Philip’s single biggest problem as ruler of a large empire?

Clearly define financial Interpret some key dates during

Philip’s reign and possible links/significance

Understand the fundamental factors leading to Philip’s being unable to resolve his financial issues

Evaluate and interpret some historiography of Philip’s reign

The system that includes the circulation of money and involves banking, credit and investment.

1. Financial1. Financial

4. Economic4. Economic

2. Political2. Political

5. Religious5. Religious

3. Military3. Military

Lepanto 1571

Relations with the Papacy

Armada 1588

Conciliar System

Limpeza

Auto de fe

Loans

Taxation

Faction

Industry

Agriculture

Trade

Lepanto 1571

How is this money raised? What issues does it present George?

U.S. war costs United States As of September 29, 2006,

around $374.5 billion has been allocated by the U.S. Congress for the

Iraq war.[

1557 1st Bankruptcy 1559 Treaty of Cateau-Cambresis end

of Habsburg-Valois wars 1560 2nd unofficial bankruptcy 1571 Lepanto campaign costs 1 million

ducats 1572 2nd Dutch revolt begins – last 40

years and costs 80 million ducats 1575 2nd bankruptcy 1588 Armada cost 10 million ducats 1590 The millones tax introduced to

pay for war against England 1596 3rd bankruptcy

A difficult start

Inheritance from his father Inheritance from Charles I – wars

between Habsburg-Valois, against Protestant German Princes and Turks.

Left 36 Million ducats in debt. System riddled with corruption Issues of 16th Century government First major decision as King was to

declare bankruptcy in 1557 Philip’s lack of flair for financial and

economic policy – inept Clearly serious problems from the

beginning.

Spain is not a single economic unitCurrencies, regulations, tariffs

differedMixed between urbanised and rural

e.g. Netherlands vs Sicily, or Aragon Mediterranean facing vs Castile Atlantic facing

Philip’s constant wars drained revenue of Spain.

1556-1559 French 1566 onwards Netherlands – estimated 80

m ducats 1568 Morisco’s revolt 1585 – England e.g. Armada est 10 M ducats First annual military costs averaged less

than 2 million ducats, by 1570’s 4 million and by 1598 10 million. Serious growing expenditure.

Spanish economy not strongResources

sparse

Spanish economy not strongResources

sparse

Imperial commitments extensive

Imperial commitments extensive

Vs

Ordinary Revenue Alcabala (10% sales tax) Customs duties Rents from crown lands

By 1598 ordinary revenue 3x that of 1556.

Extra-Ordinary Revenue Servicio – one off tax

requiring Cortes approval – nobility/clergy exempt

Hundredth Penny in Netherlands

Church e.g. Three Graces Sales of noble titles and

crown offices Sale of common land and

Royal jurisdictions Quinto – 1/5 of value of

precious metals and stones mined in Americas.

Theoretically revenue from parts of the Monarquia

Constantly a problemProvinces were reluctant – regional

differences

Bullion from new world allowed Spain to borrow heavily

Richest monarch in Europe However despite Philip’s efforts –

Spanish economy could not sustain a large empire for long with its military and civil commitments.

Taxation hit middle and lower orders as nobility and clergy exempt – e.g. Millones in 1590’s on food stuffs

Sales of crown lands short term gain – long term loss in rent revenue

Spain more notably Castile bore brunt of costs of maintaining Monarquia – Philip failed to persuade outlying regions to contribute e.g. Lepanto – Italian states most under threat paid 400K ducats, Castile paid 800K. Therefore constant drain on Spain/Castile.

Attempts at taxation caused unrest in Monarquia – e.g. 1572 Netherlands against attempts to tax via Hundredth, Twentieth and Tenth penny taxes. Ultimately backfired revenue from Netherlands dropped.

Charles to Philip ‘ attend closely to finances and learn to understand the problems involved’.

Despite advice Philip never mastered the intricacies of the Royal finances

‘I have never been able to get this business of loans and interest into my head’.

Yet he made financial decisions and too readily took advice of self-interested financiers.

Even embarked on grand schemes – e.g. Escorial est 5.5 M

Revenue did not meet expenditure - Philip resorted to borrowing on a grand scale i.e. loans.

Led to high interest rates and hold over Spain by Genoese financiers

Estimated by 1598 National Debt of 85 Million ducats interest payments 40% of annual revenue. Serious strangle hold by foreign financiers.

Declared bankrupt 4 times 1557, 1560, 1575 and 1596.

Suspended repayments in attempt to break stranglehold of creditors. Did not work.

Serious financial collapse.

Discuss