• 1  M. Artola, 1982, p. 330.

4We have addressed this problem by analysing an extreme case: the moment of the biggest eighteenth-century hike of the Spanish Real Hacienda’s most important source of inland revenue. In November 1779 the Spanish government decreed a tax increase to defray the war that broke out against Great Britain in June of the same year. In the opinion of Miguel Artola, “the most convenient option was taken”, upping by one third the amount the state received from Rentas Provinciales y Equivalentes (provincial consumer taxes in Castile and equivalent taxes in other regions).1 Artola argues that it would seem perfectly logical for the state to finance warfare expenditure by raising taxes and that the state found it easy to do so by means of a 33.3% rate hike. Artola regarded this as easy to understand. After all, we are dealing here with an absolute state that can pursue the arbitrary policy it wishes; i.e., tweak state revenue as much as it liked whenever it deemed fitting to do so. War was more than enough reason, Artola implicitly sustains, for the state’s absolutist fiscal policy to show its true colours. Artola undoubtedly sees this despotic tax hike as a clear example of arbitrariness underpinned by the absolutist model.

• 2  P. Hoffman & K. Norberg, 1994, p. 306.
• 3  M. Dincecco, 2009, p. 48-103. The comparison with the Spanish case is essential: R. Torres Sánchez(...)
• 4  As argued by J. Glete, 2007, p. 87-108. The origin of this thesis can be found in R. Lachman, 2000
• 5  This thesis is well explained in P. K. O’Brien, 2011, p. 408-446.
• 6  This is borne out by analysing the taxation changes bound up with the creation of public debt, whe (...)

6First and foremost there is a growing number of historians who shed doubt on this knee-jerk equation of absolute governments, like Charles III’s, and the untrammelled free will to change tax systems and rates. As Hoffman and Norberg conclude, with the French case in mind: “taxation and despotism were, in the last analysis, incompatible”.2 It would seem to be clear by now that the problem was not the political model, or at least not alone. The discovery that absolute states in fact had more difficulty than parliamentary states in changing their taxation policy has opened up an interesting debate about why precisely the non-absolutist states like Great Britain or the Netherlands were able to modify and mobilise their taxation resources far more successfully.3 As things currently stand in this ongoing research, everything seems to indicate that, rather than strictly a question of the political regime, what really mattered was the lower degree of opposition to taxation changes in non-absolute states. The differences between states seem to reside above all in the levels of political and economic elites, both local and national.4 Non-absolute states, in other words, might pursue a fiscal policy just as arbitrary as an absolute state, but its enforcement came up against much less social opposition and was even helped by an open and self-interested enforcement participation and consensus from the elites.5 Limits to the taxation policy, therefore, did not lie so much in any country’s particular constitutional structure but more so in the groups sustaining political power, legalising the fiscal-change measures and expediting their enforcement or even directly promoting and participating in them.6 To put it in a nutshell, therefore, the important point about Charles III’s fiscal absolutism was not whether or not it was arbitrary but whether or not it could be effectively enforced.

• 7  T.J.A. Le Goff, 1999, p. 377-413. See the comments on this issue in S. Conway & R. Torres Sánchez, (...)
• 8  R. Bonney, 2004, p. 191-215.
• 9  J. Félix, 2006, p. 42.
• 10  The best guide to the nature of Spanish absolutism is still the work of P. Fernández, 1992.

7Secondly, the idea of “convenience” attributed by Artola to this warfare-financing tax hike has also been brought under the spotlight of recent historical research and found wanting. To start with there is now a certain consensus that taxation was not the most efficient warfare-financing method in the eighteenth century.7 In the English case, which has been most closely studied, this option was taken up early, but even in France the government was unable to fall back on tax revenue to affront the conflict. As Richard Bonney argues, past experience had taught the French government (but any other European state might have plausibly learnt the same lesson), that the new taxes would not rake in enough money quick enough to finance a war.8 The only way to change this situation would have been to steal a march on events by changing the taxation policy before the war, but diplomatic watchdogs would have seen any such move as a formal declaration of war.9 Any wartime tax hike would have served, at best, for helping to pay off wartime-contracted debts afterwards. The warfare-financing tax hike decreed by Charles III cannot be seen as an isolated and almost automatic measure. To understand its real nature it needs to be studied in the historical context in which it was effectively agreed and enforced. Neither can this tax hike be written off as a convenient measure. Consideration has to be given to such factors as the real revenue-raising calculations of the authorities, which we can check against its enforcement, its efficacy in raising this calculated sum, the speed and the methods put into practice. The fact that there was an order to raise tax rates, in other words, cannot stand alone as an explanation of that taxation policy. We need also to factor in the design of the taxation change, how this tax hike was actually enforced and what were the consequences of the measure. Studying a particular taxation change from the moment it was decided upon to the moment it was enforced and the revenue received can give us some revealing insights into the true nature of Charles III’s absolutism.10

• 11  Dictamen del conde de Floridablanca sobre la forma de aumentar las rentas provinciales, issued on (...)

