526) had whetted the appetites of Spanish and Portuguese explorers, who engaged in a race to claim a share of the region for their sovereigns.449 The eventual name of the country that took Buenos

Aires as its capital, Argentina, derives from the Latin word for silver, argentum. There is cruel irony in the fact that the earliest conquistador once worked for Portuguese authorities, a group that would later contend for control of commerce in the Río de la

Plata, and in the fact that the region and river named for silver would be effectively be prohibited from the export of specie from silver mines in Potosí. These two factors would play an important role in the estuary’s development and be a matter of continuous frustration for Buenos Aires residents for the century to come.

The settlement of Peru and the Southern Cone involved false starts, violence, and instability in the decades after Díaz Solis made first contact. In Peru, it would take a series of civil wars to establish Potosí as a center of silver wealth.450 Almost from the outset of this ostensibly Spanish enterprise there were reports of Portuguese doing

449 Antonio Pigafetta, a Venetian explorer who travelled with Ferdinand Magellan on his circumnavigation in 1518-1522, was responsible for much of the myth making of the voyage. His extensive journal and logbook, which contained florid passages about the presence of giants and cannibals from the region around the 34th parallel (Buenos Aires) and southward was published and widely read upon his return to Spain. T. J. Cachey and Antonio Pigafetta, First Voyage Around the World (1519-1522): An Account of Magellan's Expedition (University of Toronto Press, 2007), 11-15.

450 The civil wars in Peru were a legacy and grew primarily out of a factionalist struggle between Pizarrists and Almagrists, those who followed conquistador, Pedro de Almagro. An excellent source on this factionalism is James Lockhart, The Men of Cajamarca; A Social and Biographical Study of the First Conquerors of Peru (Austin: Published for the Institute of Latin American Studies by the University of Texas Press, 1972), esp. 85-89.

203 business in Potosí as early as the 1550s.451 Given their experience and knowledge of the poorly defined frontier of Brazil and the political unrest in Peru, one can safely assume that Portuguese explorers and settlers who preceded the Suares brothers were among the earliest merchants to export Spanish silver via the riverine craft bound first for Atlantic ports on the Brazilian coast and then eventually aboard larger ships toward Angola,

Lisbon, or Porto.452 Most of this trade centered on the twin pillars of the Spanish Empire, silver and slaves, and the support or service sectors that made the production of specie and the distribution of this human cargo possible. Portuguese merchants, by virtue of

451 A primary source on the international mix of conquistadors and early settlers in Lima is José de la Riva- Agüero, ed., “Descripción anónima del Perú a principios del siglo XVII compuesta por un judío portugués [sic] y dirigida a los estados de Holanda,” Actas y memorias. Congreso de Historia y Geografía Hispanoamericana celebrado en Sevilla en 1914 (Madrid 1914), 347-384. The “anonymous Jew” of the title was identified as Pedro León Portocarrero by Guillermo Lohmann Villena in an article published in 1970. See “Una incógnita despejada: la identidad portugués autor de la ‘Discrición General de Piru,’” Revista de Indias (1970), 315-82. On the Portuguese in the Rio de la Plata, see Molina, Primeras experiencias, Alicia Piffer Canabrava, O comércio português no Rio da Prata (1580-1640) (Belo Horizonte: Editora Itatiaia, 1984), Ricardo de Lafuente Machain, Los portugueses en Buenos Aires (siglo XVII) (Madrid, 1931), and Eduardo Saguier, “The Social Impact of a Middleman Minority in a Divided Host Society: The Case of the Portuguese in Early Seventeenth-Century Buenos Aires,” The Hispanic American Historical Review 65, no. 3 (Aug., 1985), 467-491, and Lewis Hanke, “The Portuguese in Spanish America, with Special Reference to the Villa Imperial de Potosi” Revista de Historia de América, no. 51 (Jun., 1961), 1-48, esp. 6-7. Writes Hanke, “As early as 1550 we find a Portuguese named Gaspar Collazo doing business in Potosí, and in 1552 another Portuguese is recorded in Asunción.” Portuguese explorer, Alejo Garcia led an expedition of Guarani Indians into Inca territory from western Brazil and Paraguay as early as 1522 during the reign of Huayna Capac. For a review of seventeenth to nineteenth-century sources addressing early migrations into Incan territory, see Baron Erland Nordenskiold, “The Guarani Invasion of the in the Sixteenth Century: An Historical Indian Migration” Geographical Review 4, no. 2 (Aug., 1917), 103-121.

452 Lewis Hanke, The Portuguese in Spanish America, 6. An additional factor that made the Portuguese merchants of southern Brazil such effective global traders was the fact that many of them were Conversos and Jews who had maintained ties to diasporic communities throughout Europe, Africa, and the Middle East. Three excellent works on the Portuguese and Sephardic diasporas are Daviken Studnicki-Gizbert, A Nation upon the Ocean Sea: Portugal's Atlantic Diaspora and the Crisis of the Spanish Empire, 1492-1640 (Oxford: Oxford University Press, 2007), Jonathan I. Israel, Diasporas within a Diaspora: Jews, Crypto- Jews, and the World of Maritime Empires (1540-1740) (Boston, MA: Brill, 2002), and Boleslao Lewin, El judío en la epoca colonial. Un aspecto de la historia rioplatense (Buenos Aires, 1939). Medina, Inquisición de Lima contains transcriptions of trials against suspected Jews in the viceroyalty of Peru.

204 their placement in port cities, financial centers, and slaving stations throughout the

Atlantic were well situated to take advantage of this commerce.

After Juan Díaz de Solis’s debacle, Pedro de Mendoza established the first settlement in Buenos Aires in 1536, which he named the Puerto Nuestro Señora Santa

María del Buen Aire. This community lasted a brief time until it was abandoned in 1542 due to a combination of Querandí attacks, mismanagement, and lack of preparedness. If anything, Mendoza’s expedition had been too unwieldy and ambitious. The group that accompanied him, which numbered around 1,600 people, found it difficult to produce sufficient food as it had arrived in February, a month that lies at the end of the southern hemisphere’s primary growing season.453

Four decades after the collapse of Mendoza’s settlement, the Crown sent Juan de

Garay, a Basque conquistador who had held a number of posts throughout the

Viceroyalty of Peru, to attempt again to establish a permanent settlement in Buenos Aires in 1580.454 The primary motivation for this settlement was to address concerns that this unguarded southern flank of empire posed danger to both the souls and revenue streams of its ostensibly loyal subjects in Peru. Unlike Mendoza’s previous expedition, most of

Garay’s party came from Asunción to the northwest.455 Garay had gained military and

453 Enrique A. Peña and Pedro De. Mendoza. Documentos relativos a la expedición de don Pedro de Mendoza y acontecimientos ocurridos en Buenos Aires desde 1536 a 1541 (Buenos Aires: Curtolo, 1936).

454 Royal treasurer Hernando de Montalvo laid out the case for permanent settlement of the port for its lower cost and proximity to Potosí. See “Carta del Tesorero Hernando de Montalvo a Su Majestad (1579) in Correspondencia de los oficiales reales de hacienda del Río de la Plata con los reyes de España (1540- 1596). Tomo 1 Roberto Levillier ed. (Madrid: Sucesores de Rivadeneyra, 1915), 321-322.

455 Asunción, according to historian, R. B. Merriman, was the “chief nucleus of Spanish activity in the southeastern portion of South America” well into the seventeenth century. The Rise of the Spanish Empire in the Old World and in the New (Cooper Square, 1969) v. 4, 186. 205 executive experience as the governor of Asunción and founded Santa Fe de la Cruz456 while on an expedition down the Paraná River in 1573. This difference in orientation, which unlike earlier expeditions that had arrived after long sea journeys from the northeast, was driven by a pattern of expansion toward the southwest from Peru, Bolivia, and Paraguay, and would thus have a profound impact on how Buenos Aires was to be governed and developed. Founders like Garay seemed to possess a reflexive affinity for the interior settlements and, as a result, favored policies that supported the raising of livestock and the production of agricultural products over the creation of an entrepôt for maritime trade.

This conquest and settlement in a stepping-stone fashion—from Lima westward to Asunción, to Santa Fe, and to Buenos Aires, in this case—followed the similar patterns in the Caribbean and much of the rest of Spanish America. Following the discovery and control of the (or Cerro Potosí, as the richest silver mountain was then known), the explosive growth of Potosí sent tendrils of settlements outward radially in every direction. With a population estimated at 150,000 at the turn of the seventeenth century,457 Potosí’s demand for commodities like tallow, wax, meat, mules, rice, corn, wine, and grain was voracious and could only be met by producers in the surrounding foothills and plains of Tucumán, Salta, the Chaco, and Charcas. Each established community meant a way station and at least some security for the next wave of Spanish

456 Santa Fe, as it is known today, sits at the confluence of the Paraná and Salado rivers and is strategically located some 300 miles upriver from Buenos Aires.

457 Kendall W. Brown, A History of Mining in Latin America From the Colonial Era to the Present (Albuquerque: University of New Mexico Press, 2012), 46-47, 89-90.

206 settlers. From Jujuy, to Salta, Tucumán, Santa Fe, and Cordoba a distribution network began to take form, more closely linking Potosí to Buenos Aires. What this meant in the short and medium term was that the imperative for shaping the political and economic contours of settlement would come from the rising merchant and ecclesiastical core of

Lima, Potosí, and Asunción rather than the settlements in the Platine Delta.458 The exception to this rule was the contested northeastern bank of the Rio de la Plata (modern- day Uruguay), which would remain largely unsettled into the 1620s and provide a haven for merchants and privateers.459 Thus it was that a combination of encomenderos, miners, and merchants from the interior would work to shape how the laws and norms of trade were enforced (more of which below).

Among Garay’s original expedition, only 14 members out of 76 of the individuals who accompanied Garay to Buenos Aires in 1580 were . The rest were creoles and mestizos born in Asunción. This small group was reinforced with an additional 50 immigrants from Spain in 1583. This early attempt to establish encomenderos foundered as many of the original settlers and new arrivals abandoned allotments of lands and Indians given to them by Garay and fled the settlement entirely.

By 1590, merchants from Brazil would begin to slowly supplant some of the original

458 In both ecclesiastical and secular terms, immediate staffing decisions for the region were made by Charcas officials with the presumed approval of vice regal authorities on Lima.

459 Early seventeenth-century settlement of the northern bank of the Río de la Plata, modern-day Uruguay, involved a race between Spanish and Portuguese settlers. In 1624, the Spanish established an official settlement and Franciscan Mission at the Villa Soriano, on the banks of tributary Río Negro. The Portuguese would establish their own fort at Colonia de Sacramento in the 1670s. On the mission and early settlement on Soriano, see José Pacífico Otero, La Orden franciscana en el Uruguay: crónica histórica del convento de San Bernardino de Montevideo (Buenos Aires: Cabaut y cía, 1908), 1-18.

207 encomenderos.460

In half-century following 1580, many royal appointees for posts in both Tucumán and Buenos Aires correctly saw the assignment as a form of exile or, worse, a slow and impoverishing occupational death sentence. The mortality rates of the early failed settlements, if not quite comparable to those of Nombre de Dios and Portobelo, confirmed some of these suspicions. The region was notorious for its remoteness, its lack of mineral deposits, and as a favorite target of unconquered semi-nomadic tribes.461 One advantage that the region did seem to have, for the more intrepid settlers, was an endless source of livestock gone feral, available for the taking and breaking. The lack of predators and seemingly endless grasslands meant that livestock released decades before during previous expeditions had reproduced at precipitous rates. At least one source of wealth and sustenance, then, was the meat, hides, and tallow from wild cows and horses.462

460 Macarena Perusset Veras, Élite y comercio en el temprano siglo XVII rioplatense (Instituto Colombiano de Antropología e Historia, 2005), 260-263.

461 Aboriginal groups surrounding the Buenos Aires region included the semi-nomadic Charrua and Querandí, the latter of which were forced the abandonment of the first founding of Buenos Aires.

462 On the bounty of the Pampa, writes historian Raúl José Mandrini, “Precisely the basis for future prosperity of the town were already there, in effect, when in 1541 the first settlement of Buenos Aires, founded by Pedro de Mendoza five years earlier, was abandoned and some horses and mares set free and abandoned to their fate. A favorable environment and lack of competitive species favored the reproduction of animals so that they reverted to a wild status--cimarrones, as they were then called--and constituted an abundant resource as early as at the end of the sixteenth century. Some domesticated bulls and cows also expanded in the pampas where they also reverted to wildness. In this way, at the moment of the second founding of Buenos Aires in 1580 these wild cattle and horses were the most important and attractive of the region’s resources.” See Juliana Barr and Edward Countryman, “Transformations: The Rio de la Plata During the Bourbon Era,” in Contested Space of Early America (Philadelphia: University of Pennsylvania Press, 2014), 145-146.

