In the early-20th century, Catalonia, Spain’s industrial driving force, embodied an incredible paradox: the country did not possess even the minimum infrastructure proportionate to its contribution to the public purse. The Catalan press of the time denounced this discrepancy whilst also highlighting another disturbing fact: the gap was not only financial, but also human, as Catalonia provided 900 more recruits to the armed forces than would correspond to it according to population. This discrimination is explained by documents from the time in which State bodies suggested that the “right of conquest” over Catalonia permitted them to act as they did.
Self-government without powers or resources
The 'Mancomunitat', or association of municipalities of Catalonia (1914-25), the first self-governing body since 1714, alleviated the deficit with the State by using resources from the provincial governments of Barcelona, Girona, Lleida and Tarragona, as the Spanish government refused to devolve powers over tax collection. Consequently, the State continued to levy 250 million pesetas every year in Catalonia, returning just 19.1 million in investment in public works, education, health and agriculture. After General Miguel Primo de Rivera abolished the Mancomunitat, the tax deficit continued to exist. In 1926, Catalonia, by no means the largest or most-populated region in the State, contributed nearly one-third (30%) of all the taxes paid in Spain.
The restoration of the Generalitat, or Catalan government, during the Second Republic (1931) did not bring about an immediate improvement in the issue of financing. Spain’s slow-footedness in devolving powers to the Catalan government caused absurd situations, such as that concerning public works. The decision to devolve powers to the Generalitat in this area was made in 1931, but did not enter into effect until 1935, though this detail did not prevent the State from leaving Catalonia out of its public works plans, as it considered the Generalitat responsible, even if only nominally, in this area. Overall public investment in Catalonia amounted to less than one-third of the total taxes collected by the State from the Catalan people.
Taxation in wartime
During the Civil War, the exceptional situation led to exceptional initiatives. Due to the circumstances of the war, the Generalitat was required to take over the functions of the Republican government in Catalonia. In January 1937, despite central government opposition to Catalan autonomous economic management, the Generalitat restructured financial relations between the two under a new fiscal system. Taxes intended to provide sources of income for the Catalan Treasury and whose purpose was to help sustain the war effort were established, amended or restored. Nevertheless, the course of the war led a decrease in tax revenues, and the Generalitat accumulated a huge deficit.
The Franco regime installed an autarchic system, with strict rationing and restrictions on foreign exchanges, in which the State was to produce all necessary goods. The new authorities demonstrated their clear intention to make economic recovery in Catalonia as difficult as possible. The headquarters of Catalan companies were transferred to Madrid, and Spanish banks absorbed the country’s financial institutions, with the result that Catalan banks represented just 3% of the Spanish banking system in the mid-1950s.
Stagnation under Franco
The defeat of the Nazis led to stagnation in the Spanish economy. There was a shortage of energy and raw materials. The Catalan industrial and commercial bourgeoisie was content merely to keep their businesses going despite State interventionism. The State did not always get its own way, however. The dictatorship, which wanted Catalonia to specialise in textiles, was forced to bow to the FIAT automobile manufacturer’s desire to install the SEAT factory in Barcelona due to its port and the local qualified workforce, increasing the weight of the iron and steel industry in Catalonia. As usual, fiscal pressure was kept up. In 1951, the State invested 28% of the taxes it collected in Barcelona province in the province itself; that is to say, a fiscal deficit of 72%.
In the 1950s, incapable of raising living standards amongst the people, the autarchic model entered into crisis and was forced to evolve towards a greater liberalisation of the economic system. But nothing changed in Catalonia. In 1956, State income from Barcelona province was 5,551,154,212 pesetas, whilst spending was 1,179,668,992 pesetas. In other words, just 21% of revenue, a 79% deficit.
The population and economic growth which followed in the 1960s brought no improvements to the services that should exist in a country that acts as the driving force for an entire State. In 1975, the deficit in public education in Barcelona Metropolitan Area was 58% as regards places in basic and pre-school education whilst, in health care, there were six hospital beds per thousand inhabitants in the capital, when the WHO recommended ten beds per thousand.
Democratic transition and self-government
The dismantling of the dictatorship following the death of Franco, the restoration of democracy and the re-establishment of the Generalitat presented an opportunity to correct old vices. During the process of drafting the Catalan Statute of Autonomy in 1978, the possibility was considered of establishing a financing system based not on what the central administration should transfer to the autonomous government but on what Catalonia should transfer to the central government. The idea was to give the country complete freedom to decide how to use much of its money whilst also ensuring solidarity with less developed areas of the State. The Spanish government, presided over by Adolfo Suarez, rejected this proposal, now known as the fiscal pact, and economic issues were relegated to a secondary position since, in those times, there was more interest in securing devolution of powers in such areas as language and education, considered vital providing a firm structure for the country.
In 1994, Catalonia paid around 20% more than the Spanish average and received 17% less than that same average. Despite this, the country continues to be accused of a lack of solidarity, and these accusations are not contested outside Catalonia because conserving this image reaps political and economic benefits for Spanish political parties and State structures. What is most ironic is that Catalonia leads the autonomic process: in a curious exercise of imitation, if the country achieves powers in a particular area, the other autonomous communities also demand its devolution from the State. Perhaps this explains why Madrid refuses to talk about reforming system under which Catalonia is financed: the task threatens to be long and arduous, and there is little desire to redress injustices.
