The biggest corruption case in the history of the Islands
In 1425, six centuries ago, an audit found that Mallorca's public administrators had embezzled the equivalent of 3.8 billion euros today.
PalmCertainly, corruption is unacceptable: public money is sacred, and it's not true that this malpractice is intrinsic to human nature; crime is also intrinsic, and we don't tolerate it. However, what is also true is that corruption is not new, far from it. Perhaps it was even worse in the past. The reason is that exactly six centuries ago, an audit—yes, apparently they were already doing it back then—discovered that those responsible for the public administration of Mallorca had embezzled, in 20 years, six fiscal years' worth of budget: the equivalent of around 3.8 billion euros today. It was, in all likelihood, the largest case of corruption in the history of the Archipelago.
It must be said that, just as a corruption case currently fills newspaper pages and leads to the corresponding judicial process, irregularities of all kinds were common practice for centuries in the institutions of the Balearic Islands. These—as with everything—were in the hands of privileged minorities who acted according to their own interests, rather than the common good.
In Mallorca, the University of the City and the Kingdom, as its name suggests, governed Palma and the entire island simultaneously. Warning: this had nothing to do with what we now understand as a 'university,' which is a center of higher education. This was essentially the current Palma City Council and Island Council, all in one. Their leaders were the 'jurors,' and they acted on the advice of the members of the Grand and General Council. The 'knights' and the 'citizens,' that is, the nobles, were overrepresented relative to their percentage of the population. The same was true of the City with respect to the Part Forana, when the latter comprised the majority of Mallorcans.
The constant need to import grain, of which Mallorca always suffered a deficit; poor administration, since almost a third of the theoretical income was lost due to negligence or favoritism; the squandering of public funds—this remote corner of the world was "one of the places in the world that best paid its civil servants," according to Álvaro Santamaría—and all kinds of crooked schemes led Mallorcan finances to an unsustainable situation. It's worth remembering that, apart from the usual disasters of the time—epidemics, poor harvests, and endless demands for money from the reigning monarch for his wars—two exceptional catastrophes were recorded in Mallorca during those years: the great famine of 1374, which possibly claimed 35,000 victims in 1403 and caused nearly 5,000 deaths in the city. And this meant more expenses and fewer taxpayers.
The 'Holy Contract'
The point of no return came in 1405, when the University went bankrupt, meaning it had to admit it couldn't meet its expenses. The consequence was the signing of the Holy Contract—sanctifying everything was very much part of the mentality of the time. Perhaps now, if there were no money left in the treasury, people would think primarily about social spending. But back then, the welfare state was a mere dream.
Quite the contrary, the priority was given to the holders of Mallorca's public debt. And if possible, to pay off what was still outstanding. All tax revenue was dedicated to this end. In fact, the University, as we would say now, was taken over: not by the Crown, but by the creditors. These were the ones who would appoint a "clavario," an administrator. First, the holders of Catalonia's public debt—essentially Barcelona's—had to be paid. Then, the Mallorcans. Incidentally, the fact that priority was given to the Principality's debtors didn't exactly contribute to the Catalans being regarded with affectionate brotherly respect on this side of the Mediterranean: who knows if the absurd anti-Catalan sentiment of some Mallorcans wasn't fueled by this circumstance?
With the coffers empty, what could the juries and councilors do to raise money? Very simple: issue even more public debt. Any Economy Minister today, regardless of political affiliation, would be shocked. There came a point where all the income from the University wasn't enough to pay the annual fees owed to the debt holders. So new taxes were established to raise the cash. Of course, those who had to pay for the party were the less privileged sectors of society, precisely those with the least representation in the institutions.
In fact—oh, what a coincidence!—a good handful of those jurors and councilors who increased the public burden were, at the same time, holders of debt securities, which provided them with substantial income. This would be called a conflict of interest today, but it seems the concept hadn't been invented yet. Just a few examples: among the main investors were Felipe and Bartomeu Fuster, cousins, both jurors and members of the Grand and General Council; Arnau Sureda, who was elected to the jury six times between 1401 and 1428; Bernat Febrer, twice a juror, three times a councilor, and deputy to the governor. Santamaría cites up to 39 families who were, at the same time, those who controlled the Mallorcan public administration—nobles and merchants—and those who were creditors of the University itself, whose interests they were supposed to look after. Thirty-nine religious institutions also invested in Mallorca's public debt: it seems that his kingdom was something of this world.
Electoral fraud
Given this situation, there was no way to balance the books. So the Mallorcan nobles came up with a new source of income: the salt tax, that is, a monopoly on this product with assigned quotas of compulsory purchase. It was a basic necessity: not only for seasoning food, but also for preserving it, since refrigerators had not yet been invented. This particularly angered foreigners, who considered themselves disadvantaged by the quota allocation—and, probably, they were. Salt taxes were no joke: at times and in places as diverse as Biscay in 1631 or India in 1930, popular revolts were reported for this reason. It is believed that the fact that traditional Mallorcan bread does not contain salt could be precisely because of this circumstance, because they did not have to pay the corresponding tax.
In 1425, according to Guillem Morro, a review of the accounts revealed that the managers of the Mallorcan public administration had embezzled, since the Holy Contract came into effect (twenty years), 380,000 pounds plus interest, the equivalent of a budget of 3.8 billion euros. To give an idea of the magnitude of the deficit, in 2011, Iniciativa Verds estimated the cost of corruption in the previous legislature at 92 million: So we would need 165 years to reach that level of years.
To top it all off, there was also electoral fraud. In 1425, in Ciutadella, there were disturbances due to alleged irregularities in the university elections. Limits were set on support for close relatives for election, which suggests that this occurred frequently. They were paraded on the stump, flogged, paraded in the streets for general ridicule, and executed in public.
Despite the Holy Contract, despite the salt sheaf, and despite the tax burden, Mallorca's finances never recovered. Nor did those of other islands. In the mid-15th century, according to Miquel Àngel Casasnovas, the General University of Menorca's debt reached "unsustainable limits," largely due to the misuse of public funds: the island administration sent "embassies to the Court with sizable allowances, often to discuss private matters [...] with abundant gifts."
Six centuries ago, in 1425, the University of the City and Kingdom of Mallorca found itself, for the second time in 20 years, in a state of insolvency. So, the only thing it could do was stop paying Catalonia's creditors, to whom, as Josep Francesc López Bonet points out, outstanding amounts were already owed. Of course, the Catalans refused to give up—they couldn't allow it!—and took the matter to court. As the costs of the litigation fell on the defaulting University, the debt only increased.
This situation lasted six years, until 1431, when the "Concord of Barcelona"—another imposing name—established new conditions: the interest rate benefiting Catalan creditors was reduced from 5.9% to 4.1%, and even more so, of course, that of the Majorcans. 3 As for priorities: first, the Catalans would be paid; then, the debt would be amortized; after that, the Majorcans would be paid; and, fourth, the University's expenses.
That hadn't been settled, far from it. The abuses of the privileged, the tax burden on outsiders and artisans, the inequality between the City and the Part Forana, and the disproportionate representation continued to generate discontent. That would explode in less than 20 years. But that's another story.
Information prepared from the studies of Guillem Morro, Pau Cateura, Ricardo Urgell, María Barceló, Antonio Planas, Álvaro Santamaría, José Francisco López Bonet, José Juan Vidal and Miguel Ángel Casasnovas.