Spain in the 17th century

In the coming decades these difficulties grew and saw France gradually taking Spain's place as Europe's leading power through the later half of the century.

Although the Spanish Empire was at the height of its power under Philip II, a number of factors foreshadowed its eventual, gradual decline.

Throughout Philip III's reign the main currency was a copper-based coin called vellon, which was minted in response to the fall in imports of silver.

In 1599, a year after Philip took the throne, a bubonic plague killed about half a million people (1/10 of the Spanish population at the time).

Gaspar de Guzmán, count-duke of Olivares,[6] attempted and failed to establish the centralized administration that his contemporary, Cardinal Richelieu, had introduced in France.

[7] Under the immense pressures of the Thirty Years' War, Olivares attempted to bureaucratically centralise administration and to extract further taxes via the Union of Arms.

In 1648, at the Peace of Westphalia, Spain assented to the emperor's accommodation with the German Protestants, and in 1654 it recognized the independence of the northern Netherlands.

The Peace of the Pyrenees, in 1659, had ended fifty years of warfare with France which had achieved some minor territorial gains at the expense of the Spanish Crown.

Aristocractic contempt for trade was reinforced by its association with conversos and moriscos who were distrusted by the Spanish general population because of their Jewish or Muslim background.

Spain's increasing dependence on resources from the New World over the last century reduced incentives to develop or stimulate domestic production and to create a more efficient tax bureaucracy.

[10] Another prominent internal factor was the Spanish economy's dependence on the export of luxurious Merino wool, the demand of which was replaced by cheaper textiles from England and the Netherlands.