The Empire Where the Sun Never Sets: Philip II

The Government of Spain

Philip II, as head of the government of Spain, believed in the divine right of monarchs and used
this to justify a number of immoral and illegal acts, such as ordering murders. Philip developed a system
of regional self-government with viceroys answering to him and he ruled as an absolute monarch.

Philip II was Chief Minister and he appointed Secretaries of State to aid him. The first was
Gonzalo Perez who died in 1566. He was replaced by his son Antonio Perez who was hard working and
ambitious. Perez allied himself with the Prince of Eboli, Philip’s favourite. Eboli believed that the
government should consist of autonomous states with their own customs, laws and privileges i.e. he
wanted a federal system of government. This solution was opposed by the Dukes of Alva who wanted
Phillip to adopt a hard line approach to bring states under the close control of the Crown

Philip favoured the Alva approach and sent AIva to the Netherlands to put down the revolt there.
Alva’s failure in the Netherlands and his recall in 1573 led to Philip adopting Eboli’s idea and he
appointed the soft-liner Requesens to deal with the Netherlands.

This appeared to be a triumph for Antonio Perez (who backed Eboli) who, in triumph, became
more ambitious. With the almost certain knowledge of Philip, Perez even took to murdering political
opponents but this behaviour aroused the suspicion of Philip - his concern being the extent of Perez’s
ambitions. In 1579, Philip dismissed him and ordered his arrest. Philip chose Cardinal Granvelle to
succeed Perez who fled to Aragon where he was safe from Castilian law enforcement. Here he was safe
and he remained here as a thorn in the side of Philip.

The nobles of Castile were well-controlled by Philip. They took no part in the direct administration
of Castille except as viceroys, admirals etc. This gave them little political power but gave the families that
received such titles great prestige within Spain….. but no real power.

There was a Council of State to advise the king (nobles were allowed to attend it) but Philip did
not attend it himself so it really had no specific power. Philip had a small group of advisors to help him but
the Council of State made the nobles believe that they held the power. They had a quorum to vent their
arguments against one another but better verbally than militarily. But the nobles as a whole had no real
power.

The various kingdoms were run by professional graduates. It was through these councils that
Philip transmitted his orders to the territories under his command. Most of the staff were lawyers and
trained administrators. They were positions for those with ability not from powerful noble families. These
graduates executed royal authority but they did not formulate it. The councils were the king’s instruments.
Efficiency brought promotion. Philip listened to their ideas and read their correspondence. He also
received communication from governors and viceroys. He used their ideas to balance up opinions and he
used them formulate his own ideas.

By balancing opinion "he prevented the emergence of any institutional challenge to his own
authority." (Lockyer)

Philip inherited and developed the most advanced bureaucratic machinery in the world and each
council had its own specialisation ; the Council of Finance, the Council of the Inquisition etc. These
bodies provided Philip with specific expert opinions on selected topics but in the end Philip made policy
be it judicial, legislative, foreign etc.
 Within Castille in particular, Philip exercised absolute power. If he was seen to be weak there,
then his authority could be threatened elsewhere. The Cortes was devoid of power over legislative and
tax issues. Other cortes were never totally broken but the effort would not have been worth it as with the
exception of Castille no other region was wealthy enough to warrant the effort and they were also short of
manpower if Phillip needed to call on them for soldiers.

For all its professionalism, Philip’s administration system had four major defects:

1. It was too cautious

2. Decision making took too long

3. Corruption through the sale of offices to those without ability but with the money weakened the system.

4. The impact of the Counter-Reformation stymied the modern approach being adopted in Protestant
states. Thinking was still frowned upon and could individuals into trouble.

"To run it (the government) was well beyond the powers of

such a glutton for work and government as Philip : it
overwhelmed his subnormal successors."

Lockyer

Foreign Policy
Philip II’s foreign policy was to affect much of Europe. In many senses Philip II had too many
responsibilities and not enough financial clout to respond to his foreign problems. Philip's foreign policy
went from grand successes, such as defeating the Turks at Lepanto, to humiliating defeats as happened
in 1588 with the failure of the Spanish Armada.

Spain’s main enemy in the Mediterranean was the Turks. For centuries the Muslims had been
known as the "Devils form the East" and any attempt by any monarch in Spain to remove this threat
would have received full public support. Turkish pirates were a problem but the real danger to Spain lay
in the threat Turkey posed to Spain if she conquered Italy. From there she could easily move into Spain.
This is why most of the major sea battles took place between the narrows of Tunis and Sicily.

Unlike Charles V, Philip adopted a defensive policy against the Muslims especially as the 1550’s
were such a bad year for the Spanish in the Mediterranean e.g. the Knights of St. John were expelled
from Tripoli and a Turkish force got into Minorca. Philip wanted a barrier across the central Mediterranean
to block out the Turks and because of this plan he needed to recapture Tripoli.

