Spain’s Railway History & Economic Growth in the 19th Century
This historiographical text provides a narrative of the economic and political issues surrounding railway construction and economic development in 19th-century Spain. Originally published in 1994 and reproduced by G. Tortella in the book “Economic History of the Nineteenth and Twentieth Centuries,” this public document sheds light on this pivotal period.
Historical Context: Reign of Elizabeth II
The document was written within the historical context of the reign of Elizabeth II, specifically during the period of progressive and then moderate rule, leading up to 1866, a year of significant economic development in Spain.
Delayed Railway Development in Spain
The author questions why it took so long for railways to arrive in Spain. The answer lies in the government’s resistance to change at the time. However, upon the progressives’ rise to power, who favored economic development, changes were initiated, including the construction of the railway.
Rapid but Problematic Construction (1856-1866)
The author notes that although construction took place between 1856 and 1866, the development was rapid but had a weak structure and inadequate funding. Once completed, the rapid construction led to financial difficulties, as expenses exceeded revenues.
Railways: A Key Driver of Economic Growth
Railroads played a key role in driving economic growth across countries. In Spain, expansion was delayed until the second half of the century due to several factors:
- Unfavorable terrain conditions
- Economic stagnation
- Technological backwardness
- Lack of investment capital
- Political instability
Royal Decree on Establishment of Railways (1848)
The creation of a rail network was driven by the state administration through the Royal Decree on Establishment of Railways in 1848. This law reserved the granting of construction lines to the state but left construction to private initiative. This led to the first railway lines (Barcelona-Mataró and Madrid-Aranjuez) and the decision to adopt a wider gauge than the European standard.
General Railway Act of 1855: A Turning Point
The final impetus came from the General Railway Act of 1855, approved by the progressives. This law favored the creation of private companies responsible for construction and operation. The government provided resources and facilities, including grants funded by the General Confiscation Act of Madoz and permission to import foreign materials. The Companies Act of 1856 facilitated banking and credit, contributing to railway financing. From 1855 to 1865, a spectacular expansion in the number of miles put into service occurred, consolidating a radial structure centered in Madrid.
Foreign Investment and Limited Domestic Steel Industry Growth
State, domestic private enterprise, and especially large foreign credit companies, mainly French, provided the capital invested in construction. Unlike other countries, the construction of the Spanish network did not significantly stimulate the domestic steel industry, as the law authorized companies to import duty-free materials.
The Spanish Steel Industry: Challenges and Stages of Development
In Spain, unlike other European countries, the railroad did not entail extensive development of the steel industry. This industry always faced the problem of a lack of good quality coal and low demand. Its development can be divided into three stages:
- Andalusian Stage (1832-1860s): Centered around Málaga, it relied on local iron mining but faced high costs due to the lack of coal.
- Asturias Stage (1860s-1880s): Located around the coal fields of Langreo and Mieres, it benefited from coal wealth but suffered from its low quality.
- Basque Steel Industry (1880-): This stage began around Bilbao, spearheaded by the Ybarra family’s Altos Hornos y Fábricas, S.A. It became the symbol of the Spanish steel industry, thanks to abundant iron ore and the availability of English coke. The late 19th century saw modernization through Bessemer converters and Siemens furnaces, along with the concentration of large companies like Altos Hornos.