Rise And Fall Of Commercial Power In Spain History Essay

During the early 16th Century era, Spain was one of the most prosperous Commercial Powers throughout Europe. Historians often referred to the 16th century, as the “Golden Age” of Spain; mainly because during that time the Spanish Empire, expanded overseas into the New World. Instead of military conquest, the new lands of Spain were inherited through exploration, and from royal unions, like the marriage between Ferdinand II of Spain and Isabella I of Portugal. Spain also flourished in many aspects during the 16th century, not only by expanding their empire but also through politics, economics, and social activities.

The 16th Century ushered Spain as one of the most formidable commercial powers in Europe. During that time, Spain was able to accumulate mass amounts of wealth from Overseas. Christopher Columbus who sailed for Spain discovered many lands in South America, and the Caribbean. He claimed those lands for Spain, which allowed Spain’s empire to increase overseas into the New World. These countries of the New World provided Spain with many riches such has precious metals like gold, and silver, and an abundance of raw materials to boost their economy.

Exploration was very important to the Spaniards, many explorers paved the way for Spain’s success as a Commercial Power by discovering new lands for the empire. The most notable discoveries, and conquests made by these explorers were Bahamas which Christopher Columbus named San Salvador. Francisco Pizzaro, entered and conquered the Incan Empire, which was later named Peru. Hernado Cortez, discovered Mexico and conquered the Aztec Empire, claiming it for Spain as well. During the 16th Century, Spain had two viceroyalties which were New Spain, and Peru. The Spanish government seized control of the gold and silver mines in the New World therefore, increasing the countries resources and wealth. From all the riches that the New World provided, Spain flourished.

“There were also many other growing industries in the sixteenth -century Spain, such as the production of paper in Segovia, manufacture of leather of leather good in Cordoba and Ship building and iron founding in the Basque country”. (Israel 1981, 174)

During the “Golden Ages” of Spain, Art, Literature, and Architecture were predominant achievements made by the Spaniards.

“The Student of Spanish letters is aware that the Golden Age was a period of great writers and intensive cultivation of literature…the period underwent a series of profound changes both literary and social.” (Wilson 1961, 409)

Poetry was affluent during Spain’s Golden Age as well. Overall Spain was producing goods, and services that helped increase the economy, and commercial power of Spain throughout Europe.

Spain had many issues that led to their down fall as the most prominent Commercial Power. Mainly it was attributed to the poor decisions made by the government and the monarchy during that time. The nobility of Spain during the 16th century gained substantial wealth from the precious metals that Spain acquired through its discoveries in the New World. The main issue that Spain experienced was the lack of trade and investment during the 16th Century because of the rigid social structure of the country. The nobility kept their wealth to themselves making it more difficult for the middle class to attain wealth from the New World, this caused a divide between the aristocrats and the middle class people. English pillagers often stole the goods from the Spanish vessels, therefore decreasing the influx of wealth entering the country. For the most part England and Spain coincided peacefully, both monarchs of that time Philip II and Elizabeth I, brushed aside the minor disputes in order to maintain peace. However Philip II felt threatened by Elizabeth I, and remained cautious of the English. The English were a growing threat to the Spanish Empire, mainly because they had better and far more manoeuvrable vessels that could easily pillage a Spanish transport ship. King Philip II decided to utilize a fleet of sea vessels in order to counteract any threats to the transport ships heading from the New World to Spain. The Spanish Armada was a large fleet that was an expensive and inefficient cost to Spain.

“If Philip II had his way in the beginning there probably would not have been and Armada. It was an expensive, inefficient, and risky way to achieve his goals of consolidating control of the Netherlands, protecting the Indies and the Indies fleets, and guaranteeing his rule in Portugal.” (De Lamer 1988, 627)

Philip II was threatened by Elizabeth I of England, although their relations were cordial, England was also growing in commercial power. Originally, England’s industries mainly traded with the Northern European nations, therefore being no threat to that of the Spanish industries. Philip II’s main concern was to consolidate control over the Netherlands; when he heard of the news that Elizabeth I negotiated a treaty with the Dutch, he was enraged by this and decided to evaluate an attack on England. This treaty later impacted the Castilian exports of wool; The Castilian manufacturing industry was a great source of revenue for Spain.

“Castilian wool exports were much diminished during the 1620s, largely due to Dutch Shipping which had previously carried the wool, the Castilian manufacturing towns proved unable to profit from the situation.” (Israel 1981, 177)

The English Fleets eventually destroyed the Spanish Armada in 1558, therefore crippling Spain’s ability to adequately defend their transport ships. Another poor decision that hurt the economy of the was the expulsion of Jews and Muslim from Spain. The Jewish and Muslims were the most prominent and successful middle class merchants that Spain currently had, in essence they bridged the gap between the aristocrats and the middle class people. The increase in Spain’s population, and the increasing demand for food, goods, and services by not only the people of Spain but also by their viceroyalties, had a significant strain on Spain’s resources. The increased demand for these resources forced the prices for goods to increase as well, which eventually hindered trade for Spain. Other nations halted trade with Spain because they were able attain the same resources for a much lower price then Spain was asking for. The national debt of Spain increased significantly and was often disregarded by the current monarchy in power King Philip II. King Philip II, also was in debt because of the major costs incurred by creating the Spanish Armada, and paying his armies.

“The total cost he calculated at nearly four million ducats…Soon thereafter orders were issued that began the formation of the Armada, in Lisbon, Seville, Cadiz, and in several northern ports. (De Lamer 1988, 629)

Philip II also owed a lot of debt to foreign investors, because of his war efforts. Before Philip II’s reign many monarchs repudiated sovereign loans, this was a common practice that the monarchs employed when they were unable to pay back their loans. In Phillip II’s case he ended up paying the lenders back.

“Philip II fought wars throughout is reign and borrowed extensively to finance fluctuations in military expenditures. Philips II’s, Genoese lenders repeatedly imposed a debt ceiling on the Crown.(Conklin 1998, 484)

The Genoese lenders enforced a penalty on the Crown, and suspended lending to them if they did not pay back their loans. Such penalties, included an embargo on the deliveries to Spain’s armies. Since such penalties would have a great effect on the success of the army, Philip II paid his lenders to avoid these penalties. In order to pay these debts Philip II made more money causing inflation within the Spanish Empire. The constant inflation that Philip II did during his reign in order to pay his debts, devalued the currency of Spain. Gold and Silver were also unaffordable by the lower class people causing the economy to decline substantially.

For the most part, Spain did indeed experience a “Golden Age” during the 16th Century. During that time the country flourished, through Art, Literature, and Wealth, allowing the economy to reach its high point in terms of being the most prominent Commercial Power throughout Europe. Ultimately, poor decisions from the government of that time contributed to the fall of Spain’s commercial power. The war efforts that Philip II engaged in, with England severely increased the debt of the country. The expulsion of Jewish and Muslim merchants caused a social divide between the aristocrats and middle class people of Spain. Furthermore, the sharp rise of inflation during that time, devalued the currency of Spain. Trade with Spain was halted because the prices to purchase Spain’s good were too high. The strain on resources, the high inflation rate, and increased national debt of the country, caused Spain’s economy to significantly decline leaving the country bankrupt, and causing the commercial power of the country to fall significantly.