The Decline of the Spanish Empire: Spanish Political Economy in the 17th Century

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Partial silver 2 Reales (the Real was the standard Spanish denomination from the late medieval period to the 19th century) that depicts Philip III of Spain (1598-1621). It is dated 1599 with an S on the back side to indicated minting in Seville.

During the early 17th Century, Europe underwent a large-scale currency crisis due in large part to the near constant state of war during the century. In no place was this more apparent than in Spain where the real (the Spanish currency) had undergone tremendous inflation as result of the importation of silver from Spain’s New World holdings that had flooded the market with new coins (Elliot, 329). To make matters worse, the imports of silver began to drastically decrease during the 30 years war as a result of overexploitation in America, repeated appropriation by the Spanish government, and the resultant lack of confidence among Spanish merchants (Elliot, 339). These factors led to a decrease in Spain’s power in the Atlantic world during this period. One of the clearest examples of this diminished power was Spain’s inability to successfully govern Brazil despite controlling Portugal. They were repeatedly unable to wrest control from the Dutch who had controlled Brazil since 1630 (Elliott, 333).

    These circumstances had profound impacts on Spain that forever changed the power structure of Europe and the Atlantic World. The economic breakdown of Spain coupled with its weak monarchy led to an increased fragility in the framework of the already tenuous monarchy. Disagreements about taxes, protection, and government control led to to unrest and revolt in many Spanish provinces. The loss of Portugal in 1640 as result of an internal revolt was one of the final nails in the coffin of Spanish dominance in the Atlantic World (Cowans, 180). Portugal went on to become a key player in the slave trade and one of the strongest maritime powers during the remainder of the 17th century, eclipsing the former power of Spain.  

The Decline of the Spanish Empire: Spanish Political Economy in the 17th Century