The Rise and Fall of the Great Powers (13 page)

The Netherlands became, of course, an even greater drain upon general imperial revenues. In the early part of Charles V’s reign, the States General provided a growing amount of taxes, although always haggling over the amount and insisting upon recognition of their privileges. By the emperor’s later years, the anger at the frequent extraordinary grants which were demanded for wars in Italy and Germany had fused with religious discontents and commercial difficulties to produce a widespread feeling against Spanish rule. By 1565 the state debt of the Low Countries reached 10 million florins, and debt payments plus the costs of normal administration exceeded revenues, so that the deficit had to be made up by Spain.
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When, after a further decade of mishandling from Madrid, these local resentments burst into open revolt, the
Netherlands became a colossal drain upon imperial resources, with the 65,000 or more troops of the Army of Flanders consuming one-quarter of the total outgoings of the Spanish government for decade after decade.

But the most disastrous failure to mobilize resources lay in Spain itself, where the crown’s fiscal rights were in fact very limited. The three realms of the crown of Aragon (that is, Aragon, Catalonia, and Valencia) had their own laws and tax systems, which gave them a quite remarkable autonomy. In effect, the only guaranteed revenue for the monarch came from royal properties; additional grants were made rarely and grudgingly. When, for example, a desperate ruler like Philip IV sought in 1640 to make Catalonia pay for the troops sent there to defend the Spanish frontier, all this did was to provoke a lengthy and famous revolt. Portugal, although taken over from 1580 until its own 1640 rebellion, was completely autonomous in fiscal matters and contributed no regular funds to the general Habsburg cause. This left Castile as the real “milch cow” in the Spanish taxation system, although even here the Basque provinces were immune. The landed gentry, strongly represented in the Castilian Cortes, was usually willing to vote taxes from which they were exempt. Furthermore, taxes such as the
alcabala
(a 10 percent sales tax) and the customs duties, which were the ordinary revenues, together with the
servicios
(grants by the Cortes),
millones
(a tax on foodstuffs, also granted by the Cortes), and the various church allocations, which were the main extraordinary revenues, all tended to hit at trade, the exchange of goods, and the poor, thus spreading impoverishment and discontent, and contributing to depopulation (by emigration).
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Until the flow of American silver brought massive additional revenues to the Spanish crown (roughly from the 1560s to the late 1630s), the Habsburg war effort principally rested upon the backs of Castilian peasants and merchants; and even at its height, the royal income from sources in the New World was only about one-quarter to one-third of that derived from Castile and its six million inhabitants. Unless and until the tax burdens could be shared more equitably within that kingdom and indeed across the entirety of the Habsburg territories, this was virtually bound to be too small a base on which to sustain the staggering military expenditures of the age.

What made this inadequacy absolutely certain was the retrograde economic measures attending the exploitation of the Castilian taxpayers.
⁴⁸
The social ethos of the kingdom had never been very encouraging to trade, but in the early sixteenth century the country was relatively prosperous, boasting a growing population and some significant industries. However, the coming of the Counter-Reformation and of the Habsburgs’ many wars stimulated the religious and military elements in Spanish society while weakening the commercial ones. The economic
incentives which existed in this society all suggested the wisdom of acquiring a church benefice or purchasing a patent of minor nobility. There was a chronic lack of skilled craftsmen—for example, in the armaments industry—and mobility of labor and flexibility of practice were obstructed by the guilds.
⁴⁹
Even the development of agriculture was retarded by the privileges of the Mesta, the famous guild of sheep owners whose stock were permitted to graze widely over the kingdom; with Spain’s population growing in the first half of the sixteenth century, this simply led to an increasing need for imports of grain. Since the Mesta’s payments for these grazing rights went into the royal treasury, and a revocation of this practice would have enraged some of the crown’s strongest supporters, there was no prospect of amending the system. Finally, although there were some notable exceptions—the merchants involved in the wool trade, the financier Simon Ruiz, the region around Seville—the Castilian economy on the whole was also heavily dependent upon imports of foreign manufactures and upon the services provided by non-Spaniards, in particular Genoese, Portuguese, and Flemish entrepreneurs. It was dependent, too, upon the Dutch, even during hostilities; “by 1640 three-quarters of the goods in Spanish ports were delivered in Dutch ships,”
⁵⁰
to the profit of the nation’s greatest foes. Not surprisingly, Spain suffered from a constant trade imbalance, which could be made good only by the re-export of American gold and silver.

The horrendous costs of 140 years of war were, therefore, imposed upon a society which was economically ill-equipped to carry them. Unable to raise revenues by the most efficacious means, Habsburg monarchs resorted to a variety of expedients, easy in the short term but disastrous for the long-term good of the country. Taxes were steadily increased by all manner of means, but rarely fell upon the shoulders of those who could bear them most easily, and always tended to hurt commerce. Various privileges, monopolies, and honors were sold off by a government desperate for ready cash. A crude form of deficit financing was evolved, in part by borrowing heavily from the bankers on the credit of future Castilian taxes or American treasure, in part by selling interest-bearing government bonds
(juros)
, which in turn drew in funds that might otherwise have been invested in trade and industry. But the government’s debt policy was always done in a hand-to-mouth fashion, without regard for prudent limitations and without the control which a central bank arguably might have imposed. Even by the later stages of Charles V’s reign, therefore, government revenues had been mortgaged for years in advance; in 1543, 65 percent of ordinary revenue had to be spent paying interest on the
juros
already issued. The more the crown’s “ordinary” income became alienated, the more desperate was its search for extraordinary revenues and new taxes. The silver coinage, for example, was repeatedly debased with copper
vellon
. On occasions, the government simply seized incoming American
silver destined for private individuals and forced the latter to accept
juros
in compensation; on other occasions, as has been mentioned above, Spanish kings suspended interest repayments and declared themselves temporarily bankrupt. If this latter action did not always ruin the financial houses themselves, it certainly reduced Madrid’s credit rating for the future.