8Despite the arbitrary authority implicitly and explicitly attributed by Artola to Charles III’s government, those in charge of his taxation policy were much less sure of their ground. After the end of the war the Secretario de Estado himself, Conde de Floridablanca, with the recent experience of having implemented the biggest fiscal change of his government, wrote that “the operation of increasing or changing taxes […] is one of the most serious, most difficult and riskiest measures that might be taken within this vast monarchy of ours”.11 For the head of Charles III’s government the decision to tamper with a tax was no trifling matter; in no way was it easy and convenient and, judging from his own words, needed to be approached with the utmost caution.

• 12  This Junta de Medios also features as Consejo Particular de Medios. Its documentation in AHN, Cons (...)
• 13  The first Junta de Medios in 1779 was made up by the secretario del despacho de Hacienda, Miguel M (...)

9As a result of this mindset, raising taxes was by no means the first-resort for Charles III’s government. In 1779 the order went out for a Junta de Medios (Resources Board) to be set up, with the remit of proposing resources for tackling the war with Great Britain, declared in mid-June 1779; the Junta duly came up with ten resources or measures.12 If any importance can be given to the number and order of the proposed measures, tax hikes came in last. To finance this war the Junta proposed the establishment of “gratuitous” donations, lotteries, life annuity funds in the Americas and diverse sales of titles, jobs, encomiendas (grant of right to tributes and revenue) and graces in the Americas and in a significant ninth and tenth place, a 33% increase in the Rentas Provinciales “of Castile and Aragon” and a tax on spirits and liqueurs. Significantly, another Junta de Medios held in late June 1779 did not even mention tax increases.13 It would seem that the government was working from the idea that any warfare-financing resource was valid providing it involved no tax increases.

• 14  S. Conway, 2007, p. 45-68.

10The Secretario de Estado’s written thought must have been a deep-seated maxim of Charles III’s government, because the most surprising aspect of this whole tax-hike issue is precisely how long it took for the government to bring it in. Although the war began in June 1779, the government did not give the tax-hike order until mid-November of this year. This delay does not seem logical in the circumstances, especially in view of the fact the revenue was likely to take some time to filter through the system. The money resulting from the tax increase would not reach the state’s coffers until one year after the outbreak of war. This delay contrasts sharply with the extraordinary legislative fleet-footedness shown by the opposing sovereign George III, who, at the very moment of declaring war ordered increases in a host of taxes.14 This national difference suggests a differing sensitivity towards the role of taxes as a warfare-financing medium.

• 15  On the advantages Spain would glean from a “quick end to the war”, such as the invasion of Great B (...)

11Everything would seem to suggest that the Spanish government was confident that the taxation option would not be necessary if the military strategy came out well, seeking to defeat Great Britain by this same summer of 1779. To this end all military effort had concentrated on building up a huge navy to attack the British Isles directly together with the French fleet, followed by an invasion and a rapid end to proceedings.15 The failure of this strategy forced the authorities to ply its loins for a long war and seek more financing sources. Up to that time the war-financing method had been the traditional one of rifling all deposits of public funds right round the country. These pools of savings, with the government’s established right to tap into them, had defrayed Spain’s various conflicts since 1774 (Moroccan attack on the North African strongholds, expedition to Algeria in 1775 and to Río de la Plata in 1776) but the source was now running dry. Whether because the government confidently expected the war to be over quickly or preferred other financing sources and mistrusted the taxation option, the truth is that Charles III’s government dallied six months over the tax hike. Recent historical experience must have taught them that that the revenue would be slow to come in and they were also perfectly aware that the Real Hacienda was now entering a war with its traditional financing source exhausted, so the decision to put back the tax hike can be accounted for only by the government’s chariness of a fiscal change. This is borne out by the government’s subsequent sense of its obligation to justify the change.

• 16  On the development of control mechanisms over the state’s legislative activity and its capacity of (...)
• 17  To refer to this tax hike the Secretaría de Hacienda used the term “Extraordinary Contribution” fr (...)

12Charles III, as an absolute monarch, had all the necessary sovereignty, legitimacy and authority to decree an increase in tax rates. In theory, neither the monarch nor his government was bound to ask any other institution to vouchsafe this decision or negotiate its enforcement. Charles III was much freer than his rival George III when it came to changing his subjects’ taxation situation. Spain was still far from being a “checked leviathan”, whereas the United Kingdom was showing the first signs of being so.16 Despite these advantages, the government’s political practice was surprisingly coy, falling within parameters of behaviour that we might dub “fiscal paternalism”. For whatever reason, and despite the delay, the government decided to act with notable precautions, to forestall a taxpayer backlash, and bent over backwards to soften the impact of this tax hike. As we will soon see, this tax increase was presented as an exceptional measure and in fact was called in the documentation “Extraordinary”.17

• 18  A copy of the decree, Miguel Múzquiz, San Lorenzo, 17-11-1779, en AHN, Hacienda, Libro 8031, f. 49 (...)

