Spain’s Economic Transformation in the 19th Century: From Agrarian Reform to Industrialization
Economic Change in 19th Century Spain
Agrarian Changes and Confiscation
The liberal revolution brought significant legal changes that transformed Spain’s agricultural landscape. These included:
- Elimination of tied land
- Abolition of the judicial system
- Freedom of land enclosure, crop marketing, and pricing
- Ending tithes to the Church, replaced by state aid
A striking development was the confiscation of Church lands. Driven by enormous debt, the Crown issued the 1836 decree of confiscation of regular clergy property (Mendizábal’s seizure), initially affecting only monasteries. In 1855, the Madoz secularization law targeted remaining Church and public lands.
However, technical delays hindered increased land yield, and livestock declined. New landowners increased pressure on the peasantry through leases, pushing them to the brink of subsistence and constant hunger. Recurring agricultural crises throughout the 19th century, caused by crop failures or market fluctuations, further exacerbated the situation. The peasants’ low purchasing power also hampered the development of a market for manufactured goods.
During the early Restoration, production increased in sectors like wine, olives, and citrus, benefiting from international prosperity and urban consumption growth. However, overproduction later led to falling prices and wages. The international crisis of the 1890s and subsequent protectionist policies stalled exports, further impacting the agricultural economy. By the early 20th century, Spanish agriculture stagnated, marked by unfair land distribution, lack of investment, and rural unrest.
Spain’s Industrial Revolution
Spain’s economy lagged significantly in the mid-19th century due to geographical challenges, limited resources, slow population growth, and lack of capital. Spanish capitalists often invested in public debt, land acquisition, or stock trading, leading to dependence on foreign capital. State debt and protectionist policies also played a negative role, compounded by the loss of American colonies.
Industrial production remained low in the first half of the 19th century. By 1830, only Barcelona’s textile sector had begun industrializing. Steel production remained weak due to low machinery demand. Other consumer industries grew modestly. Mining was largely controlled by foreign capital.
From 1870, a period of growth began, fueled by global economic prosperity. This facilitated the establishment of industrial capitalism, particularly in steel and mining. Improved communications, including railway expansion, better roads, postal service, telegraph, telephone, and electricity, also contributed to this growth.
However, the international economic crisis of the 1890s impacted Spanish industry.
The Impact of the Railroad
Until 1855, the lack of a stable legal framework hindered railway development. The General Law of Railways, passed that year, triggered a railway boom. Between 1855 and 1865, significant domestic savings and state resources were invested in railways.
The 1866 international financial crisis, partly caused by the railway collapse, halted construction. It resumed only after 1876. Railroads revolutionized transport costs and speed, ultimately having a positive long-term economic impact.