Spanish Decadence

The Spanish Decadence was the gradual process of exhaustion and attrition suffered by the Spanish monarchy throughout the 17th century, during the reigns of the so-called minor Habsburgs, who were the last kings of the House of Austria: Philip III, Philip IV and Charles II. This was a historical process simultaneous to the so-called general crisis of the 17th century that swept most of Eurasia, but which was especially serious for Spain. It was so debilitating that Spain went from being the hegemonic power in Europe, with the largest economy on the continent in the mid-1500s, to becoming a financially-exhausted, second-rate power by the end of the 1600s.

The decline was reflected in all areas like demography, which was mirrored in the resurgence of the plague and other epidemics, and the gradual depopulation of Spanish cities. In economy, which was reflected in chronic fiscal problems, monetary alterations, inflation, hyperinflation, the decline of industry, and a steep drop-off in precious metal remittances from the Americas. In socioeconomy, such as chronic religious and inquisitorial tension, the expulsion of the Moors, refeudalization, the rampant ennoblement of certain idle sectors of the population, the purchase of positions, and the increased power of religious Catholic orders. The decline was also reflected politically and territorially, with the initiation of the twelve years' truce and the maneuvers of the Duke of Lerma's favorite at court, spectacularly manifested in the so-called crisis of 1640, after attempts to restore the reputation of the monarchy with the aggressive policy of the Count-Duke of Olivares. As evidenced with the Peace of Westphalia (1648) and the Treaty of the Pyrenees (1659), the pathetic situation of the final half of the 17th century was a nadir for the vast Spanish Empire. Though the high court officials surrounding Charles II had carried through a few badly-needed economic reforms, all the European chancelleries talked of nothing but the highly uncertain future of the bewitched king and his shaky hold on the Spanish throne, and the fate of his extraordinary inheritance that girdled the globe if he were to remain heirless. After a series of complex palace intrigues, Cardinal Luis Fernández Portocarrero supported passing on this vast global inheritance through Maria Theresa, Charles II's sister, to Louis XIV of France, Charles II's brother-in-law, who wanted the Spanish crown for his grandson Philip of Anjou. It was finally resolved after the death of Charles II of Spain with the War of Spanish Succession (1701-1714) and the Treaty of Utrecht (1713), which divided this vast inheritance between the Habsburgs and the Bourbons, with substantial benefits for England. And that gave way to the Austracist exile and a violent Bourbon repression.

By contrast, the Spanish Decadence coincided with the most brilliant manifestations of art and culture, in what has been called the Spanish Golden Age (in Spanish: Siglo de Oro Español). In many of these artistic and cultural triumphs there is a true awareness of decadence, which in some cases has been described as negative introspection (Quevedo, the arbitristas). Specifically, the Spanish Baroque (the culteranismo or the churrigueresque) has been interpreted as an art of appearance, scenographic, which hides under an external tinsel a weakness of structure or a poverty of content.

The historiographic interpretation of the causes of the decadence has been a much-discussed issue. On many occasions it has been attributed to the clichés characterizing a Spanish national stereotype linked to the black legend present in the anti-Spanish propaganda circulating throughout Europe since the early 1500s. Among these harmful stereotypes included pride in the old Christian caste; an obsession with an indolent nobility highly hostile to entrepreneurialism and industry and prone to violence in the defense of an archaic concept of honor; the uncritical submission, by superstition or fear rather than faith, to despotic power both political and religious; fanatical adherence to the most intolerant, cramped version of Catholicism, which led to quixotic adventures in Europe against the Protestants; and the cruel rule of the conquistadors forced upon the American Indians, which included mass forced conversions.

An alternative pink legend attributes the achievements of the Spanish Empire to an unflagging fidelity to Catholicism, an interpretation of history popular with the reactionary side of Spanish nationalism. At its most extravagant and conspiratorial, this reactionary nationalism attributes the Spanish decadence to an alleged international conspiracy. In spite of the implausibility of such a conspiracy theory, it gives a decisive role to the Jews and to the secret societies that are imagined to be ancestors of Freemasonry (in addition to linking these crypto-powers to foreign Protestants and Muslims).

