Spain’s 19th Century Economic Transformation
Introduction
The 19th century marked the era of industrialization, witnessing the birth of a new society in some countries where industry became an activity of unprecedented magnitude. Industrialization brought about a radical change in production methods and societal organization. Spain’s evolution was unique but not exceptional; like many eastern and southern countries, it lagged in consolidating an industrialized society. Its economic transformation was modest, remaining predominantly agrarian with a limited industrial sector. Spain’s per capita income was lower than countries with economies based on modern industry, such as the UK.
Mineral Resources
Between 1874 and 1914, Spain saw massive exploitation of its underground mineral deposits. The two most significant mining activities were coal and iron ore extraction.
5.1 The Mining Expansion
The expansion of mining production is explained by three factors: increased demand due to technical innovations and industrial structure changes, advancements in operating techniques lowering extraction costs, and the chronic indebtedness of the Spanish treasury, which led to granting exploitation rights to foreign companies under the new mining legislation of 1869.
5.2 Coal and Iron Mining
Although Spanish coal deposits were spread across several areas (Asturias, Cordoba, Palencia), Asturias was the most important due to its coastal proximity and access to maritime transport, despite the coal’s low calorific value. The low quality of coal was not initially a decisive disadvantage. However, when the 1869 tariff liberalized, the competitiveness of indigenous coal disappeared. Thereafter, it relied on state aid, and despite its high price, Asturian production quadrupled. Coal mining, along with wheat cultivation, became major economic sectors supported by the administration through high protective tariffs.
Iron mining presented a largely positive aspect. The Bessemer converter, transforming iron into steel, stimulated demand for Spanish ore. Vizcayan mineral had the advantage of proximity to coastal mines, reducing transport costs. In 1871, mining companies were established, but weak domestic demand meant most production was exported. Spain became the main supplier of iron ore in Europe. However, capital accumulation, pre-processing in the Basque economy (especially Biscay), and the repatriation of human and physical capital from Cuba led to significant consolidation of the steel industry in that region.
6. The Steel Industry
The steel industry was the sector that encouraged the development of modern industry, following the cotton sector. Biscay possessed important mines, mainly supplying England, but coal shortages were a major cause of the failure of the first facilities.
6.1 The Beginnings of the Steel Industry
The first attempts to create a modern steel industry developed in Andalusia, specifically in Malaga. Their production initially led to Andalusian hegemony, but failed due to difficulties in acquiring coking coal. The existence of coal deposits in Asturias turned this region into the iron and steel center of Spain between 1864 and 1879. Despite its modest production, Asturias held hegemony as the only area in Spain with coal.
From 1876, the arrival of cheaper Welsh coke to Bilbao led to the consolidation of the steel industry in Biscay.
6.2 The Biscay Steel
Between July 1879 and December 1882, three major Spanish steel companies were established in Biscay: San Francisco, Blast Furnaces, and Iron Abrica. Within a year, Blast Furnaces became the most important steel company in Spain. The consolidation of the commercial axis between Bilbao and Cardiff played a leading role in this development. This commercial hub’s influence was also significant in Cantabria, where New Roller SA was established. In 1902, these companies merged into Altos Hornos de Vizcaya, the most important steel company for much of the 20th century.
6.3 Industrial Diversification
Industrial diversification occurred within its specialization in sectors requiring large capital inflows. The benefits of exporting mineral and the Bessemer converter led to the development of a major capital equipment industry. Thus, in addition to the steel industry, major individual shipbuilding constructions were consolidated in Biscay. The Basque industrialization also benefited from the presence of a major banking sector, including the Bank of Bilbao and Viscaya Bank.