Masaryk University Faculty of Economics and Administration Field of Study: Public Economics and Administration

The European alternatives to the liberal economies after the First World War: the authoritarian and conservative economic models of and and the centrally planned economy of Czechoslovakia Diploma thesis

Supervisors: Autor: Giorgio BARBERIS Matteo SERRA František SVOBODA Francesco INGRAVALLE

Brno 2017

MASARYK UNIVERSITY

Faculty of Economics and Administration

MASTER’S THESIS DESCRIPTION

Academic year: 2017/2018

Student: Matteo Serra Field of Study: Public Economics and Administration (eng.) Title of the thesis/dissertation: The European alternatives to the liberal economies after the First World War: the authoritarian and conservative economic models of Spain and Portugal and the centrally planned economy of Czechoslovakia

Title of the thesis in English: The European alternatives to the liberal economies after the First World War: the authoritarian and conservative economic models of Spain and Portugal and the centrally planned economy of Czechoslovakia

Thesis objective, procedure and The aim of the thesis is to demonstrate the outcomes of methods used: different economic policies which differed from the main liberal economic mo-del applied in the developed world in the second half of the 20th century. Referred economies are Francoist Spain, Salazarist Portugal and communist Czechoslovakia. Among others, the comparison will include following indicators: GDP growth, poverty eduction, employ-ment level, an amount of consumption, the value of investments in all productive sectors, the overall evolution of production, savings and public spending. For a better understanding of strength and weak-nesses of alternative systems and to obtain an insight into their (dis-)function, a study of different economic and productive methods will be employed. THE FRAMEWORK At the beginning of thesis, the political and economic situation in Eu-rope after the First World War will be analysed. This is followed by a discussion of the corporatist and authoritarian economies of Francoist Spain and Salazarist Portugal, focusing on the welfare system of the mentioned countries and the political and economic choices. In the following chapter, the Soviet economic and productive system imposed in the countries of Eastern Europe is discussed with the focus on the planned economy of Czechoslovakia. Finally the paper offers a description and comparison of various economic indicators and po-licies in these three countries to understand similarities, differences. In the end, the results of two different concepts are discussed.

Extent of graphics-related work: According to thesis supervisor’s instructions Extent of thesis without 60 – 80 pages supplements:

Literature: LEVČÍK, Bedřich and Jiří SKOLKA. East-West technology transfer : study of Czechoslovakia : the place of technology transfer in the economic relations between Czechoslovakia and the OECD countries. Paris: Organisation for economic co-operation and development, 1984. 102 s. ISBN 9264126007. LEVČÍK, Friedrich. Střední a východní Evropa na cestě k tržnímu hospodářství: dosavadní výsledky a kritické poznámky k navržené strategii. Praha: Ústřední ústav národohospodářského výzkumu, 1991. 20 s. TEICHOVÁ, Alice. The Czechoslovak economy, 1918- 1980. London: Routledge, 1988. xxiii, 178. ISBN 0415003768.

Thesis supervisor: doc. Ing. František Svoboda, Ph.D.

Thesis supervisor’s department: Department of Musicology

Thesis assignment date: 2017/02/27

The deadline for the submission of Master’s thesis and uploading it into IS can be found in the academic year calendar.

...... doc. Mgr. Jiří Špalek, Ph.D prof. Ing. Antonín Slaný, CSc. Head of department dean

In Brno, date: 2017/10/19

Page 2 of 2

Name of the author: Matteo Serra

Title of the thesis: The European alternatives to the liberal economies after the First World War: the authoritarian and conservative economic models of Spain and Portugal and the centrally planned economy of Czechoslovakia

Title of the thesis in English: The European alternatives to the liberal economies after the First World War: the authoritarian and conservative economic models of Spain and Portugal and the centrally planned economy of Czechoslovakia

Department: Public economy

Thesis supervisor: doc. Ing. František Svoboda, Ph.D.

Year of the defence: 2017

Annotation The goal of the submitted thesis is to analyse three anti-liberal political and economic model that existed in Europe from the first part of 20th century to the end of it: the Salazarism, the Francoism and the communist model of Czechoslovakia. The first part of the thesis is about the political and economic situation between 1918 and 1945 in the whole Europe, the second chapter is focused on the case of Portugal (analysing Salazar’s government using original and objective notices), the third one is concentrated on Francoist Spain (underlining the positive influence of Franco’s government refusing fallacious and partisans opinion about his policies), the fourth part analyses the completely different politic-economic model of Czechoslovakia (from its creation in 1918 to the ‘60s) and the last one reunified in a single chapter the protagonists of the thesis, to understand the efficiency (or inefficiency) of their anti-liberal economic and political models and to underline what happened when they have begun the road to the liberalism (even joining the European Union). In the conclusion of the thesis the stress is put on the economic efficiency and on the great results obtained by Franco and Salazar, while the analysis show that socialism had reached only acceptable social results.

Keywords

Portugal, Salazar, Spain, Franco, Czechoslovakia, Masaryk, Ota Šik, autocracy, economy, GDP, wellness, social policies, welfare, minimum wage, Germany, economic reform, economic development.

Declaration

I certify that I have written my Master’s Thesis by myself under the supervision of professors Barberis, Svoboda and Ingravalle and I have listed all the literary and other specialist sources in accordance with legal regulations, Masaryk University internal regulations, and the internal procedural deeds of Masaryk University and the Faculty of Economics and Administration

In Brno, 2017

Author’s signature

Acknowledgements

I wish to express my sincere gratitude to all people who have made possible the realization of this work: for this reason, I am sincerely grateful to my family, who have allowed me to continue my studies and to reach this result, supporting me psychologically, morally and financially.

I am really thankful also to my first supervisor, Professor Giorgio Barberis, very skilled teacher who has decided to collaborate with me even if the topics faced were particularly dispersive and even if our political-philosophical ideals are sometimes completely opposed.

In addition, I want to thank a lot my third supervisor, Professor Francesco Ingravalle, not only for his indispensable support and his teachings (that has allowed me to enlarge decisively the boundaries of my historical and political knowledge) but also for having accepted to help me in the writing of my thesis.

To end, I want to say thanks also to my second supervisor, Professor František Svoboda, to have approved my work and to have given me the possibility to end my double degree program, and to all my Professors of economics and history who have indirectly contributed to the elaboration and the execution of my best work ever.

To my grandfather Matteo, exemplary person and man of great traditional values.

Table of Contents

Introduction ...... - 1 - 1 Politic and economic situation in Europe in the first part of the 20th century ...... - 7 - 1.1 The situation before 1929 and after the Great Depression ...... - 7 - 1.2 War economy and commercial trades ...... - 12 - 1.3 The changing after the Second World War ...... - 15 - 2 Portugal ...... - 21 - 2.1 The colonial issue and the First Republic ...... - 21 - 2.2 The military dictatorship ...... - 25 - 2.3 Antonio de Oliveira Salazar and his moral revolution ...... - 31 - 2.4 The “” and its economic features ...... - 40 - 2.5 Political and economic situation during the 1940s-1960s ...... - 51 - 2.6 The end of the Salazarism ...... - 64 - 3 Spain ...... - 67 - 3.1 The empire and the Second Republic (1931-1936) ...... - 67 - 3.2 The Civil War and the Libertarian Revolution ...... - 76 - 3.3 The economic consequences of the Civil War ...... - 87 - 3.4 The Francoism and Francisco Franco ...... - 91 - 3.5 Political and economic situation during the 1940s-1960s ...... - 100 - 3.6 The end of the Francoism ...... - 113 - 4 Czechoslovakia ...... - 119 - 4.1 The economic situation before 1938 and the Nazi occupation ...... - 119 - 4.2 The liberation and the Third Czechoslovak Republic ...... - 126 - 4.3 The first Quinquennial Plan and the centrally planned economy ...... - 132 - 4.4 The economic problems during the 1950s-1960s ...... - 143 - 4.5 The “Prague Spring” and the Soviet occupation ...... - 149 - 5 The economic and politic situation at the end of the 20th century ...... - 161 - 5.1 The end of the Portuguese dictatorship ...... - 161 - 5.2 The capitalism in Czechoslovakia ...... - 172 - Conclusion ...... - 183 - List of graphs ...... - 190 - List of tables ...... - 190 - References ...... - 191 -

Introduction

The present study is my modest attempt to connect economy, politics, history and anthropology to understand the importance of different factors in the development of a country; in this specific case, the analysis explains how to interpret and to comprehend the development of Portugal, Spain and Czechoslovakia. To obtain an interesting and objective result, I have started my work not only studying the few books and essays written about these three countries (also because nobody has ever published a comparison between the specific authoritarian economies of Spain and Portugal and the planned Czechoslovak economy), but even reading some important monographs written in the ‘40s-’60s and so exactly when the most important economic-political changes were happening.

The idea of an economic history thesis full of political references could seems an abstraction, important only for itself and for historical studies; in reality, this is the necessary fundament from where to start to understand the current economic and political models that are predominant in the world. In addition, to be able to interpret in the right way the contemporary situation, the reader will understand the importance to remember two famous general sentences: “relations between States are power relations”1 and “political uncertainty has negative effects even on the economic sphere”. Knowing these two principles, it is easier to interpret and to contextualize the authoritarian regimes in Portugal and Spain or the communist era in Czechoslovakia. The objective research method used during the elaboration will show that some of the most popular convictions about political regimes in the three countries studied or about the link between political regimes and economic development are, in reality, not completely true (as some diffuse theories about the reasons of backwardness or economic advance of some countries).

The structure of the thesis is composed by five chapters which retrace the economic , Spain and Czechoslovakia starting from the beginning of 20th century and arriving until the end of their characteristic economic and political structures, at the end of the 20th century.

The first chapter is about the economic and political situation in Europe from the ‘20s to 1946. It contains a series of useful considerations about the most important changes in the whole Europe, highlighting the events that have modified the following part of the century

1 Cf.B. Mussolini B., Discorso per la celebrazione del ventennale del fascismo. Wikisource [online]. 26 March 1939. [Accessed 15 June 2017]. Available from: https://it.wikisource.org/wiki/Italia_- _26_marzo_1939,_Discorso_ per_la_celebrazione_del_ventennale_del_fascismo - 1 - and that happened at the beginning of the century. For this reason, the first paragraph starts from the period of the First Post-War and analyzes the impact of the Great Crisis of 1929 in the whole continent. The deep depression caused the spread of protectionism, the decrease of industrial production and a growing distrust for the economic liberal system, slowly substituted by the new Keynesian theories (born during the Crisis and spread in all Europe until the ‘70s). In addition, after the ’29, many fragile democratic governments, defeated by the crisis and by the popular discontent, became dictatorship, undergoing the birth of a series of authoritarian regimes which would have definitely modified the following decades. The phenomenon interested, among others, the Republic of Weimar, Portugal and Spain, and its comprehension is fundamental to correctly interpret the political part of the following chapters. The second paragraph explains the meaning of “war economy” and “industrial reconversion”, focusing its attention on the trades during the Second World War, on the role of neutral States and on the American "Lend-Lease" policy. In the last paragraph, there is a deepening about the serious difficulties of European States after 1945 and about the economic situation during the ’50-’60. For this reason, there is a focus about the actions done by some of the main international institutions (FAO, IRO, ECO, UNICEF and OEEC) and on the importance of the UNRRA and of the Marshal Plan for the European recovery.

The second chapter contains a deep analysis about Portugal, from the 18th century to 1970. In this long period, the 18th century Lusitanian Empire had lived a growing economic and military backwardness that marginalized and relegated it into a secondary role in the European landscape. At the beginning of the 20th century, the country was in clear economic, social and political crisis: the following recovery and stability (from 1928 to 1968) would have been only a parenthesis for the small European State, which had to suffered, in 1974, the tragic end of its Empire and the failure of lusotropicalist theories. The first two paragraphs explain the essence of the Empire and its problems; then, they analyze the homeland and the political changes that transformed the monarchic State in an innovative but fragile democratic Republic (in 1910). This form of government is still existing nowadays in Portugal, even if in 1926 it had lost its democratic aspects, eliminated by a military coup. The years of the military dictatorship gave to the country the necessary political solidity that was completely absent during the sixteen republican years. Clearly, the changing interested particularly also the economic sphere, considering that the initial liberalism had been substituted by a protectionist and traditional system. Even if the military dictatorship eliminated the political problems, the country was still in economic crisis; the solution to this problem was found only from 1928, obtaining good results after the end of military governments. The third and fourth - 2 - paragraphs are concentrated on the transformation happened in 1932 in Portugal, that would have modified completely the history of the 20th century not only inside the small country, but also for its international relationships. The man who ideated and created this innovative system (legalized through the Constitution of the Estado Novo) had been a politician who saved the Empire from an economic and social deep crisis, which was mining the independent sovereignty of the State itself: Antonio de Oliveira Salazar. The professor of , convinced catholic and with a past as seminarian, devoted all his life to make more efficient the economic structure of the country, acting firstly on the education of citizens; thanks to the literary works of António Ferro (Minister of Salazarist Propaganda) and Mircea Eliade (cultural counsellor of the Romanian embassy in ), it is possible to understand that the Professor had obtained surprising results, connecting together traditional concepts coming from the Catholicism and innovative ones derived directly from his financial knowledge, eliminating the liberal concept of individuals and creating a corporative system based on families, corporations and municipalities. In the middle of the chapter, the focus on Salazar explains his moral revolution and the ideas of this politician “sui generis”: the conviction about the need to apply to the whole Nation the catholic philosophy as only way to obtain the economic success, the importance of families as smallest organic unit, the refusal of liberal and socialist ideas (considered inefficient), the need to be good Catholics to improve the own moral and social condition and the necessity to change the Nation starting from small things (avoiding the old liberal myths) are the necessary theoretical basis to understand the thought of the Professor Doutor. In the last part of the chapter, there is an explanation of the principal economic policies adopted during the last twenty years of Salazarism and a necessary deepening on the main causes of the colonial war, that finished with the disappearance of the Empire and with the end of the regime.

The third chapter examines the economic and politic situation of Spain, starting the analysis from its past as largest empire in the world and from the years of the Second Republic (1931- 1936). The republican years, presented in the first paragraph, were characterized by a general imperialist idea and by a convinced anti-clericalism (demonstrated in the Constitution of 1931). The focus on the internal transformations and on the economic policies adopted during those difficult six years explains the reasons that caused the civil war, during which the Republic had to fight against the rebel nationalists. This event lasted three years, having directly influences not only in the history of the State, but also in the European political landscape. The civil war became the direct antecedent of the following Second World War, involving in the conflict volunteers from all the world, Germany, Italy, the USSR and other - 3 - countries. The results of the fight were not only an enormous financial loss for war destructions and the death of about 600.000 people, but also a clear worsening of the already precarious economic situation in Spain. It is interesting to underline that the dissertation studies the republican years (characterized by political fragility, tensions and poverty) and the difficult period of the Alzamiento, but it analyses also the historically most important economic and social anarchic experiment (that happened in those years): the Libertarian revolution and the Catalunya Libertaria of 1936-1937, its willingness to break with the past and its innovation. The last four paragraphs are dedicated to a deep and objective analysis of the political regime born after the civil war: the Francoism, a kind of authoritarian regime supported by the army, the Falange, the Church and the monarchists. The most important figure of this particular regime was General Francisco Franco, a person who would have modified the Spanish history from 1939 to 1975. As for Portugal, also in the near Spain the Prime Minister merged the principle of Catholicism with macroeconomic theories based on conservatism and autarchy, even if the difference between the two leaders and between the two countries permitted to reach results completely different. If, at the beginning, the Francoist period had forced people to bear a deep economic crisis (the ration books were used until 1952), during the ’60s it would have created the right conditions to obtain, for Spain, the second highest growth rate in the world. The chapter ends with the crisis of the Francoism itself, that followed the leader’s disease and his following death, analyzing the last governments named by Franco and the policies that transformed the authoritarian regime in an organic democracy.

The fourth chapter explains an economic, political and social system completely different from the ones studied in Portugal and Spain: it is focused on the case of Czechoslovakia, a federal State that, in the 20th century, would have been forced to follow a development system not influenced by the Church, by the conservatism or by the own army, but imposed and predisposed by a foreign power. In this case, the reader can understand perfectly the importance, for a State, of its international relationships not only for its political and economic situation, but also for its survival. The first paragraphs explain the birth of the Czechoslovak Republic, its unique industrial predisposition and its social problems; twenty- one years of floridity and wealth ended roughly after the German occupation. The rebirth of the federation as Third Republic is presented in the second paragraph, together with the economic policies adopted to create the “Czechoslovak specific way to the socialism” able to recover quickly the country after the war effort, as explained by Dorothy Douglas in her book. The Biennial Plan that characterized that period ended in 1948, permitting to the State to - 4 - reach interesting results (nationalization of the biggest industries and lands, targeted interventions to help the backward regions, rebuilt of houses destroyed by the Allies etc.). Despite of it, the beginning of the and the strong influence of the USSR on the Eastern part of Europe imposed to the country to follow the Soviet and Stalinist extensive economic theories. This imposition caused the beginning of the Czechoslovak Socialist Republic and a series of dictatorial, inappropriate and ineffective political-economic decisions that ruined the performances of the country. In market economies, decisions taken by individual consumers and producers tend automatically to regulate supply and demand, consumption and investment; in a communist economy, these variables are modified by a small governing group and are incorporated in an economic plan that has the force of law. The results are that, in 1950, Czechoslovakia had a per capita GDP of 3.429 dollars, comparable with the Italian result of 3.573 dollars, the Austrian one of 3.822 dollars and the West German one of 4.424 dollars (and decisively better than the Portuguese value of 2.088 dollars and the Spanish one of 2.200 dollars), while, in 1990, the situation had completely deteriorated. The Czechoslovak per capita GDP of 8.464 dollars was, in fact, decisively lower than the Italian (16.054 dollars), the Austrian (16.923 dollars) and the West German ones (18.537 dollars). Even the previous backward economies of Portugal and Spain were performing better (with a result, respectively, of 10.862 dollars and 12.157 dollars). In the last paragraph, there is a detailed explanation of the desire to change demonstrated by Czechoslovak people during the New Course of 1968. The analysis starts from the Dubček and Šik’s idea of “socialism with a human face” and it is inspired by the detailed explanation done by the politician and economist Ota Šik in his monography (written in 1968). In this way, it is possible to analyze objectively the reforms purposed to boost the economy, the observation of Šik about why it was necessary for Czechoslovakia to abandon the harmful Stalinist system and the economic and social deterioration caused by twenty years of communism. The last part of the chapter is dedicated to the Soviet invasion of the federation and to a quick resume of the ‘70s and ’80s in the country.

