The dynastic integration of Portugal into the composite monarchy of the Spanish Habsburgs by Philip II in 1580 created an imperial structure on a truly global scale that lasted for sixty years until a palace coup in 1640 and a subsequent bitter, if intermittent, border war finally secured Portugal’s restoration as a separate monarchy in 1668.2 Although during the union the Habsburg monarchs and their administrations sought to develop policies that had common benefits to the various realms of the empire, this “delicate balance between the constituent parts of the monarchy” was difficult to maintain (Pulido Serrano 2018: 206).. This concept of the composite monarchy, originally explored in a classic article by John Elliott, has subsequently been deepened, nuanced, and transformed by many authors into discussions of “polycentric monarchies,” polities in which authority was diffused among a number of centers, and that in the case of the Iberian Hapsburg monarchy, resulted in weakened or incomplete political centralization (Elliott 1992: 48-49; Cardim, et al. 2012). Economic historian Regina Grafe, for example, has argued that the polycentric nature of the Spanish monarchy made the successful adoption of mercantilist policies persistently unfeasible. Thus, in the relationship of Portugal to Spain, differences and fractures between them and between interest groups within them ultimately played a major role in creating the pressures that led to their separation, and chief amongst these differences was the varying relationships and priorities of the two kingdoms in regard to the rebellious provinces of the Netherlands (Grafe 2013: 241-262).
In this article, we will examine those relationships as reflected in a previously unknown and therefore unstudied arbitrio (memorial) on the Dutch capture of Salvador, the capital of Portuguese Brazil in 1624, written by Francisco (de) Retama, an Andalusian merchant and influential policy advisor on affairs in Flanders. We will do this by examining Retama’s life and career and the main lines of his previous economic thought and policy recommendations as the relations between the Iberian monarchy and the Netherlands changed. We also examine the shifting balance of importance of Portugal’s overseas possessions in Asia and America and the effects on them caused by the policy objectives and decisions of the Hispanic monarchy.
During the period from 1580-1620, the first forty years of the dynastic union of Spain and Portugal, there was no issue that more preoccupied the Habsburg rulers of the Catholic monarchy, nor that had cost them more in wealth and in reputation, than the revolt of the seven northern provinces of the Netherlands (Elliott 1977: 41-61). By the time Philip III came to the throne in 1598, the struggle to suppress the Dutch rebels had already lasted for thirty years, and even though a treaty with England (1604), the appointment in Flanders of a new commander, Ambrosio Spínola, and the commitment of more troops had brought some success, the high costs of the military campaigns and the maintenance of about 70,000 troops in the field (3 million ducados annually) had become a burden beyond both the Crown’s capacity to pay and its access to further credit. Moreover, during the conflict, the Dutch rebels had expanded the scope of hostilities by creating a state-sponsored monopoly, the East India Company (VOC), that competed for trade in Asian waters and sponsored attacks on Portuguese (and, to a lesser extent, Spanish) ports and outposts in Asia. In addition, the Dutch had also become active by raiding and trading in the Spanish Caribbean and thus threatening Spain’s policy of exclusive commerce with its American possessions. By 1607, with considerable debate between factions favoring all-out war and those who wanted some sort of negotiated peace-but faced with restive unpaid troops in Flanders, French territorial ambitions in Savoy, and dynastic concerns with Habsburg politics in central Europe-Philip III agreed to a cease-fire, and two years later, after further negotiations, signed a twelve-year truce agreement (1609-1621) with the United Provinces of the Netherlands.
Even though it seemed that a pro-peace party had triumphed with the signing of the truce, in fact, the intention of many who wanted the armistice was to carry out economic warfare that would reduce the Dutch ability to carry out further military operations, believing that weakening the Dutch economy would strengthen that of the Catholic monarchy at the same time (Domínguez Ortiz 1963; Herrero Sánchez 2005: 207). That was a strategy that had been discussed prior to, and facilitated by, Philip II’s acquisition of the Portuguese Crown in 1581. Many advisors in Philip’s court believed that Dutch dependence on Portuguese salt for its fishery and on Portugal’s supply of pepper and spices from Asia made the rebellious provinces vulnerable to economic pressure, and that Portugal’s location astride the entrance to the western Mediterranean Sea, and thus its ability to hamper Dutch trade there, added to the benefits that the acquisition of Portugal presented.3
During the fighting in the Netherlands, the Habsburg monarchy had engaged in forms of economic warfare against the Dutch republic, but often with negative results. An embargo on all trade with the “disobedient” provinces beginning in 1595 had been skillfully breached by Dutch contrabandists and by arrangements to send goods in ships disguised as, or under the flags of, neutral or friendly trading partners. The revenues of the Crown and of the merchants of Spain, Flanders, and Portugal had borne the brunt of the smuggling and loss of legal trade, and Portuguese interests had particularly suffered since the Dutch response had been to penetrate the Indian Ocean spice trade and to attack the booming Atlantic sugar trade from Brazil.4 Now, in search of alternative strategies, the crown adopted a new policy allowing trade to all comers, including the Dutch, but imposing a stiff thirty percent tariff on all imports and restricting exports in various ways. These protectionist measures had been suggested for the most part by Juan de Gauna, an arbitrista, or memorialist, who had brought his project to the attention of the court in 1603, but like the previous embargoes, the policies suggested were damaging to Iberian and Flemish merchant interests and resented by other trading partners like Denmark, the Hanseatic cities, and France (Echevarría Bacigalupe 1986: 57-97; Duerloo 2012: 154-155). Nevertheless, Gauna had provided a model or outline for action, and as the negotiations that resulted in the Twelve Years’ Truce proceeded, and then in the years following its signing, similar plans and measures were proposed by a growing numbers of memorialists specializing in finances or political economy, and often concentrated on Flanders or the Dutch revolt as the key issue facing the Habsburg Monarchy.
The Twelve Years’ Truce (1609-21) brought some military respite to the Hispanic monarchy, allowing it to reduce its expensive army in Flanders by two-thirds. Moreover, the Dutch abandonment of plans to create a West Indies Company had also relieved some pressure on Hispanic resources in its American possessions. However, while attacks on Portuguese outposts in Asia had diminished, the continued Dutch commerce in Asian waters, penetration of the Caribbean, and Dutch control of commerce in the Baltic and north Atlantic trades had made the benefits of the armistice and peace seem ephemeral to many observers. (Murteira 2010; Valladares 2001). After about 1617, as the terminal date of the truce drew closer, a considerable debate raged in Madrid about whether to extend the truce or renew hostilities with the Dutch as the best manner to protect the interests of the monarchy (Israel 1989: 80-120). The Duke of Lerma, Philip III’s principal advisor had been willing to concede de jure recognition of Dutch independence in return for their formal agreement to end attacks on the empire’s overseas possessions, but that concession was not forthcoming, and with the death of the king and Lerma’s departure from office, the treaty was allowed to lapse.
