THE DECLINE OF SPAIN
By the time of Philip II spain had acquired a vast empire through military and marital expansion. Isabella and Ferdinand married in 1469 uniting castile with Aragorn while the Moorish granada was captured in 1492. Spain held portions of Milan, naples and sicily and embraced the Netherlands. It captured Portugal in 1580. Its resources outside included parts of Africa and the Americas as well as those colonial possessions that came from the capture of Portugal. For a brief period England and spain were united when queen mary married Philip. The Spanish dominance was maintained until the time the Dutch ,the English and the French shook it.
Herbert Heaton in his book “economic history of euroep” describes Spain as a country suffered from some inherent shortcomings. It was covered by great expanses of bleak plateau and rough mountains, sparse rainfall as well as extremes of climate. Moreover Human limitations included strong sectional and racial divisions. Added to this was spain’s feudal and military ardour and the crusading zeal of its monarchs , such as Philip II. Spain had very little to look for within its own territory.
Spain paid a lot of attention to its merino sheep whose woolwas in high demand. The monopoly over these sheep was maintained till the eighteenth century. Spain also focused on the irrigated cultivation of wine,olive,fruits, rice and sugar Barcelona emerged as a major industrial town in Europe. In 1500 Spain housed almost 7million people. To their ruler was now added the sway over other parts of Europe and over the trans-atlantic empire. The first effect of this was to give a powerful stimulus to Spanish economy. The second was to involve the country in diplomatic and dynastic disputes and thus in military and naval enterprises which swallowed most of Spain’s revenue. As the governments means declined it became harder to maintain the Spanish empire as a great power in Europe.
If there were positive returns for spain it was due to industry fed by Spanish colonies. Most of Spanish commerce expanded under this colonial impetus. By 1580 spanish merchant marine became the second largest in Europe. This period of expansion and prosperity came to an end during the last years of the century. After 1600 agriculture, industry and commerce declined fast and far. By the eighteenth century poeverty became widespread.
The severe plagues between 1600 and 1650, Heaton argues, caused a considerable damage. People moreover were opposed to the church as they felt it was absorbing to great a share of profit. One of the most disastrous causes was the heavy burden imposed on the empire’s wealth by its foreign policy- the attempt to protect the true religion from the protestants and the muslims cost a lot and was draining on royal resources. The colonial revenue did not suffice and taxes were made exhorbitant. The royal treasury went bankrupt in 1596, 1607, 1627 and 1647. No one in Seville in fact would advance money to the king- so low was the royal credit.
Royal bankruptcy forced the monarchs of spain after Philip II(who opposed debasement as vehemently as Protestantism) to debase currency drastically. This paired with military conflict such as the thirty years was and with rebellion in Portugal,Italy and spain aslong with pestilence ; dealt a crushing blow to the Spanish economy. Spanish monarchs such as Philip IV alternated reckless inflation with penitent deflation- this wrecked the Spanish economy.
The final and cruching factor responsible for the Spanish demise, according to heaton, was the decline in income from the Americas. Income from the Americas was drawn through five sources: The quint and other royal revenues, Interest from capital invested, Net earnings from shipping services, profits made on goods sent to America and produce obtained thereof, profits on commodities produced in spain for export. As Output of precious metals decline the quint fell with it. The interest sent back to Spanish investors was probably grew small.
Three organizations that took care of trade in the colonies: The council of the indies that framed and administered policy, the casa de contraction which checked maintainence of policy and issued liscences and the merchant guild which was the representative mouthpiece of the merchant. The first two organizations were diligent in their support to Spanish colonial policy but were constantly handicapped by corruption and thus were unable to implement the commercial policy in full.
Under Charles V the commercial policy was liberal for a brief period and allowed the entry of foreign trade. However, Philip II besieged by rebellion within and without maintained a strict and restrictive policy with regard to foreign trade. Trafficking with foreigners was prohibited and the death penalty was issued for those that defied the rule. All the same the Spanish due to the advance in prices were unable to keep up with colonial demands and a large part of the goods exported were foreign and thus a large part of silver flowed to foreign countries. In her hours of weakness spain granted not only the acquisition of land by foreigners but also granted them trading priveleges and favourable tariffs. Soon these men entered into partnerships with the Spanish who often contributed nomore than the name of the firm. This further diverted Spanish finance away from the mainland.
Where some foreigners were content to deal with America through spain others established illicit trading links directly with the colonists. They got their goods more cheap if no duties had to be paid. Miners too preferred selling bullion to the foeigners as they received greater returns and did not have to pay the quint. Large amounts of gold were shipped out as the foreigners required the gold desperately and spains ocean shipping was inadequate. Though instances of piracy were not absent- they were spectacular more than they were substantial and the greatest part of the revenue was still derived from illicit trade. Spanish colonial ships joined in the illicit trade to bringing drugs, dyes and dollars to America and going back heavy laden. The English French and dutch established themselves in islands close to the mainland. Spain could do little to stifle this illeagal traffic. By 1750 england was the best Spanish customer and had a number of wholesale houses in spain, which the Spanish were forced to acquiesce to due to the lack of possession of industry in their own land.
Thus while heaton argues for a series of economic and political factors being responsible for the Spanish demise, Cipolla looks at the Spanish attitude. He argues that Spaniards adopted a lacadisical and often nonchalant attitude attitude adopted towards production. There was a massive influx of bullion in the sixteenth century which resulted in increase in demand. However the bottlenecks in Spanish industry such as the lack of labour resulted in the rise in prices due to inadequate supply. The demand for goods was met through foreign imports which came in at high prices. Despite these prices the import of goods was viewed with a certain irrational pride- spain was beyond production, a petty activity reserved for the lower countries. Though initially suppliers to meet demand in spain used contraband , soon Spanish complacency led to the opening of markets to all producers. Spain was like “like an heir endowed with an eccentric will” (tawny).The riches of America while providing spain purchasing power, stimulated the economic development of Holland, England, france and other European countries.
By the seventeenth century however Spanish silver had declined partly because of diminishing production and partly because of increasing freedom of the colonies which now began to produce more of their own goods. In the meanwhile half a century of artificial prosperity induced may Spaniards to give up land and hard labour and take on the role of an semi-literate proletariat who scorned productive industry. Spain of the seventeenth century lacked entrepreneurs and artisans but had an overabundance of lawyers, beauracurats and preists. Thus the country sank into decline.