The Alchemist of Castile’s Investment Proposal
Bernardino, the 6th Duke of Frías, carried a wound that could never be hidden. It was the filthy stain of the "ugly disgrace" his father had left behind.
His father had marched into Burgundy with ten thousand infantry and two thousand cavalry during the war against France. He had been toyed with by Henry IV—who commanded a mere few hundred horsemen—and had retreated in a state of sheer terror. Henry IV had publicized the event extensively, immortalizing the humiliation in paintings and songs.
From the day he arrived in Madrid as a "friend of the King," the young boy had been "praised" for his father’s "great achievement." He grew up hearing the nobles mock his house: "The House of the Constable knows not the glory of victory."
Even after he inherited the title at twelve and became the highest-ranking grandee, the one who held the King’s sword, poets like Francisco de Quevedo wrote satirical verses mocking him as the "son of the coward Constable."
He had to wash away this disgrace. He had to reclaim the honor of the Constable’s house. That had been his mission since he was a boy.
He obsessively maintained a lean, hardened physique to avoid resembling his portly father. Yet, when gout—which clung to his family like a curse—finally struck him at the age of sixteen, he did not succumb to the pain, acting with stoic resolve instead.
Even in the cold Madrid winter, when cold sweat soaked his shirt through, he finished every official duty without a word of complaint. He vowed to himself:
"I will not die in a bed."
He would meet his end gloriously on the battlefield! If not victory, then let him die and become bleached bones! He would not be like his father, lying in bed with a bloated body, crying out in agony as he died!
These trials forged Bernardino into a man of iron. He devoted himself to military science and administration, living with the sole purpose of one day reaching the battlefield to earn his honor.
"My father may have been a coward, but I will be the Achilles of Spain."
When Olivares approached him, claiming he would grant him "honor," he told the Count-Duke’s envoy:
"The tradition of the Constable’s house is to serve the monarch, not to become a subordinate to a royal favorite."
He knew the truth well.
Honor is not something one receives because someone grants it; it is something one must seize for oneself.
"Even if I live but a single day, I shall live with honor and die with glory."
The House of Velasco was one of the most powerful noble houses in the Spanish Empire. Its head held the titles of Hereditary Constable, Constable of Castile, Duke of Frías, and Count of Haro. It was a massive house that controlled the gateway to Bilbao, the rights to wool distribution, the real power over the major city of Burgos, and the land rents from vast estates.
Believing that the crisis facing the Spanish Empire stemmed from the "moral decay of the nobility" and "rampant corruption," he held a not-so-unfavorable view of the newly emerged Marquis Juan.
He admired the man’s masculine resolve in remaining in a forsaken city—where even the nobles, the King, and the Church had turned a blind eye—to fulfill his responsibilities to the very end.
He also respected the fairness with which he had decisively punished a corrupt warehouse keeper, showing no favoritism even to his own subordinates.
These were all values the young Duke pursued.
Ironically, the reason his house, which styled itself as the protector of the shepherds, had not joined the attacks against the new "Farmer Marquis" was because Bernardino himself had been lukewarm toward the idea. Eventually, unable to withstand the pressure from Mesta members, he had "summoned" Juan to meet him directly, only to be told the Marquis was too busy.
When he finally lost patience and met the Marquis by "visiting" him in person, he found himself completely captivated by the aesthetics of "statistics."
"Thank you for coming, Your Grace."
"Not at all, Marquis. I am the one who is grateful that you have come out to greet me."
In the Duke’s eyes, Marquis Juan was not the unreasonable, pushy man the Mesta members had described. He was a man who understood propriety, a man who kept to the basics of a transaction: giving as much as one received. Once the shell of a commoner and former coachman was stripped away, there stood a cold administrator with a philosophy of efficiency.
"It is astonishing. My house, too, should learn from your management system. The perspective of averages and 'statistics'—it truly feels like a revelation."
The Marquis had divided the settlements and provided similar standards and environments. His explanation that checking 10 or 20 results to find an average naturally filtered out corruption and decay in the process was truly profound.
It wasn't just a haphazard approach. He quantified "conditions" and measured yields accordingly. Then, one could see which conditions produced the best results.
There was a precision in identifying why yields were high or low, following an administrative network as intricate as a spiderweb.
"The important thing is to clarify where responsibility lies, but one must not punish the mere fact that a problem occurred."
Shouldn't one be punished if they caused a problem? The Duke couldn't hide his confusion at the Marquis’s words.
"Shouldn't we punish those who cause problems?"
"Punishment should only be reserved for when there is malicious intent, or when someone tries to hide the problem."
The Marquis spoke with eyes full of conviction.
"Your Grace, if humans fear punishment, they will falsify statistics. Even if the wheat in the warehouse rots, they will write 'Normal' in the ledger for fear of punishment, then secretly dump it or sell it mixed with other grain. Eventually, the statistics become 'polluted,' and the state decides to go to war believing its empty warehouses are full. What happens if war breaks out and you open the granaries only to find rotten wheat? That is true ruin."
"Instead, you must greatly praise those who discover and report problems. To use an analogy for you, the Constable, they are like the military police who maintain discipline, the elite soldiers who take the initiative to catch deserters and thieves. If you show that you praise, protect, and favor them, other soldiers will report the facts and seek solutions rather than hiding problems. Presenting the solution is the job of the manager standing above them."
