The Habsburgs in Spain were being led by Charles II (1665-1700).[1] But Charles
Charles II, NewsStories/2009/April/inbreeding_of_spanish _royalty_page2.html
was sickly and without children and after the War of the Spanish Succession the Charles’s heir’s inheritance, in terms of land, was heavily cut down. The Netherlands and most of Italy went to the Austrian Habsburgs and the oversea colonies didn’t pay much attention to the Spanish Habsburgs.

The Spanish nobility started taking large pieces of the king’s power. Catalonia was virtually ruled by nobles and many of Spain’s other colonies were following the same course. Though the monarchy attempted to form a government completely control by the king, the nobles gained too much control and the country fell into economic and cultural stagnation, the only sense of pride left in their Navy.

Works Referenced

Chambers, Mortimer; Grew, Raymond; Herlihy, David; Rabb, Theodore K.; Woloch, Isser. The Western Experience: Sixth Edition. New York: McGraw-Hill, 1991

1 All information from the above named source, pages 544-5