The Spanish Empire, also known throughout history as the Hispanic Monarchy or Catholic
Monarchy, was at one time one of the largest empires to ever exist.
The Spanish Empire was fairly unique in its structure and it boasted colonial overseas
territories across the Americas, Asia, Africa, and Oceania.
During its peak, the monarchy even became known as "the empire on which the sun never
sets".
So, how did a powerful force such as the Spanish Empire collapse after centuries of dominating
land around
the globe?
The creation of this Monarchy may have foreshadowed its later decline into extinction.
In 1469, Ferdinand of Aragon and Isabella of Castille married, despite both coming from
modest backgrounds that forced the young couple to use loans simply in order to afford their
wedding ceremony…
Overcoming the obstacle of finances that would later plague and doom their now-budding empire,
the 18 and 17-year-old monarchs’ union marked an important pillar for the foundation of
the Spanish Monarchy.
While the marriage formed a personal union between Aragon and Castille, and united the
economic, religious, and military aspects of their joined Iberian territory, it did
not form a totally unitary style of authority spanning over all of the empire’s claimed
possessions.
In fact, the monarchy did not fully take on the structure of an empire until the Spanish
Habsburgs came to power at the start of the 16th century, and this formation was further
solidified by the Spanish Bourbon rulers later on.
The monarchy under Ferdinand and Isabella was fairly admirable and a solid start for
the new-formed union.
Many governmental reforms, such as with the judicial system and tax administration, brought
about remarkable improvements, as did the abolishment of serfdom, updated infrastructure,
and other changes made by the young leaders.
This foundation was not as bad as one might expect from an empire that collapsed as the
Spanish did.
Nevertheless, the decay of the large European power began long before the inevitable fall
itself…
The main problems were the poor decisions made by Spanish governments during the decades.
Spain was a global superpower, and as other big empires, the external threat wasn’t
the main issue.
In a case of a military defeat, such an empire will not crumble if everything was in order
at home, having the resources and the power to maintain its hegemony and to strengthen
itself in a few years.
The biggest problem for the Spanish Empire started from within …
Around the middle of the 16th century, Spain’s economy at home was starting to struggle…
Overseas, in contrast, the empire was still on a wave of vast expansion and had not yet
hit a rut in that regard.
Still, back in Europe, things were not going so well.
Expansion-wise, the empire was doing quite alright.
With Charles The Fifth seizing the throne, the empire was technically expanded, without
the use of military conquest, over southern Italy, Austria, the Netherlands, and the Holy
Roman Empire.
But yet somehow, despite this superficial success, the economy was in a decline.
One theory as to why this odd contradiction existed lies in the laid-back approach that
the empire took in managing its overseas possessions.
While the new colonial territories of the Spanish Empire provided new opportunities
for the exploitation of natural resources and for trade around the world, the empire
was lax with its subjects and did not ask for much.
What they did ask for, such as a share of their colonies’ mining earnings, in addition,
was often withheld.
Furthermore, the Habsburgs had hoped to maintain a state monopoly and closed mercantile system,
but more or less failed.
Instead, they set their empire up for economic hardship.
In an attempt to counteract their rapid fall behind the industrial and economic progress
of their Dutch, English, and French European neighbors, the Spanish Empire began to allow
and almost embrace illicit commercial activity that had any potential to bring in money for
the crown.
During the reign of Charles V, military conflict with France, the Ottomans, and German states
drained the Spanish fund drastically.
The emperor became desperate, having to take loans from German and Genoese banks, meanwhile
hoping to tax his subjects more to try and recover the lost finances.
While he originally turned to the Netherlands and Italy with these taxes, he was unable
to maintain them for long, and eventually had to target Spain itself.
This caused more damage at home, as Spain’s taxes were hiked and Castile took the brunt
of it.
Part of this new tax structure included the Alcabala, which differed from a normal sales
tax as it could be applied to any transaction at any point in the process of a product moving
to market and afterward.
It also put a 10% tax on the transfer of all property, personal or otherwise, and all assets.
The system was self-destructive and many notable figures within the empire, such as Cardinal
Jimenez even attempted to convince Emperor Charles to remove the harmful taxation, but
due to the revenue it brought in, the monarch refused and even added more taxes including
the cruzada, the terces, and the servicio.
This plan began to implode on itself, as the increased taxes also sparked an increase in
tax evasion.
Some tax-gatherers would even be murdered, while other citizens simply found more subtle
means of avoiding payment.
Many farmers began to emigrate to the Americans in a desperate attempt to avoid the draining
taxes.
Others realized that government employees were free of taxes, which caused a skyrocket
in the number of such workers.
