Philip II against the Cortes and the credit freeze of 1575-1577

Abstract

Numerous archival documents show how the 1575-1577 payment stop on the contracts with Genoese bankers (asientos) induced a freeze of the domestic credit market through the bankers' intermediation for asientos and credit linkages. Commercial fairs stopped, banks failed and trade suffered while the King granted legal protection to the Genoese bankers. The evidence strikingly confirms that the strategy of Philip II was not directed against the bankers but against the cities that were represented in the Cortes. He forced them to increase their fiscal commitment that funded the domestic debt (juros) into which asientos could be converted. The payment stop lasted until the cities agreed to the doubling of their commitment.