In 1560, the island of Drjeba was taken as an advance base for a larger Spanish force but this
was in a very exposed place and the Turks attacked it. The Spanish lost 28 galleys and 10,000 men were
forced to surrender after being stranded. This was a great loss to Spain’s prestige and a freak storm in
1562 destroyed 25 more galleys and lost 4,000 men leaving the navy nearly halved in strength in the
space of two years.

Time and money was spent in repairing the damage and in this time, Muslim pirates attacked
Spain itself - raids which the Spanish were powerless to stop. Granada was a prime target for attack and
in one raid in 1561, 4,000 prisoners were taken.

By 1564, Spain had 100 galleys which were needed when in May 1565, the Turks attacked Malta.
25,000 men attacked the Knights of St. John but they managed to hold out until help came. This gave
Christianity in the western Mediterranean some breathing space which was helped by the death of
Suleiman I in September 1566.

During this respite, Philip could concentrate on the Spanish Netherlands. Troops were taken from
the Mediterranean region to northern Europe. When the Turks attacked again in 1570, the Spanish were
far from prepared. The Turks took Tunis and Cyprus. There was now a real threat that Italy and Spain
could be threatened and old enemies grouped together to cope with this threat. A Holy League of Spain,
Venice and the Papal States was formed. Spain paid half the money that was needed for this force. Don
John of Spain, a famed military leader, was appointed to command the League.

On October 7th 1571, he led the League to a great naval victory at Lepanto - the last great galley
battle fought off the coast of Greece. The Turkish navy - vital to success in the Mediterranean - was
destroyed. Out of 230 galleys, only 35 survived. 30,000 Turks were killed or wounded. The League lost
just 12 galleys. The defeat all but ended Turkey’s power in the western Mediterranean and it did a great
deal to boost Philip’s status throughout western Europe.

The Turks set about building a new navy and by 1574 they had a larger and more modern navy.
However, Lepanto was a massive blow to her prestige (rather like the 1588 Armada was to be for Spain)
and Turkey’s campaign post-Lepanto was one of disengagement. The Turks tried to co-ordinate a
campaign between themselves, the Dutch and the Moriscans - a curious combination and impossible to
organise.

The Holy League - all but freed from the fear of the Muslims - fell out. Venice made a separate
peace treaty with the Turks. Philip’s bankruptcy in 1575 left Spain with minimal military presence in the
region. However, military activity had left all sides weak and secret diplomacy took over from military
conflict. In 1578, a truce between the Turks and Spain was declared and this became a formal armistice
in 1580.

Philip had not eradicated the Turkish threat in the Mediterranean, but the Turks now concentrated
on trying to expand east as this was the easiest option for them. The Turkish claim that they re-took Tunis
in 1574 and this was a sign of their potential power has to be countered against the fact that Spain had
already abandoned the region. Therefore the Turks only needed to occupy Tunis - not fight for it.

"Philip’s policy had not defeated the Turks menace but it had
been contained and peace was eventually secured."
(Lotherington)

The Economic Problems

Philip II of Spain inherited what was considered Europe's most wealthy nation with no apparent
economic problems. By 1598, Spain was essentially bankrupt and Philip III inherited a nation seemingly
doomed to decline. How did these economic problems come about?

When Philip inherited the throne in 1556, to all people he appeared to be Europe's most wealthy
monarch. However, behind the glamour of royal life, the economic troubles that were to plague Philip
throughout his reign, were developing. His inheritance from his father, Charles V, hardly helped him.

When Philip inherited the lands given to him by his father, he inherited with it many economic
problems. Charles left Philip with an empire that neither Spain’s military or economy had acquired. In
order to keep up with the demands placed on it by its empire, Spain had to try to upgrade itself into a
world power quickly.

One of the main problems Philip faced with his empire was that each part was supposed to be
self-financing and yet the majority of the time Castille ended up paying for much of Philip’s policies. For
example, the Italian states paid 400,000 ducats to the cost of the Battle of Lepanto which affected them
most directly, but Castille paid 800,000 ducats.

Philip was forced heavily to rely on taxes in Spain and in 1561 the servicio tax was made a regular
one, the excusado was introduced in 1567 and the crusada tax, together were known as the "Three
Graces" reaching as much as 1.4 million ducats per year in the 1590’s. However this was still not enough
money and the Cortes had to be persuaded to grant the millones tax in 1590. The end result of all this
taxation resulted in a tax increase of 430% between the years 1559 and 1598. This hit the Spanish
peasantry hard, since the nobility were tax exempt. Between the same time the average wage only
increased 80% and so the Spaniards witnessed a tax revolution as well as a price revolution.

