Why Was Philip Unable To Resolve His Financial
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  • 1. Philip’s single biggest problem as ruler of a large empire?
  • 2.
    • Clearly define financial
    • Interpret some key dates during Philip’s reign and possible links/significance
    • Understand the fundamental factors leading to Philip’s being unable to resolve his financial issues
    • Evaluate and interpret some historiography of Philip’s reign
  • 3.
    • The system that includes the circulation of money and involves banking, credit and investment.
  • 4. 1. Financial 4. Economic 2. Political 5. Religious 3. Military Lepanto 1571 Relations with the Papacy Armada 1588 Conciliar System Limpeza Auto de fe Loans Taxation Faction Industry Agriculture Trade Lepanto 1571
  • 5. How is this money raised? What issues does it present George? U .S. war costs   United States As of September 29 , 2006 , around $374.5 billion has been allocated by the U.S. Congress for the Iraq war. [
  • 6.
    • 1557 1 st Bankruptcy
    • 1559 Treaty of Cateau-Cambresis end of Habsburg-Valois wars
    • 1560 2 nd unofficial bankruptcy
    • 1571 Lepanto campaign costs 1 million ducats
    • 1572 2 nd Dutch revolt begins – last 40 years and costs 80 million ducats
    • 1575 2 nd bankruptcy
    • 1588 Armada cost 10 million ducats
    • 1590 The millones tax introduced to pay for war against England
    • 1596 3 rd bankruptcy
  • 7.  
  • 8. A difficult start
  • 9.
    • Inheritance from his father
    • Inheritance from Charles I – wars between Habsburg-Valois, against Protestant German Princes and Turks.
    • Left 36 Million ducats in debt.
    • System riddled with corruption
    • Issues of 16 th Century government
    • First major decision as King was to declare bankruptcy in 1557
    • Philip’s lack of flair for financial and economic policy – inept
    • Clearly serious problems from the beginning.
  • 10.
    • Spain is not a single economic unit
    • Currencies, regulations, tariffs differed
    • Mixed between urbanised and rural e.g. Netherlands vs Sicily, or Aragon Mediterranean facing vs Castile Atlantic facing
  • 11.
    • Philip’s constant wars drained revenue of Spain.
    • 1556-1559 French
    • 1566 onwards Netherlands – estimated 80 m ducats
    • 1568 Morisco’s revolt
    • 1585 – England e.g. Armada est 10 M ducats
    • First annual military costs averaged less than 2 million ducats, by 1570’s 4 million and by 1598 10 million. Serious growing expenditure.
  • 12. Spanish economy not strong Resources sparse Imperial commitments extensive Vs
  • 13.
    • Ordinary Revenue
    • Alcabala (10% sales tax)
    • Customs duties
    • Rents from crown lands
    • By 1598 ordinary revenue 3x that of 1556.
    • Extra-Ordinary Revenue
    • Servicio – one off tax requiring Cortes approval – nobility/clergy exempt
    • Hundredth Penny in Netherlands
    • Church e.g. Three Graces
    • Sales of noble titles and crown offices
    • Sale of common land and Royal jurisdictions
    • Quinto – 1/5 of value of precious metals and stones mined in Americas.
    • Theoretically revenue from parts of the Monarquia
  • 14.
    • Constantly a problem
    • Provinces were reluctant – regional differences
  • 15.
    • Bullion from new world allowed Spain to borrow heavily
    • Richest monarch in Europe
    • However despite Philip’s efforts – Spanish economy could not sustain a large empire for long with its military and civil commitments.
  • 16.  
  • 17.
    • Taxation hit middle and lower orders as nobility and clergy exempt – e.g. Millones in 1590’s on food stuffs
    • Sales of crown lands short term gain – long term loss in rent revenue
    • Spain more notably Castile bore brunt of costs of maintaining Monarquia – Philip failed to persuade outlying regions to contribute e.g. Lepanto – Italian states most under threat paid 400K ducats, Castile paid 800K. Therefore constant drain on Spain/Castile.
    • Attempts at taxation caused unrest in Monarquia – e.g. 1572 Netherlands against attempts to tax via Hundredth, Twentieth and Tenth penny taxes. Ultimately backfired revenue from Netherlands dropped.
  • 18.
    • Charles to Philip ‘ attend closely to finances and learn to understand the problems involved’.
    • Despite advice Philip never mastered the intricacies of the Royal finances
    • ‘ I have never been able to get this business of loans and interest into my head’.
    • Yet he made financial decisions and too readily took advice of self-interested financiers.
    • Even embarked on grand schemes – e.g. Escorial est 5.5 M
  • 19.
    • Revenue did not meet expenditure - Philip resorted to borrowing on a grand scale i.e. loans .
    • Led to high interest rates and hold over Spain by Genoese financiers
    • Estimated by 1598 National Debt of 85 Million ducats interest payments 40% of annual revenue. Serious strangle hold by foreign financiers.
  • 20.
    • Declared bankrupt 4 times 1557, 1560, 1575 and 1596.
    • Suspended repayments in attempt to break stranglehold of creditors. Did not work.
    • Serious financial collapse.
  • 21.
    • Discuss
  • 22.