208

Archival documents are rife with plaintive reports of deprivation and the need to increase or loosen the licensing regime in Buenos Aires. A report from Charcas bishop

Fray Martín Ignacio de Loyola to the Consejo de Indias in 1602 laid out a convincing case for more aggressively working to populate Buenos Aires. According to Loyola,

Buenos Aires was a poor region in large part because it was not permitted to export the fruits of its soil—namely grain, hides, and jerky—to the voracious markets in Brazil,

Guinea, and a number of Atlantic Islands, which he doesn’t specifically name.463

Anticipating a common counter-argument, Loyola claims that none of this commerce would negatively impact the Charcas region around Potosí and that it would have the knock-on effect of drawing settlers to the region to shore up security. The Rio de la Plata region could be, according to Loyola, a potential supplier for the entire sugar and slave plantation complex up the Brazilian seaboard and beyond.464

To the Junta de Guerra (Ministry of War), Loyola had previously sent a consulta

(consultation) specifically addressing security. In this document he highlights how the

Buenos Aires upriver route was the most convenient route to Perú and suggests that the

Crown award more encomiendas to deserving residents so that remaining Indians could be pacified and the fertile soil of the region could be exploited. All of these policies

463 Of the commercial constraints placed upon the port, wrote Rafael Antunez y Acevedo, “Por esta relacion se ve cual restringido estuvo el comercio del rio de la Plata, y que que ningun otro puerto de la dominacion española en América, tuvo menes libertad de ejecutarlo (that no other port in the Spanish American realms had less liberty to carry out [trade].” Memorias históricas sobre la legislacion, y gobierno del comercio de los españoles con sus colonias en las Indias occidentales (Madrid: En la imprenta de Sancha, 1966), 123.

464 “Lo que se podría conceder para poblar la ciudad de la Trinidad de Buenos Aires del Río de la Plata para seguridad de aquel puerto,” 9 August 1602 AGI Charcas, 1, R.6, N.168.

209 would allow the port prosper and discourage the draining off of Potosí silver.465 Loyola’s formula is a constant refrain among clergy and government officials from Charcas,

Tucumán, and Buenos Aires, but met with little enthusiasm from officials and merchant guild members from Lima and Potosí.

Peninsular and Limeño Church and secular authorities, were perhaps too concerned about the heretical Dutch, French, Portuguese, and English privateers and pirates who trawled its coastline to offer many concessions to restless Buenos Aires merchants and encomenderos.466 Risking financial ruin and threats to life and limb in and around the delta, these foreigners had the correct impression that the illicit runoff of the silver mines in Potosí could prove sufficiently lucrative to chance the threat of capture or other hazards in the South Atlantic.467 In late sixteenth-century Buenos Aires, foreigners and presumed heretics had the upper hand, frustrating the aspirations of Seville and Lima merchants and authorities alike. From its inception, Buenos Aires seemed to have little control over its destiny. By the first decade of the sixteenth century, Buenos Aires remained a thinly populated outpost of empire, perversely inaccessible not as a matter of geography or ocean winds or currents but out of political and institutional habit. Though the Crown feared the presence of foreigners and powerful silver merchants saw the threat posed by the emptiness of the Pampas and its rivers, neither group seemed fully

465 “Lo que conviene para seguridad de los puertos del Rio de la Plata,” 14 April 1602, AGI Charcas, 1, R.6, N.163.

466 For the Dutch, this sort of predation would become officially sanctioned after the end of the Spanish- Dutch truce with the creation of the Dutch West India Company in 1621.

467 “Beyond the line” of customary maritime law, which held that within three miles of coastline, a specific nation maintained jurisdiction.

210 committed enough to empowering the port town with the warships, soldiers, administrators, and trading privileges it needed. From the foreign and presumably heretical merchants who immigrated from the north bank of the Rio de la Plata and

Brazil, to the staunch defenders of the merchant and miner prerogatives of Potosí and

Lima, to the almost total absence of Church officials, the Crown seemed determined make sure Buenos Aires remain nothing more than a presidio town. The settlers, however, had other ideas.

“El hijo de la tierra,”468 Beneméritos, and Confederados: The Struggle for Platine

Trade

Perhaps to an even greater extent than was true of other communities in the

Spanish imperial commercial system, Buenos Aires was a contraband society from its inception and for generations after its permanent establishment. Aside from the asientos granted to licensed slavers,469 the arribadas forzosas (ships calling at unapproved ports outside of schedule based on stated emergency needs) that so frequently docked at

Buenos Aires ports, especially in the decade following 1594,470 and the occasional navios

468 Literally, “Son of the soil,” a phrase used to describe Hernando Arias de Saavedra, the first criollo (American-born) governor of Spanish America and the subject of Raúl A. Molina, Hernandarias, el hijo de la tierra (Buenos Aires: Editorial Lancestremere, 1948).

469 Perhaps the most famous asiento, the Asiento de Negros (a royal monopoly for importing slaves into Spanish America, was granted in 1595 to Portuguese slaver, Pedro Gomes Reinel, who held it for 20 years. Portuguese merchants would maintain the asiento until the dissolution of the composite monarchy in the 1640s and 1650s. An asiento holder as a general rule imported slaves into the main ports of the Treasure Fleet: Santo Domingo, Cartagena, Portobelo, and Veracruz, but Buenos Aires, due to its location, became as famous as a transhipment point for slaves as Portobelo was for silver.

470 Arribadas forzosas, emergency landings based on claims of duress of imminent danger due to weather, security threats, illness, or ship malfunctions, become a common feature of Buenos Aires in the 1590s. The port was ill equipped to inspect such ships and dockings would often result in the quick sale of goods while 211 de registro (individual Crown licensed ships that sailed apart from the Treasure Fleets that legally moored there,471 the merchants of Buenos Aires had very few licit options for importing or exporting goods.472 Contraband in Buenos Aires, as in other regions to a lesser extent (from Portobelo to the Canary Islands to Seville), was not a bug but a crucial feature for both the Crown and local settlers for a time because it supplied communities with the necessities of life despite the mounting protestations of monopolists in Lima and

Seville, the two groups most gravely harmed by smuggling in the Southern Cone.473 As in Panama, such trade provided a rare moneymaking opportunity for the chronically underpaid officials and clergy who monitored this traffic and extra income for those who transported the illicit commodities. It also provided a lifeline to modest producers of

Pampa474 products such as beef, tallow, hides, and jerky. And for Buenos Aires residents, it provided much needed manufactured goods from Brazil without requiring what seemed like endless waiting for the arrival of registered ships from Seville.

bribed officials looked the other way. Governor of Buenos Aires and Paraguay, Fernando de Zárate, enforced a complete port closing in 1594 in an effort to block such landings. Macarena Perusset, Contrabando y sociedad en el Río de la Plata colonial (Buenos Aires: Editorial Dunken, 2006), 98.

471 Most navios de registro were suelto (loose or individual) ships and were the only means by which Buenos Aires could import goods from abroad.

472 While many arribadas forzadas ships were doubtlessly under genuine duress, such stops were a time- worn tactic for smugglers to offload prohibited goods or even forfeit goods in collusion with government officials in order to buy them back legally at a discount. One noteworthy example of this protocol was referred to in "Residencia Audiencia de Buenos Aires" AGI Escribania 892A, f.13r-13v, the case of merchant Luis Navarrete, who called into port under duress with unlicensed slaves. The ship was seized, its goods auctioned off, and the profits were divided among officials.

473 Lima and Seville’s merchants had the institutional backing of the Casa de Contratación (1503) and the Consulados de Mercaderes (merchant guilds) of Sevilla (1543) and Lima (1613).

474 The Pampa, a Quechua word for “plain,” refers to the Pampas, an extended lowland grassy region in the interior of Argentina that supported large herds of both wild and domesticated horses, sheep, and cattle and served as the Southern Cone’s granary.

212

The first decades after the permanent settlement saw a number of growing conflicts between factions competing for preeminence in the colony. Asunción was the first city in the greater Southern Cone region to be permanently settled and its earliest settlers fought for commercial dominance.475 Indeed, many of these European inhabitants in Asunción were refugees from the failed 1542 settlement at Buenos Aires and, as was typical of first Spanish settler communities, they deeply resented intrusions into Southern

Cone commerce by later arriving Portuguese from Brazil and the agricultural producers of the Pampa region.476 They correctly recognized the threat posed to their well being by smugglers in every direction, especially factions in neighboring Tucumán and southern

Brazil, who controlled navigable routes to Potosí.477 By controlling rivers, the Paraná, the

Paraguay, and the Río de la Plata, from Asunción to the Atlantic seaboard, Asunción migrants could better control their political and economic destiny.478

475 Historian, Mario Rodriguez, describes some of the earliest attempts to ensure Paraguayan control of the Potosí market” “Juan de Garay led his band of Paraguayans down river to the Plata estuary ‘to open the doors of the land and to put an end to our [their] isolation.’ Shortly after the founding of Santa Fe (1573), contact was established with the mining market of Upper Peru, and Paraguayan products made their way to the solver city of Potosí. Sugar, wine, and wax sold profitably, but grains and meat encountered stiff competition from producers in Tucumán, closer to the mining area. “The Genesis of Economic Attitudes in the Rio De La Plata,” The Hispanic American Historical Review 36, no. 2 (May, 1956), 171-189, 171.

476 Writes Rodriguez, “Tucumeños, for example, could supply Brazil with cattle and grain in addition to silver; their Portuguese colleagues, on the other hand, could provide the interior with sugar products and with, slaves from their African possessions, and manufactures obtained principally from Dutch traders off the coast of Brazil.” (173). There was, as well, a contentious relationship between Peninsulares (migrants born in Spain) and Criollos, American-born residents for positions of power. This distinction is not as sharp in Buenos Aires as it was in more powerful centers of government such as Lima and Mexico City.

477 The Pilcomayo and Bermejo Rivers were largely un-navigable for the purposes of riverine trade from Asunción to Potosí. Trade along the Paraguay River followed its southern course to the Paraná and its convergence with the Salado River in Santa Fe. From there, commercial craft could navigate the Salado until it reached Salta.

478 This conflict between those who wished to control the Rio de la Plata and those who wished to keep it open for international trade would explode into the deadliest war in nineteenth-century Latin America in 1864, the War of the Triple Alliance. 213

Willem Janszoon Blaeu, Paraguay o Prov. De Rio De La Plata (Amsterdam, 1640). Paraguay, Tucumán, and the Río de la Plata

The first wave of conquerors and settlers in the permanent settlement of Buenos

Aires would later be referred to as the Beneméritos.479 Historians Macarena Perusset,

Eduardo Saguier, and María Campatella describe how the beneméritos had accrued social

479 Benemérito come from the Latin term, benemeritus, which translates to “the deserving or those who are worthy of good things.” The literal meaning of the term and how its meaning was acted out discursively are almost identical. The Benemeritos, indeed, believe that the hard work they did establishing Buenos Aires merited special privileges and access to its commercial potential.

214 prestige by doing much of the hard work to establish the settlement.480 This group, largely made up of encomenderos, were oriented toward the development of the colony’s internal market and wished to protect the primacy of the Tucumán-Charcas trade in leather, jerky, mules, and the other raw goods that the Pampas region excelled in producing. As silver production took off in Potosí following the discovery of accessible mercury deposits in Huancavelica in the 1560s, which led to its subsequent use in the amalgamation process, the economic catchment region around Potosí grew apace.481 With largely wide and flat cart paths at their disposal, the merchants of Buenos Aires and

Tucumán could get basic goods to Potosí far quicker and more cheaply than merchants in

Lima. It made sense, then, despite staunch opposition from Lima and Seville merchants, to supply Potosí from the south.482

In the decades bracketing the turn of the seventeenth century, the market would come to be insatiable, and the demand for manufactured goods, foodstuffs, carts, and

480 See Macarena Perusset Veras, Contrabando y sociedad en el Río de la Plata colonial (Buenos Aires: Editorial Dunken, 2006) and “Comportamientos al margen de la ley: contrabando y sociedad en Buenos Aires en el siglo XV” Historia Crítica, no. 33 (January-June 2007): 158-185. Eduardo R. Saguier, “The Contradictory Nature of the Spanish American Colonial State and the Origin of Self Government on the Rio de la Plata Region. The Case of Buenos Aires in the Early Seventeenth Century” Revista de Historia de América, no. 97 (Jan., - June 1984): 23-44 and “El combate contra la “limpieza de sangre” en los origins de la emancipación Argentina. El uso del sistema de la bastardia y del origen racial como mecanismos de defensa,” Revista de Historia America, no. 110 (July- December, 1990): 155-198, and María Andrea Campatella, “At the Periphery of Empire: Indians and Settlers in the Pampas of Buenos Aires, 1580-1776” (Rutgers: PhD Dissertation, 2008) situate tensions between both groups along a number fault lines that include race, class, and birth origins.

