Spanish Decline

In the 16th century, Spain had developed the characteristics of an absolutist government:

        1. permanent bureaucracy of nobles under a powerful king 

2. standing army

3. national taxes (servicios) which fell on the poor

Spain established an absolutist government not only in Spain itself, but also in the South American colonies, such as Peru. The majority of the national wealth in Spain came from exploitation of gold and silver found in these colonies, and from sale of cloth, grain, oil, and wine to the colonies. This combination allowed Spain to become extremely wealthy and powerful. 

However, by the 17th century, several factors forced Spain to become a second-rate power:

1. lack of a middle class as a result of the expulsion of Moors and Jews 

2. agricultural crisis and population decline 

3. failure of enterprises 

4. the English and the Dutch began trading with the Spanish colonies, disrupting the Spanish economy

5. the seemingly inexhaustible supply of silver began to decline  

Despite these economic problems, the monarchy still spent lavishly, costs always exceeding the income. Inflation, as a result of the influx of gold and silver, prevented Spanish exports from competing in international markets. Additionally, nobles, unwilling to accept the economic problems, increased rents on their estates, as well as taxes. This caused many peasants to flee the country.
 
                                          Peasant Life

     Vs.

                                                  Noble and Royal Life 

The Hapsburg kings (Philip III, Philip IV,  Charles II) of the 16th century failed to help these problems because of their weakness of character. "Their faces--small, beady eyes; the long noses; the jutting Habsburg jaws; the pathetically stupid expressions--tell a story of excessive inbreeding and decaying monarchy" (547).
                                                   Charles II of Spain

 

These factors all led to the decline of the once seemingly invincible Spain. "Seventeenth-century Spain was a victim of its past. It could not forget the grandeur of the sixteenth century and look to the future" (547).  Just as Don Quixote lived in a world of dreams, searching for glory, Spain lived in the world of its past, unable to keep up with the 17th century world.