During Philip’s reign the price of goods increased fourfold had presented a serious problem for
him. Initially the population growth in the 1530’ to 1580’s had proved beneficial with farmers doing more
arable farming and ploughing the land. Yet the yield per acre did not increase and more food was
available only because more land was being used. Also much of Spain was infertile land and the more
fertile land near the Mediterranean Sea was not ploughed due to the fear of pirates. Plague in the 1560’s
and an increase in demand saw some of Spain import wheat and Philip’s ineffectual attempts to reduce
the price rise of 1557 meant that by the 1580’s the whole of Spain was importing wheat and making do
with bread substitutes.

In 1556 trade for Spain had great potential with good contacts in the Netherlands, Spain was able
to export a lot of wool. However, soon Spain’s wool trade was in decline and mid-way through Philip’s
reign saw a decline from 400,000 sacks of wool exported per year to 25,000. Despite the Spanish trade
fairs which encouraged trade, Spain did not capitalise on its merits and banditry from Barcelona to Madrid
often saw a loss in the American bullion being transported. Furthermore, when the Aragonese traded at
Medina del Campo they were given no special privileges.

During the later stages of Philip’s reign bullion began to pour in from America. In the first half of
the C16 American bullion had numbered 200,000 ducats per year. In the 1560’s this quadrupled and by
the 1590’s this amount had increased fourfold.

However, more often than not this money went straight to Philip’s war efforts. In 1587 he was
paying more than 100,000 men. Philip’s wars did not bring the benefits they were expected. Firstly they
were not self-financing. From 1567 to 1600, over 80 million ducats was sent to the Netherlands but also
Philip’s troops (in Italy, France and the Netherlands) spent their money there and those countries
received the benefits of the soldiers pay.

Throughout Philip’s reign there was also a massive shortage in industry; 80% of the arms used to
suppress the Moricos revolt of 1568 were imported. The war with the Netherlands made the markets
unstable and deterred potential investors who preferred to invest into Philip’s debt buying bonds from him
and gaining interest. Philip’s selling of these juros (bonds) was costly since it provided immediate cash
but at the price of mortgaging the future economy. Philip also sold land - allowing nobles to have
jurisdiction over the alcabala tax which also proved costly in the long run.

Philip’s weakness for grandiose projects also put Spain into serious economic difficulties. The
Armada cost 10 million ducats and the building of the Escorial cost 5.5 million ducats despite Philip’s
reduction in household expenditure and reforms of his Council of Finance. Philip never raised enough
cash to cover his expenditure and as a result had to declare state ‘bankruptcies’ in 1557, 1560, 1576 and
1596. As the reign went on Spain’s economic problems grew worse and eventually Spain had amassed a
debt of 85.5 million ducats whilst his average annual income was 9.7 million.

The economic problem of the lack of investment in industry was to cause serious problems later in
Philip’s reign, since many foreign competitors seized the monopoly Spain had once had in trade with
America and provided them with cheaper prices. The successes of places such as Seville was not as it
seemed at the time. It was, in fact, superficial prosperity and more an account of foreign investment than
a mark of any real Spanish success. A further problem which faced Spain as well was the growing
decline in the demand for Spanish gold, not only because of foreign competition but also because
colonies in America and the Indies had evolved and were able to provide for themselves more and more.

The economic problems of Spain were also serious in relation to Philip’s military; not just the
effect of fighting wars on three fronts but also the lack of good local militia. Raids on Cadiz in 1587 and
1596 cost Philip an estimated 20 million ducats. The example of the Moriscos revolt had shown Philip
how poor his militia was and he tripled expenditure on them and fortified many Spanish ports as well as
building up his navy between 1560-1574 at a cost of 3.5 million ducats.

The reign of Philip was an economic disaster though it was seriously weakened from the start. He
was unable to keep up with the demands of imperialism. In order to solve his financial problems and
establish a firm foundation for future expenditure, Philip needed a prolonged period of peace in which he
could reform his exchequer and invest in Spanish industry. He never achieved this, instead doing the
reverse with fighting multiple wars and drawing investment away from industry by using bullion as loans
thus allowing the Genoese financiers a strong hold over Philip’s economy.

Although during Philip’s reign Spain was at the height of its power and influence, its wealth was
illusory and soon to fall into rapid decline. Philip’s excessive expenditure had made the economic
foundations of Spain very fragile. This was added to by other factors such as plagues, bad harvests and
population growth. However, although the economic problems of Philip’s reign were very serious in the
words of John Lynch "disaster was not complete". For the time being Spain could escape the
consequences of its own folly through the money it earned in America. This money provided an injection
into the dwindling life of its mother country.