Columbus, having no place else to turn, stayed on in Spain for the next six years, repeatedly being put off, awaiting the findings of governmental commissions studying his proposal. He was told that a firm decision could not be made until Spain resolved some of its internal problems, most notably its war with the Muslim-dominated Spanish state of Granada. That struggle finally came to an end in 1492. In fact, 1492 marked a major turning point for Spain. The defeat of Granada in January meant that all of the important kingdoms of Spain were now united under Ferdinand and Isabella. At last they were ready to turn to the proposal made by Columbus. His time had come, but the circumstances were not so much in his favor, and he knew it.
The Talavera Commission had reported to Isabella in 1490 that Columbus’s plan was weak and advised against backing him. Like the Portuguese, members of Spain’s Talavera Commission felt that Columbus greatly underestimated the distance across the ocean between Spain and Japan. Columbus was able to point to evidence to support his estimate of the distance. He noted that bodies and unknown trees occasionally washed ashore. These, he pointed out, had decayed by amounts that were consistent with his estimate of the sailing distance. Of course he did not know—how could he?—that he was about right regarding the distance to the next really big landmass, but that landmass was not Asia, it was the Americas.
Columbus grew weary of waiting and made a take-it-or-leave-it offer. Given the negative reports on his prospects of success, and given that he was demanding payment up front, Columbus found himself once again facing rejection. Ferdinand, in particular, preferred leaving Columbus’s proposal to taking it. And so Columbus packed his bags and headed out of town. But this time, thanks to the intervention of Luis de Santangel, the course of Spanish-American history was assured.
Santangel, keeper of the Spanish Privy Purse, was roughly the Spanish equivalent of today’s U.S. secretary of the treasury. He saw the potential merits behind Columbus’s plan, and—most important—he saw a way to justify the risks by diminishing the costs. He called on the queen the very day that Columbus left Santa Fe, urging her to meet Columbus’s terms. Santangel feared (apparently mistakenly) that Columbus would sell his plan to one of Spain’s competitors.
Eventually he persuaded Isabella, who was more sympathetic than Ferdinand, to support the proposed journey provided that he, Santangel, would raise the money. It all came down to a matter of price. Columbus had begun by insisting that the Spanish monarchs pay the costs of the expedition in advance, including his compensation. The Spanish crown was unwilling to meet those terms. Later he reduced his price, asking only for the cost of three ships and their provisions and crew up front. He agreed to a 10 percent commission for himself and his heirs drawn from any wealth generated by his discoveries. That meant a smaller upfront cost, and it meant shifting most of the risk to Columbus and his sailors.
Of course, if Columbus succeeded, the value to Spain would be enormous: Spain would dominate a lucrative trade route and would become—as it did—a major economic force in Europe and the world. Under existing circumstances, Spain had no access to the Indies at all. They did not know of the eastward route around the tip of Africa, because the Portuguese kept their navigational charts secret. The Italians, Arabs, and others garnered the benefits from the overland caravan trade. But failure had its risks too. If the monarchs had paid out of Spain’s budget, they would have faced a real prospect of rebellion by Spain’s aristocrats. These very people had tried to overthrow Isabella’s father just a quarter of a century earlier, so theirs was no idle threat. That is why Santangel’s decision to raise the money privately was so crucial to Ferdinand’s change of view. He had removed the threat of rebellion by the Spanish aristocrats, who would have resented being taxed to pay for a scheme with little chance of success. Whatever the modern take on Columbus, we surely owe Luis de Santangel three cheers for a job well done.
The Spanish decision is readily modeled with just four players: Ferdinand, Isabella, Santangel, and Columbus. As is fairly typical of a negotiated contract or business acquisition, price is a big issue. Columbus wants the most he can get. Ferdinand wants to pay nothing now; he wants it all on spec. Isabella is less negative than Ferdinand, while Santangel is supportive of the proposed exploration, but only at a price he can raise. Columbus cares most, of course, followed by Santangel and then Isabella. Ferdinand is least focused on Columbus’s proposal, being more concerned with mending fences with the pope in Rome and managing his newly unified country. As king, Ferdinand has the most clout, but Isabella was no slouch and neither was Santangel. Columbus probably had relatively little ability to persuade anyone. After all, he had failed in his efforts for six years. Here, then, is the data set I constructed:
The initial prediction is between 25 (the weighted median voter) and 37 (the weighted mean voter). You can calculate those values yourself from the table. The eventual prediction after the model simulates the bargaining process and its dynamics is for an agreement to be reached at whatever price Luis de Santangel was prepared to offer as long as he was prepared to pay more than Isabella. If Santangel had offered less than Isabella’s price, no deal would have been reached and world history would be quite different. Santangel was no fool. He was a skilled strategist who understood how to persuade and to whom he needed to make his pitch.
In the model’s logic, Santangel first persuades Isabella and then Ferdinand to go along—at no out-of-pocket expense to themselves—and then he negotiates with Columbus. That seems pretty close to what actually happened. Of course, we don’t know how much he was actually prepared to pay, only what he did pay. That’s just the sort of information that my car-buying technique can ferret out, but to use that approach there have to be multiple bidders. Columbus knew—and probably Santangel, Isabella, and Ferdinand did not—that there were no other credible prospective buyers for his plan. So he probably agreed to a lower price than he could have gotten. Too bad Columbus didn’t have a predictioneer available to help him negotiate a better arrangement, but the important thing is that the deal got done.
While the implications of Columbus’s success are pretty apparent to us in the new world, it also had far- reaching consequences for Europe, which provides a nice little segue to our next case, World War I. You see, Ferdinand and Isabella’s nephew, Philip II, was born in Valladolid and became the Spanish monarch in 1556. Philip was Spain’s king during the defeat of its armada by England in 1588, which laid the groundwork for England’s emergence as a great power and rival to the Spanish empire. Philip also was the Holy Roman Emperor, making him one incredibly powerful fellow. He ruled over Spain and its American empire (thanks to Columbus, Luis de Santangel, and Philip’s aunt and uncle), but he also ruled over Austria, Franche-Comte, Milan, Naples, the Netherlands, and Sicily.
And so the success won by Luis de Santangel’s clever maneuvering translated a generation later into binding Spain and Austria together. It also translated into sustained hostility between the French house of Burgundy and Philip’s Habsburg family in Austria and elsewhere. We already know of the tension between Philip’s family and England following the armada. And so, with lots of action along the way, the times of Ferdinand and Isabella had already set the foundation for “the war to end all wars” in 1914.
Let’s have a look at the aftermath of the assassination of the Archduke Franz Ferdinand, heir to the Austro- Hungarian throne. We can use the history of the crisis precipitated by the Archduke’s murder to ask whether the First World War (the European monarchies’ last gasp) was inevitable or could have been avoided. And if it was avoidable, what needed to be done differently? We will use my new forecasting model to address these questions.
AVOIDING WORLD WAR I