13For some reason Charles III’s government wanted to avoid appearing before “public opinion” as a despotic and arbitrary government. In a calculated and systematic way he continually resorted to a justificatory rhetoric to back up his decision and muster grassroots support and legitimacy. The very decree that imposed the one-third hike in Rentas Provinciales was a notable exercise of political justification, based on overriding arguments of pressing needs, justice and fairness.18 The rhetorical intent is obvious and the words therefore need to be read with a pinch of salt. Nonetheless, the arguments used to take on a special significance if we bear in mind the manner in which the tax hike was arranged and enforced.

• 19  S. Conway, 2006.

15The writers of this document openly tabled the justice of this tax increase because, in the government’s view, the war undertaken was intrinsically just too. The English and the English alone, it was argued, were the warmongers here, since they had been provoking the Spanish and attacking “my American domains since 1770”, which, as he expressly acknowledged, imperilled the possessions of both worlds and “the goods and trade of my beloved subjects”. By using this argument the government was presenting the conflict to taxpayers as a defensive rather than offensive war; it was just to defend oneself, especially when what was at stake was the monarchy’s most coveted possession: its colonies. This rhetoric is very different from the English government’s tax-hike justification oratory, which preferred to coax taxpayers into supporting an expansive project that would boost economic opportunities.19 An all-in-this-together political rhetoric was not really on the cards in the Spanish case.

• 20  This way of addressing the funding problem stands out for its originality when compared with the a (...)
• 21  As during the Seven Year’s War, Charles’s government preferred to tap into state “savings” in the (...)

16Once the justice of this war had been established, the Spanish government then had to detail how it would be kept up and who by. Charles III’s government expressly declared in this decree that it behoved the government itself to seek warfare-funding resources, which would be done if possible without increasing the tax burden. The principle of taxes only as a last-ditch effort was therefore made explicit right from the word go. The sequence here is crucial. It is in this characteristic trait that the Spanish government stands out from other European countries, where raising taxes was the first thing done after declaring war because state creditworthiness was guaranteed (both for attracting funds and backing up the issue of public debt).20 Quite on the contrary, in all the conflicts during Charles III’s reign (Seven Year’s War and post-1774 conflicts) tax rises were the last-ditch measure when the state’s liquid resources and savings had run out.21 As Charles III expressly recognised to justify the last-ditch effort of asking taxpayers to help finance the war: “I find myself in the inexorable need of asking my countrymen for help after saving them from any encumbrance over many years”. Probably this was what Charles III’s government really thought.

• 22  As Pegerto Saavedra has suggested, the one-third increase in these taxes was a fortunate first ste (...)
• 23  The tax-hike renewal orders in Madrid, 24-12-1780, AGS, SSH, Leg. 1741 and 21-11-1781 in AGS, SSH, (...)

17This self-justificatory rhetoric reached its peak with the arguments brandished to keep both arbitrista thinkers and taxpayers themselves happy: demonstrating unequivocally that the tax would be enforced in a just and even-handed way (a crucial argument to glean a certain public consensus and second-guess the government’s own legitimacy). For a start the tax was given a time limit; it would be enforced only during 1780. This time limit is important because this hike has traditionally been presented as an opportunity for the government to reform the Rentas Provinciales, a process that eventually led to Lerena’s 1785 reform.22 In fact this decree shows that the new tax was born with an expiry date. If the tax was then renewed this was always on the express condition of a one-year extension to its term, which called for a new justification and a new commitment from Charles III’s government.23 In fact, once the war had ended, the state did not extend the tax term anew. At least from the public-finance point of view, this revocation was also illogical, because it was precisely with the return of peace that the state’s debts and payment defaults ganged up most urgently.

• 25  On the definitive incorporation of Great Britain’s war-generated taxes into the fiscal structure, (...)

19This limited term of the new tax is yet another feature that stands out from the fiscal measures adopted by the enemy, where the new taxes ended up grafted for good on the fiscal structure, insofar as they had no time limit and were tied in with the need of paying off the public debt built up during the war.25 Both governments, in other words, made tax changes but Charles III’s was not brought in at the start of the war and was decreed with a built-in time limit.

• 26  A. González Enciso, 2003, p. 21-41.

