Don Alonzo Verdugo de Albornoz
A young Spanish nobleman

I. The decline of Spain

The seventeenth century was one of decline for Spain. Many factors contributed to the failure of Spanish society to answer the economic and political challenges it faced.



The Spanish state had been created by the marriage of Ferdinand of Aragon to Isabella of Castile in 1469. Although future monarchs of Spain ruled both Aragon and Castile, little was done to unify the administration or legal systems of the two. Indeed, Aragon itself was divided into Aragon proper, Valencia, and Catalonia - each with its own institutions, customs, and identity.
During the later sixteenth century Spain acquired a massive overseas empire, chiefly in the Americas, but also in the Far East (the Philippines were named for Philip II). Both the Spanish and the Portuguese established trading posts on the coasts of Africa and Asia that maintained a degree of independence from local rulers.


The Hispanic World in about 1600


Spain also controlled large parts of Italy (including Naples, Sicily, Sardinia and Milan), and much of the southern Netherlands (Flanders) as well as Franche Comté (bordering east central France).
In 1580, Philip II successfully invaded Portugal, claiming to have inherited it along with its possessions in the East Indies and Brazil. 

This vast array of possessions was administered by viceroys, governors, the Council of the Indies, and various other officials created piecemeal as each territory was acquired.



The empire had considerable resources but it was often difficult to exploit them, not least because local interests were reluctant to pay for the costs of other territories.

The basic Castilian tax was the alcabala - a sales tax of 10% - but many towns had agreed to a fixed sum which fell far below the theoretical 10% as a result of inflation. Moreover, in many places the receipts went to local nobles not the crown. As its yield fell, the Cortes of Castile agreed to the servicios ordinario y extraordinarios (which also fell in value) and from late in the sixteenth century to the millones (a tax on basic foodstuffs, including meat and wine) became more important. The crown was also able to obtain some income from the church.

Income from the silver mined in the New World fell after a peak in the late sixteenth century.

Registered Bullion Imports in kilos

1531-1580 2,628,000
1581-1630 11,461,000
1631-1660 2,896,000

Imports declined still further during the later seventeenth century. Remittances of silver from the Lima (Peru) treasury, for example, fell gradually from 14.8 million pesos in 1631-40 to 1.2 million in 1681-90.

Spain in the Seventeenth Century


The Spanish tax burden was very unevenly distributed: it fell more on the poor than the rich, heavily on the agricultural sector, and on Castile far more than Aragon or the Basque country. But the Spanish government's expenditure continued to climb: - in the first twelve years of Philip III's reign, he spent over 40 million ducats on the Low Countries' wars alone (a ducat is a small gold coin weighing about 3.5 grams.)

To cover the shortfall, the Spanish government both borrowed money - by the issue of juros (interest-bearing state bonds) - and assigned the revenues from future years to the bankers if they would pay the defense contracts for the present year.
By 1607 the government had a debt of almost 23 million ducats and had assigned away all its revenue for four years ahead.
By 1644 the crown's income was pledged to 1648; and by 1664 the crown owed more than 21 million ducats.

Lacking any real money the government periodically had to pay the interest owed on the juros by issuing more juros - but people were not overly keen to buy these new juros since they were none too confident that the interest would be paid.

A sixteen maravedis copper coin of Philip IV

Philip IV 16 Maravedis 1664

Another extreme expedient was the issue of "vellón" coins - vellón was worthless copper, sometimes with a tiny amount of silver added. The government forced its employees and creditors to accept this token currency, and the issues of 1636, 1641, and 1654 each made about five million ducats profit for the crown. But the debased coins simply produced inflation and confusion in the economy.

With Spanish finances in so parlous a state, a misfortune such as Piet Heyn's seizure of the Spanish treasure fleet in 1628 became a disaster. The only beneficiaries from the weakness of Spanish government finances were Spanish noblemen, from whom the crown borrowed so heavily that they held an effective stranglehold on the monarchy.

El Real Monasterio de San Lorenzo del Escorial

Conciliar government

From his vast palace outside Madrid, the Escorial, (which included a monastery, a church, a library, and more) the ever-conscientious Philip II created a system of councils to help him govern his vast empire. One type advised him on the formulation of policy, another dealt with particular territories.