The fifth and last chapter wants to create a link between the end of the previous economic and political regime in the three States analyzed and their adoption of new systems based on democratic governments and on liberal economies. For this reason, for each country the political analysis is stopped as soon as the politicians had created the current structure. Following this idea, the first paragraph starts from the beginning of Caetano’s government and explains the reformist attempts done by the new Prime Minister, its weakness and its failure. The political analysis ends with the democratic Constitution of 1976, after the - 5 -

Carnation Revolution of 1974; from the economic point of view, the paper studies the cost of the colonial war, the changes that occurred with the end of the Lusitanian Empire and the consequences of the liberalization of the market. The second paragraph, about Spain, has a similar structure: it begins with the election of Juan Carlos as King and it follows all the difficult path faced by him and by his Prime Ministers to liberalize the political regime. The political evolution is analyzed until 1978, when the new Constitution had created the Spanish Constitutional Monarchy still existing, eliminating definitely the “Una, Grande, Libre” Francoist Spain. As for Portugal, even for Spain the new democratic regime liberalized the economic sphere of the country and its effects caused a deep crisis that ended only with the entry into the European Economic Community, in 1986. The last paragraph is about Czechoslovakia: after the Velvet Revolution of 1989, the federation is, for sure, the reality that had been forced to undergo the biggest economic and political changes in comparison with Spain and Portugal. The facts are analyzed from 1989 to 1993 (and some data are referred until the end of the ‘90s). Politically, the State had to suffer its division in two independent countries, while economically it had to find a way to eliminate the socialist system and to adopt a liberal market as in the western States. Czechoslovakia had to begin a huge privatization plan in 1989 (done through an innovative system of vouchers and walrasian auctions, studied in detail) that caused an economic recession in 1992-1993. Only at the end of the century the two countries started again to growth; at the beginning of the 20th century, the Soviet era was definitely ended, while the private sector was already accounting for almost the totality of the National GDP.

As mentioned above, the preparation of the document has required an analysis extended to the articles and monographies of the period by me deepened. For this reason, I have read the original text of the Concepto confederal del comunismo libertario (that contain the principles of the Libertarian revolution), the eight Fundamental Laws of Spain (the basis of the Francoist regime, analyzed in the original language), the written interviews done by Ferro directly to Salazar and some interesting and illuminating books written between the ‘40s and the ‘60s (as Boffito and Foa, Eliade, Ferro, Douglas and Šik’s books). I hope that their constant references in the text has given to the contents of this research the necessary solidity and objectivity: in this way, the real reconstruction of events has permitted to elaborate conclusions obtained by the simple confrontation between the discovered theories and the current ideas and values.

- 6 -

1 Politic and economic situation in Europe in the first part of the 20th century

1.1 The situation before 1929 and after the Great Depression

During the period 1923-1928, Europe seemed to get out from the political and economic crisis that followed the First World War, also if the winner countries ( and the ) had lost more than 30% of their wealth while Russia and Germany were facing a deeper political and economic crisis. Despite of the new economic recovery, the European nations become indebted to the United States and they saw the decreasing of their

Graph 1: World industrial production in 1929 exportations (due to the development of non-

Graph 1: WORLDWorld industrial INDUSTRIAL production PRODUCTION in 1929 European countries). In IN 1929 1923 the factories, that

Graph 2: WorldOther industrial production in 1929 survived the crisis, ended countries 23% the industrial reconversion

Graph 3: World industrial production in 1929 USA and the various Nations 45% could find a way to stabilize USSR 2 4% their internal situations . France The European economic 7% recovery increased again the UK 9% international competition Germany 12% and it began to reduce the

Source: A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, possibilities for American Mondadori, Milano, 2008, p. 85. goods to be sold. Then European countries started to adopt protectionist policies to defence their internal markets and they began to create austerity strategies to promote deflation and to reinforce their currencies. In this way, purchasing power of wages was reduced and interest rates for bank loans grew, causing a reduction in demand for goods3.

This behaviour brought to an overproduction crisis that started from the USA: several industries were forced to close because there were always more and more unsold goods and

2 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 86. 3 A. Brancati, T. Pagliarani, Voci della storia e dell’attualità: l’età contemporanea, La Nuova Italia, Firenze, 2012, p. 210. - 7 - their prices dropped significantly. The industrial crisis was followed by a financial crisis (caused by an unexpected high listing of shares that convinced many investors to sell their participations): the sudden upsetting collapse of US stock market prices during the Black Tuesday, on 29th October 1929, caused the beginning of the Great Depression and the Wall Street slump4. The Dow Jones Industrial Average dropped of 25% in four days: it lost 30 billion dollars in market value (the equivalent of 396 billion dollars today).

The crisis (caused by the overproduction but also by a mismanagement of industrial and financial companies, excess of speculative loans and bad structure of the banking system)5 lasted for the whole ‘30s and it expanded quickly from the USA to the European countries, which were economically dependent from the Federation. For this reason, Germany and the

Graph 2: Industrial production variation from 1923 to United Kingdom felt in a 1939 particular way the depression consequences. To understand the Industrial production variation effects of the crisis in these two from 1923 to 1939 countries, it must be analyzed the (considering 1 the production in 1913) 1,9 unemployment percentage from 1,7 1929 to 1933: in the United 1,5 1,3 Kingdom, the rate passed from 1,1 11% to 17,7% (reaching 21,5% in 0,9 1931, 22,5% in 1932 and 21,3% 0,7

0,5 in 1933), while in Germany it

1933 1924 1925 1926 1927 1928 1929 1930 1931 1932 1934 1935 1936 1937 1938 1939 1923 changed from 13,1% to 14,9% USA France Germany UK (reaching 23,3% in 1931, 30,1% Source: A. Brancati, T. Pagliarani, Voci della storia e dell’attualità: l’età 6 contemporanea, La Nuova Italia, Firenze, 2012, p. 212 in 1932 and 26,3% in 1933) . In France, the consequences of the Black Thursday were balanced by the massive gold stocks while in Italy the decrease of industrial production in the period 1929-1932 was about 15-25% (depending on the various industrial sectors): the economic recovery began only from 1935, thanks to the autarchy.7

The worst situation was in the Republic of Weimar, born on 9th November 1918. The new Republic was facing the problems related to the war reparations toward the winners of the

4 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 157. 5 A. Kimberly, Stock Market Crash of 1929 Facts, Causes, and Impact, in “The Balance”, 20th February 2017. 6 A. Brancati, T. Pagliarani, Voci della storia e dell’attualità: l’età contemporanea, La Nuova Italia, Firenze, 2012, p. 212. 7 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 175. - 8 -

First World War and its economy was depending on international loans and foreign trade. When the USA decided to block the availability of loans asking back part of the money, Germany fell into a deep crisis: the unemployment grew from 1.300.000 units to 3.000.000 units in three years (1929-1932) and the inflation rate began to augment again (also if it did not arrive to the extraordinary level reached in 1923).

The solution, found by the Nations affected by the crisis, was the creation of rigid protectionist barriers to promote their internal market and to defend them from international concurrency. In this way, the governments began to assume the role of economic regulators and it caused the segmentation of the world market in many national smaller markets: in fact, the total volume of world trade decreased of 25% from 1929 to 1932 and its value fell of 70%.

The crisis caused also the changing of the preeminent economic theory: until this period, economists were following classical-liberal economic theories to explain the functioning of the market. The point of view was based on the rationalization of laissez-faire: they believed in economic growth and decline phases, but markets would have automatically brought necessary adjustments to the situation, avoiding in this way serious problems. This theory came from Adam Smith and David Ricardo: they focused their analysis on the long-run results and on the forces that determine and produce growth for the potential output of an economy. The most underlined issue was the ability of flexible wages and prices to keep the economy at its natural level of employment, without government interventions. For this reason, following the classical school theory, the achievement of “the natural level of employment and potential output” was completely natural in the long-run: the market could have reached it alone just leaving free space to its “invisible hand”. Classical economists recognized, however, that the process would have taken time (continuing only to conjecture about the long-run): in the short-run there could have been temporary problems of unemployment8. For classical economist it was normal to face economic crisis in the short-run but, with the great depression, some researchers started to criticize the classic economic model. In the United Kingdom, while the market was in a deep crisis (principally for the new reduction of international trades), the economist John Maynard Keynes had begun to develop a new framework of macroeconomic analysis. He suggested that the “temporary effects”, identified by classic economics, could have had a long length, causing important negative changes into the national and international market9. Keynes created a new economic theory,

8 L. Rittenberg, T. Tregarthen, Principles of Macroeconomics, Flat World Knowledge, Washington, 2012, p. 687. 9 Ibid., p. 688-689. - 9 - starting from the famous sentence “this long-run is a misleading guide to current affairs. In the long-run we are all dead”10 and explaining the reason of the necessity of the States intervention in economy: the changes in aggregate demand could create gaps between the actual and potential levels of output, but that gap could grow and could be prolonged. To avoid this problem, it must be used the fiscal and monetary policy to shift the aggregate demand curve and to reduce quickly the decreasing of the market11.

Keynes understood that it was possible to generate growth despite of rising wages thanks to the expansion in public expenditures, while classical economists were sure that if profits were to rise, wages must be kept down or lowered. He opposed adjustment through wage cuts, starting from the analysis of the Fordism and from a recent event happened in a British coal industry, where the reduction of wages caused a general strike in 1926: clearly a wage cut would have been a social injustice and workers could not have accepted the reductions. The active intervention of the national government would have been the best way to stimulate a growth in productivity and output12. For Keynes, this could be obtained:

• through an expansion of government expenditure, that would have enlarged the market and induced firms to increase investment, employment and output to allow the existance of higher wages; • with a high wages policy, which would have forced the reorganization of industry around the highest productivity firms (while low productivity companies would have failed). The rising of wages would have caused the rising of profits (surplus) and productivity: with the amount of production per hour growing, the amounts of output for consumption (wages) and for surplus (profits) can grow too.

On the political level, the responses to the crisis were different. Generally, the mature capitalist countries, with consolidated democratic experience (the USA, the UK and France), did not alter their policy framework, even if they gave greater powers to their governments; countries with a weaker capitalism or a more fragile democratic experience (like Germany and Italy), strengthened or took the road of totalitarian dictatorships and countries with a pre- industrial economy (Iberian and Balkan countries) adopted military-confessional dictatorships solutions. Already from the 1st March 1920, in Hungary, there was an authoritarian regime controlled by

10 J. M. Keynes, A Tract on Monetary Reform, Macmillan and Co., London, 1924, p. 80. 11 L. Rittenberg, T. Tregarthen, Principles of Macroeconomics, Flat World Knowledge, Washington, 2012, p. 690. 12 Ibid., p. 696-697. - 10 - the admiral Miklós Horthy, while on the 31st October 1922, in Italy, Mussolini had become Prime Minister. Following the Italian fascist alternative and the Hungarian regime, around the 1928 in various European countries were formed several authoritarian and dictatorial governments. In States with weak and backward economy, the problem of the ruling classes was to respond or to prevent movements of revolt of lower classes. They were considering the parliamentary democratic regime as a dangerous concession of power to the whole population and it could have caused the end of their privileges. For this reason, in Spain began the dictatorship of General Primo de Rivera (1923-1930), admirer of Mussolini and by his political decisions inspired; in Portugal, the army (with General Carmona as Head of the State, in 1926) took the power after a coup d’état to solve the precarious economic situation of the country, helped by the professor António de Oliveira Salazar; in , there was the nationalist right-wing government of Aleksandăr Cankov (from the coup d’état on 9th June 1923 to the 1926) and the authoritarian military regime, headed by Kimon Georgiev (from another coup d’état in 1934 to 1935); in Yugoslavia, the king Alexander, exponent of pan- Serbian centralism, took the power in 1928 and in Poland, from 1926, there was a dictatorship led by Marshal Pilsudsky (formally leaving the representative structures). The only country of central-eastern Europe in which there was a stable and concrete democracy was the First Republic of Czechoslovakia, born in 1918 with Tomáš Garrigue Masaryk (first president and founder of the new country) and tragically ended in 1938.

The most important political change for the future of the world, still caused by the economic situation after the Great Depression, happened in the weak Republic of Weimar13. The new semi-welfare State was an example of parliamentary democracy for the whole Europe and it was one of the first that introduced the universal suffrage (the vote was extended also to women). The problem was that the Constituent assembly established a proportional voting system that caused a particular political fragmentation and an endemic weakness of governments: this question did not make the Republic a stable and reliable political regime14. Furthermore, the Constitution kept the plebiscitary and authoritarian traits that undermined the existence of the same democracy: for example, the President of the Republic was elected directly by citizens and the article 48 of the Fundamental law provided exceptional powers (gave to the President) if the public order and the public security would have been seriously disturbed or endangered15. Although intended only as an emergency clause, the Presidents

13 VV. AA, I mondi dell’uomo, Mondadori, Milano, 1969, p. 280. 14 E. Eyck, Storia della Repubblica di Weimar (1918-1933), Einaudi, Torino, 1966, p. 68-69. 15 S. J. Lee, Hitler and Nazi Germany, Routledge, London, 2005, p. 20-22. - 11 - used often these powers to issue decrees without the support of the Parliament. The economic situation, united with the desire to stop urban conflicts and with the hate for the young Republic, convinced people to vote for the “National Socialist German workers' party” (NSDAP), attracted by the visionary ideology of Nazism and by its leader personality, Adolf Hitler: the popular support permitted to Hitler to became legally Chancellor on 30th January 1933. Using the emergence powers provided by the article 48, he took advantaged from the pretext of the Reichstag fire (on 27th February 1933) to eliminate his political opponents and to suspend some civil liberties. In the same year, the totalitarian regime was born, beginning the economic recovery of the State (reducing wages, increasing the amount of money spent by the country to increase military productions and for public works, decreasing in that way unemployment) and the research of the Lebensraum16, that would have led to the beginning of the Second World War (1st September 1939).

1.2 War economy and commercial trades

During the war, the countries started a very extensive regulation of the market economy. The war conditions bring relevant changes in the economy: following the Keynesian theory of income multiplier, military public spending can be a tool to restart the production process in times of stagnation. The State mobilizes material and financial resources and the benefits of public spending on armaments are that they help the introduction of technical progress that will be useful also for the civil production at the end of the conflict. Nevertheless, the war economy causes also considerable risks17: a part of consumption is transferred from the civil sphere to the military one, the production of war material (guns, tanks, cannons) instead of investment goods (economic goods used to produce other economic goods, like machines) causes divestitures and long-run problems. Then the war costs reduce the income of private households and, safeguarding income, the State risks inflation.

Authoritarian States, knowing their expansion programs, planned the construction of predisposed industrial installations convertible for war purposes, basing their finance on a financial autarchy. They controlled the production activity and the consumptions, using institutional organs of distribution and movement of goods agreements (doing also treaties with countries suppliers of raw materials)18. Liberal and democratic States did not affect so strongly the production and distribution structure: they created only international bodies

16 W. D. Smith, The Ideological Origins of Nazi Imperialism, Oxford University Press, Oxford, 1989, p. 251. 17 C. E. Gentilucci, Storia economica della Guerra, Società Italiana di Storia Militare, Roma, 2007, p. 5. 18 Ibid., p. 7. - 12 - whose task was to monitor the various economies and to intervene in case of precarious economic situations.

To increase the production for military use, the States had to find adequate monetary means. The most common method used by them was to create new money: in that way the effects were immediate (the money was immediately available), discrete (the whole public was not advised) and safe, also if it could cause price inflation. To prevent it there were two typical measures: the rationing of consumption, which prevents that citizens can demand more goods than the quantity provide by the law, and the price controls, which obliges producers not to raise prices despite of the increased demand for goods19.

Both measures served to reduce the value of the citizens’ demand during the war compared to the normal one, bringing to the creation of a monetary availability not expendable. However, that money still in the availability of citizens could be used into the "black market": to eliminate this possibility (which would avoid the government measures to control inflation) it was necessary that countries issued government securities, to have back the money voluntarily20. The result is that the war was supported without additional monetary expenditure: so much money the countries typed it initially, so much money was withdrawn from the circuit. Theoretically, the process should avoid the disproportionate increase in inflation. There was only the material cost, supported by all citizens and imposed by the forced reduction of civilian consumption (to increase the war materials production), while they were accumulating capital value in the form of governmental bonds. On more, citizens had to suffer for the reduction of employment and remuneration.

From the beginning of the war, the industrial sector21 started to obtain a fundamental role in the economies: the industrial capacity production had become the priority to win the conflict. Neutral countries conducted a determinant part for commercial exchanges and some of them took advantages from the situation to improve their companies (mainly countries from South America) or their international financial role (like Switzerland22); despite of the theoretical neutrality, some of those States helped Germany in different ways. Swedish banks and factories gave an important assistance to German banks during the Second World War. The neutral State permitted to Hitler to move freely troops in its territories to enter in Norway and Finland, furnishing German industries with iron, granting loans to the government and giving

19 Ibid., p. 33. 20 Ibid, p. 34-35. 21 G. Franchi, La seconda guerra mondiale, Alpha Test, Milano, 2015, p. 42. 22 N. Wylie, Britain, Switzerland, and the Second World War, Oxford University Press, Oxford, 2003, p. 238- 239. - 13 - to Germany the possibility to conduct economical transactions23 avoiding the closure of channels of banking for the belligerent country. Nevertheless, the biggest quantity of money moved by Germany used Swiss banks: Switzerland was the most relevant refuge and center for Nazi financial operations24. In 1946, the approximate value of German holdings in neutral countries was 250.000.000 dollars in Switzerland, 105.300.800 dollars in Sweden, 90.000.000 dollars in Spain and 27.000.000 dollars in Portugal25.

Despite of the Four-Year Plan of 1936 (done to obtain the complete economic self- sufficiency), Germany was for a part of its food and raw materials needs dependent by other countries. For this reason, it began commercial trades with the southeastern part of Europe (Bulgaria, Greece, Hungary, Rumania, and Yugoslavia) and with Latin America (Argentina, , Chile, Colombia, Guatemala, Mexico, Peru, and Uruguay26). In the while, Germany was having important commercial trades also with the Soviet Union: the German - Soviet credit Agreements of 1939-194027 provided a credit of 48 million dollars for the 1939, 150 million in 1940 and 106 million in 1941, to be paid back in 7 years with an interest rate of 4,5%. The debtor State paid providing the furniture of different materials: German industries delivered mainly industrial equipment and machines, including about 6.500 machine tools for the war industry28, beginning the production of the newest weapons (like for the Luftwaffe). With the British embargo against Germany, the Soviet Union started to be the most important commercial partner for the Reich, which used the treaty to obtain furniture of exported cotton, manganese, chrome, phosphate, asbestos, wood, grain and fuel. The decision of the USSR to help the Nazi enemy is explainable following Stalin’s convictions: he was sure that an European war could have keep occupied Germany for some years29, so his State could have had the time to reorganize the army and then he could have taken advantages of all the territorial concession promised by Hitler in 1939 (Finland, the Baltic States, Eastern Poland and Bessarabia), also to prepare a defense in case of a future attack. The trade with Germany was a very important priority for the Soviet policy: it was organized directly by Stalin and his

23 G. Aalders, C. Wiebes, The Art of Cloaking Ownership. The secret collaboration and protection of the German war industry by the neutrals: the case of Sweden, Amsterdam University Press, Amsterdam, 1996, pp. 1-3. 24 Ibid., p. 12. 25 Ibid., p. 17. 26 P. W. Bidwell, Latin America, Germany and the Hull Program, Foreign Affairs, New York, 1939, n. 1, p. 378. 27 H. Schwendemann, German-Soviet economic relations at the time of the Hitler-Stalin pact, 1939-1941, in “Cahiers du monde russe: Russie, Empire russe, Union soviétique, États indépendants”, n.36, 1995, p. 163-168. 28 E. E. Ericson, Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933-1941, Greenwood Publishing Group, Westport, 1999, p. 222-223. 29 R. Brackman, The Secret File of Joseph Stalin: A Hidden Life, Routledge, London, 2000, p. 283-284. - 14 - close cooperators. With the economic agreement of February 194030, the Soviet Union had to deliver 1 million tons of grain, 900.000 tons of fuel, 91.000 tons of cotton, 100.000 tons of chrome and 500.000 tons of phosphate within one year to Germany; it delivered at least 116.000 tons of fuel and 103.000 tons of grain until the end of April. From May, Stalin decided to decrease the trades because his State was risking an Allied attack for the Red Army battle against Finland31 and the economic collaboration with Germany. From April to June 1941, the USSR sent to Germany other 560.000 tons of grain and in May it brought from India 5.000 tons of rubber still to traffic to Hitler. All these trades ended on the morning of 22nd June 1941, after the beginning of the “Barbarossa Operation”, the day in which Stalin understood to have done a big error to help in all the possible ways to strengthen the German economic potential.

