The Tragic Week & Spain’s Economic Miracle
The Tragic Week
Background
The Tragic Week originated from tensions and turmoil in Barcelona, fueled by the rise of labor mobilization, nationalism, and republicanism (led by Alejandro Lerroux and the Radical Republican Party). Contributing factors included anti-clerical and anti-military sentiments (Jurisdiction Act).
The Crisis
The government’s decision to send reservist soldiers to Morocco in 1909 sparked protests. Following attacks on Spanish workers in the Rif region, the Maura government deployed troops, further escalating tensions. The “Disaster of the Barranco del Lobo” (resulting in 1200 deaths) intensified the situation, leading to a general strike called by Solidaridad Obrera in Barcelona on July 24th. The strike spread, and a state of war was declared. On August 1st, the situation culminated in the assault and burning of convents.
Aftermath
The Tragic Week resulted in 116 deaths, 300 wounded, and over 60 buildings destroyed. The subsequent repression was severe: 1500 arrested, 1700 prosecuted, 17 death sentences, and five executions, including that of Francesc Ferrer i Guàrdia, founder of the Modern School. Ferrer’s execution triggered international protests and the fall of the Maura government. In February 1910, Alfonso XIII tasked Canalejas with forming a new government, initiating a period of reform.
Canalejas’ Reforms
Canalejas implemented a more open and regenerative program. Some key measures included:
- Military Reform: Shifting to compulsory military service during war and shorter service in peacetime.
- Labor Dialogue: Fostering dialogue with the labor movement.
- Church and State: Separation of Church and State with the Padlock Law, which prohibited the establishment of new religious orders in Spain for two years.
- Education: Development of an educational program.
Canalejas was assassinated in 1912, ending this initial attempt at regeneration. Between 1913 and 1915, the Conservative Party, led by Eduardo Dato, governed, followed by the Liberals under the Count of Romanones from 1915 to 1917.
Economy, Stabilization, and Development Plans
Early Measures
The new economic team focused on addressing rising prices and the deficit by raising interest rates, reforming the tax system, and freezing public wages. In 1958, Spain joined the IMF and the World Bank. Following their recommendations, the Decree-Law of Economic Management, better known as the Stabilization Plan, was approved in July 1959.
The Stabilization Plan (1959)
The plan aimed to establish a foundation for economic growth, rapid industrialization, and integration of the Spanish economy into the international system. This required economic liberalization through deregulation, reduced public spending, and opening the Spanish economy to foreign investment and trade. Key measures included:
- Public spending limitations
- Higher interest rates
- Wage freezes
- Limits on bank lending rates
- Liberalization of protected industries
- Establishment of a new exchange rate for the peseta (60 pesetas/dollar), leading to devaluation
- Liberalization of foreign investments, allowing up to 50% ownership in Spanish companies (resulting in significant capital inflow from multinationals)
Initial Impact and Recovery
The Stabilization Plan had immediate effects. Between 1959 and 1960, there was an economic slowdown with falling prices, wages, and consumption, leading to mass emigration. However, the plan achieved its goals of deficit reduction and capital accumulation. From 1961, the Spanish economy began to recover, with growth concentrated in industry and services, leading to modernization and profound societal changes.
Factors Driving Industrial Growth
Industrial growth was driven by three factors:
- Low wages
- Capital accumulation
- Massive influx of foreign investment
These factors had two significant consequences: a heavy social cost borne by the working class and increased dependence on the external economy. This dependency stemmed from imports of capital goods and petroleum, creating a balance of payments deficit covered by tourism (80% of the trade imbalance), foreign investments, and remittances from emigrants.
Development Plans (1963-1973)
From 1963, the government attempted to regulate growth through Development Plans, designed by Laureano López Rodó. Each three-year plan aimed to achieve growth targets in key sectors through tax incentives, export subsidies, state aid, and the creation of “development poles” to attract new industries to depressed areas and generate employment. Seven development poles were established in Burgos, Huelva, Vigo, A Coruña, Valladolid, Zaragoza, and Seville.
Outcomes and the “Spanish Miracle”
The Development Plans had limited success. The 1963 plan was extended until 1969 due to unmet targets, and the 1969 plan remained in effect indefinitely. However, between 1961 and 1973, the Spanish economy experienced remarkable growth, averaging 8.6% annually until 1967 and around 6% thereafter. This period, dubbed the “Spanish Miracle” by the regime, was likely not solely due to planning but also influenced by sustained growth in European economies, tourism, remittances, and the post-war economic boom.