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The main cause of the Spanish financial crisis of the 17C was its attempt to establish a European empire. Charles V and Phillip II, successors of Ferdinand and Isabella, inherited all the lands of the Hapsburg Empire--Austria, Netherlands, Sicily and Sardinia, and "New Spain" in Mexico and Peru. Spain used the new wealth, especially silver from the Potosi mines in Peru, to finance a series of wars. Catholic Spain faced opposition from Dutch Protestants, their English Tudor allies, and France. To finance the wars Spain borrowed heavily from Italian bankers, to buy weapons from English and Dutch arms merchants. The silver from Peru was used as collateral and to repay the loans. Both the wars and the squandering of New Spain's treasure combined to bankrupt the monarchy on several occasions. The defeat of the Armada by the English in 1588 signaled the final defeat of Spain.

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Q: What contributed to Spain's mid-seventeenth century financial crisis?
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