Topic: Philip II of Spain

Topic: Philip II of Spain

Which of the following was of greater importance in causing Spain’s financial problems during the reign of Philip II?

  • The inherited financial problems
  • Philip’s expenditure

Explain your answer with reference to both (i) and (ii). (12 points/marks)

High level Student Response: (Exceeds the Standard)

Finance was probably the single biggest problem that Philip faced as ruler of the Spanish Empire. Much of this problem was the result of the financial position he inherited, most notably a debt of 36 million ducats. This is made most apparent by the fact that, having inherited the throne in 1556, he declared himself bankrupt only one year later and in 1560 he suspended interest payments on his debts. Although it could be argued that this was the result of his being at war with France from 1556 to 1559, it was more the result of the wars of his father’s reign. Charles had spent much of his reign at war with either France, in the Habsburg-Valois wars, or with turkey or the German protestant princes and these wars had placed a strain on Spain, which was contributing the most to the wars by 1556, which neither the economy nor the revenue from the New World could fund. Moreover, the taxation system that Philip inherited was a further factor in causing financial problems as the nobility were exempt from taxation and thus the wealthiest section of Spanish society were not contributing to crown revenues. There is little doubt that these were significant problems as Charles had already warned his son as early as 1543 to ‘attend closely to finances and learn to understand the problems involved.’

Although Philip had inherited a very weak financial position, Philip’s policies made the situation worse. He was at war for much of his reign and with the cost of warfare rising he put a burden on the Spanish financial system that could not be met. He was at war with France from 1556 to 1559 and again in the 1590’s, with England from 1585 and with the Ottomans and North Africa, as well as having to deal with the Dutch rebels, with the latter costing some 80 million ducats alone. He had added to the problems by spending on his court, art collections and the building of the Escorial, but these costs paled into insignificance when compared with foreign policy – the Armada alone cost 10 million ducats. Moreover, his policy of ‘deficit finance’ to finance his foreign commitments was a disaster, reflected in bankruptcies in 1575 and 1596.

Philip had inherited a weak financial situation with the scale of the debt, but it was his policies that made the situation worse. He had inherited a debt of 36 million ducats but left a debt of 87 million and that despite exploiting every source of revenue, suggesting that it was his policies, particularly overseas, that were the main cause of his difficulties.

Teacher Comments: This student earned 12 out of 12 points/marks

  • The response did analyze both factors and reaches a developed and supported judgment.
  • It is aware of the role of both factors and the links between them, but argues convincingly that it was Philip’s expenditure that was more to blame.
  • The argument is supported by very precise factual detail, making the argument more convincing.
  • It covers a range of issues and their importance in causing the financial problems is discussed.

Medium Level Student answer (Partially Meets the Standard)

Philip II came to the throne of Spain in 1556 and faced a serious financial problem. His father Charles V had left him with a large debt of over 30 million ducats. This had been caused by the constant warfare of his reign against the Turks, Protestants in the Holy Roman Empire and France. Philip was therefore forced to declare himself bankrupt shortly after coming to the throne and again a few years later, which suggest his inherited problems were a major factor. The sources of income available to the king were limited as the Spanish economy was not strong and silver from Spain’s empire in the Americas was not enough to meet the needs. The situation was not helped by the fact that the nobles did not pay taxes and this limited further the sources of income for the king.

Philip himself also spent a lot of money, particularly on warfare. He fought France, England and the Turks, which cost a lot and this was made worse because the cost of fighting was rising in the sixteenth century. He was also faced with a rebellion in the Netherlands and this also cost a lot of money to try and put down. Philip spent a lot of money on his court so that it appeared impressive to other nations and gave the impression that Spain was powerful, he built up an impressive art collection and built a new palace, the Escorial, just outside Madrid which also cost a lot of money. The cost of ruling Spain was also expensive because of the size of the empire and therefore a lot of money had to be spent on that which only added to the problems. Philip did his best to get as much money as he could from Spain. With revenue from royal lands, the church and from grants from the Spanish Cortes, but the amount was not enough and therefore he went bankrupt again in the latter part of his reign.

The amount that Philip spent, mostly on warfare, was the main reason for Spain’s problems and therefore I would argue that it was Philip’s expenditure that was the main cause of the problems.

Teacher Comments: This student earned 6 out of 12 points/marks

  • Although both factors are discussed, the answer tends to be descriptive of the problems.
  • There is some limited explanation or argument, but it is supported by generalized knowledge, making the analysis less convincing.
  • The response is aware of the main issues but it lacks the depth.
  • The judgment in the conclusion is brief and not developed or supported to make it very convincing.