Apart from exportations of neutral and non-occupied countries (Spain, Portugal, Ireland, Sweden and Switzerland) that helped both the alliances and apart from exchanges between Germany and the other Axis States (strictly ruled by the German military authorities, like in Czechoslovakia), the most intense trade was between the United States and its allies, following the rules of the "Lend-Lease" policy32. The program provided a huge supply of food, oil, land vehicles, ships and weapons, for a total value of 50.1 billion dollars, from the USA to the United Kingdom (31,3 billion dollars), France (3,2 billion dollars), China (1,6 billion dollars), the Soviet Union (11,3 billion dollars), the Netherlands (251,1 million dollars), Brazil (372,0 million dollars), (159,5 million dollars) and other countries (2 billion dollars). The “Lend-Lease” was essential for the resistance of the United Kingdom and the URSS before that the USA were involved in the conflict and it was particularly important also to obtain the final victory of the war.

1.3 The changing after the Second World War

The act of German military surrender was signed firstly on 7th May 1945 in Reims and then on 8th May in Berlin: with those documents, the “European” Second World War finished33. All European countries, which fought during the conflict, ended their finances and they definitely lost their reputation of major powers in the world, substituted by the USA and the

30 G. Schreiber, B. Stegemann, D. Vogel, Germany and the Second World War (3rd volume), Oxford University Press, Oxford, 1995, p. 39. 31 C. V. Dyke, The Soviet Invasion of Finland, 1939-40, Routledge, London, 1997, p. 35-36. 32 The program began in March 1941, during the presidency of Franklin D. Roosevelt, and it ended in . 33 Cf. C. I. Bevans, Treaties and Other International Agreements of the United States of America, 1776-1949. Multilateral, Department of State. 1968 - 15 -

USSR. The situation changed drastically: European countries had huge debts mainly with the American federation and they began to lose their colonies and their empires, because the downsizing of their power influenced the state of mind of occupied States in Africa and in Asia (that started to claim their independence sometimes with violent revolts)34. The most visible consequence of the inferiority of European power in comparison to the two continent- countries was its division in two influence spheres, delimiting the areas that were liberated respectively from the Red and the Allied armies35.

From 1st to 22nd July 1944, during the Bretton Woods conference, 44 nations decided that the dollar was to be used as reserve currency and international payment method. According to the new system defined by the Bretton Woods agreements, the US dollar was the only currency convertible into gold at the exchange rate of 35 dollars per ounce of the precious metal. Then they wanted to stabilize foreign exchange rates with the dollar, eliminating imbalance conditions in international payments36: for this reason, they provided the creation of the IMF (International Monetary Fund) and of the International Bank for Reconstruction and Development (the World Bank). The IMF had the task of ensuring monetary stability in order to rebuild international trades and to make all currencies convertible into dollars. Inside the new dollar-centric system, the central banks should maintain a stable exchange rate with the dollar (avoiding fluctuation in value). The devaluation was only permitted in particular circumstances with the IMF approval.

The economic decisions of Bretton Woods were clearly the signal of the need, for all countries, to face same urgent difficulties: after the war efforts, the most pressing problems were to restore the economies of the various States (they had spent 1.150 billion dollars to fight) and to cure 35 million of wounded people. Focusing the analysis on the GDP of European States before the beginning of the war (in 1938), Germany was able to exceed that level again only in 1954, France in 1948, Italy in 1950, Denmark in 1946, Austria in 1950, the USSR in 1948, Norway in 1946, the Netherlands in 1948 and Greece in 195637. To solve these socio-economic problems, in 1943 in Washington was founded the United Nations Relief and Rehabilitation Administration (UNRRA): it was an international relief agency that

34 For example, Vietnam, Cambodia and Laos gained independence after a long and bloody war against France in 1954, while Burma and Ceylon gained their independence from UK in 1948 without fighting. 35 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 22. 36 M. Bordo, B. Eichengreen, A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, University of Chicago Press, Chicago, 1993, p. 605-606. 37 M. Harrison, The Soviet Union after 1945: Economic recovery and political repression, in past and present”, 2011, Vol. 210, p. 103-105. - 16 - in 1945 became a part of the UN38. UNRRA was created “to plan, coordinate, administer or arrange for the administration of measures for the relief of victims of war in any area under the control of any of the United Nations through the provision of food, fuel, clothing, shelter and other basic necessities, medical and other essential services; and to facilitate in such areas, so far as necessary to the adequate provision of relief, the production and transportation of these articles and the furnishing of these services”39. It began its work at the end of 1944 (because, after the liberation of the various territories, the allied forces exercised directly the assistance to the populations) and it helped 17 Asian countries and all European ones except for France, Belgium and the Netherlands. The total contributions for operational expenditure amounted in 1946 to 3.6 billion dollars (to end, in 1947, to the amount of 11 billion dollars): the USA was by far the main contributor (73% of the total), followed by the United Kingdom (17%), Canada (3.8%) and Australia (2.1%). The expenditures done became secured loans for debtor countries40: the ones that received the loans were obliged to use the money to buy American goods. In this way, the USA were able to sell in the rest of the world an enormous quantity of exceeding goods, granting a continuity of the high productive levels reached by them during the conflict (avoiding overproduction crisis). A half of UNRRA funds were destined to the purchase of food, while the rest was used mainly to give assistance to refugees and displaced.

The big loans and the huge food supplies was not stopping a European tendency to the self- sufficiency and the growth of the socialist idea41 in the old Continent: the USA were worried about the situation and they decided to change their policies. They knew that it was necessary to reconstruct a world economy based on the free market to give to themselves a possibility to maintain their large production capacity and to avoid that a new segmented economic system would have brought to other world conflicts.

The program ended in June 1947 in Europe and in December of the same year in China42. Its welfare function was substituted by different international organizations (mainly FAO, IRO and UNICEF) while its economic task was continued by the new Marshall Plan, aimed not only to build solid commercial trades between America and Europe but also to condition politically the various European countries (avoiding that the Soviet influence sphere could

38 The UN was founded in San Francisco, on 26th June 1945, and it included 49 countries. 39 Cf. Agreement for UNRRA. Ibiblio [online]. 9 November 1943. [Accessed 28 August 2017]. Available from: http://www.ibiblio.org/pha/policy/1943/431109a.html 40 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 66. 41 The left-wing European parties could have tried to create a socialist block in Europe, deciding to leave the capitalist system to adopt a planned and controlled economy. 42 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 68-69. - 17 - have expanded also in western States) and to begin a process of European integration. For this reason, the US secretary of State George Marshall, in 1947, spoke about an extraordinary help from the USA for European countries, given only if they would have managed the money together43. On 13th April 1948, the US Congress approved the Economic Cooperation Act (also called Marshall Plan), providing to Europe 13 billion dollars from 1948 to 1952. The aid could be collected as long-term loans with low interests or as an unconditional gift and it was managed by the Economic Cooperation Administration (ECA). To organize the use of the funds in the best way, the European countries founded, on 16th April, the Organization for European Economic Co-operation (OEEC) with the task of projecting the future economic recovery of the participating States44. The Marshall Plan was a great success both for the USA and Europe: the European countries reached high level of growth, while the American State expanded its political influence on the old continent avoiding the Soviet expansion problem (also creating, in 1949, the NATO). In addition, the USA had been able to support the Germany economy restauration obtaining excellent results in a few years, in contrast with Stalin’s idea45. In West Germany (Federal Republic of Germany), from 1950 to 1959, there was the fastest economic growth in Europe: the GDP rose by nearly 8% per year and the living standards improved considerably, contrary to what happened after the First World War. Among the European countries, only Austria and Spain reached similar performances. This explains why Germany, in the early ‘60s, was able to restore its status as the most influential economic and financial power in the Continent46.

The Second World War had consequences also on the political sphere of the European countries: the military defeat of the European Axis powers led to the end and to the abolishment of Nazi-fascism from the Continent. From 1945, the will to eliminate definitely the fascist ideals exalted the idea that democracy was unconditionally the best political regime. In this way, the term democracy started to be used as synonymous of anti- dictatorial47. Italy became a parliamentary democratic Republic on 2nd June 1946, the Third Reich ended with the occupation of Berlin and the country was divided in 4 occupation zones in 1945, in Hungary the Horthy’s regime terminated in 1944 (and the State became a popular republic in 1949) and in Romania Antonescu’s authoritarian power ended in the June of the

43 I. T. Berend, The History of European Integration: A New Perspective, Routledge, London, 2016, p. 95. 44 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 84. 45 The German economic recovery was soon followed by its military (partial) repowering: with the beginning of the Korean war, in June 1950, USA began the rearmament of the Federal Republic of Germany in order to defend Western Europe from a possible Soviet invasion. 46 B. Eichengreen, A, Ritschl, Understanding West German Economic Growth in the 1950s, in «Cliometrica» vol. 3, n. 3, (2009), p. 191-219. 47 U. Spirito, Critica alla democrazia, Luni, Milano, 2000, p. 19. - 18 - same year. All the defeated countries were controlled for some years by the Allied Control Commissions48. They were military occupation governing bodies with different tasks: they ensured that the States respected the peace clauses, they instituted long-term educational programs to eradicate all traces of Nazi ideology (mainly in Germany and in Austria) and they participated to the redefinition of new States borders and to organize the transfers of populations.

In the following year, the political situation of European countries depended on the influence sphere49 in which they were closed: as Churchill noticed on 5th March 1946, “From Stettin in the Baltic to Trieste in the Adriatic an Iron Curtain has descended across the continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and ; all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject, in one form or another, not only to Soviet influence but to a very high and in some cases increasing measure of control from Moscow”50. The division of Europe in two influence spheres meant that the American sphere (including the western fully democratic countries, based on capitalism and liberal market) were bordering with the Soviet sphere, characterized by completely different political and economic systems (the Satellite States were ruled by communist parties51 supported by the USSR and their economy was based on communism). Nevertheless, while countries like Czechoslovakia had been occupied by the Red Army and forced to enter in the Soviet sphere, two States had been able to survive the war avoiding foreign occupation even though they were not communists or fully liberal-democratic countries. This particularity showed that also a 3rd political - economic way allowed to a Nation not only to have a long political stability but also to improve decisively the economic situation of its citizens, having as ultimate target the public good52 and the State prosperity. This 3rd political - economical solution became a reality in Spain and in Portugal, respectively with Franco’s government and with professor Salazar’s presidency.

48 The first Allied Commission were born in Italy on 10th November 1943, then Allies created one of them in 1944 in Bulgaria, in Finland, in Austria (as Germany divided in 4 occupation zones, although only from 1945 to 1955) and in Romania and in 1945 in Germany, Japan and in Hungary. 49 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 86-87. 50 Churchill W., The Sinews of Peace. in « Kishlansky M.A., Sources of World History», New York, Harper Collins, 1995, p. 298-302. 51 A. M. Kalinovsky, C. Daigle, The Routledge Handbook of the Cold War, Routledge, London, 2014, p. 47-48. 52 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 70. - 19 -

- 20 -

2 Portugal

2.1 The colonial issue and the First Republic

Despite of its small territorial dimensions and its decentralized position in Europe, in the 19th century Portugal was owning an important colonial empire53 that was including Islands, Archipelago, Angola, Mozambique, Cape Verde, Macao, , Goa, Daman, Diu, São Tomé and Principe, Guinea- and Brazil (the heart of the empire, a country that was over 95% of the territory of the Portuguese crown). The Portuguese colonization was oriented by the assimilation process: colonized population were considered Portuguese and they had to learn the culture, the language and the religion of the homeland, instead of their traditional ones. For this reason, the colonialism was characterized by political and administrative centralization and cultural assimilation of subjugated populations54.

Even if the empire was including various States, in the 19th century the only real colony was the Brazil: the African and Asian States, for example, were occupied only near the sea and for no more than 300 kilometres towards the hinterland. For this reason, it is better to consider these possessions as enclaves and it explains why, when Brazil became independent (1822), the had lost its most important economic partner and supplier of raw materials. Only after this defeat, from 1870 to 1890, Portugal decided to focus its imperialistic expansion desires in Africa, where the most important economic gain had been constituted by the slave trade for centuries. With the British Ultimatum55, delivered on 11th January 1890 to Portugal, the empire was forced to withdraw its troops from Malawi and Zimbabwe: this humiliating retreat caused strong political oppositions to the monarchy and to the king Dom Carlos I. The Portuguese surrender was the best decision for the country, because at the end of the century the State was clearly in an irrelevant position both for military power and for economic prestige. People tried the same to claim historical rights on conquered lands even in respect for the great Portuguese explorers of 16th century, beginning a boycott of consumption56 of English goods, but they had no results or attentions.

53 W. G. Clarence-Smith, The Third Portuguese Empire, 1825-1975: A Study in Economic Imperialism, Manchester University Press, Manchester, 1985, p. 24-26. 54 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 32. 55 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 12. 56 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 53. - 21 -

Following the failed republican revolt on 31st January 1891 and the dictatorial behaviours of the king, the Republic was proclaimed on 5th October 1910, after a second armed revolution in Lisbon.

The new Republic was led mainly from prominent figures coming from the oldest university of the country, situated in Coimbra (as the first President, Teófilo ). It was characterized by a strong nationalist and imperialist idea: the main goal was to rebuild a colonial empire following positivist theories and being anticlerical, because the Catholic Church was supporting the monarchy and it was accused to be the reason of the political and cultural decadence of the country. Monasteries and priests became the target of extremist republican groups, supported for their crimes by the government. On 10th October, a law was promulgated to provide the expulsion of all Jesuits from the State, suppressing all convents, monasteries and religious possessions. On more, the law legalized the divorce and banned religious symbols in public buildings, decreeing the separation between Church and State.

Republicans followed the political doctrine of liberalism: they wanted to protect the private properties (defending individual rights and rewarding individual abilities) and they promoted equality and liberties without following modern form of socialism that were growing in the central Europe57. During the sixteen republican years, Portugal had to face international problems like the First World War (in which the country participated) and internal difficulties, caused by political tensions and economic issues. From the political side, the Republic was supported from masonic, anticlerical and upper classes but it had to treat with monarchists (mainly in the northern part of the State58, still loyal to the king), apolitical, socialists and anarchists. From the economic side, they should have promoted the progress beginning an industrial revolution but they had not been able and they could not even solve social problems (mainly in the countryside). The situation was made more complex by the same republican party: its members were ideologically divided between radicals and conservatives. The radical party (led by ) was anticlerical and more interested to solve social problems of the country, while the conservative faction (led by António José de Almeida and Brito Camacho) was refusing socialist ideas to adopt completely liberal policy for the interests of the upper classes, without being hostile towards the church59. This division caused the end of the old republican party, separated officially in three factions from October 1911.

57 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 46-47. 58 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 13. 59 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 55-57. - 22 -

In May 1915, after two months of civil war in Lisbon against the dictatorial behaviours of the Prime Minister Pimenta de Castro, the new Head of the government, Afonso Costa, understood that the only way to avoid future monarchist or anarchist revolts against the weak Republic was to find an international recognition of the innovative form of government born in Portugal (it was one of the first in Europe). For Costa, the solution60 was to participate to the First World War, in alliance with the United Kingdom and France.

For Portugal, the First World War began on 9th March 1916, against the central empires. In the following two years of war, the State had not only socio-political problems (caused by opponents to the war, strikes, religious and political persecutions and attacks), but also economic problems caused by the conflict. The growing inflation61, added to the lack of food, led to a rising popular dissatisfaction for the government and for the decision to participate to a far and unaffordable war. For this reason, on 5th December 1917, a part of the army captained by the major Sidónio Pais62 attacked the government in Lisbon, dismissed the President of the Republic and proclaimed the birth of the República Nova, changing the Constitution to give more powers to the President. In reality, Sidónio Pais, elected President, founded a conservative dictatorship hidden by a series of popular plebiscites63. Despite of the concentration of powers, he was not able to solve the serious economic, social and political problems of the country and he failed even to supply the army fighting in the Flanders. This situation caused not only his murder, on 14th December 1918, but also the proclamation of a restored monarchy, the Monarquia do Norte in and Lisbon (on 19th January 1919) and a following “Old Republic”, re-established after a short civil war64 two months later.

The only positive effect of the war was that it improved the ability of the State to organize the supplies of energy, raw materials and food goods, in order to minor food shortages and to keep on working industries which depended on the imports of energy and other industrial inputs65.

During the ‘20s, the internal situation of Portugal was still worrying: the growing inflation, the political instability (in 1920 there were seven different governments) and the workers strikes to claim higher wages and protections were already augmenting social tensions. On

60 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 90. 61 Portugal had the highest war inflation in Western Europe (with an annual rate of 58,8% between 1914 and 1918), surpassed only by Germany, Austria, Italy and Finland. 62 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 14. 63 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 93. 64 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 63. 65 Lains P., Portugal's growth paradox, 1870-1950. Universidade do Porto, Faculdade de Economia do Porto, 2003. - 23 - more, there were several emigrations to Brazil of bourgeois, because 66,2% of the population was illiterate and subjected to extreme exploitations, as proletarians in Lisbon and Porto: it undermined the Republic from its foundations, depriving it of the middle classes’ support. The situation was getting worse also for the colonies: different European States were interested to extend their hegemony on Portuguese African countries while colonists in Angola66 were threatening the secession, because they wanted a growing political, administrative and economic autonomy for the colony and the creation of a self-government. The Angolan crisis was used by nationalists to mobilize the public opinion, soldiers and conservatives against the political system, while the violence was ramping both in the Parliament and in the cities67. All the Republican parties had already a compromised image and the most important journals were propagandizing the idea that the country needed a strong power not to worsen its situation.

