The Fall (17th century)

Decline in the 17th century
The Spanish "Golden Age" politically ends no later than 1659, with the Treaty of the Pyrenees, ratified between France and Habsburg Spain. Spain had experienced severe financial difficulties in the later 16th century, that had caused the Spanish Crown to declare bankruptcy four times in the late 1500s (1557, 1560, 1576, 1596). However, the constant financial strain did not prevent the rise of Spanish power throughout the 16th century.

Many different factors, excessive warfare, inefficient taxation, a succession of weak kings in the 17th century, power struggles in the Spanish court contributed to the decline of the Habsburg Spain in the second half of the 17th century.

During the long regency for Charles II, the last of the Spanish Habsburgs, favouritism milked Spain's treasury, and Spain's government operated principally as a dispenser of patronage. Plague, famine, floods, drought, and renewed war with France wasted the country. The Peace of the Pyrenees (1659) had ended fifty years of warfare with France, whose king, Louis XIV, found the temptation to exploit a weakened Spain too great. Louis instigated the War of Devolution (1667–68) to acquire the Spanish Netherlands.

By the 17th century, the Catholic Church and Spain had showcased a close bond to one another, attesting to the fact that Spain was virtually free of Protestantism during the 16th century. In 1620, there were 100,000 Spaniards in the clergy, by 1660 there were about 200,000 Spaniards in the clergy and the Church owned 20% of all the land in Spain. The Spanish bureaucracy in this period was highly centralized, and totally reliant on the king for its efficient functioning. Under Charles II, the councils became the sinecures of wealthy aristocrats despite various attempt at reform. Political commentators in Spain, known as arbitristas, proposed a number of measures to reverse the decline of the Spanish economy, with limited success. In rural areas of Spain, heavy taxation of peasants reduced agricultural output as peasants in the countryside migrated to the cities. The influx of silver from the Americas has been cited as the cause of inflation, although only one fifth of the precious metal, i.e. the quinto real (royal fifth), actually went to Spain. A prominent internal factor was the Spanish economy's dependence on the export of luxurious Merino wool, which had its markets in northern Europe reduced by war and growing competition from cheaper textiles.