From objective points of view backed up by ample contemporaneous documentary evidence, current historiography considers the central role of the authoritarian monarchy of the Habsburgs in undermining long-term Spanish economic power, especially an unhealthy and destabilizing overreliance on imports of New World silver. Such overreliance led to constant budgetary crises for the Spanish government, sovereign bankruptcies and ruinous hyperinflations from the mid-1500s to around 1720. Such long-term economic instability, in turn, constantly sapped Spain's ability to build up large armed forces, and thus to project consistent diplomatic and military power throughout Europe. This undermining of economic power stands in stark contrast to the more cogent and rational economic policies of the absolute monarchy that the Bourbons were developing at the same time in France. The Bourbon absolute monarchy relied less on unpredictable imports of silver and more on intensive taxation of the vast and productive French agricultural sector, by far the largest in Europe at the time. These predictable and ample tax revenues led to an enviable stability for the French government's budget and expenditures, which translated to a bigger army and navy and thus a greater projection of diplomatic and military power throughout the 1600s, eventually eclipsing that of Spain herself. Nevertheless, the clear and definite divergences of the socio-economic models associated with Catholicism and Protestantism in different parts of Europe from the early 1500s to the late 1700s, as analyzed in the sociology of Max Weber (The Protestant Ethic and the Spirit of Capitalism, 1905), continue to be considered.

Economic Causes of the Spanish Decadence
The Spanish decadence can trace its direct causes to the long-term inflation and hyperinflation caused by the New World silver pouring into the Spanish economy after 1530 or so.

This one economic problem caused a cascade of events in Spain’s economy that ultimately destroyed its prosperity and led to Spain’s long-term decline, or decadence.

These huge quantities of silver first encouraged the Spanish monarchy, starting with Charles I and continuing with the minor Habsburgs, to take out huge debts. These monarchs did so always with the belief that the Spanish crown would be able to pay back the debts in a timely manner through silver shipments. Unfortunately, that’s an awful way to run a government, as silver shipments can be quite irregular. First, there was transporting the stuff from central Mexico and Bolivia, which first required an arduous journey from the inland mountains to the coast. Then there was piracy, which was rife in the Caribbean. Lots of ships laden with silver were lost to pirates. Then there were the hurricanes—the Caribbean and the Atlantic between Spain and the Americas is lousy with hurricanes. Lots of silver ships were also lost that way. When the Spanish monarchy depended on certain deliveries of silver to arrive in Seville, and these were lost or very late, it then defaulted on those debts to its creditors, usually German and Italian banking houses. This kept happening so often that by the latter half of the 1600s, during the reign of Charles II, no banker anywhere in Europe wanted to lend to the Spanish Habsburg kings anymore. This severely hobbled the Spanish economy as sovereign debt could not be extended to fund large and expensive projects required by the nation, such as the maintenance of a permanent standing army or a large navy.

Second, there was inflation and hyperinflation on their own. Vast surges of silver that would hit the Spanish economy regularly would lead to sudden tremendous spikes in prices for all sorts of goods, especially food. Destabilizing hyperinflation happened so frequently, in fact, that a lot of Spanish people started to move out of Spanish towns and cities into the countryside, since there they could farm the land to grow their own food, and to create their own clothes and implements. That way they divorced themselves completely from a cash economy that was so unstable and unpredictable. Of course, this meant that Spain de-urbanized throughout the period of the silver surges, as towns that used to be quite large started to depopulate. Spain never managed to achieve a city of over 100,000 until 1750 or so (in this case Madrid), when before 1492 it had had at least 4 cities of that size. And, of course, without growing towns and cities there was no robust middle class and without a robust middle class there was no backbone for a strong consumer economy, as had happened in Italy, the Netherlands, France and England throughout the 1500s and 1600s.