At the beginning of 1926, a lack of power in the colonies made more clear the theory that only a strong government similar to the Italian one could have re-established the order and the wellness of Portugal. The decision to start another revolt came after the law proposal of the Prime Minister António Maria da Silva about tobacco State-owned companies (to create 2.000 new jobs, assigned with nepotism and corruption). On 28th May 1926, General Gomes da Costa began a military march from Braga (in the northern part of the country) to Lisbon against the government, accused of dictatorial behaviours, without founding an organized opposition. The revolution had a great success in the whole country, decreeing the end of the Republic and the closing of the Parliament already at the beginning of June68.

The Republic lasted for 16 difficult years, being characterized by seven Parliaments, eight Presidents of the Republic, 45 governments and 38 Prime Ministers, ending without being able to counterattack the rebel soldiers. It left a dual image about its years: some researchers consider the Republic as a completely negative period for Portugal history, because it was a demagogic political system with a disjointed State apparatus without authority. It impoverished the country delaying the economic progress (and the industrialization), aggravating the colonial dependence from the United Kingdom and being unable to avoid violent riots. Despite of all these negative aspects, others consider it as a particularly creative period that created the first democratic governmental experience in the country, involving citizens in the political process and implementing laws both to improve families’ conditions

66 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 69. 67 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 121. 68 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 74-75. - 24 - and to facilitate education. The researchers in favour to the Republic underline even its defence of the colonies from outside interferences (also participating to the First World War for this reason) and its contribute to the formation of a civilized and progressive political mentality69.

2.2 The military dictatorship

The rebellion was supported mainly by monarchists, Catholics, nationalists, some republicans and a few fascists. The new government, created after the coup d’état, wanted to lead Portugal to reach an economic recovery, eliminating the democratic party, the social violence and the diffused corruption, still avoiding the spread of socialist ideas in the country. Even if participants acted to do a real political and economic revolution, monarchists very soon were disappointed for the will to maintain the republican form of government even if closing the Parliament and ending the liberal political orientation. The prevailing political objectives came from the (a traditionalist movement that was contrary to democracy, socialism, communism and constitutional monarchy) and from the upper and ruling classes united in the “Union of economic interests” party.

The first military government was born on 31st May 192670: its head was represented by General José Mendes Cabeçadas, one of the most important figures for the coup d’état (with Generals José Augusto Alves Roçadas and António Óscar Carmona, the conservative Cunha Leal and the monarchical Sinel de Cordes). In this government, Cabeçadas was Prime and Interior Minister, Gomes da Costa War and Colonies Minister and Carmona Foreign Minister. This was also the first government in which, as Finance Minister, it appeared the name of the professor Antonio Oliveira Salazar. For Salazar, this was the first experience as Minister (he had a short experience in the Parliament in 1921, as member of the Portuguese Catholic centre71): he was not a soldier and he was not famous outside from Coimbra and his village, but the militaries chose him the same for his extensive knowledge about finance.

Despite of the new military regime, at the beginning the political instability remained a constant and from June to July there were other two governments: the first one led by Gomes da Costa, the second one by Óscar Carmona. For this reason, Cabeçadas and his ministries

69 J. H. Saraiva, Storia del Portogallo, Mondadori, Milano, 2007, p. 314. 70 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 15. 71 Ibid., p. 16. - 25 - had only the possibility to close the Parliament and to abolish the Constitution, while Salazar had not the right time to plan his work.

If da Costa’s government was the most dictatorial and damaging for the revolution and for the development of the country, with General Carmona Portugal had a stable administration, even if he used violent methods against oppositions and he promoted the press censorship. Carmona had been Prime Minister from 9th July 1926 to 18th April 1928 and during these years his government faced different revolts72, being always able to suppress them (the first one happened on 3rd February 192773); in addition to this role, he was from the 26th November 1926 to the 18th April 1951.

The main problem of this government was that Carmona and General Sinel de Cordes (the Finance Minister) were not able to solve the financial problems of the State74. The country took up a huge external debt already from the second half of 19th century to build railways and for colonies expenditures, but it could not pay the interests and so it was excluded from the possibility to take up other debts75. The foreign trust for Portugal and for its central bank further decreased in 1925, when the forger was discovered falsifying money. Sinel de Cordes was Finance Minister from 17th June 1926 to 18th April 1928 and he tried to solve the current economic problems of the country obtaining a war debt forgiveness from the United Kingdom (about 20 billion pounds sterling). Then he intensified the loans for firms to provide their development, also if he committed the error not to forecast warranties for companies’ loans.

This kind of expansionary economic policy, added to the heavy military expenditures necessaries to avoid other revolts (27% of the State budget76 was used to pay the army), made necessary the availability of adequate financial founds: that is why the Minister decided to ask a new loan of 12 million pounds sterling to the United Kingdom. Knowing the political situation of Portugal and its old difficulties to reimburse debts, English bankers refused the Portuguese loan application: this led de Cordes to request for an international financial transaction endorsement under the patronage of the League of Nations (sending to Geneva

72 From 1927 to 1931, in Portugal there were a series of revolts considered by some researchers as part of a long “intermittent civil war”. The governments decided always to react using the violence and for this reason there had been hundreds of civilians dead and thousands of deportations. 73 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 18-19. 74 While Sinel de Cordes was Finance Minister, Salazar continued his work as professor in Coimbra and he kept the role as President of the Commission for tax reform (created by the new government). This experience permitted him to simplify the Portuguese tax system, making him the most famous Lusitanian economist. 75 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 88. 76 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 20. - 26 -

General Ivens Ferraz). The LN showed itself available to help the Lusitanian empire but it asked, as warranty, the control of the financial actions77 of the country through a special commission: this request would have undermined the Portuguese financial and political sovereignty, making it dependent by the decisions of the League. To maintain the full independence, on 9th March 1928 the government chose to refuse the loan: this decision was positive for the popular reputation of the ministries, but the country was risking the default78 and the situation became negative mainly for the Finance Minister.

At the beginning of April, the government did a Constitutional reform79 and on 18th of the same month Carmona left the head of the government to become President80 a few days later, nominating as Prime Minister the colonel Vicente de Freitas. Despite of this democratic semblance (that gave more solidity to the figure of the President), the dictatorship was experiencing the worst political period of its existence: the monarchists blackmailed Carmona81, asking the return of the king in Portugal in exchange for the vote in favor to him. Nevertheless, the comeback of Dom Duarte (the successor of Dom Manuel) would have caused a series of further revolts, so the government dealt with Cunha Leal, the head of the Liberal Republican Union (União Liberal Republicana), who promised the votes from all republicans if the soldiers would have permitted to the anti-monarchist António Maria da Silva to come back from his exile. Da Silva was a communist, head of the most important terroristic organization in Portugal and a fierce opponent of the movement on 28th May: his permission to return to the homeland was the first compromise between the revolution and the democrats.

The crisis of the dictatorship was also the result of the three different political visions inside the society:

• the first one was represented by Ivens Ferraz and Cunha Leal (the Angolan bank governor) and it was sustained by democrats and republicans: they were considering the dictatorship as a transitory period necessary only to solve the worst problems in the country. After a few years, it would have ended and it would have substituted by a republican regime82;

77 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 89. 78 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 21. 79 The modification established the popular election for the President of the Republic and Carmona achieved this role after a democratic vote (with 740.830 votes in favor), also if he was the only candidate. 80 Ibid., p. 22. 81 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 195. 82 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 31. - 27 -

• the second one was represented by Salazar and it was supported by conservatives and right-wing politicians: their goal was to achieve a constitutional regime ending the military dictatorship (even if maintaining the anti-liberal and anti-democratic solution); • the third one was represented by Filomeno da Câmara and the extreme right-wing parties: they wanted to transform the military dictatorship in a fascist regime, taking as example Primo de Rivera’s government in Spain or ’s one in Italy83.

Vicente de Freitas decided to change the current Finance Minister choosing Salazar again: this decision turned up to be indispensable to continue the revolution. In 1928 Portugal had an internal debt of 2 billion escudos84 (around 18 million pounds sterling) and from the beginning of the dictatorship it was permanently growing, because the governments promoted an expansionary economic policy (interrupted only by Salazar) financing it with the emission of treasury bills and with a growing inflation. For the professor of Coimbra, that was the first important possibility to improve the situation of the country, after the failed attempt during his too short experience as Minister, in 1926. To be sure to have the necessary powers to exercise his functions, Salazar asked to all the other Ministries to submit himself all finance decisions and he wanted the right of veto for all government expenses. The politicians pleased him and from that year Salazar began to obtain a predominant role in the country, demonstrating his abilities in economics: he limited the expenses to make useless the request of a new loan and he reached the goal of the balanced budget. For the first time, from 1913, Portugal budget was not negative: in 1928-1929 Salazar achieved a surplus of 1.567.000 escudos, while in 1927 there was a deficit of 388.677.000 escudos85.

He was supporting a theory according to which Portugal did not need other loans to save its situation: the currency and balance stabilization was obtainable even only restoring the economic and financial life of the country. In his opinion, it was necessary to avoid the traditional Lusitanian rhetoric (based on patriotism), while he underlined the importance of small familiar savings for the whole Nation: the individual purpose should have been to work as more as possible and in the best way86, learning to save money and to spend rationally. Only acting in that way people would have helped to obtain the saving of the whole Nation87.

83 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 91. 84 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 199. 85 Ibid., p. 210. 86 Ibid., p. 200-202. 87 Salazar believed that people must use better their time, even refusing only one hour of free time or one day of holiday to spend it doing their best for their houses and their families. - 28 -

The balanced budget was necessary to be reached, but it was essential to change the administration and the false liberal vision of the life and of the world to have positive long- run results.

In addition, the recovery of the Portuguese finance and monetary variables was achieved thanks to a series of better conditions in the foreign markets, followed by war compensations, a severe cut in expenses with the colonies, changes in monetary policies, a fiscal reform and by the rise of tariffs and other import controls88. This was made possible by the political stabilization and also by the emigrant remittances and the good result allowed Salazar to refuse a loan from the League of Nations (negotiated by the previous finance minister).

The propaganda of the showed Salazar to the population as the saviour of the country and generally politicians liked him, because he was considered the perfect equilibrium among different politics and economics interests. His past as churchman, secretary of the Centro Académico de Democracia Cristã (CADC), member of the Centro Católico Português (CCP) and sympathizer of the king, made him favorable for the Catholic church, the monarchists, part of the army, the bankers and the upper commercial and industrial classes89. Thanks to his supporters, Salazar remained Finance Minister also in July 1929, when the government of Artur Ivens Ferraz substituted Vicente de Freitas.

In January 1930, the two main opposite political visions (the one led by Salazar and the other one led by Cunha Leal90 and Ferraz) showed their incompatibility and the need to find a predominant solution. Cunha Leal criticized Salazar’s financial policy about the management of Portuguese colonies, mainly refusing the austerity imposed by the Finance Minister also in Africa (where the Great Depression was having its most devastating effects). The governor of the Banco de Angola was supported by the Prime Minister and by the Colonies Minister, but Salazar replied the same to him, causing a government crisis. He presented his voluntary resignation to the President Carmona who refused it, preferring to change the Prime Minister: he considered the presence of Salazar indispensable to avoid other economic problems in the country. For this reason, Carmona obliged Ivens Ferraz’s government to the resignation and, on 21st January 1930, he named as new Prime Minister (a conservative General): the President’s decision was the signal of democrats and republicans’ defeat, while Salazar continued to be the Finance Minister gaining also the Colonies Ministry ad interim.

88 P. Lains, Portugal's growth paradox, 1870-1950. Universidade do Porto, Faculdade de Economia do Porto, 2003. 89 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 90. 90 Cunha Leal was the leader of the “Liberal republican union” and he supported the dictatorship from 1926 to 1930. - 29 -

The first Salazar’s target as Colonies Minister was to reduce the political and economic autonomy of Portuguese colonies, imposing also there the austerity already existing in the homeland. He elaborated the Acto Colonial (that become the Carta orgânica do Império Colonial Português in 1933), a new law that eliminated every kind of political autonomy for the colonies, concentrating all the control power in the central government. The colonialism was described as the “organic essence of the State”91 and it subordinated the colonies economic interests to the homeland program (for example, imposing to those States to take out loans only from Portugal). In this way, all the colonies finance issues began to depend by the Portuguese Colonies Minister and Salazar found a mode to solve definitely politics problems in Angola (against the conservative republicans)92.

Salazar’s importance for the economic situation of the country was relevant and, in 1930, his influence was strong on the government; despite of it, he had not the formal power of the Prime Minister. He understood that it was necessary to act firstly against the opposition to the dictatorship (republicans, communist, anarchists and fascist) and then to reform the government system. The republicans were trying to oppose to the regime following the idea of the Reviralho93: they organized a series of revolts to destabilise the political power and to return to the Republic (already from February 1927), but they had always negative results. Communists and anarchists tried to create an opposition against the dictatorship too, planning a series of strikes and protests and leading the labour movement against the political class. The government replied with a strong repression, arresting and deporting the communist leaders; the communist party (the PCP) survived the same94, while the anarchist movement (with the CGT) was losing supports. Clearly, fascists were the third group against the dictatorship, united in the “National League 28th May” (founded at the end of 1927) and in the “National Trade Unionism” (tending to the Italian fascism and led by Francisco Rolão Preto). They were contesting Salazar because they wanted a charismatic leader and a unique party. In September 1935, Salazar decided to order to the political police to eliminate the National Trade Unionism95, because it was threatening a coup d’état against him: his order, united with the exile of Preto, made the fascist opposition disappeared.

91 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 92. 92 In March 1930, Cunha Leal organized a revolt in Luanda (Angolan capital city) to obtain Salazar’s resignation and to eliminate definitely his political opponent, but the attempt failed, giving more personal power to Salazar and causing Cunha Leal’s exile in the Azores islands (May 1930). 93 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 93. 94 Ibid., p. 95. 95 Ibid,, p. 100. - 30 -

For the government, Salazar was thinking about a deep change of it: contrary to the fascists or the extreme right-wing parties, he did not want a dictatorship equal to the Spanish or the Italian one. The military period should have ended in favour of a new civil dictatorship, legitimated by a voted Constitution that would have given more powers to the Prime Minister. On 5th July 1932, the President António Óscar Carmona named Salazar as new Prime Minister (substituting Domingos Oliveira): it was clear that the professor of Coimbra was supported by all the leader groups of the dictatorship and this circumstance permitted to him to elaborate a new form of government. Salazar had worked for a long time to create a new Constitution, helped by a group of faithful people (catholics, integralists and republicans)96. In February 1933, the text of the new Constitution was published and it was approved on 19th March 1933 with a popular vote: only about 1.300.000 people had the right to vote (while the adults in Portugal were 4.000.000). Almost the totality of voters, 1.292.864, were in favour to the Constitutional project, while the contraries were only 6.190.

On 11th April 1933 the Constitution began to be operational and it ratified the birth of a new regime, called by Salazar the Estado Novo97.

2.3 Antonio de Oliveira Salazar and his moral revolution

During the 20th century, Antonio de Oliveira Salazar had been surely the most prestigious politician in Portugal, in fact, still in 2007, 41% of the television audience of a program called “Os Grandes de Portugal” named him as the most important compatriot ever98. On more, he was considered also one of the best economists (a “financial wizard”), a good dictator (by the American magazine “Time”, on 22nd July 194699) and a professor with noble value and intentions (by Austen Chamberlain)100. There is to underline that, despite of his political and economics capabilities, for sure he was an unexpected politician not only for the population but also for himself. With Salazar, Portugal ended a period of ideological and social conflicts born during the kingdom and continued during the Republic (with the problems caused by the fights among parties and by the anarchism) and during the military dictatorship101. He did a

96 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 32-33. 97 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 101. 98 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 78. 99 How Bad Is the Best? Time The Weekly Newsmagazine [online]. 22 July 1946. [Accessed 10 June 2017]. Available from: https://https://www.scribd.com/doc/6485455/Portugal-e-Salazar-Time-Magazine- 1946.scribd.com/doc/6485455/Portugal-e-Salazar-Time-Magazine-1946 100 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 250. 101 For Salazar, the army had an important role to save the country, but it was necessary to leave it in the military sphere, renewing its class pride and improving its efficiency. - 31 - moral and political revolution that permitted to him to create a catholic form of , in which people maintained all their natural rights: the completely freedom was insured to the whole population, following a Christian vision about it (and about its limits). The Romanian embassy cultural counsellor in Lisbon, Mircea Eliade, explained this vision of freedom mentioning Saint Augustine sentence “Dilige et quod vis fac”102: the limit to the human liberty derived directly from the Catholicism. The religious love quoted by Augustine, united with the charity, would have refined and purified people: they would have been allowed to do all what they wanted because they could have not been able to damage others enjoying their freedom. For Salazar, the State should have been catholic, authoritarian and based on love principle: that is why he substituted the figure of individuals with the concept of family. The family was the smaller unit provided with political rights; following this religious and philosophical theory, it is clear that only a love act can permit the creation of a family, unifying and valorising it. Salazar considered the families as the fundaments of the State and, for this reason, even the reintroduced corporations (seen as organic social groups), the municipalities and the whole Nation were regarded as an elaborate form of family, still depending by that spiritual love103.

Until the 2nd September 1921, Antonio de Oliveira Salazar was known only by his students and in his native village, Santa Comba Dão (a small town in the central part of Portugal). Born on 28th April 1889 in a humble catholic family, when he was a child he had already showed the gentle and temperate personality that would have characterized him for the whole life. The years passed in Santa Comba had been, for Salazar, full of happy and safety moments that he would have remembered until the end of his life: the life in the village was peaceful and quiet and his parents had taken particularly care of their sons, giving to them a catholic education imbued with peasant culture104. They had decided to guide Salazar to the preparation for priesthood (to make him become the future priest of the village) and he had been completely in agreement with this choice: he had done the primary school in Vimieiro (the name of Santa Comba locality)105 and in 1900 he had begun to attend the seminary in Viseu. During the eight years passed in the seminary, Salazar had deepened his knowledge about theological and profane sciences, starting his passion for social problems and education. In 1908, he had ended the experience in Viseu and during the biennium 1909-1910 he had

102 “Love and do what you want”. Saint Augustine pronounced it in the seventh of his ten homilies, commenting Saint John’s letter (on 20th April 407 A.D). 103 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 12-13. 104 Ibid., p. 128. 105 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 112. - 32 - taught in an after-school club106 (in which it was used an innovative way to teach, based on the personality of students). That work had changed his mentality, making him understand that the mission to train young people would have been more satisfying than to stay for the whole life in his small town only to console believers; as he wrote in his relation in 1919, titled “A minha resposta”, Salazar thought that the national problems were caused by educational problems. For this reason, it was useless to change governments or to do reforms: it was necessary to change people107.

In October 1910, he had been to Coimbra to study law and theology, ending in 1915: it was the obvious end of his clerical experience, in favour of the new interest for education. The education for young people (begun in their families and then continued in laic schools) would have been the only way to create a human change and in that way the whole State would have improved its situation. Salazar was conscious that it was impossible to make Portugal glorious as much as during the 15th-16th century, but it could have the same a rebirth, thanks to that kind of human growth and to the improvement of agriculture and industry sectors.