481 On the discovery and early operation of the Huancavelica mines, see Guillermo Lohmann Villena, Las minas de Huancavelica en los siglos XVI y XVII (Sevilla: Impr. de la Escuela de Estudios Hispano- Americanos, 1949). On amalgamation and the patio process, see Alan Probert “Bartolomé de Medina: the patio process of the sixteenth century silver crisis” in Peter Bakewell ed. Mines of Silver and Gold in the Americas (Aldershot, Hampshire, Great Britain: Variorum, 1997).

482 See Lebrero, Pequeña aldea, 82-83 on the comparative distances.

215 pack animals increased dramatically. The instrument by which the beneméritos controlled governance and commerce in Buenos Aires was through their domination of the local cabildo (town council or assembly) in close alliance with governors of the colony.

Perhaps the most steadfast supporter of the benemérito cause was Asunción-born

Hernando Arias de Saavedra (Hernandarias), the first creole (American-born) governor in

Spanish America. From the 1590s through the 1610s, Hernandarias would be the off-and- on governor of Buenos Aires and a more or less committed advocate for the beneméritos, provided that they remained law-abiding subjects.

A second group, the confederados, would begin trickling into the region over the next few decades from Brazil. The confederados were seen by the beneméritos as an arriviste faction of dubious loyalty in both a commercial and religious sense. Saguier refers to these two competing groups as estamentos, or corporate estates. “Unlike core colonies of the Spanish empire, such as Mexico or Peru,” writes Saguier, in Buenos

Aires, “the most crucial political conflicts arose between different corporations [...] or between different estamentos.”483 This was, then, a horizontal power struggle that was quite different from the sort of hierarchical tussling that typically took place between metropolitan authorities in, say, Panama, where the Crown, the Captains General of the fleet, and the viceroy asserted authority over the presidents of the audiencia and the cabildos. The social life of authority in Buenos Aires thus seemed far less a matter of metropolitan rank pulling than it was in Portobelo, Lima, or Mexico City and more a

483 Eduardo Ricardo Saguier, “The Uneven Incorporation of Buenos Aires into World Trade Early in the Seventeenth Century (1602-42): The Impact of Commercial Capitalism Under the Iberian Mercantilism of the Hapsburgs” (PhD, Washington University, 1985), 45.

216 matter of personality and forceful gubernatorial leadership. The chain of command meant less in a region so politically distant distant from Iberia.

Less interested in the moral economy that revolved around the agricultural production of the interior provinces and strongly oriented toward the market economy of the Atlantic system, the confederados were seen (correctly) by the beneméritos as enthusiastic supporters of smuggling or, at the least, middlemen in this illicit trading system.484 Many confederados had fled south to escape an Inquisitorial visita of the Holy

Tribunal of Portugal, which was led by Father Heitor Furtado de Mendonça in the

1590s.485 This, of course, raised suspicions among the defenders of Catholic orthodoxy in

Spain and the newly established Holy Office in Lima, even if such persecution was muted in the poorly staffed dioceses of the Southern Cone.486 While the beneméritos, then, were presumed to be secure in their orthodoxy and looked to the Andean economy, the confederados looked toward the Atlantic and maintained ties with the South

484 Eduardo Saguier, “The Social Impact of a Middleman Minority.”

485 Boxer, Sá, 81. Boxer mentions specific visits by the Holy Office to Brazil in 1591 and 1618, which led to an influx of fleeing conversos into Buenos Aires, Tucumán, and Peru. See also, Molina, Hernandarias, 168-169. See also, Roth, History of the Marranos, 284-286.

486 This neglect would come to an end in the 1630s in Lima with the Gran Complicidad, a massive crackdown on the part of Lima Inquisitors to a perceived conspiracy among Dutch and Portuguese conversos to introduce heresy into the region. An excellent source on the gran complicidad is Irene Silverblatt, Modern Inquisitions: Peru and the Colonial Origins of the Civilized World (Durham: Duke University Press, 2004), Nathan Wachtel, The Faith of Remembrance: Marrano Labyrinths (Philadelphia: University of Pennsylvania Press, 2013), and Ana Schaposchnik, The Lima Inquisition: The Plight of Crypto-Jews in Seventeenth-century Peru. (Wisconsin: The University of Wisconsin Press, 2015).

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Atlantic’s heretical hydrarchy, a dangerously promiscuous social sphere that was populated with infidels, apostates, and heretics.487

In addition to controlling governance in the late sixteenth century in Buenos

Aires, the beneméritos deployed another timeworn strategy for protecting their dominant position: the tendency toward strict endogamy.488 Since family networks were essential for knitting together and consolidating power, and the confederados were largely shut out of one of their best options for gaining status in the socially claustrophobic elite community of this yet underpopulated outpost of empire by virtue of their ethnic and familial backgrounds, marriage offered a strategy for assimilation and eventual social advancement. The ability of confederado men to marry the daughters of powerful benemeritos offered the double benefit of gaining residency for trade and improving their social standing for possible entry into the cabildo. If Portuguese confederados wished to expand their licit economic opportunities, they could do so by marrying creole women of lower standing to gain commercial access.489 Of course, this adherence to strict

487 Peter Linebaugh and Marcus Rediker, The Many-Headed Hydra: Sailors, Slaves, Commoners, and the Hidden History of the Revolutionary Atlantic (Boston: Beacon Press, 2000), 143-173. Linebaugh and Rediker draw the term hydrarchy from seventeenth-century English poet, Richard Braithwaite to describe a maritime state, which honored neither national or confessional lines that seemed especially hard to control due to the solidarity and autonomy of its sailors.

488 Saguier, “The Social Impact of a Middleman Minority,” 488-191.

489 “The Social Impact of a Middleman Minority in a Divided Host Society: The Case of the Portuguese in Early Seventeenth-Century Buenos Aires,” The Hispanic American Historical Review 65, no. 3 (Aug., 1985), 489-491. Saguier alludes to another possible strategy for gaining the hand of Spanish or creole women: increasing the amount of the arras, or groom’s dowry equivalent. Down at the heel creole and Spanish families could then improve their economic status, 490.

218 endogamy would erode over time and, by the 1620s, the distinction between the beneméritos and confederados would become largely meaningless.490

1580, aside from being Buenos Aires’s second founding, was the year the

Portuguese Crown was absorbed into Castile’s composite monarchy after King

Sebastian’s ill-fated adventurism in North Africa, where he and a large group of nobles disappeared.491 This meant a general de facto tolerance of Portuguese subjects within

Spanish realms that wasn’t mutually extended to Spaniards in Portuguese colonies, despite the widespread perception that Portuguese subjects were New Christians and crypto-Jews.492 It also meant significant autonomy for Portuguese into Brazilian affairs, despite some Inquisition visits in the 1590s and 1618.493 In “The Jewish Moment and the

Two Expansion Systems in the Atlantic, 1580-1650,” Pieter Emmer points out how contemporary sources seamlessly combined the Portuguese terms “homens de negócio”

(businessmen) with “Christãos novos” (new Christians). The dubious orthodoxy of

490 The number of Portuguese settlers in Buenos Aires would continue to grow. Manual Ricardo Trelles in 1871 transcribed a detailed list of Portuguese settlers in Buenos Aires in 1642, most of whom arrived from brazil like so many of the previous waves of migrants. See Revista del Archivo General de Buenos Aires, Buenos Aires, no. 3 (1871), 149-176.

491 Dom Sebastian I of Portugal disappeared at the Battle of Alquacir Quibir in August of 1578, in modern- day Morocco. His disappearance would lead to a succession crisis, which ended with Philip II successfully enforcing his hereditary claim to the Portuguese Crown and its subsequent absorption into the Spanish constellation of kingdoms, what is commonly referred to as a composite monarchy. On the annexation of Portugal, see Elliott, Imperial Spain, 262-271.

492 On the nature of this composite monarchy, see Elliott, J. H. "A Europe of Composite Monarchies." Past & Present, no. 137 (1992): 48-71 and Elliott, Imperial Spain, especially 5-32.

493 Stuart Schwartz points out as well that Portuguese colonists only sought to take advantage of Spanish policies when it was to their advantage, another form of forum shopping. “Luso-Spanish Relations in Hapsburg Brazil, 1580-1640,” The Americas, 25, no. 1 (July, 1968), 33-48, especially 39-40.

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Portuguese migrants from Brazil was all but presumed.494 But what was perhaps more important to governors and city council members was the fact that they arrived with formidable capital and numerous contacts, attractive assets for a group of neglected functionaries whose bare bones salaries forced them to seek alternative forms of remuneration. The Crown would come to recognize this, awarding a series of slave asientos to Portuguese merchants.495

Interestingly enough, a benemérito loyalist and stickler for commercial regulations, Hernandarias, was less fixated on the constant obsession with the orthodoxy of the confederados. Despite the identification of Portuguese with Conversos or, worse,

Crypto-Jews, Hernandarias remained steadfastly focused on making sure that commercial ships were registered to trade and paid their taxes for all merchants. Despite a royal order to expel all “marranos” from the Río de la Plata region received in January of 1603,

Hernandarias faced a great deal of pushback from his attempts to carry out the royal expulsion command by Bishop Martín Ignacio de Loyola and many vecinos who helped or hid suspected Jews.496 In this sense, his central aim of protecting commercial orthodoxy did not drift toward Inquisitorial persecution, nor would there have been

494 See Pieter Emmer, The Jews and the Expansion of Europe to the West, 1450-1800, eds. Paolo Bernardini and Norman Fiering (New York: Berghan Books, 2001), 506.

495 Rodolfo González-Lebrero, La pequeña aldea: sociedad y economía en Buenos Aires (1580-1640). (Buenos Aires: Editorial Biblos, 2002). Cited in María Andrea Campatella, At the Periphery of Empire: Indians and Settlers in the Pampas of Buenos Aires, 1580-1776 (Dissertation. New Brunswick: Rutgers, 2008).

496 The order, issued by Felipe II the previous October and containing a mix of commercial and religious justifications for the expulsion of Portuguese, was published in Recopilación de Indias, Tomo I, IX, ley 9, page 13, t. IV.

220 enough willing participants to carry out such a pogrom to its completion. It was not for lack of will on the part of Hernandarias himself that Portuguese remained in the colony

(he led another push to expel Portuguese in 1605) but rather the knot of social relationships and economic interests that stymied these efforts.497

Aside from contrasting economic orientations, the conflict between the beneméritos and confederados was familiar in another way in that the benemérito faction found cohesion in its expression of Creole nationalism. Most of the early settlers were

American-born subjects (“hijos de la tierra” like Hernandarias) who had carried out the most difficult work, breaking wild cattle and then working to carve out a market for agricultural products in Buenos Aires. Many were veterans of the violence, chaos, and hardships of the via Imperial de Potosí and the settlement of Asunción, and they wished to maintain control over the fruits of that internal productive market, which in the case of

Paraguay eventually came to include wine and mate. Most confederados had no such attachment to the lands around Potosí, only access to its silver, and they often chafed against creole control, which felt overbearing and vindictive. Many were peninsular replacements who had arrived in the Southern Cone only after much of the hard work of settlement and the violent pacification of hostile indigenous peoples had taken place.

