Spanish Economy in the Early 20th Century: Growth, Crisis, and Transformation
Spanish Economy in the Early 20th Century
Energy and Technological Advances
The growth of the Spanish economy in the early 20th century was driven by new energy sources like electricity and oil. These advancements overcame the previous obstacle of lacking competitive energy sources due to poor coal quality. The electrification of Spain occurred in two phases between 1880 and 1914. In Catalonia, electrification reduced energy dependence on coal thanks to hydroelectric production. Progress in petroleum refining and motor technology revolutionized transportation with the automobile. Improvements in communication also occurred between 1860 and 1920 with the expansion of the telegraph, telephone, and radio broadcasts.
Industrial Growth
During the first three decades of the 20th century, Spanish industrial production increased significantly, with Catalonia playing a central role. The Catalan industrial structure transformed with the emergence of new industries and the strengthening of existing ones.
Traditional and New Industries
Traditional industries like food and textiles continued to expand, alongside the chemical industry. The steel industry in Bilbao grew, leading to the creation of Altos Hornos de Vizcaya in 1902. Rapid growth occurred in the electrical, metallurgical (cars and appliances), and oil distribution industries, such as Campsa (1927). The construction sector also boomed due to the consolidation of the cement industry.
Diversification of Catalan Industry
While the textile industry remained dominant in Catalonia, its relative importance decreased as basic and light industries grew. The rise of the electricity sector was a major change, fueled by the demand for new industrial infrastructure in cities and foreign investment in the first multinationals.
Increased income contributed to higher demand and intensified trade within Spain. However, despite increased economic potential, Catalan banking experienced a deep crisis.
Regional Industrial Growth
Beyond Catalonia and the Basque Country, industrialization spread to other areas like Madrid, Galicia, Cantabria, Valencia, and Alicante. However, this expansion did not eliminate income imbalances between different regions.
Improved Communications
Transportation and communication systems underwent a significant transformation, supporting industrial growth. Major infrastructure projects, largely state-financed, were undertaken. The telegraph network expanded and improved. The first telephone carrier was Sociedad General de Telefonos de Barcelona (1890).
State Intervention
A key feature of the Spanish economy in the early 20th century was state intervention, which restricted competition and provided subsidies to stimulate investment in advanced industries. Protectionism increased with the 1891 Customs Tariff, abandoning free trade. Agreements between companies fixed prices and market share through quotas, leading to higher coal prices in Spain. While these measures had negative economic consequences, they also promoted domestic industry and market integration.
Agrarian Crisis
Spanish agriculture entered the 20th century facing the consequences of late 19th-century European crises. The crisis particularly affected cereal, vine, and olive cultivation in dryland areas and sheep wool production. The arrival of more competitive agricultural products from countries with extensive farming practices led to lower prices in Europe. This reduced revenues and profits for Spanish farmers, resulting in protests coordinated by the Agrarian League and a period of peasant unrest.
The cereal crisis was compounded by a wine crisis, intensified by the phylloxera plague, which devastated vineyards. By 1910, the plague spread throughout Catalonia, causing widespread crop loss and economic collapse. This led to conflicts between landowners and tenant farmers (Rabassaires).
Agricultural Evolution
The agrarian crisis was eventually overcome through new trade barriers and increased production. Key improvements included new crops and intensified farming practices, which boosted productivity. New crops also enhanced livestock production, increasing meat and milk supplies for urban demand. Crop specialization for export also occurred, with cereals remaining the main crop. Other productive crops included grapes, olives, citrus fruits, fruits, and vegetables. Meat and milk production also rose considerably. While some sectors like cereal production saw high prices, Catalan agriculture experienced modest productivity gains and a significant decline in the agricultural population. Grain production, especially rice, increased, boosting the livestock sector. The wine sector experienced a prolonged depression, while oil, fruits, potatoes, and citrus fruits were exported in larger volumes.
Problems in the Spanish Countryside
The Spanish countryside in the early 20th century was marked by significant land inequality. In Extremadura and Andalusia, landowners held vast estates, while the population lived near subsistence levels. Smallholdings in Galicia, combined with poor land quality in the northern sub-plateau, limited productivity gains. Irrigation projects were promoted to improve production, with a plan launched in 1902 to stimulate irrigation in dry areas and the creation of Hydrographic Confederations. A major problem at the start of the 20th century was the large number of landless peasants.