Three Centuries of Boom-Bust in Spain

Three Centuries of Boom-Bust in Spain

For Spain, 1492 was a transcendent year. The discovery of the New World and the vast hordes of gold and new riches was a springboard vaulting Spain from a barely-known kingdom in medieval Europe, to the most influential global power of the day.

However, this process was not immediate. Despite the vast gold inflows that Spain received, the discovery was a mixed blessing. During this prosperous time, the Spanish Crown declared itself bankrupt nine times: 1557, 1575, 1596, 1607, 1627, 1647, 1652, 1662, and 1666. Spanish finances did not improve significantly until after the War of the Spanish Succession (1701–14) when the Bourbons succeeded the Habsburgs to the Spanish throne.

War and Inflation under the Habsburgs

The seeds...