As person, Salazar was not fitted out with oratory ability and spontaneity; shy and lonely, his talents were his knowledge and his ability to build elaborate and stylistically perfect speeches, always presented reading from carefully prepared papers108. He was a catholic philosopher, who believed in the primacy of spirituality and in the creative force of the Spirit. At the beginning of his permanence in Coimbra, despite of the general euphoria caused by the Republic birth, he had been not interested about politics and he had been contrary to the diffuse anti-Catholic spirit. The new Republican policies had disappointed Salazar, who had understood their inefficiency, but at the same time he had been sure about the monarchic inadequacy: for this reason, he had preferred not to join one of the two opposite sides, using all his energies to continue his career and to find a way to improve morally and spiritually young students. Therefore, he had preferred to think about his studies (law, educational problems, economics and finance) and to enjoy the landscape of Coimbra instead of partying with his classmates (his only real friend was Manuel Gonçalves Cerejeira, the future cardinal and patriarch of Lisbon).

At the beginning of 1911, he had joined a movement called Centro Académico de Democracia Cristã (CADC), created to contrast the masonic diffusion109 in the university of

106 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 133-134. 107 Cf. A. de Oliveira Salazar, A minha resposta no processo de sindicância à Universidade de Coimbra, 1919. 108 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 135. 109 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 72. - 33 -

Coimbra. In its conferences, Salazar had the opportunity to experiment the Christian group life (based on common prays and following political discussions) and during this experience he had understood that he could have no longer avoided politics, because without religious freedom in two generations Catholicism would have been extinguished in Portugal (as the Prime Minister Afonso Costa announced)110. In 1912, he had been named secretary of the CADC and, in the following years, he had written some specialized essays and he had done conferences, sometimes interrupted by violent attacks111, in which he had defended the Church freedom and the necessity to fight against all kinds of democracy that gave privileges to only certain social classes.

In 1914, he had ended his jurisprudence studies and, in 1917, he had won a competition to become an assistant in economic sciences. Ending his Doctor of Philosophy (PhD) course in 1918, he had got the grade of professor and his passion for the education, added with his teaching method, had made him particularly admired by his students. The career as professor112 (of political economics, finance sciences and social economics) was the realization of his educational dream and it will affect all his private and public life: his title of “professor doutor” would have been the constant way to present him before his few public speeches, both as Finance Minister and as Head of government. As he wrote in his relation A minha resposta, in 1919 (after Sidónio Pais death, when he was temporarily suspended from teaching with the accuse to be monarchic and anti-republican), he had lived those years for his books and for his students, using all his energies to teach objectively even about the most important political and actuality facts. Despite of his self-denial and his brilliant career, during that time Salazar was famous only among his students and among the catholic people who were attending to his conferences (organized with the CADC).

In the while, in Portugal the situation was critical: on 14th December 1918, Sidónio Pais had been murdered and his dictatorship had ended. The restored Republic (called the República Velha), defeated the arising Monarquia do Norte (born in Porto on 19th January 1919 and lasted 25 days), acted strongly against monarchists and opponents to gain political stability. For Catholics, this was an uncertain period (the Republic was still anti-clerical and there was the principle of separation between State and Church, so Church interferences in public life were spurned) and, to find a political solution, the Centro Católico Português (CCP) had

110 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 146. 111 Salazar will denounce it in 1935, remembering the absence of freedom during the Republic and the constant danger. 112 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 89. - 34 - collaborated with the new government, deciding to participate to the election113 in August 1921. Salazar had presented his candidacy for the Catholic Centre, also if for him the political commitment would have caused the sacrifice to end his loved experience as professor. Unlike its forecast, he had been elected deputy and he had been to the Parliament on 2nd September 1921: also if he had attended only to one meeting114, he had understood that the Parliament was not working properly and that it was useless. That uselessness, in his opinion, was mainly caused by the various parties that were composing the Parliament and that were in continuous conflict. Clearly, the Legislative inadequacy (considering both the House of Representatives and the Senate)115 had negative consequences on the State: politicians were corrupted, most of executives were abusing of their power, the economic crisis was always worse and there was always the fear of violent revolts (or strikes). In that way, the Republic was not a good solution for Portugal but also the Monarchy would not have been better (remembering the Kingdom results), so some extremist groups began to think about a communist revolution as only way to improve the society’s wealth.

After the end of António Joaquim Granjo’s government (killed during the Noite Sangrenta, on 19th October 1921), Salazar had decided to abandon the House of Representatives to reach again the university in Coimbra and his educational projects. During the time spent doing his educational work, he continued his economic studies showing his results in conferences and meetings: in December 1923, he presented a relation about “public expenditure reduction”116 in Lisbon, a theme particularly thorny in years in which Portugal was constantly having financial problems and for sure also an economic issue with clear political links. On 4th July 1924, with his friend Gonçalves Cerejeira, he participated to a congress where he exposed the relation about “Christ peace and proletarians”: it had been one of his most famous works, in which he showed clearly his Christian and anti-Marxist political vision.

For Salazar, the unique way to have a social improvement followed by an enduring peace was not obtainable by socialist ideas but only following the Christian philosophy: while the socialists were planning to gain the social peace with a world revolution, the Christianity was believing in a “Christ’s peace” only through a demanding individual spiritual ascension. If the socialist theory was characterized by the need of a revolution done by proletarians, the hate

113 After having interpreted Pope Benedict XV’s letter, Salazar believed that the only way for Catholics to have the necessary religious freedom and the recognition of their rights was to be active also politically. The political participation and obedience was a duty for all Catholics, but it did not imply a sharing of ideas from them (and so the complete adhesion). 114 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 157. 115 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 56. 116 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 166-167. - 35 - for the owners of means of production and the will to establish a proletarian dictatorship, the Christian one was based on the obedience to the doctrine, on the religious love and on renunciation and ascension117. The moral growth and improvement would have had effects also in the economic and social sphere: that is why he was criticizing the socialist idea about wealth and works. The socialist revolution would have diminished the world productive capacity and the social stability, increasing conflicts. An inequality in richness and in social classes, based on meritocracy, was necessary for the development of the countries. There could have been a kind of “selfish wealth”118 dangerous and unproductive for the society, but also a wealth gained with sacrifice and with industriousness, belonging to people endowed with power (like administrators, politicians or managers) and particularly able to exercise their functions.

The experience done in September 1921 as deputy had been also the only one for Salazar during the Republic. His second experience as politician had lasted from 31st May to 19th June 1926 (during Cabeçadas government119, the first one in the dictatorship), specifically as Finance Minister. Despite being longer and more productive than the one-day Parliamentary career, his work as Minister ended after a too short period and so Salazar had just the time to organize his plan and to meet all the collaborators in the Ministry120 because his task ended with the government. His first real opportunity to work for the State had been on 18th April 1928, in the period of Vicente de Freitas’ government, again with the role of Finance Minister (thanks to the President Carmona’s will, who was considering him as an economist wizard). From that day, for forty years lived firstly as Finance Minister (1928-1932) and then as Prime Minister (1932-1968), Salazar's political and economic doctrines would have been necessary to shape the Portuguese destiny.

During that third political experience121, finally Salazar had the possibility to show his abilities in economics and finance, adopting unpopular measures that the other Ministries did not have the courage to take (raising taxes and reducing public services). After having received by the government some exceptional powers that he required (to reach his goals without problems), he began to work asking to other people to leave him in peace in his office, where he used to spend hours to find a way to save money and to invest in a profitable

117 Ibid., p. 168-169. 118 Ibid., p. 170. 119 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 90. 120 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 121. 121 Salazar’s political experience was permitted by the new agreement between the army and the CCP, thanks to which the CCP obtained the possibility to collocate some people, linked with the Catholic action, into the government. - 36 - mode. He continued to meet only his collaborators (from the Ministry) avoiding official ceremonies122 or reunions not appropriated with his public function. The new task for Salazar was a sacrifice: he would have had no time to teach at the University of Coimbra, no time to think about his educational projects and no time to pray and to attend to religious buildings. In his point of view, the political power was a heavy duty123 (to exercise with justice) and the State was the representing of God: its main task was to reach the common good. God himself would have limited the power, so in this way the politicians would have had no ambitions to do something illicit and he would have conserved the social order. This catholic State would have find also a solution to manage trade unions, new work methods and different political organizations, because its population would have gained the catholic spirit characterized by listening, charity and renunciation124. The educational reform was one of the fundamental tasks of that reality: the national rebirth had to start from the nationalist belief in the homeland, knowing its heroic past and its present possibilities. Loving and knowing Portugal, people would have improved its situation and themselves125.

In his opinion, policies had to be as simple as effective: he underlined the necessity to eliminate the chronical deficit (the solution was to rebalance the budget, the goal that he wanted to reach in one year) and the consolidated deficit. The target was to reach a moderate development of the country, reducing its abroad dependence; to save the finances, the State should have reinforced its controls about all production stages126. Obviously, Salazar gained only unpopularity and antipathy by people forced to endure his decisions, but he was not risking the Ministry because the army was supporting him and he was only worried about avoiding the bankrupt. He opposed a sincere and unpopular series of policies127, as the group of the so called “sacrifice policies”, to a politics based on lies and populist speeches (common in Portugal before him). The first effective decisions had been to cut public expenses reducing State staff and social investments, obtaining a Treasury enrichment and beginning a long process to stabilize the currency, to reform the credit, to lower the interest rate and to diminish the public debt128. Economically, he invented an original kind of system refusing the socialist

122 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 204. 123 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 19. 124 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 171. 125 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 52. 126 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 137. 127 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 207. 128 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 138. - 37 - and liberal ones, able to reconcile workers and industrialist’s interests: that was defined by him the “3rd economic way”, inspired by Catholicism and fascists corporatism129.

Salazar’s revolution began with the success of the balanced budget and continued with the revolution of all : while he was eliminating the old liberal myths about richness, production and individuals, he denounced all the errors that caused the economic and social crisis of the country (non-recognition of family’s function and importance, accumulation of wealth without necessity, exploitation of workers and discrimination of women and children)130. To respond to criticisms against the military dictatorship, he underlined that the new political regime formally suspended some right that actually were informally absents already during the Republic: so there was no difference about rights, while the dictatorship had been able to guarantee security and tranquility to the whole Nation. On more, his idea of revolution was not only focused on the administration: he was a “technical politician” but he wanted to extend the revolution to the society, to obtain justice and to reach a new philosophy of life131 (based on education and integration of population in a single body). He understood that the new process would have had no success if masses had not been included in the process, so it was wrong to hope that only the army would have created the right conditions for it. It would have been an error also to concentrate the attention about what was defined as “public opinions”: in reality, those wills and needs were not coming from the masses but from more influential individuals who were trying to recover all privileges lost during the dictatorship132. In fact, no farmers and merchants participated to build that “voice”, while Salazar wanted to include them in the revolutionary process. If that kind of public opinion had been against the new regime, it would have been explainable thinking about their defense of unjust privileges lost, so the government should have continued its work refusing to listen for their critics.

Thanks to General Carmona’s support and to part of the army, Salazar could realize his ideas also if he was joining no political parties: conversely, the catholic, nationalist professor and philosopher was against all form of parties, because he thought that they were only dividing the big Portuguese family. That is why he avoided to join a party and he did not want also political contacts with them; he believed in the importance and the utility of the people belonging to the various old parties (and so they could participate individually to the

129 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 21. 130 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 212. 131 Ibid., p. 213-214. 132 Ibid., p. 227. - 38 - revolution, after a re-educational process133), but the parties had to be exceeded. It must be emphasized that, without the President support, he would have had no way to continue his work: extreme right and left politicians were against him and monarchists were disappointed too134. It is true that Salazar was monarchist, but he understood the need to defend the republican form of State and that, after King Manuel II’s death, it was impossible to reestablish a monarchy in Portugal. It was not a problem for him, considering that he was used to say “the government form is secondary, while people are what matter”.

He was conscious that he would have needed years to realize his project and to improve the society, but it was necessary to put three bases for the success:

• a new strong State (so strong that he would have had no need to use violence anymore), • the executive power given to the Head of the State and to the Ministers, • the families (as real organic unity, the irreducible social cell).

The strong State, as opposed to the past, had to be a corporative and social State, formed by constitutive organisms necessary to the creation of political representatives135. The needs of everyone and the national interest were the most important goals and the only way to realize it was completing the mental and moral revolution of contemporary people, educating in a particular way the new generations. Salazar insisted particularly on the spiritual sphere primacy (linked with Portuguese catholic and European traditions) to explain that only a faithful spiritual life would have granted the political order, the social equilibrium and the economic progress, solving the problem of the contemporary moral crisis. The Professor put always the priority on the spirit primacy, on Portugal and on families: his political goal was firstly the moral and educational perfecting of all citizens. On more, he underlined that the Head of the government would have had an influence on people’s behavior136 (as in Italy) but to reach the goal to have a strong, happy, thrive and European country it was not necessary to show violence, heroism and bellicosity.

His revolution become reality from 1932 to 1968; 36 years of government (lived always as a sacrifice, more and more difficult to sustain with the passing of time137) during which Salazar showed:

133 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 24. 134 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 142-143. 135 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 221-223. 136 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 54. 137 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 232. - 39 -

• the importance of families as smallest organic unit, • the inefficiency of liberal and socialist ideas, • the need to be good Catholics to improve the own moral and social condition, • the necessity to change the Nation starting from small things, avoiding the old liberal myths.

Despite of the importance given by Salazar to the families, he could not build his own one, because he deemed that his political tasks needed the absolute dedication138. Clearly, Salazar was the Prime Minister of the Estado Novo and he was provided with large powers, considered authoritarian or dictatorial. Carmona decided to nominate him as Prime Minister because he was not linked139 with the old republican ruling class and he was the only one approved by right-wings parties and by the army. Notwithstanding his authority, he did not abuse of it (ruling not as a fascist dictator but as a catholic one140) and he continued his work for the public good, using always his technical language (as professor) similar to the one used by writers during the previous century. The dictatorship was not an end in itself, but a solid frame necessary both to continue the revolutionary process and to defend the traditions. The army chose him to represent the government and he accepted, considering the power not as a right to exercise to show his abilities, but as a conscience duty.

2.4 The “Estado Novo” and its economic features

From 1930, Salazar started to present the main features of his future political regime: he presented the new government form as a nationalist, corporative and organicist State, refusing the liberal and socialist ideas (and the oppositions). His idea was to continue the revolution, began on 28th May 1926, transforming the military dictatorship in a civilian one141. He planned to build a strong Nation in which the executive power was more important of the legislative, while the main strengths of the innovative country and his foundations should have been the “natural element of the society”: families, municipalities and corporations142. To sustain the new country, he devised the creation, on 30th July 1930, of the União Nacional (UN): it was a Portuguese political movement conceived to be the only one in the future regime and it became effective in May 1932. The UN was controlled by Salazar and its

138 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 28. 139 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 141. 140 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 18. 141 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 240. 142 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 96. - 40 - function was to reunite all Portuguese people and parties (monarchists, conservative and liberal republicans, Catholics, Democrats including the PD etc…) to defend the national interests. Consequently, he imposed the dissolution of all previous parties143, because they were the place in which people were registered to obtain privileges144, not to serve the country. The Portuguese Catholic Centre (CCP) ended to exist too, while the official royal organization remained operational (because the majority of public leaders were monarchists). The professor was forced to eliminate the CCP because he had to seem the landmark of all republicans who were supporting the dictatorship and ruling the army.

The UN was completely different from the Italian PNF or the German NSDAP: Salazar wanted to build a “dictatorship of justice” dependent on his person, not on the party (like in Italy or Germany), which was used to give stability to the government. For this reason, the membership to the UN was not compulsory to be part of the National Assembly145 or to have a public job (while in Italy and Germany only members of the ruling party could have these opportunities). As he explained during Ferro’s interviews, the Salazarism was similar to the fascism for the authority strength, for the refusal of some democratic principles, for the clear nationalism146, for the existence of national organizations (for women, for workers and for children), for the use of cinemas and theatres to build a link between society and government (created by the propaganda Minister, António Ferro) and for the social commitment. On more, in 1936, Salazar created two paramilitary organization similar to the fascist ones, to complete the political construction and the society control: the Legião Portuguesa (a sort of fascist militia, but with less political influence, done to defend the Nation and his society against anarchists and communists threats) and the Mocidade Portuguesa (similar to the Italian Opera Nazionale Balilla, created to educate politically and military the young generations)147. Despite of these similarities, there were also important differences, as the link that Salazar kept with the Church (while Mussolini used it only to obtain consensus), his determination to

143 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 20. 144 Salazar wanted to solve the clientelism problem: while old parties were permitting to Ministers to do favours for friends and relatives (also changing laws or programming public works in their favour), the UN should have been perfectly fair and legal. 145 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 97. 146 The nationalism of the new regime was clearly visible in Salazar’s motto: “Tudo pela Nação, nada contra a Nação”. 147 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 105. - 41 - impede the use of violence148 and the respect of political enemies (for example, the republican general directors in the ministries were not dismissed during the new regime)149.

The divergences from the fascist regimes and the Portuguese one were mainly due to the personality of the Lusitanian professor: Ferro noticed his propensity for the ascetic life, his will to limit his personality cult, his separation from masses and his desire to become the educator of Portuguese people, not their warlord. As Salazar admitted speaking with Ferro, he was not aspiring to reach an immense power, because he was only a “simple professor who desires to contribute to save his country” unifying morality with politics. He was the most important politician of the new regime and he exercised his political centrality alone, gathering the cabinet fewer times possible150 (he preferred to speak individually with the various Ministers); he confirmed the existence of a dictatorship, but it was necessary to solve serious Portuguese problems and it was conditioned by the Nation “primary factors”151.

Another characteristic feature of the Estado Novo, that is possible to notice in other dictatorships, was the print censorship (but there was freedom of thought, political association and the Habeas corpus152 right). Salazar did not like this instrument, preferring to valorise individual liberties and opinions; despite of this, the censorship was compulsory to avoid that people would have wrongly accused the State about its plans, so it was possible to limit it only allowing journalists to have right news directly from the ministries153. The censorship could have been understood as a limit for human freedom, but Salazar underlined that the absolute freedom was a prerogative of prehistoric man while nowadays, with the existence of States and ruled communities, liberties were reduced and insured by political authorities. This kind of freedom, guaranteed by the countries, was the only one that could have led the citizenry to happiness.