The third effect was on Spanish industry itself. Before the discovery of the Americas in 1492, Spain had robust industries inherited from the days of Moorish rule—especially in textiles, steelmaking and glass making. The steel of Toledo was renown throughout Europe as the hardest made anywhere, for example. However by 1650 these industries had all but disappeared in Spain. Why? These huge quantities of silver made it easy to buy stuff from abroad and import that instead of having the Spanish government support Spanish companies and industries. Inflation and hyperinflation also deeply discouraged investment in industries as the prices for raw materials in steelmaking and textile making, for example, would wildly swing up and down. This caused a cascade of business bankruptcies. Worse yet, the Inquisition after 1492 had driven out the more commercially-minded Jews and Muslims of the nation. These people took their industrial and commercial skills with them to the Ottoman Empire and the Netherlands, among other nations, leaving Spain bereft of the people most likely to undertake the risks of creating companies and industries. The people left over were thus the ones most wedded to traditional Christian pursuits, like farming, sheep raising for wool production, and ranching. And the Spanish nobility became so used to living off the vast silver proceeds that it looked down on anyone seeking to build up commercial or industrial enterprises, actively starving investment in nascent Spanish industries. This was the opposite of what the nobility in the Netherlands, England and France were starting to do at the time.

Fourth, the vast amounts of silver decoupled the Spanish government from its people. This is the “Dutch disease” that economists always warn about with regards to nations that depend on natural resource revenues for their government budgets. In Spain’s case, the silver allowed the government to not really seek taxes from its people. Taxes allow a government to steady its budget, since it knows how much in tax revenues it will receive per year, and how much it will be spending per year. It provides much-needed budgetary predictability. The Spanish government no longer really did this in the peak of the silver imports in the 1500s and 1600s, so its government budget fluctuated wildly up and down. Of course, vendors to the Spanish monarchy could not depend on such a wildly unpredictable client, so they stopped selling stuff to the crown. These vendors were almost always domestic Spanish industries that could’ve profited from building up the Spanish navy and army, for example. These vendor contracts usually went to foreign manufacturers instead, who provided the finished goods the Spanish government needed through silver payments.

Finally, the lack of budgetary predictability due to almost no taxes coming in meant the Spanish government never built a complex system of debt issuance through sovereign bonds, like the English and Dutch governments had pioneered in the 1600s. Bonds are what made the English and Dutch governments so much more financially powerful than they were considering the size of their economies in the 1600s. That’s because bonds allow a government to take out long-term debt to fund large infrastructure and other projects. It was through bonds that the Dutch and the English were able to build up their huge navies rather quickly. But bonds require a predictable tax system since the tax revenues could be used in the short- and long-term to pay bonds coming due. The Spanish crown under the Hapsburgs had none of this—even if it wanted to take out bonds for long-term investment in the armed forces and infrastructure, the lack of a good tax system meant that it would always default on them, just like it had with the loans it owed to German and Italian banks. Constant default would’ve dried up the market of anyone willing to buy Spanish government bonds. Ultimately this hobbled the Spanish crown’s ability to think strategically and in the long term.

When the Bourbons assumed control of Spain in 1715, they realized that Spain and its empire needed serious economic, budgetary and tax reforms. But the damage had already been done and it was hard to undo all of the economic, social and political distortions caused by this extreme over-reliance on silver shipments from the Americas.

For all these reasons, and more, Spain itself went into steep economic decline starting in the mid-1500s, becoming almost totally dependent on its vast empire in the Americas. Once the riches of its empire were lost in the 1820s and 1830s, Spain could not support itself economically, like France and the UK, and spiraled down into a deep poverty that it took a long time to resolve.

Political Background of the Spanish Decadence
The roots of the steep economic decline that caused the Spanish decadence can be traced back to the marriage alliances between Ferdinand the Catholic and Maximilian of Habsburg. This brought the Habsburg dynasty to the Spanish throne, along with the foreign policy of the Hapsburgs. This foreign policy centered around isolating and surrounding France, Europe's hegemonic power at the end of the Middle Ages, and defense of the Holy Roman Empire and its larger possessions, which included the Netherlands, Austria, Bohemia and Hungary. It was Charles of Ghent, grandson of both monarchs, who brought together the disparate Habsburg inheritances. In 1516 Charles became king of Castile and Aragon, with their American and Italian possessions, as well as lord of the Netherlands. The Austrian, Bohemian and Hungarian territories, the throne of the Holy Roman Empire, a claim to the Duchy of Burgundy, and the sovereignty of Flanders and Brabant passed to Charles in 1519.

