State monopoly or corporate business : warfare in early-modern Europe

The shift of the core of Europe from the Mediterranean to the north-west of the continent has been considered the outcome of military advantages which, in turn, mirror the early modernisation of the fiscal systems and constitutions of the northern European states. Bearing this in mind, the Portuguese regaining of Brazil from the Dutch, while they were fighting a war against the Habsburgs to regain political independence, is an intriguing issue which leads us to reconsider the widely-accepted connection between the outcomes of military campaigns and modernisation in financial and institutional spheres. In this paper, special attention is paid to the issue of how private and public affairs could intertwine in forming a state. An enlightened estimate of the rates of return from tax farming is provided, as well as proof that uncertainty caused by war raised profits if the commercial integration of trade and the collection of taxes levied on traded commodities was the rule. The accumulation of capital by private tax-collectors was eventually exploited by the state to regain Brazil from the Dutch by means of a compromise which privatised war in the colony. It is argued that the Portuguese solution as far as warfare was concerned was an efficient response to the colonial issue, albeit a divergence from the modern institutional limit between private and public affairs, which gives the state the monopoly over attack (or over defence).