Spanish Economic Transformation: 1833-1875

Economic Changes in Spain (1833-1875)

The Spanish population increased due to a decline in mortality and sustained high fertility rates. Most of the population remained rural, with 80% living in rural areas.

Agricultural Reform

Agriculture underwent significant reform, including the abolition of the feudal regime, the abolition of primogeniture, and the confiscation of lands by Mendizábal and Madoz. Juan Álvarez Mendizábal, Minister of Finance, initiated the confiscation of church property and land in 1836, dissolving religious orders. This confiscation involved the expropriation and nationalization of disentailed properties, followed by public auctions.

Secularization had three main objectives: to pay off financial debt, to expand the political foundations of liberalism, and to create a class of tenant farmers. While it did not solve the public debt problem, it did increase support for liberals. However, the disentailed properties were often bought by nobles and the bourgeoisie, which did not mitigate social inequality.

The seizure of church lands dismantled the economic power of the church. In return, the state committed to financially subsidizing the clergy.

The last major confiscation began in 1855 by Pascual Madoz, primarily affecting municipal lands.

The results of this confiscation were not entirely positive. It harmed municipalities, did not solve the state's solvency issues, and negatively impacted poor communities.

The sales of land by Mendizábal and Madoz radically changed the Spanish countryside. However, technical backwardness and unequal land distribution remained significant problems.

Industrial Development

Industrialization in Spain was limited, primarily affecting Catalonia and the Basque Country. Factors contributing to this delay included:

• Shortage of coal and raw materials
• Technological backwardness
• Dependence on foreign capital
• Lack of an integrated internal market
• Political factors such as the loss of colonial markets and political instability

Railway Expansion

The expansion of the railway was a key factor in modernization. Spain lagged behind, with the first line constructed between Mataró and Barcelona in 1848. Following the enactment of the Railways Act in 1855, there was a significant expansion of the railroad network.

Trade Policy

The overall trade policy was protectionist. The tariff laws of 1841 and 1849 favored the interests of the Catalan textile industry and Castilian landowners. While there was a brief liberal period, the restoration led to a return to protectionism.

Financial Developments

The financial sector was characterized by difficulties due to debt. However, there were some important developments:

• In 1865, the San Fernando Bank was replaced by the Bank of Spain, which became the national bank with a monopoly on note issuance.
• In 1868, the peseta was adopted as the monetary unit.