ABSTRACT

Short-term credit borrowing from bankers has been used as a paradigm of the worst financial strategy for some new states in the early modern age. The case of the Spanish monarchy is a good example of how short-term credit was not an expensive and dangerous financial strategy as many scholars have previously believed. It was an important way of obtaining credit in different parts of Europe, paying a very competitive price compared with alternatives such as public debt. Bankers were looking for silver, a good rate of interest and different non-monetary compensation that they could only find in Castile, while Spanish kings needed financial services to fund their wars in Europe which only bankers could provide. Without cooperation, the king would not have credit to pay the army and bankers would not have access to Spanish silver. They would lose their privileged position controlling the financial markets in Europe.