The decision by the new monarch, Philip IV, and his principal advisor the Count-Duke of Olivares to allow the armistice to expire in 1621 was accompanied by an ambitious plan to conduct mercantilist warfare against the Dutch republic by creating embargoes on all Dutch goods, developing strong customs institutions, negotiating diplomatically to weaken Dutch trading relations with other states, and especially seeking to promote the renewed florescence of Flanders, the Spanish Lowlands, that had benefitted from the period of truce and had become a cultural and religious center of the Catholic Reformation as well as a potential economic rival to the northern provinces. The advisors and councils of the king in this period were open to suggestions of how best to carry out this program of economic warfare, and a virtual explosion of proposals now came from the pens of the arbitristas (Fortea Pérez 1998: 155-76; Hermann 1989: 239-256). Some of those who put forward these plans and projects were cranks and position seekers, others were well-informed specialists or loyal subjects, and others represented particular interest groups or were supported by members of state councils. Clerics, scholars, theologians, merchants, lawyers, noblemen, statesmen, foreigners and natives of various parts of the Spanish Habsburg composite monarchy all offered advice, some in printed broadsheets aimed at wider distribution and public opinion, and many more in manuscripts submitted directly to state councils or committees, or solicited by the men who staffed them.5 Of course, as they had in the past, and would in the future, the arbitristas presented advice in memorials on many topics, from currency reform, social exclusion, and international relations to moral improvements and ecclesiastical matters. Nevertheless, in the last years of Philip III’s rule, and especially in the early years of Philip IV’s reign and the return to hostilities with the rebellious provinces of the Netherlands, a cohort of memorialists, many of whom were men with practical knowledge or experience as merchants or statesmen, emerged. These were men who were primarily interested in the issues of political economy and the ways in which the wealth and grandeur of the monarchy could be restored by diminishing the economic power of the rebellious provinces.
Although in recent times, the economic proposals of the arbitristas and their debates over protectionism versus free trade and the value of mercantilist policies have generated considerable interest, for many years the arbitristas were relatively neglected by historians of economic thought, not so much because of the actual content of their writings, but rather due to the negative contemporaneous connotation that the word itself had acquired during the early modern era, implying a self-interested and often unrealistic reformism. (Elliott 1977: 44).6 As historian John Elliott reminds us, “the arbitrista was the product of a society which took it for granted that the vassal had a duty to advise when he had something to communicate of benefit to king and commonwealth, the assumption being that he would also benefit himself” (Elliott 1977: 43).
For years, arbitristas had written memorials, reports, and advice to the kings of Spain, in which they spoke about economics, business, politics, and raison d'etat, but despite the diversity of their opinions, most of these authors shared a belief that something was very wrong in Castilian society. It was, therefore, this sense of decay in the society in which they lived and an urgency to alert the king to this fact that ostensibly moved these men to take up their pens. That feeling of decline was related to the difference between the successes achieved by the monarchy in general during much of the sixteenth century under Charles V and Philip II, and the terrible events of the end of that same century. Those disasters included the defeat of the great armada in 1588, the 1596 quasi-bankruptcy, Philip II’s death the following year, and the terrible famine and plague that struck Castile and Andalusia (1598-1601), decimating a significant part of the population. These events and the festering hostilities in the Low Countries created a context that stimulated the expansion of arbitrismo during the reign of Philip III (1598-1621) and that continued and intensified in the early years of Philip IV's reign, as many of the memorialists turned their attention and their pens to issues related to conflicts with the Netherlands.
We now have a number of in-depth studies of the principal arbitristas who debated the advantages and disadvantages of mercantilist measures and whose ideas influenced commercial and political policies in the seventeenth century. Francisco de Retama, although certainly not unknown to previous scholarship and often cited in discussions of Spanish trade policies toward the Netherlands in this period, has never merited similar concentrated attention, despite his importance in the formation of commercial policy.7
Francisco de Retama was an Andalusian wine merchant with considerable experience in trade in the Mediterranean and with Flanders. Retama’s origins remain somewhat cloudy. Although in various occasions he identified himself, as he does in his 1624 arbitrio on the loss of Salvador, as “vecino de Jérez,” and in other writings as “natural y vecino de Jérez,” and at times, speaks of Jérez as his “patria,” or homeland, he has also been identified as Portuguese by Rafael Valladares, as Flemish by Daviken Studnicki-Gizbert, as a Dutch Catholic by Jonathan Israel, or simply as Dutch by other scholars.8 Whatever his place of birth, however, it is clear that by the 1620s he considered himself a Spaniard and a native of Jérez de la Frontera, and was perceived by his contemporaries as a man particularly well-informed on commerce in the Low Countries.9
Retama’s career as an arbitrista and an advisor on political and economic policy was very much tied to the fixation of the Hispanic monarchy on the rise of Holland as a rebellious and heretical province, a military and economic threat, and a competitor to the Iberian empires in Asia, Africa, and the Americas. This concern with the Habsburg dominions in the Low Countries and with their political and fiscal costs was questioned by some contemporary observers like Pedro López Reino who, in his Discursos politicos cristianos (1624), had questioned, “Quid nobis Flandes prodest?” (What advantage do we get from Flanders?). But Francisco de Retama appears to have remained throughout his life in the opposing camp as an informed advisor fully invested in the need to weaken the United Provinces and to promote Flanders as an alternative and as the best way to preserve and strengthen the Hispanic monarchy.10
From later remarks in his project proposals, it appears that Retama had considerable trading experience in northern Europe and the Mediterranean. After the signing of the Twelve Years’ Truce with the rebellious Netherlands provinces in 1609, Retama became the first Spanish trader to travel to Amsterdam as agent for a group of Jérez merchants. Hoping to sell a cargo of wine and other goods, Retama’s efforts had been frustrated in Holland by bureaucratic delays, tariffs, lawsuits, and a series of impediments that eventually forced him to sell his cargo at a considerable loss of money and credit. Frustrated and sick, he left Amsterdam convinced that trade with the rebellious Dutch provinces was not possible, and that, as one of his Dutch contacts had remarked, “they did not want Spaniards to come here, but for them to go to [and trade in] Spain.”11 He became convinced that the Dutch viewed “trade and business as their greatest and most effective weapons.”12 This experience shaped much of his subsequent thinking about the utility of commerce as a weapon of war. Over the next decade, this idea became a constant theme in his many proposals in which he downplayed the potential and effectiveness of land-based military operations, and instead emphasized maritime activities, economic measures, and commercial competition as the most effective way to combat the Dutch rebels who he considered to be “intelligent men with a great sense of politics, who understand that their greatness, defense, and offense are supported by this great commerce that makes them lords of the sea.”13
Over the course of the next decades, Retama became a specialist on trade with northern Europe, suggesting methods and institutions best suited for supporting the commerce of the loyal provinces of Flanders and of Spain to diminish the trade and maritime activities of Holland, which were its most effective weapons. Opposed to costly and continuous ground warfare, he was not ideologically for “peace,” per se, but believed that Spain’s objectives could be best achieved through trade and economic and fiscal policies. As he described his project, it was simply to “take away in war and peace the commerce of the rebels of Holland and Zeeland” (Alloza Aparicio and Cárceles de Gea 2009: 50-54).14
Several of his proposals resonated with policy makers, and he was sought out for opinions and projects. He apparently took up residence in Madrid in 1609 at his own cost, and after returning from his disastrous attempt to sell wine in Amsterdam, he lived for a year (1618-1619) in the home of Baltasar de Zúñiga, the valido or chief advisor to Philip III, where he was tasked to “reduce the commerce of the rebels and to diminish their wealth.”15 This residence suggests that he was circulating within the inner circles of government and had access to important councils. His projects circulated in manuscript, and he apparently did not feel the need to have them printed.16 Although his arguments were shared to some extent with a number of the most active of the economically-oriented arbitristas of the period such the conversos Duarte Gómez Solís and Manuel López Pereira, the English Catholic Anthony Shirley, the Scottish soldier William Semple, the Walloon nobleman Gabriel de Roy, and the Italian diplomat and spy Alberto Struzzi, his detailed knowledge and practical experience with trade to northern Europe as well as a broad familiarity with commercial relations in the Mediterranean and Northern Europe often earned him serious consideration.17 Retama was kept busy. He claimed that between 1623 and 1624 alone he authored sixteen project papers (memoriales), some of which were submitted to the councils of government or to the recently created Junta de Comercio that was functioning after 1623 and was principally concerned with the problem of Dutch contraband.