Here, then, in microcosm was a clear antecedent of the creole-peninsular conflict that would play out over the next two centuries in Buenos Aires and beyond.498

497 Molina, Hernandarias, 78.

498 The creole-peninsular conflict manifested itself most noticeably in two areas: in Church appointments and colonial administration. As colonial economies developed, a number of merchants were able to buy administrative positions, such as oidor (judgeships), contador (royal accountant), to treasurer. In times of budgetary crisis, especially during wartime, the sale of offices was a short-term solution for raising revenue. The outcome of such a strategy meant a Criollo-dominated colonial administration. Peninsular 221

James Boyajian, historian of Portuguese trade and finance, emphasized some of the strategies used by Portuguese in Buenos Aires to gain formal residency, for official trade on licensed ships could only be directly carried out by Spanish residents. In addition to strategic marriage (mentioned above), which had been a common thread throughout merchant communities across the globe for centuries, naturalization could, as well, be granted by the Crown after a long period of residency, 20 years was typically sufficient.499 Perhaps the quickest way to gain access to Southern Cone markets was through the use of straw purchasers and carriers. Spanish commerce had always been characterized by the degree to which large numbers of foreigners pulled strings and made transaction decisions behind the scenes.500 Entry into Spanish trade could also be a simple factor of finding trustworthy factors with the right bonafides.

One contentious issue up through the first half of the seventeenth century was the presumed Portuguese intimacy with Dutch traders. Here, perceptions of suspect loyalties had merit, and efforts to shut out Portuguese traders meant, by extension, keeping the

appointments, similarly, initially dominated the Church. By the middle of the sixteenth century, the Crown reacted against this creole domination by reverting to a strict policy of peninsular appointments.

499 Boyajian, James C., Portuguese Trade in Asia under the Habsburgs, 1580-1640. (Baltimore: The Johns Hopkins University Press, 1993) 210. On the intricacies of subjecthood and citizenship in Spanish America, see Tamar Herzog, Defining Nations: Immigrants and Citizens in Early Modern Spain and Spanish America (New Haven: Yale University Press, 2003). Citizenship, according to Herzog, was as much a product of local affiliation (vencidad)--that is, local affiliation, as top-down naturalization granted by the Crown.

500 On the transition from German, to Genoese, to Portuguese financial support of the Crown, see Mauricio Drelichman and Hans-Joachim Voth, Lending to the Borrower from Hell: Debt, Taxes, and Default in the Age of Philip II (Princeton: Princeton University Press, 2014), 96-97, James C. Boyajian, Portuguese Bankers at the Court of Spain, 1626-1650 (New Brunswick, NJ: Rutgers University Press, 1983), and Fernand Braudel, The Mediterranean and the Mediterranean World in the Age of Philip II (New York: Harper & Row, 1972), 560.

222 troublesome and heretical Dutch at arm’s length during an epoch of bloody war between the Spain and the United Provinces.501 From the founding in 1580 to 1609, this friendly relationship between Portuguese and Dutch merchants fueled a lot of the anti-Portuguese sentiment being directed at confederados. The Sephardic network of merchants who had been expelled from Portugal at the command of King Ferdinand in 1497 had formed

Portuguese-Dutch networks in large part out of necessity.502 This illicit trade was effectively legalized in 1609, when the Spanish Crown and Dutch authorities agreed to a twelve-year truce. With the Portuguese as middlemen, the truce forced the back door to

Potosí wide open and led to a prosperous period of Platine trade from 1610 to 1620.503

This was, unsurprisingly, the period when conflict sharpened between the beneméritos and confederados. The legitimation of so many confederados, then, created a dilemma for the Crown.

The development and protection of the route that passed upriver and over land through Buenos Aires, Tucumán, Charcas, and Asuncion to Potosí, not only improved commerce but made communication faster and more frequent. Historian Garzon Maceda reports that from 1582, residents of Tucumán made a concerted effort to open trade with

501 Jonathan I. Israel and Stuart B. Schwartz, The Expansion of Tolerance: Religion in Dutch Brazil (1624- 1654) (Amsterdam: Amsterdam University Press, 2007) and Geoffrey Parker, The Dutch Revolt (Ithaca, N.Y.: Cornell University Press, 1977) are excellent sources on the tensions between Spain and the United Provinces during this period.

502 On the specific issue of the expulsion of the Jews from Portugal in 1497 and how this decision was tied to the royal wedding between King Manuel and Princess Isabella, see Francois Soyer, The Persecution of the Jews and Muslims of Portugal King Manuel I and the End of Religious Tolerance (1496–7), especially chapter 3.

503 Moutoukias, “Contrabando y control colonial,” 17.

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Brazil because it was accessible in a mere 20 days.504 The Crown would eventually respond to the overland trade that had escaped official monitoring by setting up a dry customs house in Tucuman in 1618 (more of which below).505

Strategies of Contraband in Buenos Aires

In the Iberian imperial context, commerce took place along a wide legal spectrum, from the Crown-approved monopolists who held valuable asientos for, say, slaves, tobacco, or salt to the illegal trade conducted by interlopers and pirates. It was often difficult to determine where along the spectrum of legality trade occurred, for most commerce was of the grey market variety—that is, somewhere between the two poles of legality. This is especially true of Buenos Aires given the port’s extremely limited options. When Philip II began laying out initial plans to refound Buenos Aires in 1569, he granted a license for two ships a year to visit the Platine region. After embarking with the Treasure Fleet, these ships would catch the southern current from the Canary Islands and sail to the Southern Cone with goods and passengers. This general rule remained in place aside from occasional exceptions and left the region chronically undersupplied.

Residents of the region sought out Portuguese merchants as a lifeline. Thus, most trade took place outside of the narrowly prescribed licit realm of trade decreed in 1569. In response, administrative reports were a mixture of plaintive requests for more trade

504 Ceferino Garzon Maceda, Economía del Tucuman: economía natural y economía monetaria siglos XVI- XVII-XVIII (Córdoba: Dirección General de Publicaciones, 1968), 19.

505 Moreyra y Paz Soldán, El Tribunal del Consulado de Lima: sus antecedentes y fundación (Lima, 1950), 21.

224 privileges and complaints about excesos being committed.506 In such a context contraband was perceived less as categorical transgression than as crime of degree. A bit of illicit activity for survival’s sake might be overlooked, but chronic lawbreaking required punishment.

The most common strategy by which contraband goods entered Buenos Aires was via arribadas forzosas (forced landings, hereafter, arribadas). The arribada was an element of maritime law that is difficult to categorize or define. The first recorded arribada in Spanish America was in Puerto Rico, in 1538, and consisted of three ships from Brazil carrying slaves.507 Charles V responded to this incident by requiring seized cargo to be sent to Seville, an infeasible solution for local governments of limited means and unmet needs.508 Given the danger and potential treachery of deep sea travel during the sixteenth and seventeenth centuries, seagoing vessels often anchored or docked under duress for a variety of reasons. Arribada claims generally fell under three broad categories. They were made due to shortages of food or potable water, the emergency need for ship repairs, or because of imminent threats from privateers, pirates, or enemies.

From the time of Zárate’s brief governorship in 1594-1595 and the closing of Buenos

Aires commerce with Brazil and Angola, the instances of arribadas increased markedly.

506 “Royal Cedula of December 10,” 15 AGI Charcas, 7.

507 José Antonio Saco, Eduardo Torres-Cuevas, and Arturo Sorhegui, José Antonio Saco: acerca de la esclavitud y su historia (La Habana: Ed. de ciencias sociales, 1982), 175.

508 To his credit, Charles V granted a dispensation which allowed for goods “que no se pudieren buenamente conservar” (that couldn’t be easily kept or conserve) to be sold to the public before royal officials. Recopilación de leyes de los reynos de la Indias (Madrid, 1681), IV, Book IX, Title XXVIII, Law XXII, 95.

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What typically ensued, in many of these cases, the captain of a vessel would contact local authorities about need to land a ship. This would be followed by a request to sell off some of the ship’s cargo in order to pay for supplies or repairs, but the usual result was the complete sale of all of the cargo, slaves included, in the underserved port.

One of the most egregious arribadas took place in 1623, when 12 ships arrived in Buenos

Aires from Angola. These ships, it was determined, contained property of a recently deceased governor, Diego de Gongora. The unlicensed ships, loaded with slaves, were seized and their cargoes auctioned off. The Consejo de Indias would posthumously convict Gongora for his role in this massive transgression and fine his estate 23,050 ducats.509

After goods were landed either by arribadas or clandestinely they then disappeared into the pulperias (general stores) and warehouses of the merchant community of Buenos Aires. What happened next was anyone’s guess. Goods and slaves would often be sent to the interior, where they were in high demand.510 Such goods followed no schedule and more nimbly met demand than products that had followed the northern route through Panama and Lima. And from Buenos Aires to Potosí, there were no political obstacles to their transport.

The colonists of Buenos Aires largely welcomed the proliferation of arribadas, especially those from Brazil and Angola. Slaves, referred to as piezas de negros, were as

509 “Real Cédula a don Diego de Góngora, caballero del hábito de Santiago, gobernador y capitán general de las provincias del Río de la Plata,” 10 October 1618, AGI Buenos Aires, 2, L.5, F.113V-114R; F.108R- 108V.

226 much a unit of account as currency, and offered an all but guaranteed return provided that they were healthy.511 Goods, if they arrived directly from Seville or via the circuitous route from Peru, were far more expensive than goods dumped in public auctions from arribadas, even after legal portions were divided up among royal officials. In fact, the entire procedure was largely an elaborate form of theater, from the initial claims of duress, to the sham seizure of goods by tipped off officials, to the “public” auction of goods. Within this system of generalized smuggling, profits were high enough to make up for the fines formally levied against contrabandistas. This certainly was the case of numerous arribadas during the terms of several royal functionaries who engaged in a series of mock arribadas from 1605 to 1610.512

Arribadas, of course, were not the only strategy for landing goods. The Rio de la

Plata offered a number of other options for the clandestine offloading of cargo, especially in the yet unsettled (or at least not yet formally settled) region just across the river to the northeast of Buenos Aires, an outcropping 25 miles away reachable today by a hourly ferry, Colonia del Sacramento. Historian, Macarena Perusset describes a scene in 1609, when a boat from Brazil emptied its cargo of wood, firewood, and slaves on the Island of

San Gabriel, just two miles off the coast of what is modern-day Uruguay. From there, goods and slaves would move overland, disappearing into the vastness of the Pampa.

Witnesses had reported the ship, which was then seized. What should have taken place

512 “Carta del nuevo procurador de Santa Fé y Buenos Aires,” in Robert Levillier, Roberto, Correspondencia de la Ciudad de Buenos Aires con los reyes de España (1615-1635). Tomo 2. (Madrid, 1918), 20-55.

227 among the authorities--charges for the captain and a quick liquidation of the goods in public auction--spiraled into a sort of comedy of errors that involved a series of substitute officials divvying up the goods amongst them.513 In the absence of officials spread thin throughout the Southern Cone, such improvisational tactics could hardly have surprised many. Officially licensed ships, as well, offered the same panoply of strategies for smuggling goods as well by means of concealment and the misreporting of cargo containers. But then, this sort of smuggling was ever present in Spanish realms, an outcome of a general expression of merchant prerogative that characterized a period in which containers were to remain sealed.

What, then, could really be done about arribadas forzosas and open smuggling given the widespread support for it among so many Buenos Aires residents? King Philip

III addressed the problem in a cedula in response to reports about illegal trade in Buenos

Aires in 1605. His response addressed only the damage that such trade was thought to do to the Tierra Firme fleet and the merchants who participated in this commerce. Connected to this damage, of course, was the loss of royal tax revenue. He steadfastly defended the current system and reiterated that two ships per year from Seville should be sufficient to supply the colony while leaving Peruvian trade unaffected. There is little to indicate that

513 Contrabando y sociedad en el Río de la Plata colonial (Buenos Aires: Editorial Dunken, 2006), 48-49. The officials in question: Juan de Vergara, a lieutenant interim governor filling in for Hernandarias, arranged for an illegal division of the spoils between the informant and the Alguacil del Mar, Antonio Sosa. According to existing laws, one third of the value was to go to the informant. Continues Perusset: “Estos hombres y sus seguidores fueron denominados por los Beneméritos de la conquista como Confederados. Una vez encaminada esta empresa ilícita, Diego de Vega, junto con Juan de Vergara, Simón de Valdez y otros miembros Confederados, comenzaron a tramitir y negociar el arribo de más navíos negreros en supuesta arribada forzosa. Restaba luego que alguno denunciara la carga ilegal, rematarla, comprarla y enviarla a Potosí.”49. From there, such groups were able to gain political power through the investment of their ill-gotten gains in purchasing land and properties from the benemeritos.

