Spain's biggest property scandal: how the Duke of Lerma moved the capital to Valladolid

The Duke of Lerma, adviser to Philip III, bought properties in Valladolid before the king announced the move of the court from Madrid in 1601. He then resold them, including a palace to the king himself for double what he had paid, and repeated the trick when the court returned to Madrid in 1606.

When money trinc a king, some people get ahead of the move. That is, in essence, what **Francisco de Sandoval y Rojas**, Duke of Lerma, did between 1599 and 1606. He bought houses, land and palaces in Valladolid while persuading **Philip III** that the court should leave Madrid. When the announcement was made public, the value of everything he had amassed soared. And when the court returned to Madrid five years later, he once again bought cheap and sold dear. According to various historians, the operation turned an investment of **80,000 maravedíes** (the currency of the time) into more than **55 million**, equivalent to some **10 billion euros** today.

## Madrid stops being an itinerant capital

Philip II fixed the court in Madrid in **1561**. It was not a capital in the modern legal sense, but having the king permanently resident in a city brought an enormous economic boost. The court apparatus alone brought together some **3,000 people**, rising to **20,000** counting relatives and servants. In a Madrid that then had around **20,000 inhabitants**. The effect was so powerful that in forty years the city went from those 20,000 inhabitants to almost **100,000**.

Before that decision, the capital was itinerant. The monarch ruled at times from Valladolid, at others from Toledo, Córdoba or El Guanol. Charles V had trinc that tradition. But the Spanish empire had become too large and complex to govern by moving from place to place. Philip II chose Madrid for several reasons: it was almost at the centre of the peninsula, it had natural resources, underground water, forests for hunting and a healthier climate. It already had the **Real Alcázar**, a defensive fortress that could house the royal palace.

But there was something else. Madrid offered independence. It lacked Toledo's ecclesiastical power and had no bourgeoisie as influential as Valladolid's. It was practically a blank page on which to establish a tailor-made court. Money stopped moving around the territory trinc the king and concentrated in a single city. All political, administrative and economic activity gathered there.

## The rise of a noble without a fortune

Francisco de Sandoval y Rojas was born in the mid-sixteenth century into a family of nobles without wealth. With the support of his great-uncle, the Archbishop of Seville, he entered the court of Philip II. His affability and good conversation caught the attention of the heir to the throne. They became inseparable. When Philip III became king in **1598**, at just **20 years old**, he appointed him his trusted adviser and granted him the title of Duke of Lerma.

It was not just the power the king had given him. He quickly placed his own people in the positions of responsibility at court. Philip III was, according to his own father, terribly lazy, immature and uninterested in affairs of government. The duke took advantage of that situation to act almost as the real king. His signature carried the same weight as the monarch's. Few politicians in the history of Spain have held so much power. And few have shown such an interest in money.

There was no deal at court that did not pass through his hands or those of his network of trusted people. If a commission could be skimmed along the way, it was. Bribery became legal tender at the palace. Madrid turned into a genuine patronage network.

## The move of the court to Valladolid and the double windfall

Sandoval's ambition knew no bounds. In **1599** he began to hatch his plan. On the one hand, he told the king that Madrid was uncomfortable, too big, dirty, that the palace was outdated, that disease lurked there and that he knew all the hunting grounds. At the same time, he extolled the virtues of Valladolid: fewer inhabitants, further from disease, with newly renovated palaces and wonderful hunting estates. While planting these ideas in the king's head, together with his partner and subordinate **Pere Franquesa**, he quietly acquired properties in Valladolid. Houses, land, palaces. In a short time they amassed a genuine property empire in the capital on the Pisuerga.

One of the last acquisitions, perhaps the most notable, was the **Palace of Francisco de los Cobos**, bought at the end of **1600** for a bargain price. When, a few months later, the king announced the move of the court to Valladolid, the value of the duke's holdings soared. The thousands of people relocating, including nobles, merchants and financiers, needed somewhere to live. There was the duke, ready to offer them one of his properties. The best deal was the Palace of Francisco de los Cobos, which he sold to Philip III himself for double what he had paid months earlier. It became the Royal Palace during the court's stay in Valladolid. One of those who moved there with the court was **Miguel de Cervantes**, and it was there that he finished preparing Don Quixote.

And what did Sandoval do with the money? Buy properties in Madrid, where prices had collapsed because of the court's departure. Historians recount that he acquired numerous buildings between Atocha and Neptuno. These deals gained significance five years later, when Madrid stepped up its pressure to recover the capital. So much so that **250,000 maravedíes** were pooled together to convince the crown. Much of that money, curiously, ended up in the duke's pockets. Finally, in **1606**, just five years later, the court announced it was returning to Madrid.

And the same process all over again. Merchants, nobles and financiers returned to Madrid. Francisco de Sandoval had numerous properties to offer them. He even sold some of them the very same flats, but for more money. His profits soared once again. According to various historians, with this double property windfall he invested **80,000 maravedíes** and turned them into more than **55 million**, equivalent to some **10 billion euros** today.

## Enemies, ecclesiastical refuge and a fortune still remembered

This way of operating made him tremendously rich, but also earned him numerous enemies. Controversy accompanied him to the end of his days. In **1618**, sidelined from power, he had to take refuge in the Church to protect himself from possible legal proceedings. He died in **1625**, leaving behind an extraordinary fortune and a career marked by suspicions of corruption and the use of power for personal gain.

His name is still associated today with one of the most striking episodes in Spanish economic history. A property deal in which politics, insider information and wealth became so entangled that it was hard to tell where service to the king ended and personal interest began. A story that has passed into the collective memory as the first great property scandal in the history of Spain.