"Indeed, making 'honesty' not an individual virtue, but a collective one! Truly a clear-sighted statement."
The Duke of Velasco could not hide his admiration. They said he was a former coachman, but listening to him, he sounded like a veteran who had actually experienced the military.
"More importantly, do not entrust everything to one manager; divide the tasks so they watch over each other. Human nature always tends toward the easiest path."
The Marquis spoke with certainty.
"Even in the smallest village, if one person manages everything, it becomes a source of corruption and decay. The village head should only manage agriculture, the clerk should manage the numbers, and the warehouse keeper should manage the physical goods, forcing them to check each other. Only then can I trust the numbers they submit and manage them from here in my mansion."
"Hmm... but if they collude among themselves..."
At the Duke’s words, the Marquis smiled faintly.
"They won't all be able to collude. If they could do that, the country would be finished anyway."
The Marquis, who laughed as if to say, 'Is that why it's finished?', was truly an eccentric.
The Duke decided to bury the Mesta’s protests.
It was because he had discovered in the Marquis’s words not just the logic of numbers, but the "uncompromising rigidity" he had been craving.
Having finished his thoughts, the Duke of Velasco greeted his nephew, who was six years his senior.
"It has been a long time, Duke. His Majesty so wished to see you in Madrid; since you have come all the way to Valladolid, please pay him a visit before you leave."
Duke Juan received the words lightly.
"As this is not an official schedule, I believe that would be difficult, Duke."
"Now then, let us begin the investment briefing."
I stood up, handing out paper documents one by one. They contained the same information I had delivered to the working-level staff before the meeting.
The five-year crop yield records, written by the royal scribe, included the seed-to-harvest ratio for each crop alongside the yields of others that year.
"Before we begin, everyone gathered here shares the same position. Namely, that the profitability of existing businesses is falling, and as the value of money is also falling, income is dropping even further."
Olivares’s monetary policy might have helped the national treasury, but it had produced such massive side effects that even the nobles were suffering economic hardship.
"Starting last year, aren't bond payments being made in vellón rather than silver? General Spinola?"
"Haa... that is so. They pay interest in vellón, which isn't even accepted in the markets. And now they are even talking about lowering the interest rate on long-term bonds to 5%."
Thanks to this, Spanish bonds had broken through the floor and gone straight to the basement. The Genoese banker who had purchased the most bonds was, in a word, thoroughly trapped.
Spinola clutched his face and bowed his head. When he looked up again, he seemed to have aged ten years in that single moment.
I waited a moment for him to compose himself before speaking.
"First, I possess physical assets. Wheat, barley, linen, and processed meat—all are items that maintain their value even in the current situation where the 'value of money is falling.'"
"The Admiral possesses Atlantic trade. The Constable possesses Haro, the gateway to Castile. Duke Juan possesses shipping. And the Commander-in-Chief possesses the 'consensus of the Genoese financiers.'"
I looked at each of them as I spoke. They were focusing on my words, not the documents they already knew the contents of.
"Also, I understand that everyone gathered here has invested deeply in the wool industry, one of Spain’s core businesses. Of course, the Constable is also the protector of the shepherds."
As I said this with a smile, he raised a hand, urging me to continue.
"The sheep flocks, which numbered 5 million a century ago, have now dwindled to less than 2 million. The summer pastures in the south have been gnawed away by the locust swarms that occur every year, and now they must go even further south to Andalusia for the sheep to graze. To get there, they must cross the Sierra Morena mountains, and there are so many bandits that they require military escort."
"If the number of sheep decreased, the price of wool should have risen, but the value of the Merino sheep’s golden wool has also diminished as the Low Countries and England popularized new fabrics that reduced wool consumption by half."
The collapse of the wool industry, which I had learned about through Olivares, was complex. Blended fabrics with linen, created as an alternative because wool was expensive, were lighter and more durable than pure wool fabrics, leading the trend not through low prices, but through quality.
The cost of raising sheep continued to increase in complex ways, and the locust storms that began to grow twenty years ago now wipe out the winter pastures of Extremadura, the sheep’s homeland, every three to four years. Thanks to this, the western migration route connecting to the summer pastures of León in the north is on the verge of extinction.
"People can live without wearing wool, but they cannot live without eating bread. Regardless of the falling price of wool, they must eat bread."
"Over the past 20 years, you could count on one hand the years in which a proper harvest was reaped in this land. As a result, the price of wheat in Castile is breaking through the roof. On top of that, due to the Count-Duke’s monetary policy, the value of money is heading to the basement, so the money earned from wool is being spent entirely on transporting wheat."
"I promise you all a new profit. I have proven over the past five years that even when drought or floods come, a minimum harvest is reaped."
"Participate in the Royal Company for Castilian Trade and Foodstuffs. In short, the Agricultural Development Company. I will divide my shares and promise to pay dividends in kind and silver, not vellón, accordingly."
If you can't beat them, join them.
To capture the Mesta, I had chosen to bring in the two grandees with the most influence over the Mesta and the Spanish Empire’s largest creditor.
Looking at the members of the meeting, Juan realized he was the only one who had thought of the "breath of rebellion," and thought quietly.
'Ah, I really wanted to rebel.'
He felt the illusion that his ambition, which he had hidden while packaging himself as a musician who tended to a farm, was being stared at directly from across the room.