20Probably with the same legitimacy-seeking purpose, the Spanish government accompanied the Extraordinaria’s time limit with another even more decisive public-opinion-wooing trait: the new tax’s even-handedness. Contradictory as it may seem, Charles III’s despotic government felt the need to present the tax change as fair and just. Fiscal inequality had been one of the main gripes of the proyectistas and politicians of the time in their demands for tax reforms. These authors tended to cite the Rentas Provinciales as the most extreme example of this lopsidedness, so the principle of taxation fairness was almost bound de rigor to pop up in the decree. According to the orders of the Secretaría de Hacienda, the new tax would be enforced throughout the whole of Spain rather than just in the crown of Castile. This meant that the Extraordinaria Contribución would be extended to all the taxpayers of the Crown of Aragon too, their own provincial taxes, the Equivalentes, being increased by exactly the same proportion. This geographical extension meant that this new tax burden would be truly “national”, an extremely important development in Spain’s eighteenth-century taxation system.26

• 27  The “gratuitous” and forced donations of the clergy have never received their full due as a financ (...)

22Any tax that aims at even-handedness and fairness cannot afford to leave out any group of taxpayers, or at least due arrangements have to be made to charge them in another way. The decree therefore explained, to pre-empt any grievances against privileged taxpayers, such as the church, that these were exempt from the new tax for now because other “more efficient” taxes had been levied on them. In any case the decree by no means ruled out including them within this tax later; indeed the Secretaría de Hacienda was already working towards this end.27 The message was clear: all subjects were to be charged alike in an effort to pre-empt taxpayer opposition and seek a tacit consensus and legitimacy.

• 28  Sáez de Parayuelo and Juan Matías de Arozarena to Miguel Múzquiz, Madrid, 24-11-1779, AGS, SSH, Le (...)

23The Secretaría de Hacienda’s vaunted fairness and even-handedness of the tax hike was reinforced with the argument that it would, to a certain extent, be progressive: lower earners would not pay as much tax as higher earners. An express declaration was in fact made of exclusion from the tax of: “necessary items for feeding the poor”. In all likelihood the paternalist rhetoric surrounding this tax-rise sought to emphasise its justice and fairness. Perhaps Charles III’s government was even haunted by memories of the recent popular uprisings suffered by the previous Secretario de Hacienda. The Esquilache riots still loomed large; indeed they were an express argument wielded by the Directores Generales de las Rentas Provinciales in planning the revenue collection system for this new tax and also lay behind the felt need to justify, in Madrid’s case, the exemption of some staples.28

• 29  Real Cédula 3-12-1779, AHN, Hacienda, libro 8031.
• 30  C. García, 1996, p. 187.

24Just as important as the manifest will to make sure everyone paid their bit was the secure establishment of the revenue collection method. As it later transpired, the government in fact feared that this new tax would end up strengthening non-state-controlled revenue collection methods, affecting the poorest taxpayers despite the spirit of the law. The government knew and feared that uncontrolled head taxes (repartos/repartimientos) and lump-sum payments (encabezamientos) or new consumer taxes could have disastrous effects on local economies and the worst-off. Once more the paternalist spirit shines through and the state allowed the towns to dip into the surplus funds of Propios y Arbitrios (local land revenue) in the local coffers. A subsequent instruction sent out to intendentes made the situation even clearer: the reason for using the surplus of Propios y Arbitrios as a means of paying the new tax was “to avoid untoward encumbrance of taxpayers”.29 A measure of this importance was possible due to the institutional and administrative changes in local finance control brought in by the monarchy since midway through the century. The state’s ostensible intention in doing so had been to reduce the alarming local debt levels but nobody was blind to the fact that the control systems established on local income, expenditure and debts also allowed state authorities to keep track of the resources available in Spanish towns and villages.30

• 31  AGS, SSH, Leg. 435.
• 32  Sáez de Parayuello and Juan Matías de Arozarena to Miguel Múzquiz, 24-11-1779, AGS, SSH, Leg. 2327

25Working from the state’s information on the actual financial resources at local level, the Secretario de Hacienda ascertained, at the end of 1777, that local coffers contained a total of 62.5 million reales, of which 32.2 million were in cash and the rest in outstanding credits.31 The Directores Generales de Rentas had previously estimated revenue from the Extraordinaria Contribución to be about 30.3 million reales, so it was assumed that local coffers had more than enough to defray the new tax.32 The government’s information to hand therefore prompted it to authorise – in reality to force – towns and villages to use these resources to pay the tax rise. Nonetheless, there were presumably more reasons than merely a paternalist outlook urging the state to authorise use of these local resources for payment of this tax.

• 33  “The day looked promising with heavily laden clouds but they were blown away by the north wind at (...)
• 34  Múzquiz to Directores Generales de Rentas, 15-11-1779, AGS, SSH, Leg. 2327.

