Spain’s 19th Century Liberal Revolution & Economic Reforms
The Liberal Revolution and Institutional Changes in Spain
The term Liberal Revolution applies especially to the Spanish revolutionary process that began with the Cortes of Cadiz and continued through the Liberal Triennium and the early reign of Isabel II, coinciding with the Carlist Wars.
The core principles of liberalism include:
- Freedom
- Equality
- Property Rights
In Spain, a pact emerged between the liberal bourgeoisie, who spearheaded the change, and the upper classes. This alliance ultimately brought an end to the Old Regime.
Implementation of the Liberal System in Spain (1808-1833)
- 1808-1814: Peasants rose against the established power. The most significant political outcomes were the Cortes of Cadiz and the Constitution of 1812 (Spain’s first constitution).
- 1814-1820: Fernando VII returned to power, restoring absolutism.
- 1820-1823: Military and political uprisings, notably Riego’s Pronunciamiento, forced Fernando VII to recognize the Constitution, bringing liberals to power.
- 1823-1833: The intervention of the Hundred Thousand Sons of Saint Louis restored Fernando VII’s absolute power.
- 1833: The death of Fernando VII marked the start of the Carlist Wars and solidified the agreement between nobles and liberals.
Liberals ascended to power as the Old Regime faced internal dissolution. They forged an agreement with the aristocracy to establish a liberal model. While the Church remained hostile to liberalism, the liberals prioritized granting land to the nobility over the peasants.
The nobility accepted this pact, leading to a transformation from an economic model that hindered growth to one that facilitated it. However, this period also marked a divergence from other European nations, as the new bourgeois aristocracy established an economic growth model based on privilege (often rejecting innovation) and extreme exploitation of labor.
Characteristics of the Liberal State Model:
- National Sovereignty
- Political Participation (through voting)
- Representative System
- Citizenship Rights
- Separation of Powers (Legislative, Executive, and Judicial)
Santillán Tax Reform (1845)
The Santillán Tax Reform was based on the following principles:
- State Monopoly: Only the state could collect taxes.
- Universality: Taxes were to be uniform for all citizens across Spain.
- Fairness: Taxpayers were to contribute according to their wealth.
- Legality: Taxes required parliamentary approval.
- Sufficiency: Revenues needed to cover ordinary state expenses.
- Efficiency: The system aimed for fewer taxes where possible, promoting economic activity.
While the reform partially met the principles of universality, fairness, and consistency, its implementation faced challenges.
The tax structure was divided into two main types: direct and indirect taxes. Direct taxes targeted sources of wealth, such as contributions from industry and commerce (22%) and crop and livestock (5%). Indirect taxes, however, targeted consumption, including customs income, consumption taxes, and fiscal monopolies. Indirect taxes contributed two-thirds of the total revenue and were considered socially unjust.
A significant problem with this tax system was its negative impact on consumption capacity, which, combined with other factors, led to slow economic growth. Ultimately, revenues proved insufficient to sustain the state, and the liberals failed to resolve the persistent deficit problem.
Measures in Other Sectors: Economic Liberalization
The liberal revolution was supported by two key instruments:
- Tax Reform
- A comprehensive set of measures to support agriculture.
Key reforms included:
- The Mesta, a powerful livestock guild, was abolished in 1836, losing its privileges.
- Large estates were converted into individual properties, consolidating private land ownership.
- Laws were enacted to remove water rights from feudal prerogative, leading to water privatization.
- Freedom of lease contracts was established without limitations.
- Freedom of the labor market was promoted, building on earlier reforms from 1767.
- Free trade was established: price rates were abolished in 1839, and free movement of goods was introduced in 1834, alongside a customs union.
- Industrial freedom was introduced: guilds disappeared, establishing an unrestricted free internal market, which was crucial for long-term economic growth.