Self-government without powers or resources
The 'Mancomunitat', or association of municipalities of Catalonia (1914-25), the first self-governing body since 1714, alleviated the deficit with the State by using resources from the provincial governments of Barcelona, Girona, Lleida and Tarragona, as the Spanish government refused to devolve powers over tax collection. Consequently, the State continued to levy 250 million pesetas every year in Catalonia, returning just 19.1 million in investment in public works, education, health and agriculture. After General Miguel Primo de Rivera abolished the Mancomunitat, the tax deficit continued to exist. In 1926, Catalonia, by no means the largest or most-populated region in the State, contributed nearly one-third (30%) of all the taxes paid in Spain.
The restoration of the Generalitat, or Catalan government, during the Second Republic (1931) did not bring about an immediate improvement in the issue of financing. Spain’s slow-footedness in devolving powers to the Catalan government caused absurd situations, such as that concerning public works. The decision to devolve powers to the Generalitat in this area was made in 1931, but did not enter into effect until 1935, though this detail did not prevent the State from leaving Catalonia out of its public works plans, as it considered the Generalitat responsible, even if only nominally, in this area. Overall public investment in Catalonia amounted to less than one-third of the total taxes collected by the State from the Catalan people.
Taxation in wartime
During the Civil War, the exceptional situation led to exceptional initiatives. Due to the circumstances of the war, the Generalitat was required to take over the functions of the Republican government in Catalonia. In January 1937, despite central government opposition to Catalan autonomous economic management, the Generalitat restructured financial relations between the two under a new fiscal system. Taxes intended to provide sources of income for the Catalan Treasury and whose purpose was to help sustain the war effort were established, amended or restored. Nevertheless, the course of the war led a decrease in tax revenues, and the Generalitat accumulated a huge deficit.
The Franco regime installed an autarchic system, with strict rationing and restrictions on foreign exchanges, in which the State was to produce all necessary goods. The new authorities demonstrated their clear intention to make economic recovery in Catalonia as difficult as possible. The headquarters of Catalan companies were transferred to Madrid, and Spanish banks absorbed the country’s financial institutions, with the result that Catalan banks represented just 3% of the Spanish banking system in the mid-1950s.
Stagnation under Franco
The defeat of the Nazis led to stagnation in the Spanish economy. There was a shortage of energy and raw materials. The Catalan industrial and commercial bourgeoisie was content merely to keep their businesses going despite State interventionism. The State did not always get its own way, however. The dictatorship, which wanted Catalonia to specialise in textiles, was forced to bow to the FIAT automobile manufacturer’s desire to install the SEAT factory in Barcelona due to its port and the local qualified workforce, increasing the weight of the iron and steel industry in Catalonia. As usual, fiscal pressure was kept up. In 1951, the State invested 28% of the taxes it collected in Barcelona province in the province itself; that is to say, a fiscal deficit of 72%.
In the 1950s, incapable of raising living standards amongst the people, the autarchic model entered into crisis and was forced to evolve towards a greater liberalisation of the economic system. But nothing changed in Catalonia. In 1956, State income from Barcelona province was 5,551,154,212 pesetas, whilst spending was 1,179,668,992 pesetas. In other words, just 21% of revenue, a 79% deficit.
The population and economic growth which followed in the 1960s brought no improvements to the services that should exist in a country that acts as the driving force for an entire State. In 1975, the deficit in public education in Barcelona Metropolitan Area was 58% as regards places in basic and pre-school education whilst, in health care, there were six hospital beds per thousand inhabitants in the capital, when the WHO recommended ten beds per thousand.
Democratic transition and self-government
The dismantling of the dictatorship following the death of Franco, the restoration of democracy and the re-establishment of the Generalitat presented an opportunity to correct old vices. During the process of drafting the Catalan Statute of Autonomy in 1978, the possibility was considered of establishing a financing system based not on what the central administration should transfer to the autonomous government but on what Catalonia should transfer to the central government. The idea was to give the country complete freedom to decide how to use much of its money whilst also ensuring solidarity with less developed areas of the State. The Spanish government, presided over by Adolfo Suarez, rejected this proposal, now known as the fiscal pact, and economic issues were relegated to a secondary position since, in those times, there was more interest in securing devolution of powers in such areas as language and education, considered vital providing a firm structure for the country.
In 1994, Catalonia paid around 20% more than the Spanish average and received 17% less than that same average. Despite this, the country continues to be accused of a lack of solidarity, and these accusations are not contested outside Catalonia because conserving this image reaps political and economic benefits for Spanish political parties and State structures. What is most ironic is that Catalonia leads the autonomic process: in a curious exercise of imitation, if the country achieves powers in a particular area, the other autonomous communities also demand its devolution from the State. Perhaps this explains why Madrid refuses to talk about reforming system under which Catalonia is financed: the task threatens to be long and arduous, and there is little desire to redress injustices.
Jordi Mata (Text)
Agustí Alcoberro, Francesc Cabana, Josep Maria Solé i Sabaté (Advisory) Alan Moore (Translation)
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