its own bankruptcy in the same year – the major reason for each side agreeing to negotiate at Cateau-Cambresis in 1559 – for Philip had then immediately to meet the powerful Turkish foe. The twenty-year Mediterranean war, the campaign against the Moriscos of Granada, and then the interconnected military effort in the Netherlands, northern France, and the English Channel drove the crown to search for all possible sources of income. Charles V’s revenues had tripled during his reign, but Philip II’s ‘doubled in the period 1556–73 alone, and more than redoubled by the end of the reign’.25
His outgoings, however, were far larger. In the Lepanto campaign (1571), it was reckoned that the maintenance of the Christian fleets and soldiers would cost over 4 million ducats annually, although a fair part of this burden was shared by Venice and the papacy.26 The payments to the Army of Flanders were already enormous by the 1570s, and nearly always overdue: this in turn provoking the revolts of the troops, particularly after Philip’s 1575 suspension of payments of interest to his Genoese bankers.27 The much larger flow of income from American mines – around 2 million ducats a year by the 1580s compared with one-tenth of that four decades earlier – rescued the crown’s finances, and credit, temporarily; but the armada of 1588 cost 10 million ducats and its sad fate represented a financial as well as naval disaster. By 1596, after floating loans at an epic rate, Philip again defaulted. At his death two years later his debts totalled the enormous sum of 100 million ducats, and interest payments on this sum equalled about two-thirds of all revenues.28 Although peace with France and England soon followed, the war against the Dutch ground away until the truce of 1609, which itself had been precipitated by Spanish army mutinies and a further bankruptcy in 1607.
During the few years of peace which followed, there was no substantial reduction in Spanish governmental expenditures. Quite apart from the massive interest payments, there was still tension in the Mediterranean (necessitating a grandiose scheme for constructing coastal fortifications), and the far-flung Spanish Empire was still subject to the depredations of privateers (necessitating considerable defence outlays in the Philippines and the Caribbean as well as on the high seas fleet).29 The state of armed truce in Europe which existed after 1610 hardly suggested to Spain’s proud leaders that they could reduce arms expenditures. All that the outbreak of the Thirty Years War in 1618 did, therefore, was to convert a cold war into a hot one, and to produce an increased flow of Spanish troops and money into Flanders and Germany. It is interesting to note that the run of early Habsburg victories in Europe and the successful defence of the Americas in this period largely coincided with – and was aided by – significant increases in bullion deliveries from the New World. But by the same token, the reduction in treasure receipts after 1626, the bankruptcy declaration of the following year, and the stupendous Dutch success in seizing the silver fleet in 1628 (costing Spain and its inhabitants as much as 10 million ducats) caused the war effort to peter out for a while. And despite the alliance with the emperor, there was no way (except under Wallenstein’s brief period of control) that German revenues could make up for this Spanish deficiency.
This, then, was to be the Spanish pattern for the next thirty years of war. By scraping together fresh loans, imposing new taxes, and utilizing any windfall from the Americas, a major military effort like, say, the Cardenal-Infante’s intervention in Germany in 1634–5 could be supported; but the grinding costs of war always eventually eroded these short-term gains, and within a few more years the financial position was worse than ever. By the 1640s, in the aftermath of the Catalan and Portuguese revolts, and with the American treasure flow much reduced, a long, slow decline was inevitable.30 What other fate was due to a nation which, although providing formidable fighters, was directed by governments which consistently spent two or three times more than the ordinary revenues provided?
The second chief cause of the Spanish and Austrian failure must be evident from the narrative account given above: the Habsburgs simply had too much to do, too many empires to fight, too many fronts to defend. The stalwartness of the Spanish troops in battle could not compensate for the fact that these forces had to be dispersed, in homeland garrisons, in North Africa, in Sicily and Italy, and in the New World, as well as in the Netherlands. Like the British Empire three centuries later, the Habsburg bloc was a conglomeration of widely scattered territories, a political-dynastic tour de force which required enormous sustained resources of material and ingenuity to keep going. As such, it provides one of the greatest examples of strategical overstretch in history; for the price of possessing so many territories was the existence of numerous foes, a burden also carried by the contemporaneous Ottoman Empire.31
Related to this is the very significant issue of the chronology of the Habsburg wars. European conflicts in this period were frequent, to be sure, and their costs were a terrible burden upon all societies. But all the other states – France, England, Sweden, even the Ottoman Empire – enjoyed certain periods of peace and recovery. It was the Habsburgs’, and more especially Spain’s, fate to have to turn immediately from a struggle against one enemy to a new conflict against another; peace with France was succeeded by war with the Turks; a truce in the Mediterranean was followed by extended conflict in the Atlantic, and that by the struggle for northwestern Europe. During some awful periods, imperial Spain was fighting on three fronts simultaneously, and with her enemies consciously aiding each other, diplomatically and commercially if not militarily.32 In contemporary terms, Spain resembled a large bear in the pit: more powerful than any of the dogs attacking it, but never able to deal with all of its opponents and growing gradually exhausted in the process.
Yet how could the Habsburgs escape from this vicious circle? Historians have pointed to the chronic dispersion of energies, and suggested that Charles V and his successors should have formulated a clear set of defence priorities.33 The implication of this is that some areas were expendable; but which ones?
In retrospect, one can argue that the Austrian Habsburgs, and Ferdinand II in particular, would have been wiser to have refrained from pushing forward with the Counter-Reformation in northern Germany, for that brought heavy losses and few gains. Yet the emperor would still have needed to keep a considerable army in Germany to check princely particularism, French intrigues, and Swedish ambition; and there could also be no reduction in this Habsburg armed strength so long as the Turks stood athwart Hungary, only 150 miles from Vienna. The Spanish government, for its part, could allow the demise of their Austrian cousins neither at the hands of the French and Lutherans nor at the hands of the Turks, because of what it might imply for Spain’s own position in Europe. This calculation, however, did not seem to have applied in reverse. After Charles V’s retirement in 1556 the empire did not usually feel bound to aid Madrid in the latter’s wars in western Europe and overseas; but Spain, conscious of the higher stakes, would commit itself to the empire.34 The long-term consequences of this disparity of feeling and commitment are interesting. The failure of Habsburg Spain’s European aims by the mid-seventeenth century was clearly related to its internal problems and relative economic decline; having overstrained itself in all directions, it was now weak at heart. In Habsburg Austria’s case, on the other hand, although it failed to defeat Protestantism in Germany, it did achieve a consolidation of powers in the dynastic lands (Austria, Bohemia, and so on) – so much so that on this large territorial base and with the later creation of a professional standing army,35 the Habsburg Empire would be able to re-emerge as a European Great Power in the later decades of the seventeenth century, just as Spain was entering a period of even steeper decline.36 By that stage, however, Austria’s recuperation can