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Philip II has any interest in growing the colony beyond what a small fleet, a fort, and 300 soldiers could defend, and he maintained a tin ear about the vicious circle of scarcity that kept the settlement from growing on its own.514

The stops and starts, openings and closures that characterized Buenos Aires during this period betray a great uncertainty about how to best maintain imperial presence in this sensitive region. One the one hand, it was essential that policies not discourage settlement, for the Platine Delta was a nest of inter-imperial rivalry. The Dutch in particular would immediately establish the Dutch West India Company, an aggressive institution modeled on the Dutch East India Company, which had as its central aim, the expansion of trade and trading territories, through direct military action if necessary.515

On the other hand, the original raison d’etre of the permanent settlement as a bulwark to against invasion of Potosí was threatened when the very guardians were in cahoots with silver exporters. One particular area of colonial authority where these competing aims were most evident was in the Church.

Perhaps the most fascinating Church authority in Spanish America was

Portuguese-born bishop of Tucumán, Francisco de Victoria. Born in Coimbra Portugal in

1540 to New Christian parents, the same year that the Jesuit Order arrived in Portugal,

Victoria would be educated briefly in Jesuit schools and remain particularly sympathetic

514 “Real Cédula al presidente y oficiales de la Contratación para que se ocupen de impedir el comercio entre Brasil y Perú, por el Rio de la Plata,” 26 June 1595, AGI Indiferente, 433, L.2, F.287-288.

515 On the formation of the company, see Alexander Bick. Governing the Free Sea: The Dutch West India Company and Commercial Politics, 1618-1645 (Phd Diss.: Princeton, 2012) and Jonathan Israel, The : Its Rise, Greatness and Fall, 1477-1806 (Oxford: Clarendon Press, 1995).

229 to Jesuits in the Southern Cone who, like Victoria himself, would have an outsized impact on the region’s commercial development. As was typical of so many members of the clergy throughout Spanish America, Victoria’s responsibilities included far more ambitious goals than the mere responsibility for looking after souls. He would be active in all aspects of the development of Santiago del Estero, the dusty and forsaken seat of the bishopric of Tucumán. From his role in helping to train Jesuits for their missions in the northern reaches of the Southern Cone to the opening of trade between Tucumán and southern Brazil, Victoria was both a reviled and admired figure of great spiritual and secular consequence.516

He arrived in Lima from Portugal in the late 1650s and worked as a shop assistant before taking his vows as a Dominican friar after supposedly miraculously seeing a floating miter land upon his head.517 A number of historians have debated Victoria’s primary motivations in his dual role as a Churchman and later a merchant. Historian

Muñoz Moraleda includes an entire chapter about his commercial exploits without once mentioning the legality of his efforts to open up regular trade between Brazil and

Argentina.518 What perhaps made Victoria such a polarizing figure among both contemporaries and historians was the simple fact that he appeared to have grown tired of his spiritual role almost from the moment he was first posted to Tucumán in 1578. In

516 Despite its hagiographic slant, an excellent source of biographical details about Francisco de Victoria remains Muñoz Moraleda, Francisco de Victoria: primer obispo y propulsor del Tucumán, especially chapters 1-3, 1-15.

517 Samuel Edgar, "Don Fray Francisco De Victoria OP (1540—92) Bishop of Tucumán." Jewish Historical Studies 35 (1996): 15-25 and Moraleda, 117.

518 Moraleda, 89-112.

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1584, on a visit to Peru, where he clashed with both the governor of Tucumán, Hernando de Lerma, and Viceroy, Alejandro de Toledo, he offered his resignation for the first time.

He offered a number of reasons, from the complaint that there was simply too much work to do given the bare bones clergy of Santiago del Estero, to the austere living conditions there and the difficulties outfitting its cathedral.519 This resignation was never answered, and two years later he would write again to the king of his desire “para dejar el obispado e irme a Castilla” (to leave the bishoprice and go to Castile).520 Perhaps what exacerbated his loss of enthusiasm was the fact that, by some accounts, Victoria had run his bishopric like a petty despot, arguing incessantly with secular authorities and excommunicating prelates and officials with whom he disagreed. This was the case with Juan Ramírez de

Velasco, the governor of Tucumán who succeeded Lerma. He described Victoria, in a letter to the Crown, as a serial excommunicator (twice, in Ramírez’s case) who would brook no contradictions.521

While Victoria was engaging in a political power struggle in Tucumán, he had begun outfitting ships to send silver and other goods to contacts in southern Brazil for slaves. He sent his first ship to Brazil in 1585 laden with silver bars, which was strictly prohibited by the Crown.522 He would make two additional shipments of silver and other

519 See “Carta al Rey,” 6 April 1584, AGI Charcas 137.

520 “Carta al Rey,” 21 December 1586, AGI Charcas, 137 and 6 June 1587, AGI Charcas, 1, N. 37.

521 “Carta de Juan Ramírez de Velasco, Gobernador de Tucumán,” 10 December 1586, AGI Charcas, 26, R.5, N.11. See also “Auto de excomunión dictado por Fr. Francisco de Victoria contra Juan Muñoz, en 29 de Agosto 1582” Jose Toribio Medina, La Inquisición en el Rio de la Plata (Buenos Aires: Editorial Huarpes S. A., 1945), 163.

522 Boxer, Salvador de Sa, 75 and Ernesto Muñoz Moraleda, Francisco de Victoria: primer obispo y propulsor del Tucumán (Buenos Aires: Junta de Historia Eclesiástica Argentina, 1998), 56. Jonathan I. 231 products of Tucumán in 1587, the last of which would be captured by English privateer

Thomas Cavendish, who forced the slaves and crew of the return voyage to walk back to

Buenos Aires on foot. The then governor of Tucuman, Juan Ramírez de Velasco denounced Victoria for this shipment to authorities in Lima, but no formal charges were brought against the bishop.523 In a letter describing the illegal shipments, Licenciado Juan

Cepeda wrote in quite positive terms about Victoria’s pioneering voyages to Brazil and the possibilities that such voyages opened up for Tucumán and Buenos Aires.524

Victoria is a peculiar figure who seems out of place and out of time. His repeated attempts to resign, his fondness for the Jesuit order despite his status as a Dominican, and his seeming contempt for the Crown’s commercial regulations all speak to Victoria’s affinity for the life of the merchant or entrepreneur. His outsider status, as well, as a known New Christian who excommunicated residents and clergy members out of vindictiveness only complicate his peculiar place atop the Tucumán social hierarchy.

Historian Charles Boxer would credit Victoria as a pioneering mercantile adventurer who had “openly boasted” in Brazilian ports about his exploits.525 However Victoria might have seen himself and his role, he was, in many ways, a prototypical figure in a time and

Israel, Diasporas within a Diaspora: Jews Crypto-Jews and the World Maritime Empires (1540-1740). Leiden, Boston, Köln: Brill, 2002), 130.

523 “Carta de Juan Ramírez de Velasco, Gobernador de Tucumán,” 6 April 1587, AGI Charcas, 26, R.5, N.12.

524 “Carta del licenciado Cepeda, presidente de la Audiencia de Charcas,” 13 January 1588, Charcas, 16, R.27, N.143.

See also, Roberto Levillier, Correspondencia de presidentes y oidores, documentos del Archivo de Indias (Madrid: [Impr. de J. Pueyo], 1918).

525 Boxer, Salvador de Sa, 75.

232 place where even the most upright of subjects were all but forced to resort to illicit means to improve one’s lot.

Victoria’s example would provide a blueprint for countless contrabandistas in the first two decades of the seventeenth century. The threat to Potosí silver merchants, the holders of slave asientos, and (by extension) Crown interests was genuine and all of these groups demanded a response to the increasing unlicensed trade with Brazil that resulted.

Philip III’s response to this open and chronic flouting of commercial regulations was a decree for the establishment of an Aduana Seca (Dry Customhouse) in Córdoba on

October 8, 1618.526 After describing favorable crown trade policies for the port of Buenos

Aires, the decree recounts the damage done to Crown and licensed merchant interests as a justification for the new policy. The decree, for reasons that are unclear, would remain a dead letter until Philip IV reiterated this decree and added a more ambitious set of restrictions on February 7, 1622.527

Among other regulations, the Aduana Seca was to charge a 50% tax on goods moving through Charcas from Buenos Aires to Potosí. Those discovered to have smuggled or misreported goods were to receive a steep fine as a first offense and the lash and ten years of galley service for second-time offenders, which during the period under discussion typically amounted to capital punishment.528 Silver and gold were strictly

526 Recopilacíon de leyes de los reynos de las Indias (Madrid: A. Ortega, 1774), Tomo III, Titulo XIV, Ley i.

527 Perusset, Contrabando, 120-121.

528 Although galley servitude could consist of limited terms, many galley convicts did not live to end of their terms. Ruth Pike, Penal Servitude in Early Modern Spain (Madison, Wis: University of Wisconsin Press, 1983), 21.

233 prohibited from passing through the Aduana.529 Additional instructions were given to allow inspectors to open and inspect all containers to make sure no gold or silver was being transported. Córdoba was to be the chokepoint of this trade, the only licit passage available to overland merchants. And as a final attempt to foreclose illicit routes, all communication with Brazil was strictly prohibited.530

This de jure end to free overland trade was by no means the end of the contraband trade in Buenos Aires, but it signaled, at the least, that commercial policy was entering a new phase. The port itself would remain a favorite landing point for arribadas, whether or not their duress was genuine, but the landscape of the 1620s had clearly shifted.

Following the end of the Dutch Truce in 1621 and the resumption of hostilities between

Spain and the United Provinces, Low Country authorities issued a charter for the Dutch

West India Company on June 3 of that same year, whose central aim was to seize

Portuguese territories and expand Dutch trade in the Atlantic realm. The company’s initial success was astounding. Its triumphs included Piet Heyn’s seizure of the Spanish silver fleet in 1628 and the temporary control of Pernambuco and other parts of Brazil.

This new threat to Buenos Aires and the road to Potosí was a matter of grave concern for metropole and colony alike. Seen in this context, Philip IV’s new draconian measures in

Córdoba make a great deal of sense. The period of merchant prerogative, which began in one sense with the right to maintain closed cargo containers based on a royal decree issued in 1579 was drawing to an inexorable close.

529 Recopilacíon, Tomo III, Titulo XIV Law ii.

530 Recopilacíon, Tomo III, Titulo XIV, Law iii.

234

By the mid-1620s, not much had changed vis-à-vis commercial regulations in Río de la Plata. It remained, in the words of eighteenth-century chronicler Rafael Antunez y

Acevedo, the port with the least commercial liberty in all of the Spanish realms.531 The establishment of the Aduana Seca in Córdoba, with its strict rules for trade and severe penalties for fraud or smuggling, only made matters worse for desperate Bonarenses by foreclosing other overland routes to the wealthy markets of Potosí. Former governor of

Paraguay and Procurador General Manuel de Frias in a memorial would forcefully argue for many of the same policy changes as so many previous clergy and administrators had been making for decades.532

Of primary importance, wrote Frias, continued to be the fact that the province completely lacked mineral wealth and thus could only offer “frutos de la tierra,” items like grain, tallow, jerky, and hides. While not of much interest compared to the silver, dye, or tobacco that the merchants of the royal fleet coveted, such items were essential to the maintenance of Brazil’s plantation slavery economy. This, in many ways, echoed the problems of the Caribbean communities, which experienced a similar neglect from fleet visits. If such items were profitable in smaller cabotage circuits—in the island-to-island trade or within the Rio de la Plata/Brazilian circuit—they had too high of a bulk to value ration to be profitable on transatlantic voyages. There simply was no reason for merchants to invest in the Buenos Aires trade outside of the yearly navios de registro.

531 Antunez y Acevedo, Memorias históricas sobre la legislacion, y gobierno del comercio, 123.

532 Manuel de Frias. El capitan Manuel de Frias, procurador general de las provincias del Rio de la Plata, y Paraguay, etc. [A memorial, relating to the commerce of those provinces] (1625).

235

Frias provides an additional argument for allowing greater autonomy for the Rio de la Plata producers of primary commodities: Sevillian ships and their products offered at precipitous prices in the silver starved region make it impossible to maintain enough production to get a fair exchange. Products from Brazil, procured from the cheaper

Portuguese circuits of goods and within its system of slave production, offered Bonarense merchants and encomenderos a way to get ahead. Other wise, writes Frias, the Crown could expect to continue to have settlers defect to other, more profitable regions.