This complex inheritance determined the foreign policy of Charles I (or Charles V of the Holy Roman Empire) and his successors, to the complete detriment of Spain and its possessions. Spain and its possessions thus had to face France, Pope Clement VII, the Republic of Venice, England, the Duchy of Milan, and Florence, nations which formed the League of Cognac, to defend the Aragonese possessions in Italy. Spain and its possessions also had face other war fronts with the rebellious German principalities, the Ottoman Turkish threat to the Mediterranean and Hungary, and the growth of Protestantism in Europe. The spread of Protestantism undid the bonds of union that kept the Holy Roman Empire together, reducing even more the functionality of the imperial government. All these problems kept Spain constantly overextended in wars, exhausting her already precarious government budget. This wartime overextension would trigger the infamous sovereign bankruptcies that bedeviled and economically destabilized the Spanish governments of Philip II and Philip III. In addition to these external pressures, Spain also had to face internal problems caused by the War of the Communities of Castile and the Germanías. These rebellions were sparked when the middle nobility of Aragon and Castile revolted against the fiscal exactions suddenly and rudely imposed on them by foreign rulers from Flanders, who had come to Spain with Charles I's court entourage. At the head of this class of new Flemish rulers was the regent Adriano de Utrecht, who ignored, besmirched and belittled both the Castilian and Aragonese Cortes.

Another cause of the decline was an extreme religious intolerance introduced by the two Catholic monarchs, Isabella and Ferdinand, with the imposition of the Catholic Inquisition starting in 1492. This put an end to the peaceful coexistence of Jews, Muslims and Christians that had enriched the peninsular Moorish economy throughout the Middle Ages, making Spain one of the wealthier European regions before 1492. This religious intolerance destabilized the long-term economy of Spain by driving out some of the most entrepreneurial denizens of medieval Iberia, who organized and invested in large commercial enterprises and industrial undertakings, like the steel industry of Toledo and the textile industry of Valencia. With the Muslims and Jews expelled from Spain, these entrepreneurs took their commercial and industrial skills with them, mostly to the more religiously tolerant Ottoman Empire, which welcomed hundreds of thousands of expelled Spanish Jews and Muslims to Istanbul, Thessaloniki, Cairo and other large Ottoman centers of commerce. The more religiously tolerant Netherlands, having rebelled against the Spanish crown, also took in some of these Spanish refugees, enriching Dutch economic activity in the late 1500s and throughout the 1600s.

Political Consequences
This constant warring instigated by Charles I had incalculable economic and human costs that Spain had to bear. The revenues from Spanish wool exports and other Spanish products were transferred from Spain to Flanders, along with silver and gold imports from the New World. Such transfers were earmarked solely to expend on these costly wars of Charles I. Thus investment in the economy of Spain was squeezed out. However, these revenues from Spanish exports and the silver and gold shipments proved insufficient or did not arrive in a timely manner. This forced Charles I to seek numerous enormous loans from German and Italian bankers, which seriously compromised and mortgaged the economic future of Spain. Thus, his son Philip II had to declare bankruptcy three times during his reign, in 1557, 1575 and 1597.

In fact, in addition to the debts Philip II had inherited from his father's wars, but not the imperial title, which passed, along with the German and Austrian possessions, to his uncle Ferdinand (1555). The new king managed, not without difficulty, to definitively remove France from its interests in Italy (Peace of Cateau-Cambrésis, 1559) and to stop the advance of the Ottomans in the Mediterranean (battle of Lepanto, 1571). Likewise, as grandson of John III of Portugal, he incorporated Portugal and its colonies to Spain (1580), with which the Spanish overseas empire acquired colossal dimensions, although it was also going to be even more difficult to defend. Less fortunate in the fight against the Protestants, it could not prevent the secession of the United Provinces of the north of the Netherlands, in 1579, supported by England and the numerous enemies of the Spanish hegemony, nor contain the maritime expansion of England that defeated the Invincible Armada in 1588, and maintained piracy in its service. These latter failures marked the beginning of Spanish Decadence, although its hegemony in Europe was still maintained for some time. But the Castilian economy, the mainstay of these efforts, was already ruined.