The central political point of the new reality was the Constitution of 1933154, whose sources were the Italian Carta del lavoro (1927) and two encyclicals written by Pope Pius XI: Divini Redemptoris (1937) and Quadragesimo Anno (1931)155. As Salazar explained, it was the

148 As Salazar admitted during the third interview with Ferro, there were cases of violence (due to the Guarda Nacional Republicana) against people arrested for political reason, but the government took strict measures to punish the guilty officials. 149 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 22-23. 150 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 102. 151 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 147. 152 The principle that protects personal inviolability and the consequent right of prisoner to know the cause of his arrest and to see it validated by a magistrate's decision. 153 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 74-76. 154 It substituted the Republican Constitution of 1911. 155 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 241. - 42 - beginning of an original kind of politics, based on truth, sacrifice and national interests; for this reason, it was indispensable to create a new Constitutional and nationalist State, defending families, churches, corporations and municipalities. The Fundamental law, presented as the first corporative Constitution of the world, was approved by the army, by the catholic CADC, by extreme-right republicans and by integralists (as Marcelo Caetano and Pedro Pereira, supporters of the ). It described the State as a Unitarian and corporative Republic156, based on the law equality for citizens, with a bicameral Parliament and a presidential two-headed system (the two main powers were counterbalancing themselves). The refusing of liberalism, State interventionism on economic and social sphere and the colonial imperialism were the other main features contained in the Fundamental law157. The most important political organs were:

• the President of the Republic, elected with a direct suffrage and with a mandate of seven years (art. 72). He had the power to promulgate laws by decree and he could nominate and revoke158 the Prime Minister (art. 81); • the Prime Minister was the head of the government and he purposed the list of ministries to the President. The government had the executive power (art. 108) and, with the Assembly approval, he could have legislated alone (art. 91) to face a particular difficulty. On more, the Prime Minister had to sign all President’s acts, if not they would have had no value (art. 82): for this reason, this figure was the most important one in the regime; • the National Assembly had the prerogative about the legislative power, but the President could have refused a law purposed by the Parliament. It was formed by 90 deputies elected for four years159 by citizens (with direct suffrage) and it was reunited for three months per year; • the Corporative Chamber (second chamber of the Parliament) with an advisory power (art. 103)160.

Following the principal importance given to the families as smallest organic unit, the householders were the only one with right to vote161. The Constitution forbid classes struggles and it gave the prerogative to create collective contracts to national corporative organs,

156 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 101. 157 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 148-149. 158 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 37. 159 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 102-103. 160 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 144-146. 161 Following this principle, even widows could vote. - 43 - promoting solidarity among employers and employees and prohibiting strikes. It did not prohibit the existence of political parties and it affirmed the religious freedom, the equality of all religions and the separation between State and Church. This religious openness was in countertrend with the First Republic anticlericalism.

To avoid dissent and to defend the new regime, Salazar provided the creation of the Polícia de Vigilância e Defesa do Estado (PVDE), the special military tribunal and the secretariat of the national propaganda (led by Ferro). After some exiles for political enemies, it is important to notice that there was not a particular opposition against the Estado Novo162: this is clearly understandable seeing the results of the popular elections, in 1934 (for the Parliament, in which citizens decided to elect only members coming from the UN) and in 1935 (for the President election, during which people chose again Carmona).

From the economic and financial side, the most important laws of the new regime were the Estatuto do Trabalho Nacional (promulgated on 23rd September 1933) and the decree law n°24402 of 1934, which gave to the State the task to supervise the economy163 and the society, introducing innovative rights for workers. The two laws protected the workforces in different ways: the decree reduced the working week, imposing at the limit eight hours of job per day (art. 24) and one day off per week, while the Statute stimulated collective contracts and ensured a minimum wage, giving to employees the right to work in hygienically healthy buildings (art. 25). In addition, it created some National Syndicates to defend their positions164 and it took particularly care about women165 and children’s jobs.

The central part of the Estatuto for the national macroeconomics was the one in which it defined the corporative organization of the economy, grouping workers and employers in four different kind of organisms166 (basing the grouping on each of them profession). The four organisms were organized in regional and national federations and those kind of federations were grouped in corporations167. In this way, the corporations began to be one of the fundaments of the Estado Novo, created thanks to the predisposition of a Presidency Undersecretariat with the task to prepare them and to think about social security. In Salazar’s

162 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 105. 163 Portugal economy was mainly agricultural: 48,1% of workers were employed in the first sector and Salazar was particularly attached to the traditional agriculture too (refusing modernizations, multinationals and industrialization). 164 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 41. 165 The Constitution gave to women the same rights provided for men. 166 They were national unions (representing employees’ interests), Gremio (employers’ organizations), Casas do Povo (farmers’ corporations) and Casas dos Pescadores (anglers’ corporations). 167 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 104. - 44 - thought, they were the best method to realize the nationalist regime. In addition to the four organisms, there was a corporation done to form mentally and spiritually employees after their work (called Fundação Nacional para a Alegria no Trabalho, with the power to elaborate collective work contracts)168. As the professor Fezas Vital noticed, there was an important difference between the State corporatism (in the Italian style) and the Associative corporatism (typically Portuguese). In the first one, corporations had the same legal nature of political organs, so they had a delegated authority; their goals were dependent from State goals. In the second one, there was a Catholic influence and a separation between politics and economics: it meant that the corporations were freer from the government controls. Salazar’s idea was to create a pure corporative order, in which the State would have left the economic issues to the representatives of workers and employers associations united for the public good, eliminating individualists’ claims. It would have promoted a way to bargain for salaries, social security and production among three parts: the State, the employers and the employees. Unluckily for him, in Portugal born an impure corporatism, different from his expectations169. The whole structure, in fact, was managed by the State and there were bilateral agreements between State and employers about work conditions: the government had the power to decide (creating laws). The government decided the representatives of workers and so that class’ delegates were useless: the clear consequences of this situation were too low wages for labourers and peasants (even if they were 82% of active population in 1940). Given the results and considering that the corporations were opened only in 1956 (and closed four years later), the Lusitanian corporatism had no success in the country, except for its ability to eliminate those social tensions so common during the republican era170.

Coming back to the Portuguese finances, the Professor, whose thought still was to keep a positive balance, continually monitored Portugal economy and, from 1931, he was stoking it using public contributes. It was done to improve the economic situation, promoting the construction of infrastructures and public works (incentivising private interests) still keeping the budget surplus. This plan created new roads, railways, harbours and merchant ships, securing the economic oligarchy’s support to the regime171. Clearly, the series of reductions in social spending imposed the control of employees (whose life conditions were not improved) and to solve the problem in 1935 the government abolished trade unions, creating a

168 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 182- 183. 169 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 237-238. 170 Ibid., p. 239-240. 171 Ibid., p. 139. - 45 - corporative organization guarded by the police. In the short-run, it was certain that the payment of public debts, the tax growth, the interest rate cut and the bigger amount of expenses for public works would have reduced the citizens’ purchasing power. Nevertheless, in the long-run, all citizens would have had a benefits172 from the previous financial sacrifice and it would have created wellness.

As opposed to the liberal economies of France and United Kingdom, Portugal economy began to be based on protectionism and autarchy. This decision favoured both large Portuguese landowners and the weak national economy. The self-sufficiency of the State was clearly granted by the goods coming from the colonies, used to realize the agricultural autarchy (similar to the Italian one). This will explained the creation of the Federação Nacional dos Produtores de Trigo, in 1933: it was a cartel formed by grain producers, to impose on them not to buy foreign agricultural products. The “professors’ government” promoted the production of typical goods (as fish products, wine, cork and tungsten, particularly important for international relationships) and changed the legislation for employees. Portuguese exporters benefited from the country investments and for this reason exports of canned fish and minerals boomed, giving a considerable gain for the industrial sector.

Principally, there was a complete aversion towards communist economy (referring to the Soviet Union): the Professor denounced the absence of originality in that model, citing the communist ideals already present in Plato’s Politéia and underlining the resumption of Marx’s ideas done by Lenin. He knew that the capitalism needed to be changed to favour community’s benefits, but it was impossible to suppress it and the private propriety because that was typical of human nature. Following Pope Pius XI173 (author of the encyclicals that influenced the Constitution), the private propriety was a natural right born before the State and so the government had no right to abolish it. Choosing the communist way, they would have risked the same contradictions that were current in Soviet Union174 (the natural rebirth of private propriety and the failure of the primordial idea). It was wrong too to be against the big landowners just thinking about richness and power, because their possession where the outcome of natural or economic phenomena: the opposition to them was justified only if the material wealth was seen as to be completed with sentimental richness (as peace, happiness and the beauty of familiar life). For Salazar, this way to think would have justified the will to fraction their possessions to create small farms, led by single families. It was logically linked

172 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 113- 114. 173 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 169. 174 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 80-81. - 46 - with the Constitution, which prescribed to the economic organization of the Nation the need to obtain the maximum socially useful production and richness to give power to the State and justice to citizens175. Obviously, to create those new small properties, it was essential to change the economic factors, which were favouring the large estates, with the governmental interventions (for example, changing crops or making the water more available). Avoiding this fundamental process, the small properties created politically would have ended again in bigger ones in a few years (as in the eastern part of Europe) 176.

Salazar’s thought was particularly modern when he was commenting the State socialism and the State acquisitions. He understood that people could have tried to take advantage from the security given by the State ownership of an enterprise, losing interest to improve themselves because certain about the wage, the pension and the enterprise infallibility. For this reason, he legitimized the State interventionism only where there was an inadequate private initiative and to develop all the internal and external conditions necessaries to improve the economy177: the government should have intervened to coordinate the production equilibrium, to defend the national economy and to promote the evolution of the corporative economy178. The same originality was noticeable when the State faced the problem of the unemployment: it promoted the idea of an unemployment benefit linked with the participation to public works (if not it would have been a disincentive to individual’s activities).

The State intervention in the economy affected also the second sector, because the government changed the legislation and supported industries (determining their size, production and resource utilization), promoting the birth of monopolies. Investment in machinery and equipment, designed to increase the capacity of an existing firm, began to need a government approval from 1931. After the ‘40s, the government started to rule the expansion of the second sector179, to maintain the traditional economic and social order favouring lands interests. Actually, that policy caused a slowdown of the industrialization in the country and the lack of private entrepreneurial spirit forced the State to manage the sector still keeping the “national interest” as fundamental rule: it avoided illicit exploitations180 and labours, but it was not able to recover the sector.

175 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 169. 176 D. Serapiglia, Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014, p. 83-84. 177 Ibid., p. 86. 178 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 183. 179 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 118. 180 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 184. - 47 -

The results of economic policies applied during the first years of the Estado Novo were the increase in land productivity, the augment of exportations (as it is visible in the table, export ratio increased particularly after 1938, while importations decreased drastically from ‘30s), the partial industrial recovery and the increase of Portugal Bank gold reserves (Table 1). The Table 1: Portuguese trade ratios. share of the industrial sector in total output augmented and, as for the agriculture and

manufacturing, there was a development with high levels of factor productivity181. The structural transformations in the first sector followed the evolution of aggregate domestic Source: S. Edwards, G. Esquivel, G. Márquez, The Decline of Latin American Economies: Growth, demand, which was boosted by agricultural Institutions, and Crises, University of Chicago Press, Chicago, 2007, p. 68. protectionism and State subsidies, particularly to wheat and other cereals; in addition, the higher levels of tariff protection and the intervention contracted importations and foreign concurrency.

In the years from 1930 to 1950, the economy expanded faster than in any previous period: the economic growth and industrialization gained energy in the ‘30s thanks to the exchange rate devaluation and, after the Second World War, thanks to the opening up to positive influences of growth from the more developed countries. In that period, Portugal’s rate of economic growth increased and, for the first time since industrialization began, the gap to the most European developed countries was partially reduced (even if the result included the slowing down of economic growth in that States after 1929). It is interesting to notice that the Portuguese economy expanded slowly when more favourable external conditions developed, being able to expand more rapidly when the international economic conditions were less favourable182.

Considering that Portugal fiscal accounts from the ‘30s until the early ‘60s had usually a surplus in the current account, the State had the resources to finance public infrastructure projects without being obliged to adopt inflationary financing or to make loans; it significantly reduced its debt, diminishing its economic dependence on British investment. About prices, despite of a period of very high inflation (with prices increasing on average by 27% per year between 1914 and 1929, which means that the cost of living around 1929 was thirty times more than in 1914), during the years 1929-1939 the State lived a period

181 S. Edwards, G. Esquivel, G. Márquez, The Decline of Latin American Economies: Growth, Institutions, and Crises, University of Chicago Press, Chicago, 2007, p. 69-70. 182 P. Lains, Portugal's growth paradox, 1870-1950. Universidade do Porto, Faculdade de Economia do Porto, 2003. - 48 - characterized by a stable or slightly declining inflation183. Even if there was an economic improvement, it is important to underline that the country was still living in an economic backwardness, caused principally by the consequences of 18th century institutions that controlled growth (limiting, for example, the development of transport infrastructures184) and by imperfect property rights that prevailed in the Ancien Régime. The same backwardness was influencing also industries (there was a predominance of traditional activities while mechanization and the use of coal or other sources of power was still relatively scarce) and the society: 68.1% of the Portuguese population was classified as illiterate by the 1930 census and there were many families forced to live below the absolute poverty threshold, suffering from malnutrition and related illnesses. The minimum wage insured by the Constitution (about 13 escudos185 per day) was too low to cover indispensable expenses (for foods, heating, lighting, clothing and so on), estimated on a daily amount of 18 escudos per person. To avoid undernourishment and to have a decent life, in the families as many as possible members had to work: for this reason, in the ’30s-’40s also women and children186 were forced to find a job. The situation was worse for people living in the cities, while people who began to live in the new houses created by the regime (single houses with a small piece of land, built to protect an idea of “familiar union”) had at least the possibility to avoid buying some kind of foods187.

Despite of the various changes purposed by the Professor, the interest for colonies remained a constant and he promoted the empire defence until the end of his government not only for economic reasons, but also to do a “civilization mission”188. At that time, Portugal still owned the territories of Angola, Mozambique, Cape Verde, São Tomé and Principe, East Timor, Goa, Daman, Diu and Guinea-Bissau: to continue the economic subsistence, the maintenance of those possessions was necessary for the homeland. The link between the Salazarism and the Third Portuguese colonial empire was so strict that their end happened together. The Carta Orgânica do Império Colonial Português (which reproduced the principles of the Acto Colonial of 1930)189 politically regulated the colonial issues, promoting monetary saving

183 S. Edwards, G. Esquivel, G. Márquez, The Decline of Latin American Economies: Growth, Institutions, and Crises, University of Chicago Press, Chicago, 2007, p. 72-73. 184 The political instability and the scarcity of financial resources caused even low levels of investment in infrastructure and education. 185 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 188-189. 186 Children could work when they were at least 12 years old, but minors under 18 years old and women could not be hired for night employments. 187 D. Serapiglia, La via portoghese al corporativismo, Carocci, Roma, 2011, p. 190. 188 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 61. 189 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 103. - 49 -

(mainly in Angola) and creating a series of instruments to control the colonial economies. In this way, Portugal government could manage trades and investments of all its colonies, limiting their foreign relations and supporting the sale of Portuguese textile products and wine. Clearly, these decisions were particularly positive for the homeland but limitative and disadvantaged for colonies inhabitants. The most important colony for the economy of the State was Angola: in that country, the presence of Portuguese colonists was augmenting continually (from 13.000 people in 1918 to 58.000 in 1930) and they began to have nationalist ferments against the exploiter homeland190. The Carta Orgânica was followed by the decree n° 27.552 of 1937, which created economic organisms to coordinate the exportations of colonial goods and their productions.

The colonial system started to had big problems during the ‘50s (with the first great decolonization movements), while the economic policies adopted by the government caused oppositional activities191 already before the ‘40s. In 1936, the Frente National won the elections in Spain: the socialist, democratic and anarchical victory in the neighbouring country fomented revolts also in Portugal (the most famous episode was the mutiny of three warships anchored in the Tagus River, on 8th September 1936)192. Then, on 4th June 1937, a group of communists and anarchists planned an attack against Salazar by detonating a bomb while he was going, as on all Fridays, to the Church. To prevent other problems, the Prime Minister augmented the repression (taking directly example from Mussolini’s police) and, in the same years, he made build the house in which he passed his whole life, restructuring a monastery with a garden and a chapel near the Parliament193.

During the Estado Novo, the various changes renovated also the banking system of the Empire. Salazar imposed extreme restrictions on colonial expenditure: for this reason, there was a replacement of the project of a colonial investment bank with government-controlled colonial development funds. Only the largest colonial firms, which had the centre of their business in Portugal, were able to obtain credits from Portuguese commercial banks (which provided long-term credits and owned the capital of some important colonial firms). In this

190 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 60. 191 The opposition was coming both from right and left wings militants but also from workers negatively affected by the new rules of the corporative economy. 192 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 108. 193 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 43. - 50 - period, the Bank of Angola and the Banco Nacional Ultramarino194 were the most important banks and enjoyed a complete monopoly of banking activity.

All banks had a similar structure for governing bodies. They were three: the Board of Directors (elected by the shareholders), the General Assembly and the Board of Auditors. The government put a group of main rules that should have applied everywhere, not only in Portugal banks as before but also in overseas territories:

• accounts had to be published annually, • banks could not buy real estate not for their activities, • the active interest rate must not exceed the discount rate of the issuer bank of the respective colony by more than 2% points while the passive interest rate should not overcome half of the discount rate of the issuing bank of the corresponding province, • deposit accounts had to be at least one fifth of outstanding sight liabilities; the rest of the outstanding liabilities had to be insured by assets payable in ninety days195.

In addition, it was forbidden for a firm or a legal entity to accept credit in excess of one tenth of the sum of the bank capital and reserves. Overseas central banks should have their central administration in Portugal, setting up their reserves there. The unit of currency shall be the escudo in all overseas provinces. Even if there were a series of autonomous bank in the colonies, Portuguese colonial banking followed the continental model, based on government initiative and control of the development. On more, the banking activity rested principally a way to take advantages from the opportunities offered by the economy rather than an independent way to foster the economic development of the countries.

2.5 Political and economic situation during the 1940s-1960s

The last part of ‘30s and the whole ‘40s were the first problematic periods for the regime. Although 15.000 political opponents had been exiled in the period from the 28th May 1926 to the 1939, sent to the various Atlantic colonial islands (like in Madeira196 and Cape Verde archipelagos), others escaped in Spain: in the near country, they benefited of the Second Republic protection and so they could organize a compact opposition to their regime. The

194 The BNU was a private bank controlled by the government, with the power to be the only issuer of banknotes for the whole Empire and with a business extend in the entire world. 195 A. B. Nunes, C. Bastien, N. Valério, R. Martins de Sousa, S. Domingos Costa, Banking in the Portuguese Colonial Empire (1864-1975), 2010. 196 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 93. - 51 - disapproval was led by the anarchic movement and by communists197, who tried to increase the dissent among exploited workers. For Salazar, the recent Spanish Republic was a threat for the Portuguese government198 (except for the Bienio Negro period) and, for this reason, he accepted to welcome in his country a big number of Spanish anti-republican leaders or militaries exiled (as General Sanjurjo). His opposition to the liberal-democratic ideas of the Republic explains why the Professor decided to help the nationalist formation during the Spanish civil war, even if he did not intervene in an official way, avoiding being an active part directly in the fights. During the three years of civil war, Portugal sent weapons and supplies199 to the rebel army, enlisting also a volunteer battalion (the Viriatos). To manage the delicate moment, Salazar obtained the offices of the war and the Foreign Ministry: in this way, he could help the Spanish nationalists to conquer territories near the Portuguese boarder and he refused to grant political asylum to republicans. His support was weaker than the Italian and German one because he did not intervene with a real army to help the nationalist part, remaining faithful to that pacifism announced during his few speeches200.