29Charles III’s caution and damage-limitation approach continued when it came to making revenue-collection arrangements. To start with the tax-hike decree was repeatedly put back for fear that the bad weather and drought the country was currently suffering from would increase taxpayer opposition. The government’s qualms even led it to halt distribution of the already printed decree to regional authorities until such time as the weather might change, even though it had already been signed by the king.33 The great problem for the government, however, lay in how to enforce the decree. The overriding fear was that failure to make due provision for all possible snags and drawbacks might bring the whole procedure grinding to a halt due to complaints and suits brought by taxpayers; in the words of Miguel Múzquiz: “You (Directores Generales de Rentas) will see the downpour that is going to engulf the Finance Ministry”.34

• 35  Exclusion was made of tercias (tithes), servicio ordinario (a property tax on commoners collected (...)
• 36  Such was the case of the Granada silk revenue, where “any alteration might undo all progress made (...)
• 37  “After your majesty’s transfer to them of the spirit tax.” Directores Generales de Rentas, Juan Ma (...)
• 38  Directores Generales de Rentas, Juan Matías de Arozarena and Saez de Parayuelo to Miguel Múzquiz, (...)

30The Secretaría de Hacienda saw the main problem to be coming up with a clear definition of Rentas Provinciales before applying the 33% increase thereto. This definition process was left up to the Directores Generales de Rentas. After a painstaking analysis of the characteristics of each tax making up the Provinciales, it was agreed to exclude some of them.35 The directors were at pains to explain this exclusion since it implied a reduction in the amount of revenue collected. Motley arguments were offered ranging from economic effects that a certain tax might have on economic activity,36 to any legal ceiling that might exist, as in the case of situados, tercias or aguardiente.37 The patchy nature and trend of the taxes making up the Rentas Provinciales seriously hindered the design of the taxation policy, no matter how absolute the state’s powers might be. In all, the costs of these excluded taxes were reckoned to trim 5.6 million reales off the previously estimated 32 million revenue from the Extraordinaria Contribución.38 Some idea of the importance of this reduction can be gained by comparing this 5.6 million of excluded taxes with the 5 million to be contributed by Catalonia for the Extraordinaria.

• 39  Indeed the taxation-fuelled unrest against Esquilache stemmed partly from the attempts made since (...)
• 40  Directores Generales de Rentas, Juan Matías de Arozarena and Sáez de Parayuelo to Miguel Múzquiz, (...)
• 41  Miguel Múzquiz to Directores Generales de Rentas, Palacio, 20-12-1779, AGS, DGR-II, Leg. 610.
• 42  Miguel Múzquiz to Consejo de Castilla, Madrid, 20-12-1779, AGS, DGR-II, Leg

31This was not the only limit the government imposed on itself and, indeed, there were more exceptions. The most important was the case of Madrid, whose Rentas Provinciales were farmed out to the Cinco Gremios Mayores. In Madrid the government’s fear of any grassroots reaction to a change in the tax structure was particularly evident. With memories of the Esquilache riot still vivid in its mind,39 the government clearly pleaded caution: “equivalent measures with no risk of inciting popular unrest should be sought”.40 To hammer home this point it was decided that the exceptional methods would be enforced only in the inner city, with general Rentas Provinciales being applied to the province of Madrid as a whole. The Gremios were authorised to levy special consumer charges, but once again with the caveat that “the poorer people and tradesmen of Madrid should not see their staples threatened by the Extraordinaria Contribución”.41 In the end the Gremios were allowed to levy the charge only on cocoa, wine, wax, sugar and textiles on the grounds that “the poorer people can mostly eschew such goods and the charge therefore encumbers more so the better off who can afford same”.42 A calculation was also made to ensure that the extra tax should be collected only until adding up to a one-third increase and should not be prolonged beyond the liability established for the inner city of Madrid (1.9 million reales de vellón). In other words, instead of levying the tax where it was likeliest to contribute most, such as a consumer-intensive built-up area, equity with the rest of the realm was the overriding motive, to avoid upsetting Madrid residents. This was the exact opposite procedure to the English, who tended to levy their taxes where business and demand for goods was highest. Once more, Charles III’s government shifted uneasily between a love and dread of its subjects, showing special sensitivity towards its Madrid subjects.

• 43  Many examples in AGS, DGR-II, Leg. 610.
• 44  P. K. O’Brien, 2006, p. 341-363.