While Retama did not limit himself to economic or commercial matters and wrote on a variety of contemporary issues, he seems to have been most concerned with, best informed about, and thus most effective when he wrote on economic policies and conditions.18 These papers, while often repetitive in their emphases and arguments, consistently reinforced a mercantilist approach to the political challenge of the Dutch revolt. At the same time, his critique of the monarchy’s excessive regulations and taxes on commodities that drove up prices and made commerce unprofitable demonstrated that the arguments of the free traders had some influence on his thinking, as well. Notable in his writing was his ability to provide a description of Spain’s commercial relations with northern Europe and the Mediterranean as he did in a 1623 memorial that listed in detail all of Spain’s exports and provided estimates of their annual value. Although his figures may have been inflated, his detailed discussion of types of textiles and varieties of wine assured his readers of his knowledge and authority in these matters.19 At the same time, however, like some of the better known arbitristas, his vision was appropriately global given the extent and interests of the Hispanic Monarchy. His arguments and points of reference ranged from the timber trade of Norway, the grain exports of Poland, and the potential market of Moscow, to the silks of China and pepper trade of the Indian Ocean, but Spain and the Low Countries were always at the core of his thinking.
In many ways Retama was a typical arbitrista during what historian Ángel Alloza Aparicio has called the “critical conjuncture” of the years 1618-1629 as Spain confronted the decision of war or truce in the Netherlands, the diminishing returns of its colonial possessions, and the formulation of imperial policies in response to a combination of political crises and economic malaise. As is the case with other memorialists of his era, it is virtually impossible to determine the extent to which his proposals and ideas were original or simply reflected opinions that were circulating widely at the time among the political class and were commonly shared among the arbitristas, but with variations in nuance and emphasis.20 The memorialists of this generation were no longer primarily theologians and men of letters, as they had been in the sixteenth century (Curto 2009), but were now composed of an increasing number of men with political or administrative experience or with commercial interests and experience like Retama who treated the economy not as an extension of political and religious objectives, but rather as the principal means to secure those objectives, and for some, as the primary objective.21
Noticeable in Retama’s memorials are pragmatic rationales for his policy suggestions rather than legal or moral arguments as we might expect from a man of his background. He had been in Amsterdam after 1609 when Hugo Grotius’ Mare liberum had been anonymously first published there, and he was quite active as an arbitrista in the period when contrary intellectual responses to Grotius appeared, like the Portuguese canonist Serafim de Freitas’s Do justo império asiático dos portugueses (1625). Retama, like other Castilian merchants, advocated freedom of commerce, drawing on custom and law, a position that shared some similarity with Grotius’s argument for the idea of freedom of the sea, but he remained unquestioning, or at least constrained, in terms of Spain or Portugal’s sovereignty over the sea routes to their possessions, and the right of the king to regulate trade (Alloza Aparicio and Cárceles de Gea 2009: 153-170).22 The relationship of freedom of the sea and freedom of commerce was neither clear nor inevitable. The result was essentially pragmatic, but sometimes included seemingly contradictory arguments and policy proposals that questioned the value of colonies but defended the right to make their trade exclusive, or supported mercantilist measures to nationalize commerce but sought to create a monopoly company open even to investment by subjects of rival states.23 It would appear that in the world of much early modern commerce where a regime of passes and permits to foreign vessels was common, cross-national partnerships were normal, and there was a regular use of multiple flags and alternate ship names used selectively in various ports, that the questions of sovereignty and legality were conditions decidedly secondary to those of profit and loss for anyone engaged in commerce.
Retama’s arbitrios often underlined the benefits of the union of public and private interests. Many arbitrios of the time expressed opinions or suggested policies and then requested some private favor or advantage. What stands out in the thought of Retama was the idea that a merchant’s search for profit, in other words, the individual search for self-interest, ultimately implied that the kingdom itself will become richer. If looked at only from the perspective that this ultimately provided a positive trade balance for the kingdom in question, it was a common mercantilist idea in the seventeenth century. However, if we look at it from the point of view of a convergence of interests, it was an idea that became frequent in the works on the economy only a century later, at the dawn of economic science (Echevarría Bacigalupe 1999: 105-124).
During this critical period of the 1620s while the mercantilist ideas triumphed and the army retreated, the Iberian royal government responded to the Dutch problem with the creation of institutions and policies designed to reform and restore the monarchy and to find solutions to its political and economic challenges (Echevarría Bacigalupe 1999: 123). This period of reform or “restoration” characterized by Olivares’s programs and the institutions and committees (juntas) created to carry them out produced an ideal atmosphere in which project proposers like Retama could flourish. The arbitristas had been active in Spain since the reign of Philip II (1556-1598), but under Philip III (1598-1621) and Philip IV (1621-1665) there was a virtual explosion of these writings and proposals, most of them now centered on questions of political economy and often engaged in a continuing debate about the advantages and disadvantages of state-controlled mercantilism vs. unrestricted free trade (Dubet and Sabatini 2009; Dubet 2000). It is within this context that Retama’s ideas and career are best understood.
Retama’s advice seems to have been influential in the creation of policy, or at least was given serious consideration in government circles. In an early arbitrio submitted to Philip III and read by the Council of State in 1619 during the discussions about the extension of the truce, Retama made clear the concern he shared with many of the contemporary arbitristas about the Hispanic Monarchy’s negative balance of trade and the outflow of its specie to the countries with which it traded. He believed that the monarchy was potentially self-sufficient except for naval supplies, lumber, and other materials that it received from the Baltic and for grain imports upon which Portugal was particularly dependent, although he recognized that Spain also needed cereal imports for its bread. Nevertheless, he believed that the monarchy’s control or potential control of high quality merino wool, Asian luxury items such as pepper and spices, and American silver, sugar, and dyestuffs like cochineal all gave it great potential leverage that could be used to conduct a successful campaign of economic warfare against the Dutch. This could be achieved by excluding their direct trade with the Hispanic Monarchy and by prohibiting the extensive and profitable freighting of the 8,000 Dutch ships that served as transporters for Baltic naval stores, textiles from other nations, and bulky olive oil and wine shipments from Spain and Italy. He understood that eliminating the Dutch supply of Baltic commodities would require new sources and thus direct commercial relations with Denmark, Sweden, Danzig, and the Hanseatic cities. Still, Retama held that the result of these measures would be a weakening of the Dutch merchant marine and a reduction of its corps of experienced seamen as well as fewer profits for the rebel provinces, and at the same time these changes would increase the incomes and tax revenues of the Hispanic Monarchy. Retama optimistically claimed that further military operations would produce little, but if the truce were extended for twenty years and his policy suggestions were implemented, then the economy and thus maritime power of the Dutch could be broken and an impoverished United Provinces would not have the will nor the resources to attack the overseas possessions of the Hispanic monarchy.
