The Spanish Empire’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 ii © Copyright 2016 by Patrick Funiciello. All rights reserved iii 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 smuggling 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 Spain, 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 capitalism 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. iv 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 silver 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 (Caribbean ports in modern-day Panama) and the activities of New Christian Portuguese merchants and their ecclesiastical and government enablers in Buenos Aires. 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 gold 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, presidios 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 vi 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-Seville route over the Potosi-Callao-Panama-Havana- Seville route in channeling silver, slaves, and lucrative commodities from the metropole to checkpoints in the Caribbean, Peru, and back. These focal points of inquiry will contribute to and respond to challenges posed by theoretical literature on the commercial revolution 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 Madrid, 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. viii Table of Contents Acknowledgments ......................................................................................................... iv Abstract of Dissertation .................................................................................................. v List of Figures