32Once a definition has been made of how much was to be raked in with the new tax, i.e., about 36 million reales de vellón in the whole of Spain, arrangements were then made for transferring the money, as previously agreed, from the local authorities to the Real Hacienda. The problem for the state was how quick this revenue could be obtained, with the words “winning time” continually featuring in the Secretaría de Hacienda’s correspondence.43 The state was really obsessed with this issue of speed. As Patrick O’Brien has shown, the true financial challenge of all European governments was not to create new taxes but to cut the revenue-receiving cost and time and ipso facto increase the efficiency of the whole operation.44

• 45  See the comparison of the revenue collection speed in various royal taxes (Tobacco, General, Lanas(...)
• 46  Real Cédula 3-12-1779, AHN, Hacienda, libro 8031.

33We would argue that if Charles III’s government turned to Rentas Provinciales for the biggest war-financing tax increase, this was hardly on the grounds of its being the easiest revenue to bring in. Quite on the contrary, it was in fact the most time-consuming revenue collecting tax of all.45 The real reason for doing so must have been that it glimpsed the best possibility of cloaking the revenue-transfer sleight of hand that was intended, above all, to solve the grave problem of revenue-collecting tardiness in the new taxes. Precisely in an instruction prior to the tax-hike order it was indicated that the decision had been taken to pay the Extraordinaria Contribución with the leftovers of the Propios y Arbitrios because this was conducive to “sooner and more effective enforcement of a great part of this service”.46 In our judgement the war and associated urgency gave the pretext and chance for masquerading a transfer of funds from local authorities to the king’s coffers. In all likelihood war was the excuse and the alibi was fiscal paternalism, but the way the whole revenue collection process was arranged raises the question of whether it in fact amounted to a clear subjection of local funds to the financial interests of the state.

• 47  C. García, 1996, p. 195.
• 48  This follows from the correspondence between Miguel Múzquiz and Manuel Becerra, Comptroller of Pro (...)

34Charles III’s government could call above all on two key factors to make sure the local council’s savings were spent perforce on payment of the Extraordinaria Contribución. Firstly the system of intendentes and secondly a long track record of growing control over local treasuries. Since 1760 there had been a local accounts watchdog body called Contaduría General de Propios y Arbitrios, albeit closely watched over in its turn by the Consejo de Castilla, because the Secretaría de Hacienda preferred to place his trust in the intendentes.47 The Consejo de Castilla’s annual stream of information helped to keep a constant track of the money available at local level. In truth these accounts procedures were not totally accurate, designed as they were to flaunt the “progress” being made in the Bourbon’s reformist, local-debt-reduction policies. In time this sparked off the protests of the Secretaría de Hacienda who wanted to know how much was effectively being held in local treasuries.48 After a fierce clash with the Consejo de Castilla, the Secretaría de Hacienda finally found out that the Consejo’s much-vaunted 347.6 million reales de vellón as “cumulative profit since 1760” from the towns of the whole of Spain, in fact boiled down to only 68 million reales de vellón. Even these were only theoretically available because part thereof corresponded to local debt. The study to find out how much the Secretaría de Hacienda could actually call on as ready cash threw up the final figure of 37.5 million reales de vellón. It is a striking coincidence that this resulting figure should tally so closely with the 36.1 million reales de vellón that the government hoped to glean from the Extraordinaria Contribución.

• 49  On 24th November the Secretaría de Hacienda ordered the Consejo de Castilla to set up with some ur (...)
• 50  On the coordinating role of the treasurers general, see R. Torres Sánchez, 2012.
• 51  Barón de la Linde to Múzquiz, Barcelona 8-12-1779. Múzquiz to Linde, Madrid 22-12-1779, AGS, SSH, (...)

36The government set up a consejo particular within the Consejo de Castilla, closely watched over by the Secretaría de Hacienda, with the express remit of urgently dealing with any doubts thrown up by authorities or taxpayers “as quickly as possible and with overriding preference to any other business.”49 All the information generated was supposed to help the treasurer general, in liaison with the intendentes, to supervise the circulation of available capital.50 In fact, however, what the Real Hacienda was quickly flooded with was not local savings but rather intendentes’ reports warning of the non-existence of the ostensibly-available capital and asking for an extension of the payment deadline. From Barcelona the Barón de la Linde insisted on a three-fold phase in of the Equivalente payment, as had always been the custom with the Catastro, the provincial tax of Catalonia. The tax hike and immediate payment thereof as decreed, explained the intendente of Catalonia, could not be done “without alteration thereof in this case, not only in due accordance with the agreed rules for payment of the Catastro but also because it would be impossible for towns and villages to come up with the extra payment”. Múzquiz’s response was a forthright no: “the third increase is to be enforced on the whole Catastro as on the whole Contribución de Aragón, Equivalente de Valencia and Talla en Mallorca, without the exception that (you) have mistakenly assumed”.51 The important point for the minister here was not the “how much” but “when,” i.e., the revenue collection speed. But the intendentes had already given warning of the real situation, that the money was not in fact available in the amount assumed by the Consejo de Castilla or the Secretaría de Hacienda. The implicit objective of a swift transfer of funds from local authorities to central government was floundering by now, and therewith any hope of a burden-free tax hike.

