1. Decline of Spain Unit 2. Chapter 15.2

2. What was the truth about Spain at the end of Philip II’s reign and the beginning of Philip III? By the 17 th Century, the nation which had been the most powerful started to decline fast. There were many factors which contributed to downfall of Spain We will look at the social, economic and political

3. Social Issues DISUNITY –Aragon and Castile (1469) / Aragon vs. Castile Legal systems and internal government of each was still very separate (courts etc.) Aragon was divided into Aragon Proper, Valencia, and Catalonia (Each had its own institutions, customs and identity –Massive overseas empire (Americas, Far East)

4. Spanish Empire

5. Taxation (Economic) The empire had considerable resources Unable to exploit because local interests were reluctant to pay for the costs of other territories. Castilian tax- alcabala (10% sales tax) –Inflation (people couldn’t pay) –Collection went to local nobles rather than crown –They then began to tax basic food, meat and wine (much of which fell on peasants) Silver mines declined in productivity

6. Registered Bullion Imports in kilos 1531-15802,628,000 1581-163011,461,000 1631-16602,896,000

7. Taxation (Cont) Uneven distribution –Fell on poor more than rich –Heavily on farmers –On Castile more than Aragon All the while their spending was out of control (Like the USA TODAY!)

8. DEBT Borrowed money (with interest bearing bonds) They assigned revenues from future years to the bankers to pay for the current defense contracts (Sound familiar)

9. DEBT PRINTED NEW MONEY!!

10. SPANISH NOBILITY

11. #2 Philip III -Lazy -Allowed duke of Lerma to run the show -Appointed friends and relatives to high positions -No problems solved -Fascinated with his court and also miracle working relics -Fathered 8

12. Philip IV -Relied on Count of Olivares (Sully, Richelieu) -Some reforms made, but it was for the benefit of his monarchy not Spain

13. Summary

14. SPAIN’S ECONOMY No Middle Class –Jews and MOORS gone –Decline in population (2million) INFLATION (PRICE REVOLUTION) –Hurt domestic economy, unable to export Catholic Church (most prosperous business in Spain) No trace of Capitalism Little industry (outproduced by Dutch and English) Nobility –Poor work ethic –Refused to work and cont. their lifestyles –Tax exempt Taxes on Peasants

15. Military and Political Poor leadership –Philip III, IV and Charles II lethal Loss of 30 Years War –Lost Netherlands –Lost Portugal Treaty of Pyrenees (1659) End of Spain as Great Power –War w/ France continued 11 years after Westphalia –Spain Lost Netherlands and Catalonia in N. Spain Navy by 1700 had only 8 ships (army mercenaries) War of Spanish Succession resulted in loss of most European Possessions and the ASIENTO