The Rise and Fall of the Great Powers. Paul Kennedy
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 per cent 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 centre 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 larger 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’.51 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 spiralling 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 52
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 neighbour. In the few decades which followed the Hundred Years War, the consolidation of the crown’s territories vis-à-vis England, Burgundy, and Brittany, 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.54 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 per cent), 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.55
Only after the accession of Henry of Navarre to the French throne as Henry IV (1589–1610), with his policies of internal compromise and external military actions against Spain, did matters improve; and the peace which he secured with Madrid in 1598 had the great advantage of maintaining France as an independent power. But it was a country severely weakened by civil war, brigandage, high prices, and interrupted trade and agriculture, and its fiscal system was in pieces. In 1596 the national debt was almost 300 million livres, and four-fifths of that year’s revenue of 31 million livres had already been assigned and alienated.