Frias’s memorial arrived, as did so many of the sober treatises of the arbistristas and mercantilists of chapter one, as largely a dead letter. The entrenched interest groups of the empire, the asentistas of the slave trade, the consulado merchants, and the commercial institutions at the metropole (the Casa de Contratatación and Consejo de

Indias), simply had other priorities than developing Buenos Aires beyond its role as an overgrown presidio. The Crown would continue to bet on and protect the club goods of merchant institutions and original viceregal centers in Lima and Mexico City. Buenos

Aires would continue to operate primarily as a contraband society for the first half of the seventeenth century in response to the suffocating constraints placed upon its merchants.

In the decade that followed, there would be one significant change in how the

Church dealt with at least some the contrabandistas of Peru and the Southern Cone; it would vastly ramp up its efforts to root out and punish merchants for perceived heresy.

This, of course, was not a new policy. The Lima Inquisition had focused from the beginning of its founding in 1569 on jealously guarding the orthodoxy of the southern cone. Jose Toribio Medina’s collection of transcribed Inquisition cases in which

236

Portuguese merchants were accused of skipping mass, preventing family members from going to mass, being overheard speaking about the Old Testament, and other indications that they had been Judaizing in secret.533 They were, as Toribio Medina writes, “from the first days of the establishment of the Inquisition in Lima, seen as suspicious in their faith and in their conscience and treated with unusual rigor.”534 By 1635 in Lima, exacerbated by the occupation by Dutch West India Company in Brazil, with their capital in Recife, the Inquisition had political as well as religious reasons to flush Portuguese merchants out of the Peru and the Southern Cone. In what came to be known as the Gran

Complicidad (great conspiracy), almost the entire converso community was arrested and charged with Judaizing. Despite accusations of complicity between the merchants being tried and the Dutch West Indies Company, no evidence was found. Nonetheless, ten pf the accused were burned to death and many others died in prison.535 While this particular pogrom didn’t end the presence of Portuguese conversos in Buenos Aires completely, it certainly served as a warning that conversos would be subjected to increased scrutiny in

Buenos Aires going forward.

533 See the cases of Jorge de Paz and Juan Acuña de Noronha in Jose Toribio Medina, La Inquisicion en el Rio de la Plata, 147-149.

534 Medina, La Inquisicion en el Rio de la Plata, 150.

535 See Irene Silverblatt, Modern Inquisitions, 29-54 and Ana Schaposchnik, The Lima Inquisition, 76-99 on the Gran Complicidad. 237

Chapter 4

Epilogue

Laws, Institutions, and Multi-Polarity: Theorizing Spain’s Commercial Empire

A. A violent order is disorder; and B. A great disorder is an order. These Two things are one.536

This study has, thus far, addressed sixteenth- and seventeenth-century Iberian thought on moral and market economies and examined the physical sites of smuggling in an effort to highlight its role in the functioning of the Spanish commercial system. In addition to examining the contemporary scholarship, from the Salamancistas to the fiscal mercantilists, it has touched upon travel literature, merchant correspondence, and administrative reports from a number of key nodes in imperial Spain’s commercial network. This chapter will expand upon some of the useful models that have been touched upon in an effort to demystify the differential patterns of economic development in colonial systems such as the Spanish Empire. The work of scholars from a mixture of fields including institutional economics, organizational theory, and the history of law will be mined to shed light upon how and why contraband came to play such an important role in Spain’s empire. It will begin with a discussion of dependency theory, first developed in part by Tucumán-born structural economist Raul Prebisch in the late 1940s

536 Wallace Stevens. Selected Poems (Knopf Doubleday Publishing Group, 2011), 215. Quote taken from Robert Cover, “The Supreme Court 1982 Term—Nomos and Narrative” Harvard Law Review 97, no. 4 (1983): 4-68, 4.

238 and later articulated by Andre Gunder Frank and Fernando Henrique Cardoso in works published in 1967 and 1979 respectively.537 It will then examine the theories of legal scholar Robert Cover and legal historian Lauren Benton to address how laws accumulated both in the metropole, how they were enforced in the periphery and how they impacted commercial law breaking. The works of New Institutional Economic writers such as Douglass North, Robert Coase, and historians who responded to their work like Avner Greif, Sheila Ogilvie, and Regina Grafe will highlight how monopolies and guilds encouraged smuggling. Finally, it will conclude with a discussion of what (if any) structural, institutional, or legal factors made the Spanish Empire particularly prone to high levels of smuggling and other forms of illicit economic activity.

Dependency theory, first articulated by Raúl Prebisch, can be broadly construed as an explanatory framework for differential wealth and development patterns in regions and countries around the globe.538 Dependency theory was, in its later iterations, a reaction to modernization theory, which had posited a universal explanation for how

537 Raúl Prebisch’s conclusions were presented in 1949 in Havana at the Economic Commission for Latin America (ECLAC or CEPAL) and published the following year as The Economic Development of Latin America and its Principal Problem. Andre Gunder Frank’s major works on the topic were published in the late 1960s and 1970s. Perhaps the most accessible versions of his argument can be found in Andre Gunder Frank, Capitalism and Underdevelopment in Latin America; Historical Studies of Chile and Brazil (New York: Monthly Review Press, 1967), and "The Development of Underdevelopment," in Dependence and Underdevelopment, eds. James D. Cockcroft, Andre Gunder Frank, and Dale Johnson, (Garden City, New York: Anchor Books, 1972). Dependency, broadly construed, produced the useful analytical concepts of core/center and periphery that can be applied to the differential power relationships between, in this particular case, the metropole (Madrid and Seville) and the peripheral settlements, both colonial capitals such as Lima and Mexico City and secondary ports like Portobelo and Buenos Aires. Fernando Henrique Cardoso and Enzo Faletto, Dependency and development in Latin America (Berkeley: University of California Press, 1979).

538 United Nations. The Economic Development of Latin America and Its Principal Problems (Lake Success: United Nations Dept. of Economic Affairs, 1950).

239 historical development of economies moved in predetermined stages.539 Raúl Prebisch developed dependency theory to explain why certain successful producers of primary commodities such as sugar, grain, or coffee remained poor while the producers of higher- value manufactured goods tended to become increasingly wealthy. Looked at as a historical phenomenon, dependency theory explained how developmental paths were set in accordance with the needs and demands of the metropole. Because sugar, coffee, tobacco, hides, grain, were products highly sought by merchants and consumers in

Madrid and (later) the merchants of Lima and Mexico City, institutions, infrastructure, and networks were established by metropolitan authorities and their enablers540 to focus on the maximization of their production. Such production decisions, such as where to clear fields, build forts, ports, roads, and settlements had accumulated over the long arc of the colonial history hardened into rigid paths of development, production, and distribution, crowding out alternative investments in areas such as education, industry, etc. This broad construal of dependency theory explains why many primary producing regions of Latin America (and elsewhere in the former colonies) have remained underdeveloped, for beyond mere philosophical or ideological similarities or differences, the center had left deep developmental scars upon peripheral societies.

539 Perhaps the most famous modernization theorist was W. W. Rostow, whose Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: University Press, 1960) argued that modernization takes place along a trajectory from traditional society to take-off to mass consumption regardless of the particular circumstances of a society.

540 The imperial middlemen, or comprador class (local merchants) are one example of colonial enablers who would have supported such a metropolitan/periphery arrangement based on their structural advantage in the import/export market. See Andre Gunder Frank, Lumpenbourgeoisie: Lumpendevelopment, Dependence, Class, and Politics in Latin America (New York: Monthly Review Press, 1972).

240

Building upon Prebisch’s theories, Andre Gunder Frank offered a more systemic explanation of how developmental paths diverged between imperial centers and their peripheries. The metropolitan nodes of the global system (pace Gunder Frank) projected economic power due to their formidable wealth—they simultaneously demanded the production of primary commodities and produced higher value goods—and exerted political control over overseas territories to guarantee the continuation of this center/periphery orientation.541 In the Spanish context, the original metropoles, Madrid as the political center and Seville as the economic center, made production and distribution decisions based on the powerful interests at the core of empire and were linked together by an intermediary class of indigenous and creole compradores (local merchants, bankers, and distributers).542 Powerful institutions like the Casa de Contratación, Consejo de Indias, and the merchant guild of Seville, at the behest of the Crown, focused narrowly on the production of silver and the security of its transport along a fortified axis from the centers of production to Seville.543

This standard core/periphery narrative, however, becomes strained when one considers the growth of Lima and Mexico City, the empire’s most prominent satellites.

With growing populations and easy access to the wealth of empire, both cities experienced robust demographic growth throughout the seventeenth century, while it is precisely toward the turn of the seventeenth century at the metropole that economic crisis

541 Gunder Frank, Capitalism and Underdevelopment, 53.

542 Andre Gunder Frank, Lumpenbourgeoisie: Lumpendevelopment, 9.

543 Asiento holders should be included as members of this suite of metropolitan institutions.

241 is most acutely felt.544 In peripheral Mexico City and Lima, dependency upon metropolitan products was greatly reduced. Wine, olives, grain, beef, pork, textiles (in many cases from the Far East) came to be increasingly produced and/or procured nearby.545 All of this is to say that the best way to make sense of the course of empire in the case of Spain is to envision its transformation from a macrocephalic entity into a multi-polar empire or many centers and many peripheries.

Negotiated Empires, an edited collection of essays published in 2002 complicates the dynamic of imperial centers and peripheries in constructive ways.546 Jack Greene and

Amy Bushnell point out that spheres of control can be defined as ecumenes: sites of immediate control by peoples of European origins; spheres of influence: areas of contested space; and the rest of claimed territory, which was largely the realm of empty or unenforceable claims.547 Sociologist Edward Shils emphasizes how “attachment to the central value system becomes attenuated” the further one is from the metropole.548

Lyman Johnson and Susan Socolow highlight the interregional nature of the Spanish

Empire; legal centers gave way in this conceptualization to market forces and local

544 On the crisis of the 1590s and early 1600s, see Elliott, Imperial Spain, 279-295.

545 On wine production in the Southern Cone and Peru, see Nicholas P. Cushner, Lords of the Land: Sugar, Wine, and Jesuit Estates of Coastal Peru, 1600-1767 (Albany: State University of New York Press, 1980). and Pablo Lacoste, "La Vid Y El Vino En América Del Sur: El Desplazamiento De Los Polos Vitivinícolas (siglos XVI Al XX)," Universum (Talca) Universum 19, no. 2 (2004): 62-93.

546 Christine Daniels and Michael V. Kennedy eds., Negotiated Empires: Centers and Peripheries in the Americas, 1500-1820 Christine Daniels and Michael V. Kennedy eds. (New York: Routledge, 2002).

547Jack Greene and Amy Bushnell,“Peripheries, Centers, and the Construction of Early Modern American Empires, An Introduction,” in Negotiated Empires, 2.

548 Greene and Bushnell, “Peripheries,” 3.

242 institutional imperative that exerted their own gravitational pull.549 All of this is to say that center/periphery analysis is most effective when it reformulated as a historicized paradigm that integrates both the letter and the spirit of the law. It wasn’t simply a unidirectional process in which metropolitan authorities projected their aims upon willing peripherial subjects. The process had to be continuously negotiated.

The rise of multi-polarity in the Spanish Empire created tensions between interest groups from the old metropole and the rising institutions in Lima and Mexico City. With the creation of the Lima Consulado de Comercio in 1613, it became increasingly clear that the prerogatives of Peruvian merchants were no longer necessarily aligned with those of Seville. What was to the distinct advantage of Lima merchants, policies such as skipping Portobelo fairs in order to create artificial scarcities and lobbying for the complete closure of Buenos Aires to Brazilian and African goods would be seen in a different light on the currency-starved docks of Seville. While the de jure authority still rested in the old metropole, the aims of the old center were diverging from those in the institutions of the rising satellites.

This divergence manifested itself in a number of ways. As has been explored in previous chapters, would-be merchants in Portobelo and Buenos Aires were stymied in their attempts to participate in commerce as much by powerful merchants, administrators, and clergy in Lima and their counterparts in Charcas and Panama City who tended to do their bidding. Hernandarias’s creole nationalism might have aligned with the viceroyalty of Peru, but confederados and their fellow travelers, the contrabandistas, largely ignored

549 Lyman Johnson and Susan Socolow,“Colonial Center, Colonial Peripheries, and the Economic Agency of the Spanish State,” in Negotiated Empires, 63-64. 243 the authority of Peru. Their activities, which involved promiscuous commercial relations with Brazil and Angola, were in many ways an implicit rejection of this particular manifestation of multi-polarity. The gravitational force field of Buenos Aires merchants, at least from a commercial perspective, was the Platine region and South Atlantic.

