<P> Spain badly needed time and peace to repair its finances and to rebuild its economy . In 1622, Don Balthasar was replaced by Gaspar de Guzmán, Count - Duke of Olivares, a reasonably honest and able man . After certain initial setbacks, the Bohemians were defeated at White Mountain in 1621, and again at Stadtlohn in 1623 . The war with the Netherlands was renewed in 1621 with Spinola taking the fortress of Breda in 1625 . The intervention of Christian IV of Denmark in the war threatened the Spanish position, but the victory of the Imperial general Albert of Wallenstein over the Danes at Dessau Bridge and again at Lutter (both in 1626), eliminated that threat . </P> <P> There was hope in Madrid that the Netherlands might finally be reincorporated into the Empire, and after the defeat of Denmark the Protestants in Germany seemed crushed . France was once again involved in its own instabilities (the Siege of La Rochelle began in 1627), and Spain's eminence seemed clear . The Count - Duke Olivares asserted, "God is Spanish and fights for our nation these days". </P> <P> Olivares realized that Spain needed to reform, and to reform it needed peace, first and foremost with the Dutch United Provinces . Olivares aimed for "peace with honor", however, which meant in practice a peace settlement that would have restored to Spain something of its predominant position in the Netherlands . This was unacceptable to the United Provinces, and the inevitable consequence was the constant hope that one more victory would finally lead to "peace with honor", perpetuating the ruinous war that Olivares had wanted to avoid to begin with . In 1625, Olivares proposed the Union of Arms, which aimed at raising revenues from the Indies and other kingdoms of Iberia for imperial defense, which met strong opposition . The Union of Arms was the sparking point for a major revolt in Catalonia in 1640 . This turmoil also seemed a propitious moment for the Portuguese to revolt against Hapsburg rule, with the Duke of Braganza proclaimed as John IV of Portugal . </P> <P> While Spinola and the Spanish army were focused on the Netherlands, the war seemed to go in Spain's favor . But in 1627 the Castilian economy collapsed . The Hapsburgs had been debasing their currency to pay for the war and prices exploded, just as they had in previous years in Austria . Until 1631, parts of Castile operated on a barter economy owing to the currency crisis, and the government was unable to collect any meaningful taxes from the peasantry and had to depend on revenue from its colonies . The Spanish armies, like others in German territories, resorted to "paying themselves" on the land . </P>

Who expanded the spanish empire in the western hemisphere