“La Paga de la Condenación”: Royal Pardons and Pragmatism Toward Private Enterprise Under the Late Spanish Habsburg Monarchy

Castilian rulers have a long history of pardoning individuals who committed crimes when it served economic or political interests. The practice offers insight into Spanish royal pragmatism concerning trade with Spanish America in the seventeenth century, when the crown struggled to strike a balance between an official mercantilist ideology towards commerce and the increasingly capitalistic reality of Atlantic trade. Spanish merchants operating across the empire regularly ignored royal laws that forbade foreigners from trading directly with Spanish America, which became gradually unrealistic as foreign capital and credit increasingly funded Spanish trading ventures across the Atlantic. The establishment of the Wisselbank in Amsterdam and the first stock exchange incentivized Spanish merchants to partner with Dutch, French, English, and Jewish Portuguese merchants who held stock and credit there, while the new Dutch, French, and English Caribbean territories created new spaces for merchants to bypass Spanish royal restrictions on trans-imperial trade in Spanish America.

The crown was not blind to this reality. Publicly, it continued to demand that its agents fight contraband and restrict foreigners from accessing Spanish markets. It nevertheless retained mechanisms that allowed it to tap into the profits that private transnational merchant associations reaped through international collaboration. One way this was achieved was through the institution of the indulto: royal pardons issued to merchants caught engaging in contraband trade. A systematic analysis of over a hundred indultos issued between 1601 and 1699 reveals a pattern. Wealthy merchants who violated royal restrictions on trade with Spanish America were regularly pardoned upon the payment of a fee, sometimes with a short temporary banishment from trading with Spanish America but more often with no extra penalty. While the crown officially denounced contraband, it remained pragmatic in finding ways to profit off evolving Atlantic trade structures over the course of the seventeenth century.