Franco’s victory of the civil war ended to be a great internal success even for Salazar and a heavy defeat for opponents of both regimes: this is true because the Professor supported the nationalist formation but, at the same time, the Portuguese people who were refusing their dictator defended the Second Republic, losing with it. On more, the Lusitanian State took advantages from the strategical alliance with the two fascist dictatorships, increasing the commercial trades with Italy and Germany201 (without ruining the good relations with the United Kingdom).

The international relations started to be a problem for Salazar from the beginning of the Second World War. He signed a non-aggression pact with Franco on 17th March 1939202, trying to create an Iberian alliance. The two politicians met for the first time on 11th-12th February 1942 in Seville: for Salazar it was the first foreign trip since 1927. During those days, Salazar and Franco discussed about the risk of a Germanization of Europe (in the chase in which Germany would have won the war), the impact of Bolshevism on Allies and the effects of the USA on Iberian economy. The Professor was already sceptic about German victory and he was hoping that none would have defeated completely the enemies (to take

197 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 40. 198 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 256. 199 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 107. 200 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 41. 201 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 106. 202 F. R. de Meneses, Salazar: A Political Biography, Enigma Books, New York, 2009, p. 256. - 52 - advantages from his relations). The meeting had a great importance firstly to create a favourable environment for the coexistence of the two regimes, insuring to safeguard mutual economic interests. Salazar’s speeches had a so positive effect that he gained not only the admiration of Ramón Serrano Suñer, but also the security of a long future peace between Spain and Portugal203. The most successful point of the conference was the commitment, taken by both the countries, to help each other military in case of a foreign attack: as the Professor said, it was difficult that Germany, the United Kingdom or the USA would have attacked the Iberian Peninsula, but the agreement showed the harmony that was born between the two political leaders.

Obviously, in 1939 Portugal announced its neutrality to the war204, trying also to organize a “neutral Latin block” with Spain, South America and Italy. This block would have been opposed to the other two already in battle and its task would have been to participate to the Peace negotiations205. Even if this plan had been taken in consideration by Italy and Spain, the German success against France in 1940 changed their ideas, at the expenses of Salazar. While the war stated to interest also the Western part of Europe, Italy decided to enter in the conflict to support Germany, Spain declared its non-belligerency and Portugal elaborated an emergency plan to enter in war in the Allies formation. It remained only an idea, but Salazar preferred eventually to support the United Kingdom because he knew that this State was having the most powerful navy206, so it would have been a too dangerous enemy. The Professor was contrary to the Axis powers for some reasons: he admired Mussolini as politician but he did not like his ambitions (and his way to consider the Church) and, first of all, he was in complete disagreement with Hitler. The new “positive Christianity”207 created by Germany was for him in clear opposition to the right Catholic doctrine, then he was opposed to the Jews persecutions208 and afraid of Hitler’s will to extend German conquers.

After the French defeat on 22nd June 1940209 until 1942, Portugal became a refuge for immigrants who were escaping from their homelands now occupied by Nazis. Some Jews

203 F. R. de Meneses, Salazar: A Political Biography, Enigma Books, New York, 2009, p. 260-262. 204 M. Eliade, Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013, p. 260. 205 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 108. 206 The alliance with the United Kingdom would have insured the Portuguese colonial possessions, but the State would have risked a Nazi occupation directly in the homeland. 207 The term appeared for the first time in 1920: it refused the Jewish-written parts of the Bible (refusing also the Old Testament) and the Jews origins of Christ. He lost also his importance, substituted by the Nazi party and by the main target to obtain the national unity, including both Christians and Protestants in the same new Church. 208 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 44. 209 In that day, officials of Nazi Germany and of the French Third Republic signed an armistice in Compiègne, on a railway wagon. Hitler chose that place as the site where to sign the armistice because, in the same city and railway wagon, Germany had been forced to sign the capitulation in 1918. - 53 - decided to immigrate in the Lusitanian country too: they knew that Salazar was not anti- Semite and in reality he was having problems only to accept communists in his Nation. Immigrates were welcomed without hostility (for people with their documents) and the only limits were constituted by rules provided to defend Portuguese workers. This availability to welcome immigrants brought money into Portugal economy (thanks to some emergency associations sponsored by the USA) and rewarded Salazar with a honoris causa degree210 in civil right, given to him by Oxford University in 1941.

In addition to this, the French defeat created an alarming problem for the Lusitanian State. The Nazi army conquered territories up to the Pyrenees and for this reason, from June 1940 to April 1941, Salazar feared a German invasion in his country. To avoid the end of his government and of his empire, he planned an escape to the Azores with the ministries to do in the moment in which Nazis would have crossed the mountains. The operation would have been done with the support of the United Kingdom211, which would have destroyed Portuguese infrastructures before Nazi’s arrive and which would have helped the government to escape. The plan was never applied, but it is useful to understand the uncertain period lived by the country during the war: Germany was seen as a danger and Salazar was right to be afraid of an invasion. On 10th January 1941, during the planned but never realized “Operation Felix”, Nazis would have occupied Gibraltar and the Portuguese coasts (to avoid an English landing). As seen, the relations with Spain after Seville meeting became friendly, but during 1940-1941 they were not so positive: Spain was tempted to enter in the war supporting Germany and, in addition, there were some Spanish (as Suñer) desirous to conquer Portugal212 and to unify the whole peninsula. During these difficult years, Salazar did his best to keep his country far from the war, dealing both with Germany and with the Allies. Portugal was undergoing a commercial embargo imposed by the United Kingdom, created to control all Portuguese commerce. The most strategical good traded with the States in war was the wolfram, sold by Salazar to Germany and to Allies. The United Kingdom permitted the trade with Nazis to avoid a German occupation of Portugal, while the Professor preferred to help the enemy to preserve his regime. In 1943, Salazar began to be closer to the Allies, allowing them to create some military bases in the Azores (17th August 1943), always to be sure about the survival of his government after the end of the war. After the 6th June 1944, Portugal

210 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 47. 211 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 110. 212 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 49-50. - 54 - ended its profitable trade of wolfram with Germany, gaining the full confidence by the Allies213.

At the end of the war, the results of Salazar’s approach to the Allies were that the United Kingdom and the USA defended his regime, permitting to him to continue his work. While the rest of Europe was devastated by the five year of war, Portugal remained unhurt. Lisbon began to be a cosmopolitan city and the country enjoyed a period of economic prosperity, thanks to the trades done during the fights. From 1939 to 1945, the gold reserves of the State passed from 63,4 to 365,5 tons214 but there were large percentages of poor and illiteracy people. To give impetus to the economic growth, Salazar decided to accept the helps provided by the Marshall plan from September 1948 (after the decrease of exportations), receiving 35 million dollars in the period 1948-1949 and 1949-1950 and 70 million in the period 1950- 1951. With a totality of 140 million, Portugal was one of the country that received less helps, but they were indispensable the same to buy food, fertilizers, row materials, semi-finished products, fuels, vehicles and machinery. The American helps boosted Portuguese development, also if in reality Salazar was not so motivated to enter in the consumerism era, because he still believed in the traditional Catholic virtues of poverty and moderation.

From the political side, the second after war was characterized by the end of the right-wing authoritarian regimes (except for Portugal and Spain). Salazar maintained his power thanks to Allies support but also because he eliminated all fascist aspects, limiting the authoritarianism and permitting the birth of an electoral opposition215. This was the beginning of an organic democracy in Portugal, characterized by “free elections as in the United Kingdom” and declared by the Professor in a public speech216. During the last years of the ‘40s, the regime repression and censorship began to be lower and the industrial sector beneficed of the improvement done during the war. On more, Salazar granted amnesty for sentenced for political crimes and he promulgated a new electoral law (on 22nd September 1945) to be used already in November 1945. The only worrying problems were related to the society: the English embargo had been beneficial for rich industrialists and large landowners, but it caused the impoverishment of low classes. The poorest people suffered firstly for the growth of food prices and secondly for the famine of 1948217. Considering that they were already living in

213 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 113. 214 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 52. 215 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 117. 216 T. Gallagher, Portugal: A Twentieth-century Interpretation, Manchester University Press, Manchester, 1983, p. 115. 217 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 119. - 55 - unhealthy houses (without electricity or running water), the negative economic circumstance caused an increase of child mortality and a decrease of the low life expectancy, creating a dissatisfaction demonstrated during workers strikes and revolts from 1941 to 1944.

Despite of the political actions done in opposition to Salazar by the MUD218 (Movimento de Unidade Democrática) and the consents received, the UN won the elections on 18th November 1945, occupying all the places in the National Assembly (became 120 after the 1945). The elections were won thanks to 489.000 favourable votes on 900.000 (while the Portuguese citizens were about 8.000.000)219 and also because the MUD decided not to participate to the elections. Clearly, as before the elections the MUD had tried to gather people against Salazar, after the elections Salazar revenged with the defeated enemy: firstly, he punished its supporters and then he controlled its leaders, reorganizing the political police (he created the PIDE from the old PVDE). He gave the same the possibility to exist to the MUD, until he understood that the movement was becoming a danger for the country. In 1948, after that it tried to convince foreign countries not to accept Portugal in the NATO, the government decided to make it illegal. The last attempt of the oppositions failed in 1949, when Carmona won again the presidential elections. In the same year, the State joined the North Atlantic Treaty Organization as founder member; although Salazar did not like the American supremacy and its hegemony in the Atlantic, he was satisfied to be a part of the international organism to be sure to be supported by the other members, also because the Allies were considering him the defender of the free civility against the communist danger. In 1955, the country entered also in the United Nations (UN) and in 1960 in the EFTA (European Free Trade Association)220.

On 18th April 1951, General Carmona died, after 24 years spent as President of the Republic. The situation opened a new possibility for oppositions to change something in the country: the monarchists tried to change the State form, while oppositions to the regime purposed two different candidates for the elections. Salazar announced that it was necessary to continue the Republican form, planning the election for the new President on 21st July 1951. The candidates were General Francisco Craveiro Lopes, member of the UN and purposed by the Professor, the admiral Ruy Luís Gomes, representative of the MUD, and the admiral Manuel Quintão Meireles, suggested by the moderate opposition221. Craveiro Lopes won the elections, also if 22,4% of the entitled to vote decided to abstain. It was another victory for the regime,

218 The MUD and the communist party (PCP) were the most powerful opponents to the regime. 219 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 122-123. 220 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 55. 221 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 128. - 56 - while the abstention was not a problem. Salazar did not believe in the masses support: he always preferred a population disinterested about politics222, who would have left him to manage public affairs while citizens were thinking to save money, to their family and to work.

After having defeated monarchists and democrats, it was necessary to plan the future development of the country. There were two main ideals opposite during that period: the Reformists, represented by Marcelo Caetano (President of the UN, President of the corporative assembly and Minister of the presidency), and the Conservatives, led by the colonel Santos Costa (War Minister from 1944). The Reformists wanted to boost the industrialization of the country, strengthening the Portuguese links with Western Europe and inside the NATO; the Conservatives were against modernizations inside the economy, the society and the political regime. The disputes between these two ways to see the reality continued until the 1958, year in which the State had to elect again a President223. Craveiro Lopes had supported the Reformists during his mandate, sometimes against Salazar’s will. For this reason, his new proposal was the member of the UN and admiral Américo Deus Rodrigues Tomaz, while the oppositions purposed General , a reformist who declared that, in case of victory, he would have resigned immediately Salazar224.

The elections were made on 8th June 1958 and Américo Tomaz won with 76,4% of preferences, becoming the third and last President225 of the Estado Novo on 9th August 1958. Delgado lose with a 23,6% of votes, despite of his charisma and the popular approbation: his ideas to resign Salazar and to change the political and social system in a few time frightened the army, which had begun to refuse him. These elections were again a victory for the regime, but the difficult election campaign and the splits inside the country (and inside the colonies, where Delgado obtained wide approvals) were the sign of the urgency to recover the political system. To reinforce liberal supports to the Estado Novo, Salazar expelled from the government the War Minister Fernando dos Santos Costa (the head of conservationists) and the Presidency Minister Marcelo Caetano (leader of reformists). Then, in 1959, he changed the mechanism of presidential elections, abolishing the direct suffrage and making the President elected by a college formed by the National Assembly, by procurators of the Corporative chamber and by others political representatives coming from decentralized

222 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 58. 223 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 129. 224 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 57. 225 Tomaz was re-elected by the legislature in 1965 and 1972, but he was the only candidate in both the occasions. - 57 - administrations226. This decision gave more stability to Salazar’s position, but it rendered the political organization more authoritarian.

The homeland problems were not the only one for Salazar during the ‘50s: in the colonies, the situation was critical too. Having seen the position of the USA and the USSR against the European colonial empires, the Professor did a Constitutional review in 1951 to eliminate formally the terminology inherent the empire or the colonies: the colonies become “provinces of the Portuguese Ultramar”227 and there Salazar gave more representation to settlers (members in legislative councils with few powers, named by colonial authorities). Despite of these innovations, the power was still in the hand of the general governor, dependent by the Overseas Minister. Clearly, colonisers were disappointed by their absence of political power and the situation was worsened by the economical choices of Salazar228. There is to say that he decided to increase the exploitation of raw materials produced in the “provinces” (mainly cotton and coffee) to favour Portuguese bourgeois, but he used Portuguese capitals also to industrialize the country and to build essential infrastructures229, obtaining a colonial GDP growth of 4% in the ‘50s. In Angola, after the Second World War, there had been a strong unbalanced economic growth during which some classes gained power and very wealthy life conditions, while native populations were exploited and discriminated. In the years 1959- 1960, a native family used to live with about 30 dollars per year and natives were forced to work by the Estatuto do indígena.

The decolonization movement had not hit Portugal yet, but in 1961 the international events shook Salazar. The new American President, John Fitzgerald Kennedy, showed his opposition to the old colonialist powers230 and the UN condemned the Portuguese colonialism, affirming the right of self-determination for natives. Salazar replied to the accuses of Kennedy saying that he was just a boy, while he defended his empire from the UN threats affirming that the provinces were already autonomous and that the empire was founded on the lusotropicalism231. That theory, created by the sociologist Gilberto Freyre, explained Portugal as a multicontinental country (divided by Africa, Asia and Europe) formed by different cultures and different races, living together in harmony: there was a complete equality in front

226 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 130. 227 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 62. 228 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 136-137. 229 In the colonies, universities were forbidden, so there was no way to receive a tertiary education until Moreira’s reforms. In fact, in Angola and Mozambique, the first universities were born on 23rd July 1962. 230 J. P. Hubbard, The United States and the End of British Colonial Rule in Africa, 1941–1968, McFarland, Jefferson, 2010, p. 286-287. 231 G. J. Bender, Angola: mito y realidad de su colonización, Siglo XXI, San Ángel, 1980, p. 27. - 58 - of the law and the racism was absent. From this point of view, the empire was natural and indispensable for the life of the homeland. Portuguese people were defending their mother country, following the ideas of their dictator, but the UN and the circumstances were contrary to the pacific reformation of the empire.

After some years during which was claimed by India, Macao by China, by Indonesia and Portuguese territories in Africa witnessed the development of independence movements, on 18th December, the Lusitanian Empire began to lose Goa232, , attacked by the Indian army and conquered without efforts. In the same year, the Angolan separatists (members of the MPLA, the UPA or the FNLA)233 stopped to try to find a political solution for the autonomy, preferring to adopt a more violent way. In January, February and March there were respectively a strike of cotton workers in Malanje, an attack against the prison in Luanda (to save political opponents) and a revolt of coffee workers in the northern part of the country. The colonial authority had not enough resources to control the whole State and to avoid rebellions; white people were a strict minority (3,6% in Angola, 1,5% in Mozambique) while black people were poor, mistreated and ready to commit any violence on Portuguese conquerors234. Salazar repressed the strikes and the revolts searching for the separatist organizations (illegals and persecuted), but in 1961 the situation was so deteriorated that led to a real war, the first one of three wars that forced the empire to leave its old colonies. The war started on 15th March 1916 in Angola, when separatists of the UPA killed almost 2.000 white settlers in some rural localities, without doing differences for women or children. The Portuguese administration, at the beginning, resulted impotent and confused, so the settlers had to defend themselves without helps by the homeland.

The situation was still worsened by the effects of the Angolan conflicts in the homeland: conservatives would have continued the war forever in order to keep the empire, while reformists would have ended fast the colonial problem leaving the provinces free. This last group organized a coup d’état, planned for the 13th April 1961 (the so-called Abrilada)235, to solve the problem directly dismissing Salazar and Tomaz. The leaders of the Abrilada were General Botelho Moniz (Minister of the National defence) and the ex-President Craivero

232 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 164. 233 These were the three main nationalist and anticolonialist groups, formed by black people, mestizos and some white ones. The Movimento Popular de Libertação de Angola was born in 1956, the União das Populações de Angola in 1958 and the Frente Nacional de Libertação de Angola in 1961. 234 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 65. 235 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 154-155. - 59 -

Lopes. The plan failed without being applied because not all military officials approved it and, when Salazar knew about the coup, removed Moniz from the Ministry and other conspirators from public works. Defeated the rebels, Salazar worked to create a consensus about the colonial war, using all the ways that were available: he had a great success, which unified around his figure Portuguese coming from both regime supporters and regime opponents. For the first time in his long government, the Professor moved large masses to help the suffering country, obtaining helps also from volunteer soldiers who left the homeland to go to fight against the UPA, in Angola, with the motto “Angola nossa, Angola è Portugal”236.

Portugal did not organize only military expeditions to solve the problem in Africa: it had begun an administrative and economic integration of the colonies with itself through population and capital transfers, gradually liberalizing trades and creating a common currency (the Escudo Area)237.

In May 1961, the first arrived in Angola, concentrating mainly near Luanda and in the north, while Salazar searched a way to give more autonomy to the colonies, delegating powers to white settlers and avoiding to leave the country to the natives. The idea was to find a deal between reformists and white colonizers. The new Overseas Minister, Adriano Moreira, prepared a political, social and economic reform: politically, the governors received more powers and the number of deputies elected by the colonies in the National Assembly increased, to involve colonials’ elites in the government of their countries. Economically, the Minister opened the countries to foreign investments, increasing public investments238 too and obtaining a GDP growth of 7% from 1963 to 1973. The openness to international capitals began with the First Six-Years Plan (1952-1958), created to accelerate the country's rate of economic growth239 (a decision whose urgency grew with the outbreak of guerrilla warfare in Angola in 1961), and augmented with the Second Six-Years Plan (1959- 1964), which envisaged a contribution of 25% from foreign sources. With the Third Six-Years

236 L. M. Heywood, Contested Power in Angola, 1840s to the Present, Boydell & Brewer, Woodbridge, 2000, p. 189. 237 E. Solsten, Portugal: A Country Study, in «Washington: GPO for the Library of Congress», (1993). 238 An example of the new infrastructures is the one built to celebrate the fortieth anniversary of the dictatorship: in 1966, the regime inaugurated the Ponte Salazar, across the Tagus River in Lisbon. 239 Salazar and his policy advisers recognized that additional requests by the State on national output for military expenditures, as well as for increased transfers of official investment to the "overseas provinces", could only be met by a sharp rise in the productive capacity of the country. - 60 -

Plan (1967-1973), the investments coming not from Portuguese sources reached the 36% of the total240.