Philip III
The decline worsened under the reign of Philip III, who could not continue the very costly foreign policy of his predecessors due to lack of resources. The income of the crown was not small, but the wars consumed that and much more. This economic precariousness was aggravated by the expulsion in 1609 of the Moors, the population descended from the Muslims that still remained in the Peninsula, the main support of the agricultural economy in Valencia, in the crown of Aragon, although some supported the Barbary piracy that ravaged the coast.

The Moors were rejected by the crown, which saw with concern the possibility of a new uprising that acted as a fifth column of the Berbers or the Turks. They were detested by the Church, which doubted the sincerity of their conversion, but their expulsion was an important loss of useful "arms" for the national economy. The measures that from the power were taken to face the lack of liquidity, as sale of positions or the devaluation of the currency, did not do but aggravate the situation, establishing the corruption and the absenteeism in the administration, distorting dangerously the mercantile exchanges.

Philip III lacked the capacity of his father and grandfather, and delegated the government in men of confidence. The figure of the valido was thus instituted. Both the Duke of Lerma, and his son and successor in the position, the Duke of Uceda, were revealed as mediocre governors, rather more worried about increasing their personal fortune than to solve the serious problems of the monarchy, that from 1618 was embarked in the Thirty Years' War, supporting their relatives, the Habsburg emperors.

Philip IV
The ascent to the throne of Philip IV (1621) meant the assumption of the tasks of government by a new valide, the Count-Duke of Olivares. A member of a minor branch of an important noble lineage, he also took care to increase his personal income and possessions, although to a lesser extent than his predecessors. In fact, Olivares did have political ambitions and statesmanship. In the Grand Memorial he presented to the young Philip in 1624, he outlined his program. Its objective was to ensure that the monarchy effectively unified all the economic, human and military resources of its various kingdoms (Union of Arms, 1626), to use them to renew its glory, which basically meant spending them in the new wars in which it was engaged: with Holland and England for colonial dominion and with various European states, Richelieu's France and Louis XIII in the shadows, for Hapsburg supremacy on the continent. This orientation meant disrupting the political complex that constituted the very essence of the monarchy founded by the Catholic Monarchs, which was born of the confederation of different kingdoms that retained their legal, economic and administrative peculiarities. And that was something that their subjects were not willing to tolerate, especially in the crown of Aragon, since in the crown of Castile the rebellion had been crushed by Charles I.

The decade of 1640 was disastrous for Olivares' rule, and threatened to collapse the very unity of the entire Spanish Monarchy. The Portuguese installed the Braganza dynasty, naming John IV king, tired of suffering in their colonies the consequences of the European conflicts (1640). There was also an uprising in Catalonia (1640–1652) which almost separated this territory from the Spanish Monarchy and incorporated it into France, which did manage to annex the trans-Pyrenean counties of Roussillon and Cerdanya. Conspiracies and secessionist uprisings also broke out in Andalusia (1641), Sicily (1646–1652) and Naples (1647–1648). Meanwhile, on the European war scene, the battle of Nördlingen (1634) represented one of the last victories of the Spanish armies. From that moment on, fortunes became adverse for the Habsburg coalition in the Thirty Years' War, complicated by the official entry of France into the conflict in 1635. The year 1643, with the defeat by the French at Rocroi and the fall from grace of Olivares, marked the turning point, from which everything would go from bad to worse. The economy again suffered from the war efforts, complicated by bad harvests, the continuous devaluations of the currency and the alienation of positions. On the other hand, the demographic problem caused by the death or absence of so many young men became more acute. Four bankruptcies were declared (1627, 1647, 1656 and 1662), while the possessions and trade with America suffered the harassment of the English and Dutch, and France expanded at the cost of absorbing the Spanish possessions on its borders. The Treaty of Münster (1648) and the Treaty of the Pyrenees (1659) ratified the end of Spanish hegemony in Europe, which passed the baton to the powerful France of Louis XIV.

