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Basque Center
BASQUE STUDIES
Tutorial Ph D
Minor
Online courses
Guggenheim
Lesson
1
Lesson
2
Lesson 3
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Online Course C460 ·
Bilbao Guggenheim Museum
Lesson three
Industrialization
Required reading
Eduardo J. Glass. “General Economic Development”
(Chapter 3, Bilbao’s Modern Business Elite,
Univ. of Nevada Press, Reno, 1997.)
Max Weber, letter to his mother from Bilbao.
Suggested reading
Erik Wolf. “The New Laborers” (Chapter 12,
Europe and the People Without History, Univ. of
California Press, Berkeley, 1982.)
Learning goals
1. What are the facts of Bilbao’s
industrialization?
2. The spread of capital from mining to
metallurgy, shipping, banking, and other industries.
3. Bilbao’s industrial development and its
relationship to the European global capitalist
system
“The panorama of the mountains rising above the
sea and the Nervion valley, smoking with a hundred chimneys,
forms a spectacle that is so stunning as to become
unforgettable,” wrote Max Weber to his mother from
Bilbao at the turn of the 20th century.
During the first half of 19th century, Vizcaya lagged
behind other Spanish provinces in modern industrial
development. Even if primarily a rural province, agriculture
was still insufficient to feed Vizkaians. The explosive
growth took place after 1876. This did not take place ex
nihilo; from 1840 to 1875 there had been other
modernization attempts.
By 1856 Bilbao was tenth among commercial Spanish
ports, but by the mid-1860s it became second after
Barcelona. Bilbao’s ascent was a difficult one.
Setbacks included the decline of iron and wool (traditional
materials for export) during the first part of the century
and the First Carlist War of succession to the Spanish
throne during the early 1830s. Andalucia established more
advanced factories. Bilbao lost the right to import
duty-free products and became fully integrated into the
Spanish market. This opened new trade opportunities with the
Spanish colonies: Cuba, Puerto Rico, and the Philippines.
Imports grew during the 1840s, 1850s, and 1860s with Great
Britain (textiles, machinery, drugs and chemical products),
France (silk and textiles), and Norway (codfish) providing
approximately 75% of the imports. Bilbao exported grain,
flour, wine, and iron ore, with grain and flour amounting to
72% of the exports during 1858-1866. Still, Bilbao’s
port was a distant second to the neighboring port of
Santander. Bilbao’s shipyards enjoyed great prosperity
during the 1850s and 1860s. Total tonnage went from 30,000
in 1847 to 68,200 in 1858 (739 vessels).
Banking and insurance was another growth industry of
the 1850s. The Union Bilbaina insurance company was founded
in 1850 by forty of the wealthiest Bilbao merchants. By 1861
seven insurance companies operated in Bilbao. Banco Bilbao
was established in 1857 and had the privilege of issuing
paper money that served as legal tender. Large partnerships
had the advantages of reducing risks and the ambitious
project of constructing the railroad line (completed in
1863) between Bilbao and Tudela (necessary to maintain the
Castilian market) required such large partnerships. Financed
mostly by foreign countries, the Spanish railroad network
was extended from 500 to 5,000 kilometers between 1855 and
1865, with most of the materials imported from Great
Britain. The Bilbao-Tudela railroad was financed with local
capital.
Modernization spread to the manufacturing industries
of the mid-1800s. Merchants dominated the iron industry
until the 1830s and in the late 1840s there were 621 mills
in Vizcaya. The ferrerias or foundries (small earths fueled
by charcoal and powered by water), almost unchanged since
the Middle Ages, were finally obsolete. In 1848 the iron
factory Santa Ana built the first Vizcaian blast furnace.
The modern giants facilitated the separation of the smelting
and refining processes and their output was much larger,
producing as much as one hundred ferrerias. The blast
furnace of Nuestra Senora del Carmen followed in 1855. Lack
of coal was a serious hindrance to these iron factories. The
neighboring region of Asturias produced more iron wrought
than Vizcaya in the mid-1860s. The cost of iron ore was 8.75
pesetas in Vizcays versus 14.87 in Asturias; yet the cost of
coke was 19.75 in Asturias versus 54.25 in Vizcaya. The
failure to find coal near Bilbao forced the Ybarras and Co.
to export the metal from Asturias or Great
Britain.
Bilbao’s prosperity necessitated urban renewal
projects. Water conduits had to be built by the 1860s for
the needs of Bilbao’s inhabitants.
As the local iron industry was breaking away from the
obsolete ferrerias, the city began to grow as one of the
most important ports of Spain. The population growth was
double Spain’s during 1859 &endash; 1900. In 1887 41.5%
of the town of Valmaseda, 73% of Baracaldo, and 38.2% of
Bilbao were immigrants and the industrial and service
sectors equaled those in agriculture.
As late as 1900 two-thirds of the active population
in Spain were in the primary sector; this proportion was
almost reversed in Vizcaya.
The worth of new companies in Vizcaya during the year
1901 was 483 million pesetas. This represented 55% of all
investments in Spain. Where did these investments come from?
