The Castilian Public Banks and the Act of 1575

Abstract

Deposit banks, also called “public banks” and established in the main cities of Castile during the sixteenth century, had close ties with Genoese bankers. Thanks to these local banks many foreign and national financiers gathered the funds they provided to the Crown. The decree of 1575 had worse effects on these public banks and their clients than on the Monarchy’s bankers. Many public banks went bankrupt and the local credit collapsed. The suspension of payments to the bankers in 1575 was not only planned to review their loan contracts, but to send a clear message to the cities of Castile about the importance of satisfying the king´s fiscal demands. The bankruptcy in 1576 of the Pedro de Morga bank in Seville is a good example to see the links existed between the Crown, the Genoese bankers and local banks.