The state of the lands inherited by Philip II: A 'poisoned chalice'?
Charles V had spent 35 years as the most powerful man in Europe, attempting to rule over Spain, parts of Italy, Germany, Austria, the Netherlands and most of Eastern Europe. When he abdicated, knowing the huge problems of running an Empire this size, he split his lands between his brother, Ferdinand of Habsburg, and his son, Philip II. Philip received Spain and her territories in the New World, Italy and the Netherlands (he would lose the latter in the Dutch revolt).
The biggest problem to plague Charles’ reign had been finance, and this was a problem he passed on to Philip. Charles advised his son that,
"Your treasury will be in such a state when you succeed me that it will give you a lot of trouble."
Charles had imposed a huge tax burden on the poor, and yet failed to remove the tax immunity of the Spanish nobility. Not only did this cause huge resentment (for the first three years of Philip’s reign, Aragon was in revolt), it led the upwardly mobile to ignore trade and industry and instead clamour for a place in the nobility, with the tax exemption that came with it.
As Charles sought more and more money, he was forced to turn to Castile. Firstly he borrowed heavily, raising juros (interest-bearing loans) from his subjects. Repayment of these loans consumed over 60% of the crown's income by 1556. He then borrowed heavily from international sources, but when Philip ascended he was forced to suspend all payment from the Castilian treasury and convert all of the crown's debts into juros. Philip and his successors would never shake off the legacy of debt left behind by Charles . When Charles abdicated he left Philip with a debt of 36 million ducats and an annual deficit of 1 million ducats.
Charles had burdened his territories in the Low Countries with excessive taxation. This caused deep resentment in the Low Countries and Ghent (Charles' birthplace) was in open revolt in 1537. Even as the Dutch economy was in decline Charles continued to increase their burden to finance his Italian wars. This has led many historians to argue that the conditions for the Dutch revolt, which would be a huge thorn in the side for Philip, and arguably bring about the downfall of the Spanish Empire, were set in the reign of Charles.
Although Charles had managed to defend the Catholic faith admirably during his reign, it could be argued that the animosity of the Netherlands led to them becoming a hotbed for Lutherism. Charles had been adamant in his persecution of heretics, but even during his reign there was evidence that the provincial leaders in the Netherlands were failing to implement Charles' religious policies. Even when his policies were successful, some historians argue this only increased the tenacity of the remaining Protestants.
Despite these problems, it must not be forgotten that Charles passed his son the mantle of the most powerful monarchy in Europe. Possibly the only man who could challenge Philip was Suleiman the Magnificent of the Ottoman Empire. Charles had managed to hold the line against the Muslim naval challenge in the Mediterranean and stop them gaining mastery there. It can be argued that Charles laid the foundations for Philip's success at the Battle of Lepanto in 1571, although he never totally achieved his objectives here. Historians are divided as to whether Philip's successes here really owed to his father's.
Despite the financial difficulties and dissent in the Spanish Empire, Charles left his son a powerful and religiously-unified Empire in a period of great religious strife in Europe. Philip was able to win the war against his Valois rival Henry II by default, with a treaty signed at Cateau-Cambresis and Henry then dying in a jousting accident. However great the Spanish Empire was, if Philip III is said to have presided over its decline, and the seeds for this sowed in the reign of Philip II, it can be said that the seeds of Philip's troubles were sowed in the reign of Charles V. The legacy of debt which followed his expensive wars and Imperial ambitions would overshadow his lineage.
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