Some historians emphasize the importance of the capital
accumulated through mining and its investment in other
industries, others tend to underplay the direct contribution
of mining. Montero, for instance, calculates that between
1878 and 1898 the mining profits were of the order of 405
million pesetas. Glass puts the number at 324 and not all of
these profits belonged to Vizcayan businessmen (between 56
and 74%). Not all of the 240 million of the local
entrepreneurs accounted for the Vizcayan investments during
the 1880-1900 period. According to the British consul, for
example, during 1886-1899 around 420 million pesetas were
invested in new companies. These do not include three of the
most important steel factories, the renewal of the local
fleet, and other companies founded during the 1880s, all of
which would require at least another 100 million. Glass
concludes that mining profits can account at best for 60% of
the investments. The rest of the money could only come from
local savings or from outside businesses. Fernández
de Pinedo and others have called attention to these outside
investors. Thus 57% of Altos Hornos de Bilbao steel
factory’s capital was from outside the province. The
larger stockholder of La Vizcaya was a shipping company of
Basque businessmen based in Liverpool.
The modernization of the iron and steel industry took
place between 1879 and 1882 with the establishment of three
modern factories with powerful blast furnaces fueled by
coke: San Francisco, Altos Hornos de Bilbao, and
La Vizcaya. By 1881, San Francisco’s four
blast furnaces were producing about 36,000 tons of iron,
almost a third of the total Spanish
production.
The other two factories soon followed the success of
San Francisco. Altos Hornos was the
continuation of two Ybarra and Co. factories; they secured
the exclusive rights to the Bessemer converter in Spain.
La Vizcaya, promoted by Victor Chavarri, was the
creation of several prominent mine-owning families. The
three factories enjoyed special arrangements that reduced
the costs of transportation of the ore. Their location on
the Nervion river facilitated the import of British coal,
which was the return freight for the ore exported to
England, and which made its cost drop dramatically in
Bilbao. Vizcaya became hegemonic in Spain in the manufacture
of iron and steel. Its share of Spain’s total
production increased to 66% between 1880 and 1913 (from 23%
between 1861-1879). Vizcaian businessmen also promoted the
extraction of other minerals such as lead, coal, sulfur, and
copper throughout Spain.
Bilbao could produce steel at one of the cheapest
prices in Europe. How much was exported? According to Pinedo
30%; according to Portilla 60%. Italy absorbed 65% of the
bars in the 1887-1890 period; Germany 9%; France
7.25%.
Although the furnaces were the main establishment of
modernization, railroad lines, chemical factories, and
shipping companies were also rapidly developed. Between 1880
and 1885 new railway lines parallel to both banks of the
Nervion and connected Bilbao with the seacoast.
Bilbao’s Sociedad Española de Dinnertime owned
the rights to the Nobel patent to produce dynamite in Spain.
In 1878, an oil refinery was established on the banks of the
Nervion.
Between 1880 and 1885 the shipping industry attracted
vast amounts of capital. The capital amounted to 30.3
million which was more than the combined capital of La
Vizcaya and Altos Hornos. The tonnage of local
steamers rose from 6 in 1771 to about 90,000 in 1885. This
large investment was related to the massive exports of
minerals from Bilbao. During the mid-1890s the Spanish
government requested three vessels to be built at the
shipyard Astillerons de Nervion. They were built
successfully, but sank in Cuba during the Spanish-American
War. Such promotion of national industries was extended to
other companies as well. Shipping continued to attract
capital. From 90,000 tons in 1885, it grew to 156,000 tons
ten years later. Bilbao’s biggest shipping company,
Sota and Aznar, was formed at this period. Assisted by the
Boer War, Bilbao’s fleet increased again 50% between
1895 and 1900. It became the largest in the country,
accounting for about one half of the total Spanish
tonnage.
The Bilbao Stock Exchange was created in 1890 and
increased in value 50% during the first five years. Banking
was restructured at the turn of the century; it attracted
almost one hundred million pesetas. In 1901 Banco de Bilbao
and Banco de Comercio merged, while new banks were formed.
The seven local banks had a combined capital of 98 million
pesetas. Only three of them survived after the 1901 crash.
Two of them, Banco de Bilbao and Banco de Vizcaya, were
among the five largest Spanish banks until they merged in
1988.
The metallurgic industry attracted less capital than
banking, shipping, and mining, but it continued to grow and
remained the backbone of the Vizcayan manufacturing sector.
In 1901 Altos Hornos de Bilbao, La Vizcaya, and La
Iberia merged to create the new company, Altos Hornos
de Vizcaya, with a combined capital of 32.7 million
pesetas. The tendency towards industrial concentration
continued during the first decades of the century. Many of
these firms became de facto monopolies, protected from
foreign competition with high tariffs, at the expense of
Spanish consumers.
In 1929, although Basques constituted a mere 3% of
Spain’s population, Basque capital represented 25% of
Spanish banking resources, 38% of the investment in
shipyards, 40% of the stock in engineering and electrical
construction firms, 68% of the funds dedicated to shipping
companies, and 62% of the investments in steel
factories.
Written Lesson for Submission
Please write a two to three page essay on one of
the topics below or choose another relevant topic. Again,
the essay should creatively engage with the facts and ideas
presented in the written materials and should not consist of
merely repeating the information offered by the instructor
and the readings.
1. Describe some of the basic dilemmas faced by
traditional cultures when confronted with the new wave of
globalization.
2. What is your view of the tensions between
“universal civilization” and “national
cultures?”
3. Is Bilbao’s pre-modern history a closed
economic unit or cultural independent configuration in any
sense? Or is it, rather, a global construction?
4. To the degree that Bilbao has been at the forefront
of Basque commerce, industry and urban life, what are the
implications of such global reach for “Basque
culture” in general?
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