Stagnation and Decline in Spain

Spain's fictional nobleman Don Quixote, exceedingly idealistic and unrealistic (illustrated by Antoine Johannot)

Spanish-Habsburg empire, 1648, in green. The Dutch Republic, recently independent, in red. (Wikimedia Commons)

While the United Netherlands had been growing economically and liberalizing, Spain had been weakening – despite its imports of silver and gold from the Americas. With their activities and trade abroad, Spain's social structure remained basically unchanged. Into the 1600s its landed aristocracy held on its powers, and many if not most Spaniards clung to the values of the aristocracy. There was the belief that business was fit only for Jews, Arabs and other foreigners. For employment, people looked to the Church, to the imperial court and to governmental bureaucracy. Rather than bourgeoisie's interest in frugality, those with wealth squandered it on luxuries for the sake of prestige, and Spain's Habsburg rulers squandered wealth fighting wars for the sake of prestige and their Catholic faith.

Rather than being interested in balancing its financial books, the king's government was engaged in deficit spending. The precious metals gathered from the Americas was used to purchase goods from other countries. Much of the coffee and tobacco that Spain took from the Americas it consumed rather than sold to other countries. It fell to Dutch merchants to buy goods in Spanish ports and transport them elsewhere, including to the colonists in the Americas. And the English and French were also selling goods to the colonists in America.

Spain's population declined as a result of its wars and migration to the Americas. And Spain had lost the skills of Jews and Arabs driven from the country in the early 1600s. The Christians who replaced them were unable to maintain the intricate irrigation systems and other features of what had been a highly productive Moorish agriculture. Largely, Spain's agriculture was in the hands of estates owned by the aristocracy and the Church. These were absentee landlords, who were more interested in prestige than agricultural production. Their intermediaries lent the land in small parcels to sharecroppers or tenants on short leases, leaving those who worked the soil without incentive to advance agriculture. Spain became more dependent upon importing wheat and other grains from abroad. And many of Spain's peasants fell into debt peonage.

Spain's nobility was one-tenth of its population. They spent some of their fortune seeking government office, and in government, it is said, were thirty parasites for every man who did an honest day's work. Some of the nobility maintained customs barriers as a source of revenue, taxing commerce and driving up prices. The government taxed the working poor more than it did the wealthy, while the idle, vagabonds and discharged soldiers swarmed into the cities and about the imperial court. Harvests in northern and central Spain were gathered by French workers, doing work that the Spaniards preferred not to do and taking their pay back with them to France. Trade and industry in Madrid were pursued largely by Frenchmen, about 40,000 in number, who claimed to be Flemish or Burgundian rather than Frenchmen, in order to escape a special tax imposed upon the French.