Spanish Economic Transformation 1900-1933: Industry and Infrastructure
Industrial Developments in Early 20th Century Spain
Energy and Technological Change
Among the factors driving changes in the Spanish economy in the first third of the twentieth century, the use of new energy sources, with the spread of electricity and oil, stands out. On one hand, the commercial use of electricity and its application in transportation opened up the possibility of mechanized industrial production, with a consequent reduction in manufacturing costs. The progress of electrification in Spain occurred in two phases: lighting and power for industries and transport. Also, progress was made in improving the transmission of information with the expansion of the telegraph, telephone, and radio broadcasts.
Industrial Growth
The industrial product per capita increased, and the industrial structure underwent a major transformation with the emergence of new industries and the strengthening of existing ones.
Traditional Sectors and New Industries
Among the traditional sectors, the Catalan Textile industry continued to expand, but began to lose relative weight. The food industries also declined.
The chemical industry was consolidated through the manufacture of products such as fertilizers, medicines, paints, and explosives. The steel industry grew considerably in Biscay, leading to the creation of the corporation Altos Hornos de Vizcaya in 1902. Also, in Cantabria, the steel company New Mountain S.A. was formed.
Among the new industries, the rapid growth of the electricity industry stands out. There was also significant growth in the metallurgical industry, with the car and appliance sectors expanding rapidly. The growth of the vehicle fleet spurred the creation of businesses for the distribution of refined petroleum, such as the Campsa company, founded in 1927. There was also the dissemination of the first appliances. Construction received a massive boost from the consolidation of the cement industry.
Territorial Distribution of Industry
Industrialization spread over wider areas of the Spanish territory. Madrid became the third industrial region. Other representative areas of industrial progress were Galicia, where the canning industry stood out, Zaragoza, and Seville. The furniture and toy industries also gained significance, especially in Valencia. Despite the wider territorial distribution of industry, profound imbalances in the distribution of income among the different Spanish geographical areas persisted.
State Interventionism
One of the characteristics of the Spanish economy during the first third of the twentieth century was the restriction of competition between firms and constant state intervention in the economy. Companies themselves established agreements to fix prices and share markets by quotas. This meant selling prices in Spain were higher than in other countries.
State intervention was manifested in two directions:
- The granting of aid to encourage private investment in technologically advanced industries, which entailed an increase in protectionism.
- Explicit protection, most notably in the case of coal.
These protective measures had both negative and positive effects:
- Negative effects: Sustaining industries with low productivity and making them uncompetitive with foreign countries.
- Positive effects: Promoting technological progress, helping to unify the domestic market, and fostering the emergence of new industries.
Development of Infrastructure
Improving the roads absorbed most of the State’s investment effort. The mileage of roads increased very significantly, along with the railways, which were also outside the scope of direct state support. The telegraph network grew and significantly improved the quality of transmissions. Telephony also grew significantly in the number of subscribers due to the creation of the public company, the National Telephone Company of Spain. State investment to stimulate economic expansion increased overall public spending.