Key in this strategy would be the place of the loyal provinces of Flanders as a competitor and alternative to Holland and Zeeland. Retama believed that the ports and merchant communities of Ostend, Dunkirk, Gravelines, and, by implication, Antwerp would be able to replace Amsterdam and that they should be favored by lower tariffs on trade to attract foreign commerce. In addition, he wanted the sale of cochineal and dyewood from Spanish America and even the pepper from Portuguese Asia limited to Flanders. He also argued that currency adjustments be made in Flanders to stop the flow of Spanish silver into foreign hands. For the same objective, he was also an exponent of an early form of import substitution, advocating increased production of cloth in Flanders and Spain itself to diminish the outflow of specie. He lamented, “it is a shame worthy of a great remedy to see, as I saw, so many bars of silver, thousands of reales de a ocho [pesos] unloaded in Amsterdam every day, taken from these kingdoms without leaving any benefit to Your Majesty.”24
Retama advocated following the example of England by limiting the shipping to the Catholic Monarchy exclusively to the vessels of “natives,” that is, to Spanish Habsburg subjects, to damage the extensive Dutch carrying trade. Although this proposal was unrealistic given the size of the Monarchy’s merchant marine, Retama’s parallel suggestion to increase the size of the Flemish merchant fleet and to provide for more ships to protect it was welcomed in the council of state and subsequently also urged by other arbitristas (Stradling 1992: 30). At an early stage, he also favored the idea of what emerged in 1624 as the Almirantazgo de paises septentrionales (Admiralty of Northern Countries), a sort of mercantile company under state auspices with the powers of an admiralty court. Started in Seville by Flemish and German merchants in Andalusia and lasting only until 1630 because it was undercapitalized, the Almirantazgo used its armed fleet to protect the trade to Flanders and northern Europe, organize convoys from the Baltic region, and to disrupt Dutch and other contrabanders. After 1625, its anti-contraband activities were assumed by a Madrid based Junta de Almirantazgo that managed a complex of authorizing agents in foreign commercial ports and anti-contraband inspectors (veedores) in Spanish and Portuguese ports to prohibit the commerce of the monarchy’s enemies or to license them to trade when necessary (Aragón Ruano 2003: 217-254; Díaz González, 1999: 91-128).
Unsurprisingly, Retama ended his career in royal service and made a transition from project advisor to state employee as a veedor for the Junta de Almirantazgo.25 Given his long association with commerce and economic warfare and his contacts at court, in 1628 he was appointed to one of the Almirantazgo inspector positions the province of Guipúzcoa.26 This was an area of intensive contraband of Dutch, English, and Portuguese goods, often coming in through France, especially the towns and ports like St. Jean de Luz and Bayonne where Portuguese Sephardi communities were well established. The veedores or customs inspectors were entitled to a percentage of the of the confiscated goods and vessels, and so his appointment presented Retama with a potentially lucrative position. Stationed in San Sebastian, he quickly became involved in bitter jurisdictional disputes with local and provincial interests and with other judicial authorities such as the Inquisition over the inspection and disruption of the contraband trade and the rights of royal versus provincial jurisdiction. He was also accused of abusing his authority to personally benefit from his office, and although exonerated of most charges by the Junta de Almirantazgo, he was imprisoned for a period. In 1629, along with some subordinates, he was sentenced to fines and four years of exile from the region.27 Retama, however, continued to defend himself, accusing the local officials themselves of being involved in the contraband that he was disrupting. Despite his legal problems, after the outbreak of hostilities with France in 1635 and a Spanish renewed concern with contraband in the Basque provinces, he was reappointed as veedor in 1637, this time stationed in Bilbao, but once again he was accused of abusing his office for personal gain (Alloza Aparicio 2006: 131). It appears that notwithstanding the accusations against him, Retama had done well in the Basque provinces. It had probably been during his years of residence in the north that he had married María de Aizaga, an advantageous union that eventually involved him in a family dispute over an important entailed estate (mayorazgo) in 1641, but he died in office in the following year.28 In some ways, his transformation from arbitrista to a government agent with suspect personal ambitions was exactly the kind of career profile that seemed to confirm the negative contemporary view of the arbitristas as selfishly motivated and somewhat unrealistic promoters not simply of reforms, but of themselves as well.
Our primary concern, however, is not Retama’s personal problems or his bureaucratic career, but his perceptions and ideas as an arbitrista in the period before 1630, during which he and other memorialists of his cohort were successfully recommending the policies of economic warfare. These mercantilist measures eventually produced unexpected results which placed a considerable strain on the shared economic interests that held the polities of the composite Hispanic monarchy together. Retama as an early advocate of some of these policies and then after 1628 as veedor, an enforcer of the anti-contraband measures, was a key, if unwitting or unintentional, figure in the deterioration of Portuguese accommodation to its union within the Catholic monarchy. The restrictions on contraband, the presence of Spanish customs officials in Portuguese ports and in ports where Portuguese traded, and after 1628 the imposition of new taxes on the Portuguese exports of salt (a commodity so important to the Dutch fishing industry) all contributed to a sea change in accommodation that increased the level of Portuguese discontent with the status of Portugal within the imperial system (Schaub 1996: 381-402).29
There are three aspects of Retama’s thinking in this period of c. 1617-1628 that are important to keep in mind as a guide to his influence on policy, and to his own perceptions of the world economy. First, although his conception of economy was global and he was not uninformed on issues outside of Europe, his attention and his projects always focused on the European continent. He was fully aware that the spices, pepper, silver, and sugar from the overseas empire added to the income of the state and that the policy of excluding the Dutch from the colonial trades had provoked their attacks in the Indian Ocean and in Spanish America. Nevertheless, even though the Dutch attacks had damaged the colonial trades, in Retama’s mercantilist view it was commerce itself, and not having colonies nor bullionism, that was the surest path to economic strength. As he argued in his arbitrio of 1623:
. . . Venice, Genoa, Holland, France, England, and Poland have no silver nor gold or Indies to get them from . . . but great treasures go to them from trade, but not to Spain; not because its commerce is lacking, but because its currency is comparatively devalued with that of the rest of Europe . . . commerce makes men clever, and it is them and their industry that are the real Indies.30
Retama lamented that the profits gained from the Indies ended up in Turkey, China, India, and Northern Europe, and that Spain was “separated from its own wealth.”31 The silver from the Indies alone was no solution. The problem lay in the negative balance of trade, and if that could be eliminated, then “even if the West Indies were gone, this Monarchy would be preserved and richer than it is today.”32 There was little original in this anti-colonial and anti-bullionist stance that had been circulating since the beginning of the century in the writings of prominent arbitristas like MartÍn González de Cellorigo. This argument had a strong appeal to the advocates of mercantilist measures like Retama who believed that Spain had become “the Indies of Europe” in the sense that it was easily exploited and drained of its wealth by other nations.33
Secondly, although on occasion Retama mentioned the religious dimension of the Dutch rebellion and the necessity of opposing the infection of Protestantism, his principal arguments always concentrated on commerce and its political and economic implications. He did at times join the swelling chorus of other arbitristas and moralists in a condemnation of both the gentlemanly avoidance of business activities as well as the sins of idleness or indolence (ocio), which a later commentator called the “father of poverty and maestro of ignorance,” and that many of his contemporaries also denounced as the characteristic that had led to Spain’s decline, but this too was a secondary consideration in Retama’s projects.34 He did not ignore cultural attitudes and practices (costumbres), but economic structures, trade, and production were far more important to his worldview than culture or religion, and the loyal southern provinces of Flanders were to be the preferred locale where his policies could be best deployed.