• 52  Directores Generales de Rentas to Múzquiz, 17-10-1780. AGS, DGR-II, Leg. 610.
• 53  Manuel Martínez de Irujo to Pedro Francisco de Pueyo, Valencia 29-12-1779, AGS, SSH, Leg. 999.
• 54  Barón de la Linde to Miguel Múzquiz, Barcelona 11-12-1779, AGS, SSH, Leg. 999.

37In January 1780 the worst fears came true. All the involved authorities agreed that the money did not exist in local councils; the Directores Generales de Rentas final conclusion after the avalanche of negative reports was: “the Propios surplus wrongly supposed to exist by the respective Contadurías has in fact been unforthcoming in many towns and villages”. The Secretaría de Hacienda’s response, telling intendentes to up the pressure on local councils to come up with the money, was unavailing. The Directores themselves pointed out “this seldom serves any purpose other than making it even more difficult for towns and taxpayers to comply.”52 In the words of the intendente of Valencia, no one was saying that the accounts presented to the Consejo de Castilla or intendentes were false; it was just that the money, physically, was not there: “the funds do not now exist” and that “those surpluses were make-believe”.53 The intendente of Catalonia came to the selfsame conclusion: “the ostensible surpluses, in most towns, do not actually exist in the coffers”.54

• 55  Ayuntamiento de Cádiz 16-2-1780, AGS, SSH, Leg. 1739.
• 56  Autorización del Consejo de Castilla, Madrid 7-5-1778, AGS, SSH, Leg. 1739.
• 57  Francisco Antonio Domezain to Miguel Múzquiz, Seville 15-12-1779, AGS, SSH, Leg. 1741.

38The situation was practically the same throughout the whole of Spain. The money was non-existent, as it turned out, because it had been spent on urgencies, unforeseen expenses or even expenses authorised by the Consejo de Castilla but then left out of the accounts sent to Madrid. Cádiz declared itself to be incapable of paying its Extraordinaria due of 1,474,193 reales because, with the permission of the Consejo de Castilla, it had invested all the 1778 and 1779 surpluses in street-cleaning and -paving work.55 Vélez Málaga had lent its 1778 surpluses to the “local harvesters of wine, raisins, almonds, figs, lemons and oranges” to promote their production and exportation.56 Similarly, Seville had already committed its present and future surpluses. To offset the effects of the poor harvest of 1779 the city had borrowed 120,000 pesos from local merchants to import grain. To pay off this loan, which had been authorised by the Consejo de Castilla, Seville had mortgaged precisely the yield of two dehesas and all the future revenue surpluses. The city was now in a cleft stick. If it ceased to pay off the loan, in order to meet its Extraordinaria commitments, this would entail breach of contract, ruling out any similar recourse in the future and also, they argued, driving up wheat prices.57 Such examples are endless.

• 59  We have used the “estado de cobranza” (charge statement) closest to the end of the month. AGS, SSH (...)

40The upshot of this actual situation of local finances was that money earmarked for payment of the Extraordinaria Contribución did not reach the royal coffers with the speed or ease required. A transfer that was expected to take a few days dragged on much longer. By mid-February only ten per cent, 3.2 million reales, had been paid over and it was not until January 1782 that all was paid off.59

• 60  Por la villa de Bohoyo, provincia de Ciudad Rodrigo, Consejo to Múzquiz, 14-7-1781, AGS, SSH, Leg. (...)
• 61  Consejo to Múzquiz, 26-6-1781. AGS, SSH, Leg. 1741.
• 62  The intendente dealt with Seville’s request to raise funds for paying the Extraordinaria by holdin (...)
• 63  Witness the town of Arévalo, which declared that it had no surpluses to pay the Extraordinaria Con (...)
• 64  The right of peazgo had been a propio (local revenue-generating asset) of the city of Lérida since (...)
• 65  Miguel Múzquiz to Conde de Ricla, Madrid 6-4-1780, AGS, SSH, Leg. 999.

42From mid-March 1780, at first timidly and then openly, the government passed on instructions to the consejo particular for it to accept any type of tax or debt proposed by the ayuntamientos. The catalogue of measures adopted by towns and villages to meet this Extraordinaria payment swelled endlessly: hiring of fishing rights in the River Tormes,60 exporting of sosa and barilla in Cartagena,61 or, to take one more example, bullfighting in Seville.62 The most frequent recourse however, in country towns, was the ploughing of new arable land and the use of funds or sale of cereals and money from the pósitos (local grain stores)63 while cities tended to turn to public debt or levy taxes on wine and spirits. Each case was pretty sui generis, however, revealing local councils of that time to have a whole host of other functions besides serving local residents. Take the case of Lérida, which asked the Consejo Particular for permission to pay the one-third increase under the Catastro, 61,379 reales, from the city’s bridge toll fund (peazgo), since it had no Propios (local revenue-generating assets) and “no other means of coming up with the money”.64 The intendente of Catalonia and Secretario de Guerra, Conde de Ricla, supported the city’s request, because the toll fund also served for city fortification work, but Miguel Múzquiz’s response, written in his own hand, was forthright: “his majesty considered it to be more urgent to pay the third part of the extraordinary contribution than extending the city’s bridge”.65 Quite clearly the political discourse had shifted.

