Spanish Disentailment Laws: 19th Century Reforms

Disentailment by the Cortes of Cadiz (1811)

In 1811, the Cortes of Cadiz addressed the pressing public debt problem. While bankruptcy was considered, a group of deputies successfully passed a decree. This decree stipulated that affected land rents would be used for debt payment.

This marked the first general disentailment statute of the nineteenth century, though its practical application was limited. During the Liberal Triennium, disentailment law was restored. In 1820, all monasteries of the monastic orders were suppressed. With this decree, disentailment was no longer limited to partial measures but was pursued with greater resolve.

Mendizábal's Disentailment & Reforms

Juan Álvarez Mendizábal, a key figure in Spanish disentailment, participated in the War of Independence and was a staunch supporter of liberal ideas. He financially backed Rafael Riego's uprising in 1820, which led to his exile after the rebellion failed.

Upon his return to Spain in 1835, he joined the Progressive Party and was appointed Finance Minister. In September of the same year, he became interim President of the Government, retaining his Finance Minister portfolio until 1836.

Spain faced a dire economic situation, exacerbated by military spending during the ongoing civil war. Mendizábal's primary concern was this financial crisis. State coffers were empty, public debt had reached gigantic proportions, and the government desperately needed funds. Consequently, he initiated a large-scale sale of national assets.

Mendizábal's First Disentailment Law (1836)

In 1836, a decree approved the sale of real estate belonging to corporations and religious communities, alongside the suppression of monastic institutions. Exceptions were made for properties designated for public services or national monuments, which the government explicitly listed.

The same decree announced the formation of regulations for these property sales, with the explicit aim of reducing public debt. Sales were to be public auctions, with purchasers bidding for the properties.

Payment options included:

• Debt Securities: Purchasers using debt securities had to pay a fifth of the price in cash, with the remainder paid over the next eight years. However, these securities had significantly depreciated, making them practically worthless.
• Cash: For payments made entirely in cash, more favorable terms were offered. A fifth of the price was paid upfront in cash, with the remainder spread over sixteen years.

While using debt securities allowed the state to clear outstanding debt, cash payments were preferred due to immediate financial needs.

Mendizábal's Second Disentailment Law (1837)

In 1837, a second disentailment law was enacted, conceived more as a tax reform. Tithes were abolished, and almost all clergy property was declared national property subject to transfer.

However, its practical application was almost nil, as transfers were not scheduled to begin until 1840, and the relevant section of the law was subsequently repealed.