But there were limits. Although throughout the period of his memorials Retama remained consistent in his desire to strengthen the economy of the loyal provinces of Flanders as a way of undermining the rebellious provinces of Holland, there were boundaries that he would not cross to achieve this goal. He wrote at a time when a central issue in Iberia was the status of the converted Jews and their descendants and their economic role as merchants, contractors, and bankers. Some of the Spanish and Portuguese converts had immigrated to Holland and had become a resident Sephardic community with active commercial contacts across the world. As a merchant himself, he must have been particularly aware of that community and their potential role in the economic life of both the rebel provinces and the Hispanic Monarchy. Unlike the Count-Duke of Olivares, the architect of the protectionist measures against the Dutch, Retama opposed allowing these conversos that had fled to Amsterdam and Rotterdam to reestablish themselves and their capital in Antwerp or return to Iberia. He suggested that, in fact, the economic benefits of doing this would be limited since of the 600 converso families that had emigrated to the Netherlands, only a dozen or so were wealthy. Moreover, he added, “they are a people of bad example, very scandalous, and with good reason they should not be, nor trade in Christian lands, as they were very prudently expelled from these kingdoms [Spain].”35 In a later arbitrio written after 1621, he went even further. Departing from the strategy of Olivares and some of the converso arbitristas who wanted the return of the Sephardi merchants and their capital to Iberia as a way of weakening the Dutch, Retama, who knew Holland well enough to recognize the importance of that community to the economic success of Amsterdam, remained against their return. His recommendation instead was to foment hostility toward the Jews in the Netherlands that would result in their expulsion to other countries, rather than their return to Iberia. His attitude toward conversos, however, is somewhat perplexing. Although his negative statements about Jews expressed the accepted anti-Semitic discourse of the Inquisition, and Retama himself was by 1628 a familiar (lay assistant) of the Holy Office, a position that supposedly implied his religious orthodoxy and the purity of his family’s Christian origins, he had earlier exchanged ideas with the converso arbitrista López Pereira and perhaps collaborated with him.36 In a memorial of 1624 on the problems of contraband in Navarre and Aragon, he warned that the men who controlled the customs offices (puertos secos) of those regions were Portuguese, and that they were in contact with the “Portuguese of Amsterdam,” who were notorious for smuggling Dutch goods into Spain.37 Even though in Spain the term “Portuguese” had become a synonym for converso, it is noticeable, however, that in his warning there was no mention of their ethnicity or religious status. Moreover, as will be shown in his memorial on the retaking of Salvador, his was curiously one of the few Spanish accounts which did not attribute the fall of the city to the treason and collaboration of the conversos.
Finally, one area in which Retama seems to have been on the cutting edge, if not its originator, was a proposal to organize government chartered joint stock companies following the model that he had observed in Holland with the formation of the VOC before the Twelve Years’ Truce, and of the Dutch West India Company (WIC) after 1621 (Aragón Ruano 2016: 171-205).38 Other memorialists of his cohort had previously made similar suggestions, proposing that the commerce in the Indian Ocean or the Americas could be organized in this way. In 1624, both Retama and the Portuguese New Christian arbitrista López Pereira had submitted proposals to the recently created Junta de Comercio calling for the elimination of the Portuguese estanco or royal monopoly on the pepper coming from the Indian Ocean. Instead, they argued for the creation of a chartered company to handle the pepper and spice trade arriving from Goa. Retama called for establishing the new company’s headquarters not in Lisbon, but in Flanders, where, he argued, it could attract Dutch investors, as well, and therefore divert their capital from investment in the Dutch overseas companies that had caused such harm to the monarchy.39 The Junta de Comercio was willing to consider the formation of such a company and believed that imitation of a foreign model might be positive if it could be adapted to the Spanish “temperament and disposition,” but it was clear that while Retama’s proposal would favor the mercantile interests of Antwerp, other interests were involved as well. Thus, the junta asked for opinions from the councils of state, Portugal, and the Indies. There were objections. The project was stillborn, and when such a company was finally created in 1628, it was not based in Flanders, but in Portugal, and its direction came from Madrid. The Portuguese remained suspicious of Castilian motives, and the Company of the East Indies (Companhia da India Oriental) never drew the required investments either in Portugal, the Lowlands, or Castile, and by 1633 the crown disbanded it (Disney 1977; De Silva 1974).40
Retama’s proposal on the trade from India and its failure underlines the contextual realities in which he wrote. The policy decisions being made in Madrid supposedly for the good of the Hispanic monarchy as a whole had in various ways always benefitted or disadvantaged one interest group or another, or some region or country, at the expense of others. The policy of Olivares and the restrictions foreign trade made specifically to combat the Dutch and to favor Flanders had, along with other conditions, contributed to a growing sense of disadvantage to various interests in Portugal and thus provoked increasing complaints that these decisions were made at Portuguese expense. This was an inherent structural problem for composite monarchies faced with the continual problem of policy decisions that had differential effects on their composite parts. Retama himself was aware of those effects and remarked in his 1623 memorial that the protectionist disruption of trade to Flanders and the resulting rise of prices would probably result in resentment against Castile, since Flanders was not lacking in the “attitudes and sentiments” also found in Portugal, a statement that in itself was recognition that Portuguese interest groups had already perceived their disadvantage and held Castilian self- interest responsible.41 This was, to some extent, the product of the strategic policy of economic warfare made possible by Philip II’s acquisition of Portugal four decades earlier. Such complaints had begun somewhat unfairly in the 1580s after the union with Spain when English privateers had attacked Portuguese Atlantic shipping as a way to strike at the Hispanic Monarchy. These attacks had increased after 1595 when Habsburg prohibition of trade with Holland had interrupted the active Portuguese salt exports to the Dutch and the use of Dutch shipping to carry the growing sugar trade in the Atlantic (Schaub 2001a: 329-381; Lenk 2011: 87-106). The period of the Twelve Years’ Truce and with it the return of Dutch purchasers to the salt pans of Portugal and Dutch ships to the Brazil sugar trade had reduced some of the complaints about commerce in the Atlantic, but Portuguese resentments intensified about Dutch penetration and commercial competition in the Indian Ocean that had not been prohibited in the negotiations of the truce (Murteira 2010: 2012). The end of the armistice with the Dutch in 1621 and the new trade restrictions under Philip IV and Olivares, which Retama and other arbitristas had urged, produced a renewed outcry from the Portuguese merchants and from some of Portugal’s governing class about the sacrifice of Portugal’s overseas interests, which by this time were shifting to the south Atlantic Ocean as Brazilian sugar production, and with it an African slave trade, began to boom. The Dutch had long been the primary carriers of cargoes from Portugal’s Brazilian colony, and by the end of the truce in 1621, Dutch ships were carrying about a third to a half those cargoes to Europe, although often in collaboration with Portuguese merchant agents through a system of indirect trade which generated profits for both.42 Some 50,000 crates of Brazilian sugar were arriving in the United Provinces, and by the first decade of the seventeenth century, Brazilian products were bringing in three to five million florins to the Dutch economy; more than Asian pepper and spices, West African gold, and New Netherlands furs combined (Enthoven 2003). With the resumption of hostilities and the exclusion of Dutch goods and shipping, the Brazil trade now became a Dutch target, and between 1623 and 1626 alone 120 ships with over 60,000 crates of sugar were lost. By that later date, the governors of Portugal made clear their concerns, questioning the underlying assumptions of the policy of economic warfare when they asked the king “if the utility of closing commerce to enemies is worth more than the lack of commerce?”43
In fact, the end of the Twelve Years’ Truce in 1621 and its effects on the relationships between parts of the Habsburg monarchy was only one of several events and factors that reflected a series of structural and conjunctural changes that were altering the relative advantages that had made the integration of Portugal within the Hispanic Monarchy attractive in 1580. The new mercantilist measures of Olivares, the creation of monopoly trading companies, and the widespread repression of smuggling and other forms of illegal or semi-legal trade disrupted profitable networks in the Iberian Peninsula and across the empire (Molas Ribalta 1987). A new inquisitorial campaign beginning even before the end of the truce against conversos, many of whom were involved in commerce, also disrupted Atlantic networks. The increased government interference with trade generated objections from mercantile interests within various regions of Spain but were especially disliked in Portugal where complaints were sometimes were made with a nativist tone about Castilian indifference to Portuguese interests (Alloza Aparicio 2009). The effects were not limited to the Iberian Peninsula. In the Spanish Indies, for example, the 1623 creation of an inland customs house in Córdoba in the Río de la Plata to stop the outflow of contraband silver from Potosí and the illegal importation of African slaves, while not entirely successful in stopping the latter, did severely limit the flow of silver to Portuguese Brazil to the dismay of merchants and its governing class, as well.
