INTRODUCTION

Long before abdicating, Charles V addressed the following prophetic words to his son and prospective heir, Prince Philip: “Financial matters will be left in such a state that you will have a lot of work.” The same could have been declared by every Spanish Habsburg monarch to his respective successor. It is said that Charles's abdication was motivated by financial troubles, and from then on, for more than a century, things became only worse.

The root cause of the financial problem was, as in most European nations of the time – and perhaps of all times – war. In peacetime the resources of the Spanish Crown were amply sufficient to cover expenses; the trouble was that peaceful years were the exception. At the end of Charles's reign, peacetime expenditure was only one half of ordinary revenue: even admitting that there was already a heavy burden of debt, a hypothetical budget would have been in balance. War upset all calculations. From the moment he spent a small borrowed fortune bribing the imperial electors, Emperor Charles was involved in wars on several fronts: against France over Italy in the 1520s, against the Turks in the Mediterranean in the 1530s, and then against the Protestants in Germany in the 1540s and 1550s. In spite of the wealth of his domains, ordinary revenue could not finance this continuous war effort, and he had to have recourse to credit.