Charles II
The death of Philip IV meant the enthronement of Charles II the Bewitched, so called because of his symptoms of mental and physical retardation. His reign represented the lowest point of the Spanish Decadence, with a court full of intrigues in which during ten years the regent, the queen mother Mariana of Austria and her confessor, the German Jesuit Nithard, who pretended to act as valid, disputed the power with Don Juan José of Austria, bastard son of Felipe IV. However, in the midst of these problems and the harassment suffered by the Spanish possessions, many of which fell into the hands of his enemies, the first glimpses of recovery took place. When Carlos was declared of age, aware of his limitations, he entrusted the government to the Duke of Medinaceli and the Count of Oropesa. The administration and finance reform projects, proposed by the arbitrists and applied, in part, by the new valides, would be the prelude to the important changes introduced in the 18th century by the enlightened ministers of the Bourbon dynasty.

The childless death of Charles II in 1700, opened a period of uncertainty. The will of the deceased named Philip of Anjou, great-grandson of Philip IV of Spain and grandson of Louis XIV of France, as heir. But there were other candidates with rights, such as Ferdinand of Bavaria and, above all, Archduke Charles of Habsburg, who did not accept this solution and won supporters in Spain. Finally, after the War of the Spanish Succession (1701–1714), Philip of Bourbon, supported by his powerful grandfather, became the founder of a new dynasty in Spain.

Society and culture
The reign of the House of Austria brought serious social problems to Spain:


 * Religious persecutions due to intolerance. The Inquisition fostered corruption and delation, and was a contributing factor to Spanish Decadence. It became a method to destroy enemies, jealous friends and even to settle property disputes or to gain influence.
 * Decline of industries of all kinds, due to the sale of raw materials to obtain liquidity quickly, and the great increase in imports, fatal for the loom industry.
 * Desertification of Castile, due to the support given by Philip II to the Mesta to obtain a greater quantity of merino wool, so that the uncontrolled transhumant grazing ended with the cultivated fields by not respecting the royal cattle trails.
 * Abandonment of large areas due to several causes: emigration to America, the wars and expulsion of the Moors and the half million victims of the great plague of 1598–1602.
 * Bureaucracy: The expansion of the Spanish Empire in the New World was carried out from Seville. The control of the Americas was carried out by viceroys that functioned with effective autonomy. The Habsburgs, a family that had traditionally ruled over several non-contiguous dominions and had been forced to delegate autonomy to local administrators, duplicated these feudal policies in Spain, particularly in the Basque Country and Aragon. That way, taxes, infrastructure improvement and internal trade policies were defined independently by each region, maintaining internal customs barriers and tolls. The Count-Duke of Olivares considered it essential that the bureaucracy be centralized, and even supported the complete union of Portugal with Spain, although he never had the opportunity to make his ideas a reality. After Charles I abdicated, the bureaucracy had become ever larger and more corrupt until, by the dismissal of Olivares in 1643, it became obsolete.

From the cultural point of view, the sciences shone, such as Jerónimo de Ayanz y Beaumont with his inventions, Francisco Hernández de Toledo and his beginning of taxonomy, Juan de Herrera and the foundation in 1582 of the 'Academia Real Mathematica', the School of Salamanca with its philosophical, theological and economic theories, in addition to its leading role in the creation of the Gregorian calendar, Domingo de Soto and his postulates on gravity or Jerónimo Muñoz and his description of the supernova SN 1572.

In the arts, especially painting with authors such as Velázquez, Claudio Coello, Bartolomé Murillo and others. There were also great writers, poets and theaters or historians such as Cervantes, Lope de Vega, Juan de Mariana, Quevedo or Calderón de la Barca, which has led to call the time of Philip IV the Spanish Golden Age.