Authorities in Panama City, who in turn were forced to defer to Lima, similarly outranked merchants and cabildo members in Portobelo.

De facto metropoles, Lima and Mexico City, impacted the development of

Portobelo and Buenos Aires in a number of ways. Peru and Mexico both established their own royally sanctioned mints in 1535 (Mexico City) and 1572 (Potosí). Thus, silver production from crude ore to finished Spanish real coins took place thousands of miles from the de jure metropole, and these minted coins (along with silver bars) were often used to directly purchase goods via the Manila Galleons. In fact, the Spanish reales, coined in Mexico City were the favored coins throughout the Indian Ocean system during the period under discussion. Despite a series of royal prohibitions on such traffic, luxury goods from the Far East, especially fine silks and finished goods such as copper and iron, could be found throughout the Mexico City and Lima.

Both de facto metropoles were also key re-export centers, which meant higher prices for Buenos Aires residents especially, in much the same way that Seville had by the seventeenth century become a colonial re-export center for imported manufactures being sent to Spanish America. Given the far lower prices of contraband from the Far

East and in foreign bottoms trawling the Caribbean and Platine estuary, the highly taxed goods of Seville, a burden which accumulated each time goods were resold, had become

244 too expensive for many colonists. Philip II had initially responded to reports about direct shipments from Peru to the Philippines by banning all direct trade between the two colonies in 1582, but this didn’t stop goods from making their way to fill local shops with

East Asian goods.550

Rather than attribute the rise in contraband in the early seventeenth century in ports like Buenos Aires and Portobelo to the policies of the Crown, it makes rather more sense to examine how the Spanish empire’s multi-polarity created new tension lines between the de facto metropoles and their own neglected peripheries. Madrid and Seville, in this case, had actually lost their central positions among manufacturing and financial centers of Europe. Reduced primarily to a re-distribution center, Seville came to be outpaced even in that function by re-distribution centers further afield, in Lima and

Mexico City. It’s no wonder, then, that the Crown would be so slow to punish those who had bent the commercial rules, for in many cases such crimes only impacted Peruvian merchants and had little if any impact on Seville (the obvious exception being reductions in silver imports).

Rather than suggesting that there was a fully-formed hub and spoke empire at all or that hierarchies had come to be established in some comprehensible way by the turn of the seventeenth century it makes more sense to imagine that the Spanish metropole in

Madrid and Seville had never fully achieved pre-eminence. Both J. H. Elliott and Henry

Kamen made similar arguments when they alluded to a lack of monarchical consolidation

550 Borah, Early Colonial Trade and Navigation between Mexico and Peru, 118-121.

245

(Elliott) and a lack of development (Kamen).551 There was no real fall from political or developmental grace since Spain had never really emerged out of its medieval malaise as a composite monarchy. In an excellent recent collection of essays on mercantilism,

Regina Grafe contributes an additional layer to debates about the nature of the Spanish

Empire. In “Polycentric States: The Spanish Reigns and the ‘Failures’ of Mercantilism,”

Grafe traces how mercantilist policies—that is, policies that consolidated political and economic centralization—were never able to gain significant purchase in the the Iberian sphere because “non-Castilian territories…sheltered behind historic rights in order to actively scupper any tendency toward integration.”552

The problem outlined by Grafe and the editors of Mercantilism Reimagined, then, wasn’t that the Spanish Empire was unwilling or incapable of establishing comprehensive development policy to take advantage of the endowments of empire, rather that there had been insufficient integration in the first place, from a political perspective as well as from an economic perspective. Writes Grafe, “[m]ercantilist policies were perceived as disenfranchisement and were resisted for sociopolitical reasons because they interfered with where sovereignty and power were located, how they were legitimized, and the way in which they were practiced.” Mercantilist policies were thus embedded in cultural, social, and political forms that would scarce consider them. There was, in the parlance of

551 In "A Europe Of Composite Monarchies." Past and Present 137, no. 1 (1992): 48-71. Elliott makes the case that Castile was the first among equals in a system that tied together personal monarchies. Kamen makes the case that the declinologists have gotten the trajectory of the Spanish decline wrong based on the fact that the empire had never developed properly in “The Decline of Spain: A historical Myth?: A Rejoinder" Past and Present 91 (May, 1981): 181-185.

552 Grafe, “Polycentric States,” 249.

246

Wennerlind and Stern, no “coherent, strong, and expansive nation-state” upon which to establish mercantilist policies to enrich the commonwealth, only a set of disparate and often bitterly opposed monarchies, pace Grafe.553

Jeremy Adelman’s Sovereignty and Revolution in the Iberian Atlantic554 takes a different approach to the dissolution of empire and the erosion of metropolitan loyalty among creoles in the late eighteenth century. He utilizes the theories of A. O. Hirschman to explain how creole merchants might choose to opt out of the official commercial system by trading in contraband goods. Hirschman’s Exit, Loyalty, and Voice: Responses to Decline in Firms, Organizations, and States, is a scholarly examination of the conditions in which participants in a corrupt or underperforming organization or system decide to leave or attempt to reform said system.555 Adelman’s deployment of the theories of Hirschman primarily targeted the political strain of the late Bourbon commercial system, which involved a series of frequently contradictory shifts in policy from the closed system of the treasure fleet system to the “comercio libre” (free trade) policies of Bourbon reformers.556 Hirschman’s theory can just as fruitfully be used to analyse contraband during the period discussed in this dissertation.

553 Grafe, “Polycentric States,” 242.

554Jeremy Adelman’s Sovereignty and Revolution in the Iberian Atlantic (Princeton: Princeton University Press, 2006).

555 Hirschman, Exit, Loyalty, and Voice, 6.

556 Comercio libre in this case was a misnomer. What such policies tended to do was increase the number of legal ports and allow for the issuance of more individual licenses.

247

In the economic sphere, the realm of producers, consumers, and merchants of

Spanish America, something approaching monopoly or, at the least, oligopoly was the default when it came to imperial commerce. Seasonal convoys in most cases offered little opportunity for less connected and capitalized merchants who wished to participate.

Foreigners were prohibited from direct participation. Those excluded had two options in this case pace Hirschman): exit or voice. For consumers and producers who felt the brunt of the scarcities created by neglect of the Treasure Fleet, the voice option was to petition the government for privileges, as was the case with the letters of Ignacio Loyola, bishop of Tucumán, who made a powerful case for allowing Bonarense residents to export the fruits of their labor for manufactured goods. For those who could not afford the high cost of entry (the membership requirements of the Lima merchant guild were substantial) the best option was exit from the system via contraband. This was certainly the case for foreigners, who had no other option.

What did this outside competition do to the monopoly? For a time, from the creation of the Treasure Fleet in 1565 to the first decades of the seventeenth century, silver continued to pour into Crown offers. Many merchants had the option of dabbling in exit strategies through smuggling while simultaneously trading in licensed goods. The

Crown responded quite often with general pardons for notorious smuggling ports and composiciones for individual transgressors. Composiciones were curious legal instruments that allowed for mild financial penalties to be paid for crimes committed, typically for fraud or contraband. Historians Barbara and Stanley Stein describe them as the means by which “powerful transgressors legitimated or 'laundered' by ritualized

248 settlements with the state.”557 Vila Vilar described the composición as not quite “un permiso definitivo para comerciar. Era una solución transitoria que podía servir un cierto período de tiempo y a ella se acogieron la mayoría de los extranjeros residentes en la

Indias (not a definitive permit to trade but a temporary solution that could serve for a period of time and was welcomed by foreigners trading in the Indies).”558 While such instruments were not an endorsement of smuggling, the recourse they offered to transgressors certainly amounted to some degree of leniency.

While dependency theory with some adaptations explains how some of the changing imperial dynamic might have encouraged or forced Spanish and Portuguese subjects to voice their concerns about the exclusionary commercial system in petitions or opt for the exit option through smuggling another key aspect of this dynamic all but guaranteed high levels of lawbreaking--the sheer accretion of laws that characterized the

Habsburg era. Legal scholar Robert Cover contributes another framework for understanding the dynamic of licit and illicit commerce in the Spanish Empire. In

“Violence and the Word” he lays out in the starkest terms how legal interpretation in the form of enforcement and adjudication requires the “organized violence of institutions” if it is to be effective.559 Where Cover’s analysis has special resonance in the Spanish imperial realm is in its discussions of how the metropole interacted with peripheries it could only rarely confront with slow-to-arrive and infrequent missives, instructions, and

557 See Stein and Stein, Silver, Trade, and War, 23.

558 Los Corzo y los Mañara: tipos y arquetipos del mercader con Indias (Sevilla, 1991), 83.

559 Robert Cover, “Violence and the Word,” Yale Law Journal 95 (1986): 1601-1629, 1601.

249 decrees. Legal interpretation and enforcement, in this sense, had to be outsourced to local/peripheral authorities for this reason. This created a jarring conflict between the normative world of settlers and the legal realm of the metropole—that is, the vast gap between obedecer (obedience to royal commands) and cumplir (the execution thereof).

The thick field of Habsburg law and government created a great tension between the normative universe of struggling settlers and oft-misinformed agents of the Crown. Small wonder that contraband was so widespread.

In “Nomos and Narrative,” Cover offers a provocative description of how national law codes come to monopolize what had once been a menagerie of legal orders. Here,

“law reflects a tension between what is [widespread law breaking and conniving local officialdom] and what might be [an honoring of the commercial rules of the game and the prerogative of the merchant guilds].”560 The Habsburg age embodies Cover’s early modern state, with its “multiplicity of laws [and] the fecundity of the jurisgenerative principle.561 Cover’s theory describes the endless pendulum of royal decrees that kept communities like Buenos Aires in a state of suspense, which led to a general erosion of loyalty to the law.

This gets to the problem with Lima, Portobelo, Buenos Aires, and other settlements in Spanish America. Left to mostly their own devices, these communities had developed their own nomos in the breach of official authorities. The felt need for more aggressive jurispathy is especially evident in both the Recopilación and in the later works

560 Cover, “Nomos and Narrative,” 36.

561 “Nomos and Narrative,” 40.

250 of the fiscal mercantilists. What was once a relatively straightforward issue of compliance became a thicket of laws, which had accrued over a century of commerce.

Historian Lauren Benton, provides an analysis of plural legal orders in the colonial context in Law and Colonial Cultures: Legal Regimes in World History, 1400-1900.562

Because metropolitan communities already had pluralistic legal regimes, there were many ambiguities that traveled westward to Spanish America.563 These ambiguities were only magnified as Lima and Mexico City took on the role of de facto metropoles in

Spanish America. Both Portobelo and Buenos Aires would suffer the brunt of these ambiguities in their push for greater autonomy and control over locale trade and revenue collection. While Benton’s focus is primarily on the disconnect between metropolitan authority in Church jurisdiction, especially in the context of jurisdiction over indigenous peoples in borderland regions such as New Mexico, she stresses that “jurisdictional uncertainties” were baked into the entire colonial order.564 These sorts of tensions were evident in both the squabbles between the Panama president, captains general, and the viceroy of Peru in the tensions between Charcas clergy, Lima merchants, and Bonarense treasurers and confederados.

In her follow up book, A Search for Sovereignty: Law and Geography in

European Empires, 1400—1900, Benton addresses maritime laws and the rationalization

562 Lauren Benton, Law and Colonial Cultures: Legal Regimes in World History, 1400-1900 (New York: Cambridge University Press, 2002).

563 Benton, Law and Colonial Cultures, 13.

564 Benton, Law and Colonial Cultures, 101.

251 of space.565 In establishing sovereignty, European imperial projects required various strategies to bring exotic landscapes into familiarity, which they accomplished through mapping and the creation of corridors and enclaves. This is precisely what Spain did in its plodding establishment of Treasure Fleet routes and trade fairs. In addition to establishing authority and sovereignty in this manner, Spain jealously guarded information about the many features of the landscapes and seascapes within its sphere of control but was unable, in the end, to prevent its proliferation. Portobelo and Buenos Aires bore the brunt of this tension between the normative universe and the rules of officialdom. This was an even taller task given the widespread disobedience of colonial officialdom. Another wrinkle in the Spanish case, however, is that many officials were quite sanguine about how to punish contrabandistas, offering legal instruments that allowed them to pay small fines, or even buy back confiscated goods.