In response to these measures as hostilities began anew, the United Provinces of the Netherlands looked for potential areas of the Catholic monarchy to attack and Brazil emerged as a preferred target for a variety of reasons. As historian Evaldo Cabral de Mello (2010: 29) stated, “Portuguese America would constitute the fragile link of the Castilian imperial system, in view of its condition as a Portuguese possession, which placed its defense in a subordinate position in the scale of the Madrid government’s military priorities.” Thus, in the early years of Philip IV's reign, the conflict that was previously confined to central Europe and Asia now shifted to the Atlantic, particularly towards the Northeast of Brazil. Whatever had been the benefits of the Iberian Union in 1580, the end of the truce in the Netherlands had now made clear that Portugal had also inherited Spain’s enemies.44
Retama’s arbitrio on the Fall and Recapture of Salvador
The Dutch capture on May 11, 1624 of the city of Salvador, capital of the Brazilian colony-seat of its governor, court of appeals, and bishop, and a port city for one of Brazil’s flourishing sugar plantation zones-was perceived as a major disaster. It was in some ways an Atlantic parallel to the fall of Ormuz in the Persian Gulf in 1622, a loss to an Anglo-Persian attack that had shaken Portuguese confidence in the security of its Indian Ocean trading system, but its implications were perhaps even worse since Brazil’s sugar economy and its associated African slave trade had overtaken the importance of the spices and pepper of Asia in the Portuguese economy by the first decade of the seventeenth century. Salvador’s surrender-with little resistance-was a clear result of the end of the truce and the reopening of hostilities. The newly created Dutch West India Company chose Salvador and its sugar-producing region around the Bay of All Saints as a logical target given the growing demand for sugar in Europe, the development of sugar refining in the Netherlands, and the extensive role Dutch shippers had played in transporting this product during the period of the Twelve Years’ Truce.45
The Dutch seizure of Salvador made it clear that the Hispanic Monarchy needed to respond forcefully to the challenge. Almost immediately, various royal councils began to plan a response and to receive proposals for a military expedition. Diego de Silva y Mendonza, the former Viceroy of Portugal, Conde de Salinas, and Marquis de Alenquer, penned what amounted to an arbitrio suggesting a rapid military response before the Dutch could improve their defensive fortifications. He emphasized the geo-strategic advantages the Dutch would gain by cutting off the route to Asia around the Cape and by providing a way station for Dutch action in Chile and the Pacific Ocean in general.46 Moreover, he warned of the danger to the slave trade: “They can take Angola, and this is necessary since neither Bahia nor the Indies of Castille can sustain themselves without slaves.”47 On learning of the surrender of the city, the present governors of Portugal, Diogo de Castro (Count of Basto) and Diogo da Silva (Count of Portalegre) wrote from Lisbon directly to Olivares that the need to stop the Dutch from establishing roots in Brazil was essential and that there was little to hope to stop them, since most of the residents of Brazil were either crypto-Jews who would welcome the Dutch or the unreliable descendants of penal exiles. Moreover, little could be expected from the local elites whose leaders were far more interested in escaping their debt obligations than in serving the king. The governors’ real fear, however, was that Lisbon-poorly defended, its castles in disrepair, deficient in artillery or troops, and financially destitute-was probably the next target. The only solution was to send the Spanish Atlantic fleet to dislodge the Dutch from Salvador at whatever the cost or risk, since, in the long run, the price for losing Brazil would be far greater.48
The governors’ letter arrived in Madrid on August 6, and only five days later, Retama presented his arbitrio to the king on the fall of the city with his analysis of its implications and the steps necessary to confront the situation. In Retama’s many previous memorials, Brazil had hardly ever been mentioned, an absence that was typical in most of the contemporaneous arbitrios prior to the 1620s. In fact, even at the moment of the union of Spain and Portugal at the Cortes of Tomar in 1581 when Philip II officially accepted the Portuguese crown, virtually no mention was made or attention given to Brazil. In the following forty years, its primary importance in Spanish calculations had remained strategic and geopolitical because of its proximity to Peru and its silver. By the first decade of the seventeenth century, however, as Brazilian sugar production boomed and the profits of the Portuguese pepper and spice trade with Asia declined, Brazil began to take on a new importance for Portugal, but one that had also clearly attracted the interest of the Hispanic Monarchy’s rivals and enemies. Retama’s arbitrio, therefore, reveals what he appears to have learned about the colony and its potential but also discloses his vision of how Brazil and its metropole, Portugal, could be incorporated into his conception of the Monarchy’s economy. In Retama’s memorial, he returns to the themes and arguments that he had expressed repeatedly in the previous six years about the centrality of trade as the key to economic warfare against the United Provinces, but there seems also to be a reconsideration concerning the importance of overseas possessions and about the use of military action to meet the Dutch threat to empire. No longer willing to depend on the commercial strangulation of the United Provinces to bring the desired political effects by themselves, Retama, aware that the Dutch would send more troops to occupy the city, urged immediate military action before the Dutch could establish roots in the region. The Count-Duke of Olivares had decided on renewed hostilities in 1621 when the Twelve Years’ Truce ended, and to retain a voice in council Retama now moved away from his previous stance against land warfare that he had previously advocated repeatedly to Philip III. He now seemed to justify his position by arguing that the retaking of Salvador would be an attack on the maritime strength of the Dutch, “the masters of the sea,” and that to do so was, along with commercial competition, the most effective way to diminish their threat to the Monarchy, since “all their warfare is mercantile.”49 Retama’s memorial on the recovery of Salvador reveals how an architect of imperial policies that were damaging to various interest groups in Portugal remained oblivious to their negative implications, even though he wrote in support of the defense of Portugal’s imperial integrity. Retama perceived Portuguese interests as parallel to, or the same as those of the Catholic monarchy, but that was a position that was increasingly questioned within Portugal.50
The arbitrio (see the Appendix) begins with the usual Spanish geopolitical concerns about foreign intervention in Brazil and concern that a permanent Dutch presence in Brazil so close to Peru would endanger the flow or silver to Spain and also give the Dutch a vantage point from which to cut off Portugal’s south Atlantic route to India. Retama realized that Lisbon was no longer the opulent city it had once been, but he understood the economic potential of Portugal’s American colony Brazil that he described as “one of the things of greatest substance for the conservation and trade of Portugal.”51 He understood its potential for the Dutch and believed that if they were allowed to remain in Brazil-a land of great agricultural possibilities-its commerce would flourish and the Dutch would shift the focus of their trade from Europe to Brazil, as happened “to our nation with the discovery of the West Indies.”52
The advantages for the Netherlands would be many. Its distant and perilous trade in the Mediterranean through the straits of Gibraltar and the avoidance of Spanish fleets in order to trade with places like Cyprus or the Levant would become unnecessary, and even though Holland no longer had a trade with Spain, Italy, and Turkey, Brazil would provide an alternative with lands “so extensive and so good.”53 He projected that many people would come from northern Europe to settle these lands, and as the population grew, so too would the income of the state along with that of the inhabitants.
