How the West Won: The Neglected Story of the Triumph of Modernity (43 page)

How had such a level of Spanish vulnerability come to pass?

Financial Ruin

Despite the torrent of gold and silver from the New World, the wealth of the Spanish Empire was largely illusory given its staggering debts. The problems began with Ferdinand and Isabella, who never managed to balance their budgets. Charles V assumed their substantial debts at his coronation and expanded them on a properly imperial scale, starting by borrowing more than a half million gold guilders from the banker Jakob Fugger to gain the Holy Roman Emperorship. This, too, was but a drop in the bucket. During his reign Charles secured more than five hundred loans from European bankers, amounting to about 29 million ducats.
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Much of this amount still had not been repaid when his son Philip II ascended to the throne in 1556, and a year later Philip declared bankruptcy. Nevertheless, only five years later debt was again so high that the empire paid out 1.4 million ducats—more than 25 percent of the
total annual budget—as interest on current loans.
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By 1565 the imperial debt in the Low Countries alone stood at 5 million ducats, and interest payments plus fixed costs of governing produced an additional deficit of 250,000 ducats a year.
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The same pattern held for the empire as a whole—debt dominated everything. During the first half of the 1570s, Philip II’s revenues averaged about 5.5 million ducats a year, while his total expenditures often nearly doubled that amount, with interest on his debts alone exceeding 2 million a year.
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No one was too surprised when again in 1575 Philip disavowed all his debts, amounting to about 36 million ducats. By doing so, however, he left his regime in the Netherlands penniless. As his governor-general complained, “Even if the king found himself with ten millions in gold and wanted to send it here, he has no way of doing so with this Bankruptcy.”
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To send it by sea was far too risky. Only a few years before, in 1568, the Spanish had tried to sneak four small coasters with 155 chests of ducats to Antwerp to pay the Duke of Alva’s soldiers. But the English intercepted the boats, and most of the cash ended up in Queen Elizabeth’s treasury.
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To send money by a letter or bill of exchange also was impossible, because Spanish bankers in the Netherlands could no longer pay such an amount, and other bankers would not honor Spanish credit. Eventually the northern Netherlands was lost in large part for lack of money to pay the troops on time. The empire struggled through many subsequent bankruptcies.

Backward Spain

Since the start of the seventeenth century, Western historians have devoted immense effort to explaining the “decline of Spain.” The English traveler Francis Willughby wrote in 1673 that Spain had fallen on bad times because of: “1. A bad religion. 2. The tyrannical Inquisition. 3. The multitude of Whores. 4. The barrenness of the Soil. 5. The wretched laziness of the people very like the Welsh and Irish … 6. The expulsion of the Jews and Moors. 7. Wars and plantations.”
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Forty years later the Florentine ambassador to Spain noted that “poverty is great here, and I believe it is due not so much to the quality of the country as to the nature of the Spaniards, who do not exert themselves; they rather send to other nations the raw materials which grow in their kingdom only to buy them back manufactured by others.”
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Such views persisted. As the distinguished historian J. H. Elliot summed up in 1961, “It seems improbable that any account of the decline of Spain can substantially alter the commonly accepted version
of seventeenth-century Spanish history, for there are always the same cards, however we shuffle them.”
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But then Henry Kamen produced a whole new deck:
Spain never declined because it never rose!
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Kamen’s brilliant revision of the conventional wisdom turns on a crucial distinction between Spain and the Spanish Empire. The empire was a
dynastic
creation, not one built by Spanish expansion or conquest, aside from its foothold in the New World. Spain’s subsequent contributions to the empire consisted mainly of military recruits and gold and silver brought from the New World. These massive amounts of specie brought no significant benefits to Spain itself; rather, they caused inflation throughout western Europe and financed the empire’s large, well-equipped armies to fight the French, Protestant German princes, various Italians, the Dutch, and the English. In fact, the costs of empire bled wealth from Spain, which remained an underdeveloped, feudal nation. Once Spain’s backwardness was no longer obscured by the grandeur of the empire, it was incorrectly seen as a decline from better times.