Within each territory, a viceroy implemented the orders of, and reported back to, the Council. In the New World colonies, judicial tribunals (audiencias) exercised both legal and political functions, limiting and checking up on the powers of the viceroy.

The system was highly centralized, painfully slow, and totally reliant on the king for its efficient functioning. Philip II spent his whole life processing the paperwork; the idle Philip III and the self-indulgent Philip IV left control to their Councils of State. Under the mediocre Charles II, the councils became the sinecures of wealthy aristocrats (despite various attempt at reform.)

The councils also relied on the viceroy and other local officials to implement and enforce central decisions. When - as for example in Peru under Philip IV - offices were sold to local grandees, central control gave way to corruption and incompetence.


Genealogy of the Kings of Spain
(not all offspring and marriages shown)

 The Kings of Spain

The historian John Lynch described Philip III as "the laziest king in Spanish history," "unable to escape his own mediocrity". Pious, generous, and fond of food and hunting, Philip III fathered eight children in 12 years before his wife, Margaret of Austria, died in childbirth in 1611.

Philip IV was only sixteen at his accession, and was "a jaded voluptuary well before middle age" (Lynch.) Less idle than his father, he did decide some major policies. But he was also less interested in administration than in the good life - art, horses, women (he fathered 5 illegitimate children,) bull fights, &c.

Charles II (Carlos) was only four years old when he acceded to the throne. The product of generations of inbreeding, he was so mentally unstable and physically ill that he was nicknamed El Hechizado "the bewitched."

"This last pallid relic of a fading dynasty was left to preside over the inert corpse of a shattered monarchy, itself no more that a pallid relic of the great imperial past"
 (J. H. Elliot.)

The sterile, crippled king died aged 39, having lived longer than many expected. (The children of his half-sister Maria Teresa, wife of Louis XIV, then held the best claim to the Spanish crown.)



Validos (privados)


The role of validos (or chief ministers) of the kings of Spain was created partly because of the idleness of Philip III, but it was also a reflection of the difficulties of a monarch ruling directly over so complex and extensive a system of government.
The first valido, appointed by Philip III, was Gómez de Sandoval y Rojas, Duke of Lerma. Philip placed him in charge as soon as he acceded in 1598, and left Lerma there until 1618. Lerma was appointed because Philip liked him, not because he had much experience in government. He used his position to enrich himself and his relatives.
Philip IV's valido was Gaspar de Guzmán, Duke of Olivares.
From 1643 to 1661, Luis de Haro was valido - a modest and amiable man, he spent most of his time trying to stave off government bankruptcy. (He failed. The crown defaulted on its debts in 1660.) He did recognize that Spanish attempts to regain the Dutch Netherlands must be abandoned, and helped bring that hopeless war to an end.

Mariana of Austria

Since Charles II was too young at his accession to take any active part in government, his mother Mariana of Austria at first chose Johann Everard Nithard as her agent, but this Austrian was so generally distrusted that she dismissed him in 1669. From 1673, Mariana's favorite was Fernando Valenzuela, the "duende de palacio" (ghost of the palace). He lost his place in 1675 to a palace intrigue organized by Don John of Austria, but managed to return. In 1678, another palace revolution erupted and Valenzuela was ousted. He was imprisoned in the Philippines and then exiled to Mexico. Don John (1629-79) who also edged Mariana out of power was supposedly an illegitimate son of Philip IV by Maria Calderona (an actress so promiscuous that the issue could not be certain) although he looked nothing like his purported father. He died soon afterwards.

The Cortes

Castille, Navarre, and Aragon had Cortes (Aragon proper, Valencia, and Catalonia each had individual Cortes) - Courts or representative assemblies that the king was meant to consult and ask for taxation. Aragon's Cortes were traditionally more powerful than Castile's but all lost power during the 16th and 17th centuries.

The Castilian Cortes represented only eighteen of the towns, and only the social elite of those towns at that. In voting taxation they favored their own interests over those of the population as a whole, particularly as many of their members were corrupted by government kick-backs. Elsewhere, the Cortes included nobles and high clerics, as well as representatives of towns.

The Cortes did present grievances to the king, but they never became representatives of the Spanish political class (as Parliament did in England) and after 1665, the Cortes of Castile effectively ceased to exist.