In the arbitrio we can see that Retama has some knowledge about the conditions and potential of Brazil, but that his own experience and concerns with Europe remained always foremost in his analysis. He believed the Dutch could take wheat, sugar, dyewood, and timber from Brazil, and he argued that its land had the climate (temple) to produce wine and olive oil because land that grows sugar cane is suitable for the planting of olive groves and the cultivation of vineyards.
Here Retama, the former wine merchant, digresses to detail the potential danger of Dutch commercial competition. If they can plant vines, it will do great damage to the viniculture of Spain and to the Mediterranean wine trade. Looking not only at the Brazilian northeastern coast, he warns that the lands to the south around Rio de Janeiro which can grow sugar might also be good for the production of wine. If the Dutch extend their influence there, then they could become competitors to the Spanish wine industry. Dutch marketing of Brazilian sugar had already undercut Andalusia’s sugar production with lower prices, and, as he had argued in earlier arbitrios, that the Dutch had cut into the Portuguese pepper trade, by selling at lower prices. They had been able to do this because of their lower shipping costs and lower import and sales taxes.54 He believed the areas near Rio de Janeiro were less plagued by ants, an observation revealing that the terrible fame of saúva (leaf-cutting ants) in Brazil was known to him, but his remark about the suitability of sugar-producing lands revealed that Retama had little understanding of the tropical environment and the fact that it is difficult to produce quality grape wine outside the zone of 30-50 degrees latitude where the diurnal temperature range allows for a balance of sugar and acid levels. He was, however, prescient in looking southward, since in the 1650s there was a Dutch project to take Rio de Janeiro. Although Retama was wrong about the suitability of sugar lands for viticulture, had he looked further southward toward modern day Rio Grande do Sul, his projection of a Brazilian wine industry would have been on the mark.55
It is also interesting to note that by predicting that the Dutch would settle in Brazil in order to fully exploit all its potential advantages, Retama was implying that the Catholic monarchy itself should be doing this as well; that is, populating the territory and producing all kinds of products with lower prices than those produced in Europe.56 This was an idea that directly contested the type of settlement carried out by both Portugal and Spain, based on monoculture and large landed estates.
Despite these musings about the possibility of Dutch agricultural competition with Spain, Retama believed that the real victims of a thriving Dutch colony in Brazil would be places like Denmark, Poland, and Danzig, providers of grains and timber that the Dutch had carried profitably out of the sound to Italy, Crete, Cyprus, and the Levant. Denmark, which depended on the shipping taxes through the sound, could not afford this change, and these northern states would suffer if the Dutch could produce and sell those products on their own with far lower shipping costs (Israel 1989: 38-79). That possibility made the northern states natural allies of the Spanish monarchy in its struggle against the United Netherlands. This potential natural alliance had been suggested by Retama in previous memorials before the successful Dutch attack against Salvador, and he now used the present situation to again make this argument as the potential of a tropical Dutch Atlantic colony threatened the European balance of power.
But Retama believed that there were factors that would hinder the Dutch project of a profitable colony in Brazil. The colony could not thrive without 100,000 African or Native American laborers, and the enslaved Africans were particularly susceptible to smallpox (viruelas) that caused great mortality. Since Portuguese Angola was controlled by the Catholic monarchy, the slave trade could be easily stopped, and the Dutch, who were not usually attracted to the “difficult labors of the field” (los travaxos recios del campo), would have to seek the support of “malicious Portuguese” who favored the Dutch, or the supporters of Dom Antonio, the pretender to the Portuguese throne, or make some kind of arrangement with the local Black and Amerindian laboring classes in order to make the colony profitable. Most likely, the Dutch would have to turn to bringing colonists from other northern countries to populate the colony. Thus, it might be six or eight years before it would be profitable, and that profitability for Retama was the key to everything. If the costs of colonization and defense of their colony could be made high enough that there was little profit, then the investors in the Dutch West India Company would withdraw their funds. The Dutch then would not have the resources to pay for the men and ships to carry out their attacks on the Catholic monarchy, and as a result their Brazilian colony will be abandoned. Moreover, Retama believed, even if the colonization was successful, a Dutch monopoly of its trade would draw the animosity and jealousy of England, France, and other excluded countries, just as Spain had suffered by closing its trade to the Indies to foreigners. Here Retama’s advocacy of freedom of commerce is made clear: “Not allowing commerce to either of the Indies except to the nations of Spain has caused us to be so hated, and that has caused the theft of our goods and the attack and disruption in both Indies, and the same will happen to the [Dutch] rebels”.57 On the other hand, an opening of the Brazil trade to them would lower the profitability of their enterprise.
Thus, Retama’s strategy for the recovery of Brazil did not depend on a clear military victory, although that would have been welcomed, but rather on continued military and commercial pressure on the Dutch that would keep their costs high and profitability low, thus making the colony unattractive and depriving the Netherlands of the sources to continue its struggle against Spain. Under such conditions, the Dutch would be forced to look for alternative colonies.58
It is important to keep in mind that Retama was writing with a sense of immediacy in the shadow of Portugal’s loss of Ormuz (1622) to an Anglo-Persian alliance and concern with the increasing Dutch penetration into the area of Portuguese commerce in Asia. The attack on Brazil was the opening of another front in a global battle. It threatened to disrupt the flow of silver and gold from the Spanish Indies to Spain and, accompanied by Dutch contraband with the Peruvian viceroyalty, to ruin Spain’s commerce with its own colony, thereby reducing its ability to respond to external threats. Dutch access to the silver of Peru would provide the rebellious Netherlands with the resources to attack the Monarchy while at the same time diminishing its means to defend itself. For Retama, the only way to stop this had to be a war against the infrastructure of the Dutch economy-its commerce, its shipping, and its manufactures-and as Retama noted, in his previous memorials he had constantly reminded Olivares and other ministers that “there no better path or remedy than to cut these roots from which grow their defense and offense against this Monarchy, and their [the Dutch] efforts will be fruitless, [if by] acting quickly so that all their machinations will end in smoke and wind.”59
Retama reminded his readers that he was not a soldier; thus his actual military suggestions for the campaign to retake Salvador were limited. He suggested that the fleet to retake Salvador should include 10,000 men divided into groups of 100-150 in each vessel in order to avoid overcrowding and the threat of contagious disease.60 He recognized that the Dutch were tough opponents; subtle calculators of raison d’etat, good soldiers, and great sailors, they should never be underestimated. He believed Spain should follow the Dutch example and choose the commander of the fleet on the basis of experience and talent, and not according to lineage or rank. Retama also wanted the Spanish troops to be disciplined veterans “who had heard the sound of artillery” and were well trained. This was no task for fledglings (bisoños) or for paid mercenaries. He warned against over-confidence, and while he recognized the martial qualities of the Portuguese of all classes, he also remembered the military catastrophe they had suffered in Morocco when in 1578 the Portuguese king Dom Sebastião and his ill-prepared and over-confident troops had been routed at Alcázar Quibir. The Dutch, Retama believed, were much better soldiers than the Turks or the Moors of North Africa, and the Catholic monarchy needed to commit to using its seasoned veterans from the Atlantic fleets for this expedition or find ways for the veterans of the Flanders tercios to slip away so as not to tip off the enemy, return to Lisbon, and join the fleet. The Portuguese could draw off seasoned soldiers from its North African enclaves. Retama’s suggestions reflected not only his overall economically based strategy as well as his perception of the various capacities