Spanish Industrialization Law of 1939: A Post-War Analysis

Spanish Industrialization Law of 1939

This document is a firsthand legal text, a law enacted to provide state support for the creation of industries of national interest. Authored by Franco in October 1939, it reflects the post-Civil War priorities of the Spanish state.

Published after the end of the Civil War, the law emerged from the state's recognition of the importance of industries, particularly those with wartime applications. The country's situation was dire, with widespread destruction of infrastructure and reduced agricultural and industrial output. The Northern Campaign highlighted the need for state control over key industries.

The Rationale Behind the Law

The law was driven by the realization that controlling industries, especially iron production, was crucial for producing weapons and other essential goods. Industries of national interest were those that could support the state's survival. This was due to Franco's limited international support and a desire for self-sufficiency, reflecting the regime's autarkic economic policy. The focus was on defense-related industries, though others were also included.

Incentives for Industries

The law offered several incentives to encourage industrial development:

• Expropriation of land for factory construction.
• Significant tax reductions, potentially up to 50%.
• Guaranteed earnings, initially 4% of investment or up to 6 million pesetas for large investments.
• Reduced tariffs on imported technology and machinery.

In return, the state maintained control through an accountant and an advisor on the company council. Companies could gain full independence by renouncing state support once profitable.

Impact and Aftermath

Spain remained largely agricultural until the 1960s. While this law spurred some industrial growth, it was a slow process. The Instituto Nacional de Industria was created to further support and control industry. Efforts were made to create industrial hubs and development regions, but unemployment remained high. Emigration, both internal and external, became a solution, with many Spaniards moving to other European countries for work. This emigration had a dual benefit: reducing unemployment and bringing foreign currency into the Spanish economy.