Seventeenth- century Spanish society was extremely inegalitarian. The nobility were not only richer than ordinary people but had special legal privileges. They were, for example, exempt from many taxes.

The Spanish aristocracy:


Titulos - dukes, marquises, counts & viscounts




In Spain high social status was closely associated with leisure. Work - particularly manual labor - was considered undignified and demeaning. Even merchants who became wealthy tried to buy land and titles and invest in juros, so that they would no longer have to work for a living.

Large numbers of Spaniards entered the church: - there were perhaps 100,000 clergy in the 1620s and 150,000 or more in the later seventeenth century. Others spent long years in college education - 21 new universities were founded during the sixteenth century. This increased the proportion of Spaniards in economically unproductive activities.



Political commentators, "arbitristas", bemoaned the inverse correlation between productive work and high status, but could do little to change such a widespread social attitude.

The prevalent contempt for retail trading was reinforced by its associations with Spain's ethnic minority groups - Marranos (Jewish converts to Christianity) and Moriscos (Muslim converts to Christianity.)




During the Middle Ages, Spain had been conquered by Muslims invading from Africa. The Christian Spanish re-conquered all of Spain by the end of the fifteenth century - finally retaking Granada in 1492. Initially tolerant towards the Jews and Muslims, the Spanish government had grown increasingly wary and in the sixteenth century had offered a hard choice between expulsion and conversion.

Many Spaniards were highly suspicious of how genuine the "conversion" of Moriscos had been. They feared that the Moriscos were secretly in favor of Islamic reconquest. The Spanish Inquisition was established in order to ascertain whether converts or their children were backsliding. All those with Jewish or Moorish blood tended to be suspected - this emphasis on limpieza de sangre (purity of blood) had a pernicious influence on Spanish society.

Suspicion of Moriscos increased after the Rebellion of the Alpujarras in 1570, when Andalusian Moriscos had rebelled against attempts to make them abandon the use of the Arabic language and of Muslim customs. Spain was almost continuously at war with the Ottoman Turks in the Mediterranean at that time, and the Spanish government saw the Moriscos as a seditious fifth column.

"Fundamentally, the Morisco question was that of an unassimilated - and possibly unassimilable - racial minority which had given endless trouble ever since the conquest of Granada." (J. H. Ellliott.)


In Valencia, where Moriscos made up about one third of the population, and in Castile where many Moriscos displaced after the Alpujarras rebellion had drifted into casual labor, there was strong popular feeling against them.

On 9 April 1609, Philip III issued a decree of expulsion and over the course of the next five years about 275,000 Moriscos were forcibly deported (of a total Morisco population of 319,000.)
The expulsion was as widely popular as it was economically disastrous.




Merino sheep


The exactions of noble landlords and the high levels of taxation drove the Spanish peasantry into poverty. The peasantry were typically tenants on estates who had to give a large proportion of their output to the landowners. This discouraged hard work and innovation in agricultural methods, as the rewards went to the landlord not the peasant.

Rural poverty provoked migration to Spain's cities and to the New World.

Another group of migrants to the New World consisted of the younger sons of noble families - primogeniture commonly gave all the real estate to the eldest son.

Another reason for the decline of agriculture was the sheep. Spain's merino sheep produced some of the highest quality wool in the world, and from it was made expensive, luxury cloth. The grandees dominated the Mesta - an organization representing sheep-owners. They were able to obtain special privileges from the crown: - sheep-farming was less labor intensive than arable production, and this meant more men were available for the Spanish army. Furthermore, the profits from wool and cloth production were easily taxed by the government.

Unfortunately, during the seventeenth century these profits began to fall. The English and Dutch began to sell the new draperies - lighter cheaper textiles that soon cut into the demand for Spanish products.
600 textile looms were operating in Segovia in 1580 - only 159 in 1691.

The debasement of the coinage also contributed to inflation and industrial decline.

A contrast to the general story of economic weakness was Catalonia, where the peasants held secure tenure and property rights, and the Cortes showed a real determination to protect farmers' rights. Here agriculture prospered, until the Catalan revolt and the 1650-54 plague in Barcelona (killing 36,000 of its inhabitants) undermined the local economy.


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