Impoverished Spain depended on imports not only for manufactured products but even for sufficient food. Spanish agriculture was hampered by poor soil and by the strange institution known as the
Mesta
. Spanish sheep grew high-quality fleeces—not as good as those of English sheep but better than could be found elsewhere—and Spain had, in fact, replaced England as the source of wool for the Flemish and Italian cloth industries. The
Mesta
was an organization of sheep owners who had royal privileges to sustain migratory flocks of millions of sheep. The flocks moved all across Spain—north in the summer, south in the winter—grazing as they went, making it impossible to farm along their routes.
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When conflicts arose with landowners, the crown always sided with the
Mesta
on grounds that nothing was more important to the economy than the wool exports. The government’s protection of the
Mesta
discouraged investments in agriculture, so Spain needed to import large shipments of grain and other foodstuffs.
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Geography also made it difficult to unite a Spanish nation or even to carry on domestic commerce. Rough mountain ranges created easily defended enclaves (as Wellington was to demonstrate during the Napoleonic Wars), but these same natural barriers greatly handicapped commercial transport and, as Elliot put it, “added terrifyingly to prices.”
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For example, it cost more to transport spices from Lisbon to Toledo than it did to buy the spices in Lisbon.

As for manufacturing, Spain had little, and most of what did exist soon perished when the flood of gold and silver from the Americas allowed far greater reliance on imports. Nor did Spain develop much in the way of an indigenous merchant class, its commercial life remaining in the hands of foreigners, most of them from Italy. This was a source of pride among leading Spanish citizens—known as the hidalgos. Manufacturing and commerce were for inferior people and nations, so let others toil for Spain, was how they put it.
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So while the empire dominated northern Europe, Spain itself remained frozen in feudalism and produced mainly young men, many of them from the nobility, with no opportunities except as professional soldiers. These well-trained, long-service, well-equipped Spanish soldiers were the most feared and formidable fighting force in Europe. But they fought for the empire, not Spain. Their victories were far from home—in the Low Countries, in Italy, and along the Rhine. And the means to pay them came thousands of miles across the Atlantic.

Spain could not even arm these fine soldiers. It had no weapons factories; it made no gunpowder; it cast no cannons or even any cannonballs. When an urgent shortage of balls arose in 1572, Philip II wrote to Italy asking that two Italian experts in casting cannonballs be sent at once to Madrid, because “there is no one here who knows how to make them.”
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This led nowhere. When the huge Armada sailed against England in 1588, all its guns and cannonballs were imported, as was most everything else aboard, including the supply of ship’s biscuit. Of course, the ships weren’t built in Spain either.

Colonial Drift

Although the defeat of the Armada had been a terrible blow, Spanish imperialism suffered more important defeats elsewhere. In 1594 the Dutch began to intrude in the Caribbean. The English soon did likewise, and in 1605 they laid claim to Barbados in the West Indies. The New World no longer was uncontestedly Spanish. Nor was it any longer an unlimited source of silver. Costs of mining had risen substantially as it became necessary to work deeper veins. In addition, the demand for Spanish imports began to fall sharply in the Americas. The problem was that Spanish colonists had essentially re-created the Spanish economy. They now produced their own grain, wine, oil, and coarse cloth equal to that they had long imported from home. Spanish merchants, who had
long prospered from trading with the Americas, soon found themselves overstocked. As Elliot put it: “The goods which Spain produced were not wanted in America; the goods that America wanted were not produced in Spain.” Beginning in the 1590s, Spain became less important to the economies of its American colonies, and Dutch and English interlopers became more active.
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The Spanish were especially vulnerable to these incursions because their colonies were so thinly settled. Perhaps the most remarkable aspect of Spanish settlement of the New World, especially from early in the sixteenth century until well into the nineteenth, is how few came over. Spanish emigrants to the New World were required to register at the House of Trade in Seville, and during the course of the entire sixteenth century only about 56,000 did so. At one time historians assumed that this total was exceeded many times over by illegal immigrants, but it now is accepted that the number of unregistered emigrants was small.
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Likewise, the estimate that somewhat more than 300,000 Spaniards went to the New World from 1500 to 1640 is now thought to be much too high.
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But even this figure would have left most of Latin America unsettled by Europeans.

