Spain’s Economic and Social Transformation: 1902-1931
Economic Developments (1902-1931)
Industrial Development
At the turn of the 20th century, Spain remained an agrarian nation. However, significant changes occurred in the industrial sector, particularly in mining and steel production, concentrated in the Basque Country. New industries, such as electricity and chemicals, also emerged.
Industrial growth was hindered by factors such as the excessive geographic concentration in Catalonia and the Basque Country, dependence on foreign technology, and a weak domestic market.
Finance and Banking
The Restoration government implemented policies to improve public finances, reducing debt interest, controlling government spending, and increasing taxes. This led to a period of budget surpluses from 1900 to 1909.
The Bank of Spain was transformed in 1899, gaining control over note issuance, which helped limit inflation and stabilize the peseta.
Major banks were founded during this period, including Bilbao, Vizcaya, Mercantil de Santander Hispano, and Spanish Credit.
Economic Consequences of the First World War
Spain’s neutral status during World War I led to an economic boom. The disappearance of foreign competition and the high demand for raw materials and manufactured goods from belligerent countries fueled production and exports.
However, the end of the war and the decline in demand triggered a crisis. Domestic markets could not replace exports, leading to business closures and unemployment.
The steel and chemical industries modernized, while mining and railways were nationalized to reduce foreign capital. However, sectors like textiles and agriculture faced challenges due to a lack of modernization.
From Crisis to the Euphoria of the Twenties
The European economic crisis prolonged Spain’s economic difficulties until 1924. The dictatorship of Primo de Rivera implemented an ambitious investment policy in infrastructure, including irrigation projects, railway nationalization, and the establishment of CAMPSA and the Telephone Company.
This investment policy led to a return to borrowing, which would have negative consequences during the Great Depression of 1929.
Society (1902-1931)
The Population
Spain’s population grew steadily from 18.6 million in 1900 to 23.5 million in 1930. Improved healthcare led to a decline in mortality rates.
However, high infant mortality remained a challenge, indicating the country’s relative backwardness. The influenza epidemic of 1918-1919, known as the”Spanish Flu” caused widespread devastation.
Internal migration from rural areas to cities led to increasing urbanization, with 50% of the population living in urban areas by 1930. External migration also occurred, with over a million Spaniards leaving for Latin America.
Social Evolution between 1900 and 1930
Spanish society remained marked by significant wealth disparities. The upper classes included those linked to finance and industry, as well as a new bourgeoisie enriched by wartime business.
The middle classes grew in size, particularly in urban areas. They often held political views in opposition to the Restoration regime, supporting republican or nationalist groups.
The working class expanded numerically, organized around the CNT and UGT trade unions. A large population of landless laborers in the south faced desperate social conditions, leading to radical political positions.
The Labor Movement
The socialist PSOE and UGT were influential in Asturias, the Basque Country, Madrid, and Andalusia. The anarchists and CNT union were strong in Catalonia, Aragon, Levante, and Andalusia.
The PSOE experienced a crisis after the Russian Revolution, with a small group breaking away to form the Communist Party of Spain (PCE) in 1921.
The anarchists also faced tensions between peaceful and revolutionary factions, with the latter forming the FAI in 1927.
Catholic unions, though a minority, were active in the north, primarily among small farmers and peasants.