Industrialization in 19th Century Spain: Challenges and Regional Development
The Industrial Revolution in Spain can be described as a delayed process compared to other European countries. Agriculture offered low yields, leading to subsistence crises and low purchasing power for the majority of the population, hindering the domestic market. The scarcity of energy sources and Spain’s peripheral position further complicated economic improvement. Additionally, there was a delay in the demographic transition, limited migration, and very little education. Industry was concentrated in two main areas, Catalonia and the Basque Country, but their lack of competitiveness necessitated protectionist policies.
One of the main obstacles to industrial development was the Spanish economy’s heavy reliance on agriculture. Low agricultural yields caused ongoing subsistence crises, as domestic production was insufficient to meet the population’s needs. The low purchasing power of the majority further hindered the creation of a national market. Other significant issues included a delayed demographic transition, limited migration, and high illiteracy rates (only 30% literate), which limited innovation. Spain’s peripheral position hampered trade relations, and the shortage of national capital led to reliance on foreign capital from Belgium or France. Industry was limited to Catalonia and the Basque Country, necessitating protectionist policies due to their uncompetitiveness and the scarcity of energy sources, particularly coal. The main Spanish industries were textiles (cotton in Catalonia) and steel. Catalonia was the center of industrial activity, having achieved significant economic development since the eighteenth century through trade with America, abundant labor, an entrepreneurial mindset, and protectionist policies against English textiles. This development was based on new techniques like mules driven by waterwheels or steam engines, although this caused worker protests. Other textile sectors were located in Castile and León (wool), Valencia, Murcia, and Granada (silk), and Galicia (linen). The steel industry faced significant challenges due to its dependence on raw materials: iron and coal. Spanish mining, despite rich deposits, was largely paralyzed during the nineteenth century due to low demand, economic backwardness, and a lack of exploitation technologies. The Mining Law of 1868 gave impetus to the sector and encouraged a mining boom. Foreign investment and the sale of subsoil holdings to private hands further stimulated development.
Mining exports helped develop the steel industry and created Basque companies like Ybarra and Altos Hornos de Vizcaya. Still, the Spanish steel industry lagged behind other European countries. Other important industrial activities included mills for grinding grain or making paper, farm-related industries like olive oil and wine production, and the nascent mechanical industry, symbolized by the steam factory. Natural barriers hindered the creation of a national market. Building roads was essential for communication between mountainous regions. Transportation relied on highways, shipping, and rail. The road network was generally poor, but shipping improved with the introduction of navigation. The first railway was Barcelona-Mataró (1848). A centralized model linked Madrid with the main economic centers, but the track gauge was wider than the European standard. The Railways Act of 1855 spurred railway construction due to grants and facilities provided. Twenty railway companies were created, including MZA (Madrid-Zaragoza-Alicante), the Northern Railway, and SJC (Seville-Jerez-Cádiz). The 1868 revolution (La Gloriosa) and the subsequent economic crisis halted railroad development.
From the time of Charles IV, the Spanish treasury was burdened with debt. The Mon-Santillán reform simplified the tax system into direct taxes (property, commercial, and industrial) and indirect taxes (goods circulation, consumption, and monopolies). The reformed system required everyone to contribute, but those with more wealth did not pay proportionally, meaning it was not a progressive tax system and was insufficient to cover expenses. Another measure to develop the domestic market was the introduction of the peseta as the official currency and the creation of banks and credit-issuing institutions. However, the “railway bubble” crisis led to their bankruptcy, leaving the Bank of Spain with a monopoly on issuing currency. During the nineteenth century, Spanish governments, traders, and farmers debated between protectionist policies (high tariffs) and an open-door policy (low tariffs). Catalan industrialists, grouped in “Development of the national work,” advocated for protectionism, while agricultural exporters and railway builders favored free trade (Figuerola Tariff, 1869).
In conclusion, Spain remained largely agricultural, with industrialization impacting only Catalonia and the Basque Country. The situation was complex, with limited resources and significant spending on railway construction. Some historians view Spain’s industrialization as delayed, while others consider it a complete failure.