• 66  RO 27-12-1780, AGS, DGR-II, Leg. 610.
• 67  The last extension on 27-12-1782 for the year 1783 in AGS, SSH, Leg. 1744.

43As the war dragged on, more and more resources were needed and the government, flying in the teeth of its own announcements, decided to extend the Extraordinaria for one year more during 1781,66 this measure then being repeated in subsequent years for as long as the war lasted.67 Although it was a mere extension, the Secretaría de Hacienda deemed it fitting to phase in changes in the revenue-collecting arrangements, learning directly from the lessons of the first year of enforcement of the Extraordinaria.

• 68  Miguel Múzquiz, Madrid 27-12-1780, AGS, DGR, II, Leg. 610.

44For a start the self-legitimising rhetoric of 1779 was now toned right down. The Secretaría de Hacienda devoted most of its extension order to explaining revenue-collection arrangements, now quite different. The state now showed more flexibility in accepting means of payment. It continued to recommend that local councils should pay the contribution from the Propios y Arbitrios surplus but left open the possibility of the council taking up new loans or levying new taxes. The state even countenanced the possibility of inter-council loans “on a payback basis”, against the surety of such new taxes as may be levied. As for the type of taxes, there was now no limit, barring the catch-all recommendation that councils “should give preference to measures that stimulate arable and livestock farming such as bringing new land under the plough, pastureland enclosures and other of similar ilk that do not impinge on commonland rights”.68 Wine and spirit taxes were also recommended, on the grounds that “these are by no means staples and excessive use therefore should rather be discouraged”. Nonetheless, the Secretaría de Hacienda left it up to the towns to make such tax proposals as they deemed fitting in each case, always on condition of avoiding poll taxes and not “overtaxing the staples of the poor”. Lastly, the Secretaría de Hacienda made a pointed reminder about the need of rapid payment and directly blamed payment delays on the councils’ debtors, asking for greater harshness to be used against them.

• 69  There are many examples of suspension of public works. Witness the paving of the streets of Palenc (...)
• 70  Sundry circulars of Manuel Becerra, 11-1-1781 and 27-1-1781, AGS, SSH, Leg. 999.

45But the most telling measure of the extension order, in terms of reflecting the change in the government’s outlook, was state authorisation of a de facto suspension of payments by councils of the whole of Spain. The Secretaría de Hacienda considered that, with the aim of pre-empting any head taxes and in the interests of “the Real Hacienda receiving as soon as possible the one-third increase in Rentas Provinciales o su Equivalente” it would be fitting for the local authorities to cease forthwith to pay back censos (redemptions in fact being compulsory under the regulation approved by the Consejo de Castilla) or to pay historical debts or “any debt whatsoever and even the execution of agreed construction work, if not yet begun or, if so, if it can now be suspended without causing grave damage to anyone”. This freeze on debt payments and cancellation of public work69 was granted only for one year “being suspended for now and no further than the year 1781”.70 It goes without saying by now, however, that this suspension of payments was extended too in later years, in the new extensions, and right up to the end of the war. The state did not seem willing to wield the same justice against council debtors as against their creditors. The government gave breathing space to local treasuries and also improved revenue-collection prospects, but these debt payment defaults must surely have undermined local authorities’ creditworthiness in the search for new lenders later.

• 71  It is difficult to calculate the amount of new land brought under the plough but there were litera (...)

46With these extensions the government had handed over the whole fiscal initiative to the local councils. The problem for the latter was that their chances of increasing the local tax trawl dwindled as the war dragged on and demand, concomitantly, fell. In the end most towns had no option but to fall back on head taxes and borrowing, i.e., just what the government had initially wished to avoid. The revenue-collection initiative had finally been left in the hands of local councillors. The state, in the end, had to give up on its efficiency drive just to make sure the money came in anyhow. From the warfare funding point of view it was a pyrrhic victory. For local finances, however, it was a severe blow that led to higher borrowing levels, a forfeiture of creditworthiness and a reduction in taxable demand. The one and only positive feature in all this was the increase in arable land and therewith the perpetuation of a productive and fiscal model based on expansive agriculture.71