In the shadow of this multi-polarity and against the jurisgenerative accretion of often-contradictory laws appeared the merchant trade guilds of Mexico City and Lima.566

Much recent scholarship has addressed the function of such guilds and come to quite different conclusions. New institutional economics (NIE), a term coined by John

Williamson based on the work of Ronald Coase and more recently refined in the works of

Douglass North, Avner Greif, Stephen Epstein, Sheilagh Ogilvie, Paul Milgrom, and

Barry Weingast, has offered economic historians an approach to institutions that

565 (Cambridge: Cambridge University Press, 2010).

566 Sancho de Moncada, and Jean Vilar Berrogain, Restauración política de España. (Madrid: Instituto de Estudios Fiscales, Ministerio de Hacienda, 1974), 201.

252 addresses the social norms, bounded rationality, information asymmetries, and ideology that impacts economic behavior.567 But as a sub-discipline, according to historian

Ogilvie, NIE could still use a broader and deeper empirical basis for many of the presumptions it makes about growth and efficiency. Ogilvie’s sharp critique of Grief and

Epstein in particular leaves a mark not because institutional comparisons don’t shed light upon how market economies came to elbow aside moral economies in late Medieval

Europe and the Mediterranean, but because, according to Ogilvie, both Grief and Epstein make overly ambitious claims that are not supported by sufficient evidence.

The disagreement revolves around whether to credit commercial institutions, in this case, merchant guilds, with positive externalities that fostered long-run growth and efficiency or, as Ogilvie counters, to envision them mainly as instruments of political power and distribution. Early modern Iberian commercial institutions—the merchant guilds, the Crown, and the organs of colonial administration—provide an example of institutional function that snugly fits within Ogilvie’s conflict and political redistribution paradigm. Indeed, the entire rickety structure of Iberian commerce around the turn of the seventeenth century was strategically built to create scarcities in both time and space and, in the eyes of the unfortunate colonial subjects who played by its rules, to prop up an

567 Roberta Dessi and Sheilagh Ogilvie, “Social Capital and Collusion: The Case of Merchant Guilds,” Cambridge Working Papers in Economics No. 417 (Cambridge, 2004); Avner Greif, Paul Milgrom, and Barry R Weingast, “Coordination, Commitment, and Enforcement: The Case of Merchant Guilds,” Journal of Political Economy, CII (1994), 745–776; Greif, Institutions and the Path to the Modern Economy: Lessons from Medieval Trade (New York, 2006); Frédéric Mauro, “Merchant Communities, 1350–1750,” in The Rise of Merchant Empires: Long-Distance Trade in the Early Modern World, 1350–1750, ed. James D. Tracy (New York, 1990), 255–286; Greif, “The Fundamental Problem of Exchange: A Research Agenda in Historical Institutional Analysis,” European Review of Economic History IV (2000): 251–284; Douglass C. North, Structure and Change in Economic History (New York, 1981); Daron Acemoglu and Simon Johnson, “Unbundling Institutions,” Journal of Political Economy 113 (2005): 949–995. 253 inefficient transaction regime that would channel revenue and resources to the hand- picked merchants, military men, and Church men and women who had gotten their royal licenses through official channels.

The Spanish empire provides some valuable object lessons for historians about the impact of long-lasting institutions. One would be hard pressed to find starker examples of the purely redistributive function of merchant guilds than the merchant guilds of Mexico City, Lima, and Seville. Established by royal charter in 1543, Seville’s merchant guild came to serve as a front for foreign agents and traders. By the end of the century, despite its privileged position, it would be overtaken by the guilds of Mexico

City (1593) and Lima (1613) in the competition for information, the generation and dissemination of which is often mentioned among new institutional economics writers as one of the most important goods offered by merchant guilds during this period. So how did information move within and among these circles?

The archival documents are not explicit about this. Spain’s official overseas communications network involved aviso ships, which made stops along a number of major and minor ports from Seville to Tierra Firme and Mexico. These smaller, swifter ships, according to historian, Manuel Lucena Salmoral, were tasked with supporting fleet ships by informing merchants and settlers of their arrival and communicated cargoes and prices of goods in advance. They were forbidden from carrying cargo or extra passengers.

Sent alone before 1574, aviso ships were capable of rapid turnaround and generally traveled one per fleet. After this period, capacities were increased from 60 to 80 tons and another mail ship was added to each fleet. It was common for administrators to provide a

254 brief rundown of news arriving via aviso ships in ports throughout the Caribbean in the first lines of their official correspondence. In theory, the faster official news outpaced that of cargo ships, the quicker goods could be inspected and transported for sale at ports, allowing communities to minimize what historian Pedro Peréz Herrero aptly refers to as the “conjunctural prostration” that bedeviled settler communities in Spanish America.

This was especially true of the Panamá-bound silver from mines at Potosí. Not counting loading and refreshment stops and other vicissitudes of unreliable Pacific sailing, the round trip from Panamá to Callao could take between three and four months. In practice, however, fast travelling information could set in motion the shadowy suppliers in minor ports and cue smugglers as to what the market was like for popular black and gray market commodities such as fine linens, cloth, clothing, slaves, wine, dyestuffs, and other non- perishables.

It is quite evident, then, that in addition to managing scarcities in material commodities, as the Lima Consulado did through their successful attempts to make the

Portobelo Fairs less frequent, royal and colonial institutions went to great lengths to turn information into a club good. Evidence of this tendency can be seen in the royal decree of

Philip IV, issued in response to the contrabandistas of Buenos Aires in 1622, which prohibited not only commerce, but also all forms of communication, passage, and carriage between the colonies.568 Throughout the 1620s, Philip IV would begin to create a commercial cordon sanitaire of sorts, but such activities would do little to stanch the flow of silver or discourage the exit from the system of smugglers. Such laws were not only

568 Recopilación, Libro VIII P Titulo 14 Law iii, 73-74.

255 jurisgenerative in their tendency but, in fact, created additional categories of criminality.

Contraband continued to grow as a means of getting around the new rules of the game, and neglected colonists were happy to have access to these goods.

* * *

By 1625, Philip IV’s establishment of the punitive Almirantazgo de Paises

Septentrionales (Admiralty of the North Countries) had signalled a shift in commercial enforcement from the piecemeal approach of his forebears to a commitment to large-scale economic warfare on smugglers of all stripes, regardless of the consequences. After the end of the Dutch truce in 1621, whole categories of licit goods had transformed, overnight, into illicit contraband and an ambitious system of confiscation and rewards for identifying smuggled goods replaced the less aggressive model of ferreting out smuggling at official ports. This would generate a growth industry of informants, who saw in contraband ships a chance to become wealthy through the generous confiscation policies.569 The immediate consequence of this stricter enforcement regime was greater insecurity beyond the line, as Spain’s competitors, England, Holland, and France in response ramped up their own represalia (reprisal) campaigns in an effort recover seized goods.

It is quite easy to condemn Philip IV’s actions as shortsighted and counterproductive, but the Crown was spread thin in the 1620s. Unable to rejuvenate

569 An obvious parallel to sixteenth- and seventeenth-century confiscation rewards are asset forfeiture programs in the United States and elsewhere, which encourage police to seize goods without due process. In the case of Imperial Spain, one of the justifications for fast adjudication was the legitimate concern that contraband goods were often perishable and that delays in adjudication sent ripples through networks of licit trade. 256

Spain’s withering manufacturing base in the face of foreign competition, adjust to the fact that the colonies had begun to produce their own manufactures, or pay its soldiers, who were spread throughout the Low Countries and the Italian Peninsula, Philip IV’s knee- jerk war on contraband was a last ditch effort to protect Spanish economic interests. This crackdown had a doubly negative impact on the Portuguese economy, and Spain’s relationship with Portugal became particularly strained after it began to tighten prohibitions and prosecutions on trade with England and the Netherlands. The seizure of

English, Dutch, and Portuguese ships not only cut into profits and created tensions between Spanish inspectors and Portuguese administrators, but also reduced Portugal’s tax revenues. To make up for this shortfall, Portugal was forced to introduce new taxes, which it levied on members of its elite.570 Despite the grumbling of specific groups of merchants in Portugal and elsewhere, Philip’s embargoes and represalia policies did reduce contraband imports by foreigners. But as was typical of such top-down enforcement efforts, strict policies tended to generate more enemies and spur increasingly creative solutions to getting around the new rules. It is also worth emphasizing that all of these policies took place far closer to the metropole, at the nucleus of its maritime empire, where Spain’s military strength lay. If the war on contraband yielded only mixed results in and around the Iberian Peninsula, how would the Crown be able to effectively wage it abroad? The short answer to that question is, quite poorly, as reports of massive disparities between the silver receipts reported on the official Treasure Fleets and in

570 Alloza Aparicio, “Portuguese Contraband and the Closure of the Iberian Markets, 1621-1640. The Economic Roots of an Anti-Habsburg Feeling” e-JPH 7, no. 2 (Winter 2009): 11.

257 alternative sources like the Dutch Gazettes.571 By the middle of the seventeenth century,

Spain had lost not only Portugal, but control over the lion’s share of its commerce.

A great deal has rightly been made of the recent leak of the “Panama Papers,” a set of primarily commercial and financial documents obtained from law firm, Mossack

Fonseca.572 What this document dump has revealed is a pattern of extensive and long lasting tax evasion and financial fraud that includes a number of high-level officials and heads of state. Both general and specialist audiences have followed the Panama Papers with a mixture of shock, vindication, and confirmation that their worst fears about global financial practices were, in fact, based on sound evidence. Are the Panama Papers the bracing exception to the rule of global capitalism or its defining feature? Historians of

Panama, the Spanish Empire, and globalization have been quick to latch onto the story and dust off older narratives about the turpitude of political leaders, merchants, and bankers who act contrary to the public good when left to their own devices. Such narratives, as this dissertation has demonstrated, would have been instantly recognizable in a Salamancan lecture hall, where generations of theologians and natural philosophers grappled with how a society might strike the perfect balance between moral and market economies. Rather than blame Panama or, by extension, the Spanish Empire for being an

571 Michel Morineau, Incroyable gazettes et fabuleux métaux: les rétours des trésors américains d'après les gazettes hollandaises (XVIe-XVIIIe siècles) (Cambridge: Cambridge University Press, 1985). Enriqueta Vila Vilar, Las ferias de Portobelo, makes this point out the massive disparity between the official registration of goods in Portobelo and the amount registered in the Casa de Cruces in the middle of the Isthmus of Panama, 64-66.

572 The Panama Papers were actually leaked in 2015, but the more than 200,000 documents were carefully combed through before their exposure in April 2016.

258 atypical nest of corruption and smuggling, many of these analysts consider evasion of the law as a constant characteristic of globalization.573

While it is easy to make convincing arguments that runaway corruption, fraud, and smuggling are essential components of both historical and contemporary capitalism, which is what many Panama Papers commenters are claiming, such arguments largely miss the mark. What smugglers, embezzlers, and fraudsters have always responded to are regulatory regimes, many of which have raised the price of admission and participation to levels beyond their means. Such law breaking would certainly be recognizable within other economic systems, or any system, for that matter, which trafficked in exclusive privileges and club goods dispensed through institutional membership. Throughout this dissertation, contraband has been cast as a common element of mid-colonial Spanish commerce. Spain, for its part, was somewhat uniquely positioned among competing imperial powers during this brief moment to actually enforce many of its commercial laws by deploying its powerful guardacostas (coast guard) and port inspectors when it chose to do so. But the mildness and inconsistency of such enforcement efforts revealed some degree of acquiescence to gravitational forces that the Crown could not control.

573 Jesús García Calero, “Los otros «papeles de Panamá» del siglo XVI” ABC 10/04/2016 http://www.abc.es/cultura/abci-otros-papeles-panama-desde-siglo-201604100223_noticia.html On the Panama Papers specifically, “Lo que revelan los documentos no es una tendencia especial a la corrupción, sino algunas de las características inherentes a la globalización. Un intercambio difícil de controlar, máxime cuando las distancias eran como eran en el la Edad Moderna.” Fray Tomás de Berlanga, obispo Panamá: descripción, etc.,” AGI, Patronato, 194, R.27, N.109V.

259

Bibliography

Manuscript Sources

Archivo General de Indias (Seville, Spain), AGI Buenos Aires Charcas Contaduría Contratación Escribania Filipinas Indiferente Lima Panama Patronato Santo Domingo

Biblioteca Nacional de España (Madrid, Spaim) BNE

British Library (London, England)

Torre do Tombo (Lisbon, Portugal), ANTT

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