There were many reasons why the Spanish did not voyage west in large numbers. For one thing, unlike England, Spain was not abundant in “shopkeepers” or people having the outlook required to become successful smallholders. Spain was a land of huge estates and of agricultural laborers only slightly above serfdom. Nor were there glittering prospects of becoming a successful shopkeeper or smallholder in a New World that was also dominated by feudal landowners—although the prospects were more promising there than in Spain.

Second, the voyage was extremely dangerous. Many died aboard ship from various diseases or from running out of water. Also, the Atlantic was wide and stormy, and Spain’s inferior ships, poor maintenance, and relatively unskilled sailors meant that large numbers of ships were lost. Between 1516 and 1555 about 2,500 ships left Spain for the Indies. Of them, about 750—or 30 percent—were lost.
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In addition, most of those who did emigrate did not plan to stay; they intended merely to sojourn in pursuit of sudden wealth. Many, perhaps most, of those who hit it rich returned to Spain, where they expressed immense relief to be back. Correspondence from this era shows that those who traveled to the colonies often expressed regrets over having come.

Finally, the authorities in both Spain and the colonies restricted immigration. Because the Spanish colonial economies were fueled mainly by the mining and exporting of gold and silver, the authorities regarded additional population as doing nothing but adding to the costs of subsidizing life in the colonies. To limit newcomers, whenever possible the authorities refused entry unless one had relatives already established in a colony.

Emigrants from Britain came to the British colonies in North America in far greater numbers than came to Latin America from Spain—an estimated 600,000 between 1640 and 1760.
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Many others came from the Netherlands, France, Germany, and other parts of Europe. They did not come in search of feudal estates or to mine gold and silver. Most of them came because of the high wages prevailing in the colonies and the extraordinary opportunities to obtain fertile farmland or to set up a workshop or store. They had no interest in going back. Moreover, because they came in British ships, and began coming a century later, their voyages were safer, less debilitating, and shorter. Although most became smallholders, the droves of immigrants to the northern colonies did not generally become subsistence farmers.
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Their family farms were huge by comparison with European peasant plots, and they shared in the profits from exporting their crops and hides to Britain as well as feeding the nonagricultural colonists. In contrast, the Spanish colonies imported not only manufactured goods but also large amounts of food, paid for mainly with precious metals from mines, many of which the Spanish crown owned outright.

Of course, the Spanish Empire didn’t just drop dead, or even stop fighting. In 1590 and again the next year imperial troops in the Netherlands turned south and fought unsuccessful campaigns against the French. And soon these same northern armies were embroiled in the Thirty Years’ War. But the news, both economic and military, continued to be mostly bad. In 1596 the empire once again declared bankruptcy, then again in 1607, 1627, 1647, and 1653. In 1638 the French captured the fortress at Breisach on the Rhine, thus closing the Spanish Road from Italy to the Netherlands. Thereafter, Spanish troops and supplies could reach the Netherlands only by sea, subject to attack by both the English and the Dutch navies.

By this time the tide had so irrevocably turned that people now began to publish treatises to explain the “decline of Spain.” But it was the empire that had declined; Spain had never risen. As Douglas C. North
explained in a book that helped win him the Nobel Prize in economics, Spain’s “economy remained medieval throughout its bid for political dominance. Where it retained political sway, as in the Spanish Netherlands, the economy of the area withered.”
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