Spain was a favourite enigma among politicians who talked incessantly of her weakness and took every precaution against her strength. ‘Daily doth the weakness of the government … discover itself more and more unto me. The wisest and most judicious of the nation itself, are contented both to acknowledge and lament it … Such is the extremity of their idleness and loose regard of their most important affairs … as it could not but lay open to the whole world, the nakedness and miseries of their estates,’ wisely proclaimed an Englishman as early as 1605, while both Dutch and Italian travellers confirmed his views. Yet the King of England assiduously wooed a Spanish alliance for years to come. The Spaniards were a race of priest-ridden decadents, declared German pamphleteers, yet in the same breath they told of gigantic armies and secret fortresses on the Rhine that were a strange comment on the decadence of those who raised them.
The truth was midway between the two. The economic decline of Spain had begun and was gaining in speed while the population, particularly in Castile, dwindled with terrifying rapidity. The economic policy of the government was equally unconstructive both in industry and agriculture, and financial policy there was none. So great had been the demands on the royal revenues for the past three generations that many of the taxes were now paid directly to the creditors of the Crown without passing through the royal treasury. In 1607 the government had repudiated its debts for the fourth time in fifty years without gaining more than the briefest respite. The exemption of the clergy from the financial burdens of the community increased the pressure on the middle classes and the peasants and further hampered the possibility of recovery. In spite of all this, a great state in its decline may yet be more powerful than a small state not yet arrived at greatness. England was more prosperous than Spain but she was not a quarter as powerful, and even France could not in a crisis have drawn on such resources as were still at the disposition of this once great and now sickening monarchy. The enfeebled government rested on four strong supports – the silver mines of the New World, the recruiting grounds of northern Italy, the loyalty of the southern Netherlands and the genius of a Genoese soldier, Ambrogio Spinola. The government still had an army, reputedly the best in Europe, could still pay it since the bullion of Peru was reserved for little else, had a base in Flanders whence to re-conquer the Dutch, and a general who could do it. Should the prosperous northern provinces be regained economic recovery would be possible for the whole of the Spanish empire.
—CV Wedgwood, The Thirty Years War