of different peoples, but also his perception and understanding of the policy preferences of the Count-Duke of Olivares, Philip IV’s favored minister. Although Olivares’s policy of the “Union of Arms” that required the states of the Monarchy to provide contingents of troops for the general defense of all officially dated only from 1625, preliminary memoranda and correspondence indicates that by 1621 its basic ideas were circulating widely (Elliott and de la Peña 1978: vol. 2, 171-208). Retama appears to have heard of the project. While celebrating the bravery and military capacity of the Portuguese to defend their interests, Retama also emphasized that the Dutch seizure of Salvador was a direct threat to the Catholic monarchy, and that Castile had a responsibility to respond to it, as well.61 He called on Castile to mobilize a multi-national force that would include Walloons, Burgundians, and Italians, a suggestion that Olivares surely accepted enthusiastically. When the joint Luso-Spanish armada did sail to retake Bahia in 1625, it included not only Castilian and Portuguese troops but also a Neapolitan regiment (tercio), as well.62 The success of the collaborative response to retake Salvador was later celebrated by Olivares as evidence of the advantages of such cooperation and of the Union de armas, despite the fact that rivalry and tension between the Portuguese and Castilian troops during the campaign was long remembered by the Portuguese as evidence of Spanish disregard and animosity toward them.63
In the final pages of the arbítrio on the recovery of Salvador, Retama made a number of specific proposals of how the campaign should be conducted despite the fact that, as he reminded his readers, “I am not a soldier.”64 These recommendations make clear that Retama’s strategy was always fundamentally economic and that the protection of maritime commerce and sea routes was always the most important concern. Although now committed to a naval expedition to retake Salvador, Retama emphasized that raising a great armada was extremely expensive and this fleet should not be put at risk in any way. It was needed to protect and defend the coasts of Spain, the silver fleets from Spanish America, the South Atlantic passage to and from Asia, and commercial routes in general, not only from the Dutch rebels but also from Turks and Barbary corsairs and even from supposed friends whom the cunning (mañoso) Dutch might seek to mobilize.65 To avoid any risk to the joint Luso-Spanish armada, Retama suggested that the jornada be sent to Pernambuco, and then its forces, joined with native allies, Black slaves, and colonists, could march overland and join forces with the local resistance in Bahia. The Dutch, not expecting an attack by land, having invested in fortifications against attack from the sea, and cut off from provisions from the countryside, would be forced to surrender. His underlying objective was always to raise the costs and decrease the profits of the West India Company, and by doing so stop Dutch attacks.
This cautious maritime strategy was ultimately ignored. The Luso-Spanish fleet did sail for the Bay of All Saints, and despite delays, arrived before a Dutch fleet could reinforce their troops in Salvador. The city was retaken. Retama’s overall strategy of mercantilist measures and commercial competition remained the basis of Spanish policy. In this arbitrio, Retama had presented his ideas and comments on how to defeat the Dutch rebels as a “service to God our Lord, Your Majesty, and the well-being of these kingdoms and conservation of this Monarchy.”66 As he had always argued, “the best battle we can give them is a merchant’s war (11/12-13),” but his sometimes conflicting advocacy of a restriction free commerce and of mercantilist measures and protections particularly favorable to Flanders became in the next decade a continuing point of contention in the relationship between Portugal and Madrid (Allorza Aparicio 2009: 1-6). Retama’s role after 1629 as a customs inspector (veedor) in Viscaya active in interrupting smuggling and illegal trade, much of it Portuguese, seems a fitting personal anomaly in the conflicting theoretical positions neither he nor his kings had been able to resolve.
By the 1630s, the effects of the mercantilist policies of economic warfare, the changing fiscal situations of Portugal and Castile that resulted in less income and higher taxes, and the Dutch return to Brazil and seizure of the principal sugar-producing region of Pernambuco all contributed to an increasing questioning of Portugal’s place within the composite Habsburg Monarchy (Rooney 1994). In 1632, resentment of what was felt to be the Monarchy’s increasing disregard for Portuguese interests was made clear when the Portuguese council of state strenuously objected to the grant of a royal license for a group of Madrid merchants to trade directly from Seville to Brazil.67 The council complained that there could be no greater matter than this violation of Portugal’s exclusive right to trade with its colony given its present “misery” and that the Portuguese people had always demonstrated and were presently demonstrating their love and loyalty to the crown with their persons and their possessions (fazendas). In contrast to Retama’s guiding philosophy that private commercial interest and state policy shared a common goal, the councilors complained that “businessmen always take care of their private interest without concern for the service of Your Majesty nor for the common good.”68 The governor of Portugal, the Count of Castro D’ayre, supported the council’s objections, pointing out that with the decline in the commerce with India and the diminished of trade with northern Europe due to contraband and the loss of the salt trade, the Brazil trade was the only “thing of great substance”69 left to Portugal. To turn it over now to Castile, he complained, would be far worse than all the new taxes and all the other sacrifices already asked of Portugal in the service of its king. With surprising frankness, the governor admonished the king and questioned the very constitutional basis of the Habsburg composite monarchy:
. . . as a universal king, Your Majesty is obliged to not destroy one kingdom to expand another, but to conserve them both equally with the greatest prudence possible, and as the king of each, your Majesty has the obligation to treat Portugal or any other kingdom so as not to allow its ruin, but to defend its conservation and to seek its growth, as if Your Majesty had only that kingdom; and there is no interest for which You Majesty should break with these commitments nor the solemn oaths that Your Majesty has taken. . .70
This final reference suggesting a violation of the contractual arrangement at the Cortes of Tomar when the Habsburgs acquired the Portuguese Crown indicated an increasing perception of the structural limitations of a composite monarchy when the interests of the whole might be sought at the expense of its parts. The issue was not a question of preference for a particular economic theory, but of what seem to be “national concerns.” Whereas Portuguese interests had greatly complained about, and actively circumvented, Habsburg embargos and other mercantilist measures that had interrupted or restricted their commerce, when their own exclusivity of trade was threatened, they leaped to the defense of such policies.
The conflict of international political objectives and economic tactics inherent in the mercantilist policies suggested by Retama and many of his contemporary arbitristas increasingly underlined the inherent contradictions of a multi-state composite monarchy. Regina Grafe (2013) has suggested that the weakness of the Iberian Habsburg monarchy and its inability to centralize authority and effectively enforce mercantilist commercial and fiscal policies can be ascribed primarily to regional constitutional limitations (fueros) or the diffuse and extensive taxing power of municipal governments. While we concur to a large extent, we would add that, in the case of Portugal, what was increasingly perceived as a sacrifice of the kingdom of Portugal’s interest for the good of the monarchy as a whole lay at the heart of objections to the increasing fiscal burdens and the enforcement of mercantilist commercial restrictions even before the modern concept of the nation had been fully developed.71
Well before the palace coup of December 1640 that led to the separation of Portugal from the Habsburg Iberian Monarchy, and predating the factional struggle that preceded it and the nationalist rhetoric that was later employed to justify it, various groups and institutions in Portugal had begun to see the impact of those policies in national terms, and spoke out against them (Alloza Aparicio and Cárceles de Gea 2009: 83; Alloza Aparicio 2009: 12). That Retama ended his career as an enforcer of the policies that he had himself had advocated, and which he believed to be essential in the mercantilist war against the Netherlands despite his realization of their possible negative effects on the internal composition of the Monarchy, was symbolic of the weakness within the composite structure that the Habsburg Iberian monarchy had created.