One Spaniard even wrote that there were a thousand employees where 40 would suffice.
Noblemen were also exempt from many taxes, prompting other desperate peasants to join
their more underground lifestyle.
By the end of Charles’ time as emperor, the region of Aragon in particular was actually
paying fewer taxes than it had before the new system had been implemented.
As if this new predicament wasn’t enough to shake the empire’s foundation, the Spanish
monarchs were now also faced with the challenge of a Dutch revolt in their Netherland colony.
The Dutch were furious with the Spanish Empire for neglecting both their needs and problems
and for implementing some of the new, damaging taxes from Spain now in the Netherlands as
well.
In addition, there was the factor of rising Protestantism, particularly Calvinism, in
the Netherland region, that directly conflicted with the Spaniards’ strong Catholicism.
This revolt sparked a war not just between the Dutch and the Spanish, but even more so
between the Spanish and the French, who were eager to join anyone in a campaign against
Spain.
This war was expensive and long-lasting.
The Dutch did gain full autonomy from the Spanish Empire in 1581 as the Dutch Republic,
but conflict between the now competing powers continued deep into the 17th century.
As taxes continued to rise, so did tensions and dissatisfaction within the empire.
In 1640, Portugal, which had only been united with Spain in 1580, erupted into rebellion
and eventually declared its own independence from the Spanish Empire.
This jolted the European holdings of the Spaniards and many more of their semi-autonomous territories
began threatening their own revolts, and some regions throughout Italy, Flanders, and France
even broke free.
Adding fuel to the already raging fire, the new issuance of copper coins triggered inflation
in 1641, which was counteracted with a messy anti-inflationary reform the following year.
At this time, as stated by a French envoy to Spain, “It would be difficult to describe
to its full extent the disorder in the government of Spain.”
By the 18th century, the Bourbon monarchs, who replaced the Habsburgs when they were
unable to produce another heir, attempted to mend the issues arising within their empire,
but they were undermined by their own thirst for war and further expansion.
At this point, Protestantism was spreading like wildfire and the Spaniards were inspired
to fight back in the name of Catholicism, as well as feeling compelled to directly oppose
the Ottoman Empire’s advances as they too hoped to expand their influence.
This uptick in warfare cost money, and the Spanish Empire lacked a surplus of finances.
Hoping to counteract this problem, the Bourbon monarchs aimed to reestablish a Spanish monopoly
as had been attempted before, but they were stopped by the terms of the Treaty of Utrecht
in 1713 which ended the War of Spanish Succession.
The empire tried to offset this blockade by rolling out strict new trade and commerce
reforms both at home and overseas, which eventually sparked a war with the British in the late
1700s, demonstrating the never-ending chaos that had been created.
Some local political writers even recognized the growing monetary problems and sent letters
to the crown, suggesting that "royal expenditure must be regulated, the sale of office halted,
the growth of the church checked.
The tax system must be overhauled, special concessions must be made to agricultural laborers,
rivers be made navigable and dry lands irrigated.”
Furthermore, the authors even pointed out directly the empire’s “humiliating”
dependence on foreign nations.
But it was too late.
Because of these internal problems, the territories of in Americas were pretty much neglected
as they were a very good stream of gold and silver and not a territory to be more populated
and incorporated more under Spanish Authority.
The Spanish Administration in the Americans was inferior to the English Administration,
as the new English and later British Territories had a rapid growth in population due to liberal
immigration policies, attracting large proportions of German and French people.
Meanwhile, the Spanish territories had a slow growth due to greater emphasis on military
conquest, many early failures to establish permanent settlements and poor relations with
Native Americans.
At the start of the 19th Century, Napoleonic France invaded Spain, and this was the fire
that sparkled the revolutions in the Americas.
The other vice-royalties rebelled as their home nation was too weak to have the reins
and it was clear that the Spain was just a shadow of its former self.
The revolutions had success and it was clear that Spain wasn’t able to fight them.
In just a few years they lost almost all of their American possessions and at the end
of 19th Century after the Spanish American War they lost Cuba, Puerto Rico, Guam and
The Philippines, marking the official end of the empire.
The sole reason for the collapse of the Spanish Empire was essentially ill-management by the
monarchs and possibly overconfidence of their ability to maintain stable colonial territories.
In less simple terms, money, or lack thereof and poor judgment, played a hugely significant
role in the humiliating fall of an empire with so much potential at its start.
Still, finances were not on the side of the Spaniards and it seems that, somehow, the
foreshadowing of Ferdinand and Isabella’s wedding would come to life in spite of every
desperate reach to overcome it…