Even if some of the blows which buffeted the Castilian economy in these years were not man-made, their impact was the greater because of human folly. The plagues which depopulated much of the countryside around the beginning of the seventeenth century were unpredictable, but they added to the other causes—extortionate rents, the actions of the Mesta, military service—which were already hurting agriculture. The flow of American silver was bound to cause economic problems (especially price inflation) which no society of the time had the experience to handle, but the conditions prevailing in Spain meant that this phenomenon hurt the productive classes more than the unproductive, that the silver tended to flow swiftly out of Seville into the hands of foreign bankers and military provision merchants, and that these new transatlantic sources of wealth were exploited by the crown in a way which worked against rather than for the creation of “sound finance.” The flood of precious metals from the Indies, it was said, was to Spain as water on a roof—it poured on and then was drained away.

At the center of the Spanish decline, therefore, was the failure to recognize the importance of preserving the economic underpinnings of a powerful military machine. Time and again the wrong measures were adopted. The expulsion of the Jews, and later the Moriscos; the closing of contacts with foreign universities; the government directive that the Biscayan shipyards should concentrate upon large warships to the near exclusion of smaller, more useful trading vessels; the sale of monopolies which restricted trade; the heavy taxes upon wool exports, which made them uncompetitive in foreign markets; the
internal
customs barriers between the various Spanish kingdoms, which hurt commerce and drove up prices—these were just some of the ill-considered decisions which, in the long term, seriously affected Spain’s capacity to carry out the great military role which it had allocated to itself in European (and extra-European) affairs. Although the decline of Spanish power did not fully reveal itself until the 1640s, the causes had existed for decades beforehand.

Yet this Habsburg failure, it is important to emphasize, was a
relative
one. To abandon the story here without examination of the experiences of the other European powers would leave an incomplete analysis. War, as one historian has argued, “was by far the severest test
that faced the sixteenth-century state.”
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The changes in military techniques which permitted the great rise in the size of armies and the almost simultaneous evolution of large-scale naval conflict placed enormous new pressures upon the organized societies of the West. Each belligerent had to learn how to create a satisfactory administrative structure to meet the “military revolution”; and, of equal importance, it also had to devise new means of paying for the spiraling costs of war. The strains which were placed upon the Habsburg rulers and their subjects may, because of the sheer number of years in which their armies were fighting, have been unusual; but, as
Table 1
shows, the challenge of supervising and financing bigger military forces was common to all states, many of which seemed to possess far fewer resources than did imperial Spain. How did they meet the test?

Table
1.
Increase in Military Manpower, 1470–1660
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Omitted from this brief survey is one of the most persistent and threatening foes of the Habsburgs, the Ottoman Empire, chiefly because its strengths and weaknesses were discussed in the
previous chapter
; but it is worth recalling that many of the problems and deficiencies with which Turkish administrators had to contend—strategical overextension, failure to tap resources efficiently, the crushing of commercial entrepreneurship in the cause of religious orthodoxy or military prestige—appear similar to those which troubled Philip II and his successors. Also omitted will be Russia and Prussia, as nations whose period as great powers in European politics had not yet arrived; and, further, Poland-Lithuania, which despite its territorial extent was too hampered by ethnic diversity and the fetters of feudalism (serfdom, a backward economy, an elective monarchy, “an aristocratic anarchy which was to make it a byword for political ineptitude”
⁵³
) to commence its own takeoff to becoming a modern nation-state. Instead, the countries to be examined are the “new monarchies” of France, England, and Sweden and the “bourgeois republic” of the United Provinces.

    Because France was the state which ultimately replaced Spain as the greatest military power, it has been natural for historians to focus upon the former’s many advantages. It would be wrong, however, to antedate the period of French predominance; throughout most of the
years covered in this chapter, France looked—and was—decidedly weaker than its southern neighbor. In the few decades which followed the Hundred Years War, the consolidation of the crown’s territories vis-à-vis England, Burgundy, and Britanny, the habit of levying direct taxation (especially the
taille
, a poll tax), without application to the States General, the steady administrative work of the new secretaries of state, and the existence of a “royal” army with a powerful artillery train made France appear to be a successful, unified, postfeudal monarchy.
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Yet the very fragility of this structure was soon to be made clear. The Italian wars, besides repeatedly showing how short-lived and disastrous were the French efforts to gain influence in that peninsula (even when allied with Venice or the Turks), were also very expensive: it was not only the Habsburgs but also the French crown which had to declare bankruptcy in the fateful year of 1557. Well before that crash, and despite all the increase in the
taille
and in indirect taxes like the
gabelle
and customs, the French monarchy was already resorting to heavy borrowings from financiers at high rates of interest (10–16 percent), and to dubious expedients like selling offices. Worse still, it was in France rather than Spain or England that religious rivalries interacted with the ambitions of the great noble houses to produce a bloody and long-lasting civil war. Far from being a great force in international affairs, France after 1560 threatened to become the new cockpit of Europe, perhaps to be divided permanently along religious borders as was to be the fate of the Netherlands and Germany.
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