The first development plan identified the problems caused by low incomes, unemployment, low labour productivity and inadequacy of infrastructures. For this reason, it tried to solve the wage depression241 (even if it did not augment salaries, controlling only agricultural prices and forbidding wage bargaining) and it destined two-thirds of the total investments for the generation of electrical power and for improvement in transportations-communications, while agriculture received only a little part of contributions.

The second development plan changed just a bit the prerogative of investments: in its years, it was necessary to increase productions, to raise living standards and to give a priority to the industrial development. Considering the dependence of industries on foreign supplies, the plan tried to favourite trades, at least for basic industries (as steel ones) and the second sector received more than 27% of the total investments.

The third development plan, anticipated by a transitional plan (between 1965 and 1967), was mainly focused on social problems and it boosted the equitable income distribution and private consumptions (even if the defence expenditures had a privilege). Despite the efforts to elaborate the future goals, the results obtained with the three development plans were not the ones expected: the investments caused a growing disequilibrium among Portuguese regions and, in addition, a great part of the finances that should have used to improve the economy ended to be used to pay the army in Africa242.

Socially, Salazar gave the Portuguese citizenship to all natives and he eliminated the obligation to work in extensive crops for Angolans (improving black people wealth). In the while, the army was fighting in the country obtaining great results and conquering almost all the territories that the UPA had conquered a few time before243.

At the end of 1962, the war seemed to be won by Portugal, so Salazar decided to block the reforms in favour of Angola and to dismiss the reformist Moreira. The problem is that the worsening of the situation pushed again secessionists to fight; on more, Guinea-Bissau and

240 W. Minter, Portuguese Africa and the West, Penguin Books, London, 1972, p. 114. 241 D. Corkhill, Development of the Portugese Economy: A Case of Europeanization, Routledge, London, 2002, p. 22. 242 Ibid., p. 23-24. 243 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 158. - 61 -

Mozambique244 started independence wars too, respectively in 1963 and in 1964. From that moment, the Estado Novo continued its battle to conserve the empire, losing only in 1974, when the revolution changed the regime. The colonial war efforts caused a reduction of the consensus in the homeland: in 1962 there had been a university protest against police and in the same year employees manifested against the regime. They were grouped in Acção Socialista Portuguesa (ASP) and in the PCP, which was part of the Frente Patriótico de Libertação Nacional (FPLN)245.

From the economic point of view, the State was changing quickly even if the Professor was still anchored to the past. The government maintained the Import Substitution Industrialization approach to the economic policy to defend, reinforce and grow local industries using a variety of strategies, including tariffs, import quotas and subsidized government loans. The strategy goal was that a country should reduce its foreign dependency basing his needs on the local production of industrialized products. To realize his will, Salazar reduced inflation to give more value to the currency (indispensable to permit the importation of capital goods), did an active industrial policy to control and sponsor the production of strategic substitutes and discouraged foreign direct investment. This industrial development strategy helped the State to grow, even if there were the effects of the expensive war effort in African territories. Of course, the government obtained this success keeping the budget balance (or the budget surplus) and avoiding asking loans to foreign countries246. The GDP growth was around 2% more than the European average, a result achieved considering also the effects of tourism (including pilgrimages to Fatima’s sanctuary, completely rebuilt by Salazar) and of the emigrants’ remittances. Despite of the economic growth, Portugal GDP was still one of the lowest in the west Europe, being around the 62% of the average of EEC in 1973247.

A similar growth was present also for industrial production (from 6 to 15% per year) and for private consumption (6,5%), while the State was becoming interesting for foreign investors. The exportations increased by 52% and importations by 40%, thanks to the reduced trade barriers; on more, the country became more solid and international because of its participation in the Organisation for Economic Cooperation and Development (OECD), in the General

244 In Guinea, the guerrilla was coordinated by the Partido Africano da Independência da Guiné e Cabo Verde (PAIGC) while in Mozambique the most important organization was the Frente de Libertação de Moçambique (FRELIMO). 245 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 164-165. 246 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 54. 247 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 167. - 62 -

Agreement on Tariffs and Trade (GATT)248, in the International Monetary Fund (IMF) and in the World Bank. During this period, characterized by a strong economic growth, the Estado Novo had the possibility to integrate itself with the developed economies of Western Europe. Portuguese economic expansion made more important also its GDP per capita in comparison with the European Economic Community: it passed from 38% of the EEC average249 in 1963 to 56,4% reached in 1973, from 432 dollars to 1.749 per year250. The society changed too and the country lived years particularly full of migrations. From 1960 to 1974, more than 1.500.000 young Portuguese left the country to go to live in other European countries, because salaries were lower than in the near Sates251. At the same time, there was an important immigration, composed by ex-settlers that were escaping from the almost lost African colonies, while inside the country there were migrations from the rural parts to the cities. The first sector lost a lot of employed and so many fields rested uncultivated for lack of work force: clearly, agriculture did not enjoy the same growth that the overall economy was having during the ‘60s252. The situation caused an increase of people living near cities in extreme poverty and the landowners lost in a short period all their economic and political power. The conservative, traditional and reactionary basis of the regime ended to exist, substituted by a class of new riches coming from finance and industries: these one gained power from the ‘50s, thanks to the industrialization of the country protected by the government. The economic development of the country favorited the enlargement of middle urban classes: they gained wealth and instruction, so they wanted to obtain a political representation, a liberal system and the end of the colonial war253.

Despite of these florid economic moments, in the second part of the ‘60s, the Estado Novo was still an archaic country, less developed in comparison with Western European countries and with a strong censorship. The illiteracy was no more a problem, because the State did a lot to improve the situation: the results were that literacy levels among children increased from 56% in 1940 to 97% in 1960. The richness was not well distributed and there were strong economic differences inside the homeland. The southern part of the State was

248 The adhesion to the EFTA, to the GATT, to the IMF and to the World Bank followed the pressure of new influential Europe-oriented industrial and technical groups on Salazar. 249 The average per capita GDP in the EEC States was 1.118 dollars in 1963 and 3.268 dollars in 1973. 250 R. Costa, From Dictatorship to Democracy in Twentieth-Century Portugal, Springer, Berlin, 2017, p. 121- 123. 251 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 76. 252 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 166. 253 At the beginning, people approved the war, but in the ‘70s the dissent was increasing due to weapons embargoes imposed by the international community, for its length and financial costs and for the worsening of diplomatic relations with other United Nations members. - 63 - characterized by great land ownerships254, while in the north there were principally small proprieties: in both the situations, poverty was spread among farmers (but the same poverty was recognizable also among employers in the few big industrial oligopolies). Malnutrition struck 33% of the population and child mortality was at 4%, even because it did not exist a free and universal welfare. The colonial war was stressing the economy, consuming on average 7% of the GDP to finance 200.000 soldiers in Angola, Guinea and Mozambique; to make matters worse, the Petroleum crisis in 1973 blocked the decennial industrial growth.

2.6 The end of the Salazarism

In the last years of the ‘60s, the social basis of the Salazarism was the upper bourgeois classes, mainly monopolists who were thinking only about their economic interests255. They needed both the colonies and a European integration of the homeland, so they hoped for a non-drastic solution that would have transformed the old empire in a liberal and modern entity, where Portugal would have kept favourite links with the old colonies256. In that period, Salazar was over 70 years old and some critics affirmed that his quasi-monastic life, lived mainly in his official residence thinking about economic problems of the country, had consumed his person. Following his catholic spirituality, he did not create a family: he said that he was married with the country, so his only relatives were two adoptive daughters. Maria da Conceição de Melo Rita, one of the two girls, had written a book about her 35 years passed living with the dictator: she described him as a good person, with a hard character also inside the family house257. Here, the Professor wanted to control everything as in his professional life, promoting savings for himself and for the others. Politics was not an argument of discussion: Salazar never talked about it with Maria, except in 1961, when he showed his worry for the colonial war and for the Abrilada, saying that after his death Portugal would have lost all its colonies.

Despite of the ability demonstrated in 1961 to defend strenuously the empire and the regime, in 1968 the Professor began to show problems caused both by his cardiovascular diseases and by his age (for example, in June, he convened two time the Council of Ministers proposing

254 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 77. 255 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 169. 256 Ibid., p. 168. 257 M. J. Oliveira, Micas A herdeira de Salazar. PÚBLICO [online], 2007. [Accessed 1 July 2017] Available from: https://micas-a-herdeira-de-salazar-237563

- 64 - always the same discussions)258. Then, on 3rd August 1968, he felt from a chair, hurting his head: the head trauma and the cerebral haemorrhage preventing him to continue to rule his government. His closest collaborators reputed that Salazar would have died in a few days, so it was necessary to search for a successor. On 27th September 1968, the President Américo Thomaz invited Marcelo Caetano to form a government, imposing to him a series of political conditions259 to preserve the regime. With his acceptation, Caetano terminated the Salazarism. In the while, Salazar continued to live in his house near the Parliament thinking of being still the Prime Minister260. He died on 27th July 1970 when he was 81 years old, after 36 years lived as Head of Government and 4 as Finance Minister: this political longevity makes his regime the longest dictatorship in Europe.

258 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 70. 259 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 170. 260 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 73. - 65 -

- 66 -

3 Spain

3.1 The empire and the Second Republic (1931-1936)

The Spanish contemporary history is, as for the Portuguese one, impossible to understand without considering the past of the country as important colonial empire, at least from 16th to 19th century. The empire included territories in South America (Peru, Argentina and ), Central and North America (the most important were Mexico, Cuba and the half of United States), Europe (as in Italy and in the Netherlands), in Africa and in Asia. In the period of the maximum extension, Spain had the largest empire in the world. It was called "El imperio en el que nunca se pone el sol" (the empire on which the sun never sets). This great empire lived his siglo d’oro (its golden age) during the 16th–17th century, when there were gold and silver trades that brought in the homeland about 1,5 billion dollars per century. From 1503 and for the next 160 years, during the period of major extraction, 16.900 tons of silver and 181 tons of gold came from Spanish America261.

In the 19th century, while in Spain there had been the Bourbon Restoration with King Alfonso XII (1874), the image of a florid and advantageous colonial system became definitely a memory: the defeat during the Spanish-American war (against the United States, in 1898)262 caused the loss of Spanish last major overseas colonies (Cuba, Guam, Puerto Rico and the Philippines). The disappointment and the dissatisfaction for the painful defeat had the consequence to reinforce Spanish interests to create a new empire in Africa, starting from Morocco263. The decision to attack the African country, in 1908, caused a revolt in Barcelona, famous as the “Semana Trágica”. It was the sign of the popular discontent for social and political problems. This revolt was followed by other protests and strikes in the whole State, against the classes that were keeping the power (politics and clergymen). The country was living in a situation of economic backwardness: only at the beginning of the 20th century a textile, carbon and steel industry began to develop. The industrial development continued during the First World War, taking advantages from the Spanish political decision. The neutrality of the State, in fact, permitted to live a period of economic boom: Spain could supply agricultural and industrial products both to the Triple Entente and to the Triple Alliance, improving its economy.

261 L. Palermo, Storia del commercio, Laterza, Roma, 2014, p. 38-40. 262 C. Schmidt-Nowara, J. M. Nieto-Phillips, Interpreting Spanish Colonialism: Empires, Nations, and Legends, UNM Press, Albuquerque, 2005, p. 2-3. 263 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 22. - 67 -

Despite of this economic recovery, the different political factions (agrarians versus industrials), the lack of real political representation of the great social groups, the bad situation of popular classes (especially the peasants) and Catalan nationalism prevented the various governments from implementing stable government programs and a true liberal democracy. A military defeat in 1921 damaged the consent to the monarchy, substituted by Miguel Primo de Rivera’s dictatorship in 1923. After the resignations of the dictator, on 12th April 1931, the new Head of the government, Juan Bautista Aznar, announced free elections264 on behalf of the king, to calculate the popular support to the Monarchy. Contrary to expectations, they had a historic result: even though traditional monarchical parties had achieved the majority in rural areas, Republicans were victorious in 41 provincial over 50, including Madrid and Barcelona265. Because of this triumph, the Republic was officially proclaimed on 14th April, while the king Alfonso XIII began his exile in Marseilles.

The provisional government programmed parliamentary elections on 28th June. The conservative catholic Republican Alcalà-Zamora was elected Prime Minister. In the new Parliament, the largest party was the Socialist one, with 115 deputies divided into two trends. The first one, led by Largo Caballero, was closely linked to the anarchist Unión General de Trabajadores (UGT) and it was characterized by substantial reformism266. The second current was led by Prieto and it was the expression of a small intellectual, radical and anti-clerical bourgeoisie, which proved to be endowed with a greater political realism. Right-wing parties obtained just a minority of seats, but they were enough the same to create problems inside the Parliament and to block reforms267.

The first political decision taken by the Parliament was the establishment of a Constituent court responsible for drawing up a Constitutional project, which was approved on 9th December 1931.

The Constitution was extremely progressive and democratic, but it did not obtain the consent of all political forces: the dissent highlighted the profound discrepancies between the Left and the Right, especially about the religious questions and about autonomies. The most conservative Catholic sectors strongly opposed to the declared aconfesionalidad (art. 3), while the right-wing parties contested the reform of the State structure, which guaranteed the right

264 M. A. Iannaccone, Persecuzione. La repressione della chiesa in Spagna fra Seconda Repubblica e guerra civile (1931-1939), Lindau, Torino, 2015, p. 79. 265 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 28. 266 J. A. Crow, Spain: The Root and the Flower. An Interpretation of Spain and the Spanish People, University of California Press, Berkeley, 2005, p. 330. 267 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 38. - 68 - to self-government in some regions. The approval of the anti-religious articles of the Constitution led to the resignation of the Catholic politicians from the government: Alcalà- Zamora268 decided to resign and, on 14th October 1931, the progressive republican Manuel Azaña became Prime Minister269.

The article 1 defined Spain as a democratic Republic formed by all types of workers, organized in a regime of freedom and justice270. The powers of all its organs were coming from citizens. In this way, the Constituent Assembly wanted to highlight the popular will that originated the Republic and that was composing its basis. On more, the Republic was described as an integral State, compatible with the autonomy of municipalities and regions: Spain was recognized as a single State, but it was tolerated the possibility of setting up autonomous governments271 in Catalonia and in the Basque Country.

The Constitution expressed the equality of all citizens before the law (art. 2), protected families (art. 43), and gave to everyone the right to receive an education and the duty to work (art. 46 and 48). State institutions were separated from ecclesiastical schools and primary and secondary schools were set up, subtracting the teaching from religious building. The problem was that there were not enough laics teachers and schools (and the same happened for the universities). People obtained the right to vote at the age of 23 and, for the first time, women obtained the same right too (art. 36). In addition, it foresaw the nationalization of public services and the possibility of forced expropriation of any type of property for social and public use, paying a compensation (art. 44 and 45).

The three fundamental powers were separated and the Cortes received the legislative power (art. 51). It was a unicameral Parliament, formed by 470 deputies elected for four years by citizens. The Council of Ministers and the President of the Republic obtained the executive power (but these two organs were under the strict control of Parliament) and the judicial power was entrusted to some independent judges272 (art. 67, 90 and 94).

All these aspects made the Republican Constitution one of the most innovative in Europe in that period. The problem was that not all political forces were in agreement with its news, so

268 Alcalà-Zamora was elected President of the Republic on 11th December 1931 and he was dismissed on 7th April 1936. 269 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 41. 270 Art. 1: España es una República democrática de trabajadores de toda clase, que se organiza en régimen de Libertad y de Justicia. Los poderes de todos sus órganos emanan del pueblo. La República constituye un Estado integral, compatible con la autonomía de los Municipios y las Regiones. 271 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 40. 272 Constitución de la República española (1931). [online]. 19 December 1931. [Accessed 10 June 2017]. Available from:http://www1.icsi.berkeley.edu/~chema/republica/constitucion.html - 69 - for the Republic survival it was necessary to obtain a large popular consensus, increasing wages, projecting a good agricultural reform and reducing unemployment. These difficult objectives were made even more complicated by the effects of the Great Depression of 1929 on the Spanish economy and by the social conflicts. The dissent was diffused among farmers: 2% of the population possessed 70% of the land and these large landowners were still using feudal methods to manage their fields, paying too few the workers and leaving almost 38% of farmland unused273. The consequences of this situation was that the agricultural production was below the European average and employees would have changed their position. The failure of Azaña’s government agricultural reform and the decision to reorganize the army augmented the opposition to the Republic. The army did not like Azaña’s reform274 (he decided to halve the divisions, from sixteen to eight, reducing the number of officials too), so they joined the opposition that was already including industrials, landowners (mainly small landowners from the northern and central regions), the Catholic Church and labourers. It is important to notice that the army’s dissent would have been one of the main causes of the beginning of the Alzamiento in 1936, the civil war that concluded the Republican period.

The second main cause of the Alzamiento had been the catholic persecution275. The Spanish Catholic Church included 80.000 clergymen at that time (priests, friars and nuns); it had a strong power on the most culturally backward social strata and it possessed a significant economic power within the country. When the government began to plan the expropriation of ecclesiastical lands and the abolition of the privileges of the clergy, an anti-clericalism broke out in the countryside, fomented by the anarchists. This phenomenon reflected popular discontent and it led to the destruction of several religious buildings276, causing the killing of many prelates (from the beginning of the Second Republic to the end of the civil war, about 10.000 clergymen were murdered).

After the new parliamentary elections, on 19th November 1933, the Confederación Española de Derechás Autonomas (CEDA), led by the fascist sympathizer José Maria Gil-Robles, gained a minimum majority of votes277, obtaining the majority also inside the Cortes. The

273 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 25-28. 274 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 128. 275 M. A. Iannaccone, Persecuzione. La repressione della chiesa in Spagna fra seconda repubblica e guerra civile (1931-1939), Lindau, Torino, 2015, p. 108. 276 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 24. 277 M. A. Iannaccone, Persecuzione. La repressione della chiesa in Spagna fra seconda repubblica e guerra civile (1931-1939), Lindau, Torino, 2015, p. 144. - 70 - reactionary political party, formed by all oppositions to the left-wings parties (landowners, clergymen, Jesuits and the military class), ruled the power with the radical party from 1933 to 1935, in the two-years period called Bienio Negro. The President Alcalà-Zamora named Prime Minister Alejandro Lerroux and the new executive began a policy that reflected the interests of wealthy classes, the supporters of the elected parties278. Management positions in the State apparatus gradually passed into the hands of clerical and pro-fascist elements. The Constitution was not changed: the government decided only to change the agrarian reform, imposing a print censorship, blocking school reform (to the benefit of the Church) and repressing popular demonstrations.

The Bienio Negro ended to be a conservative and reactionary answer to the first period of the Republic. Clearly, even the new government had to face the usual problems concerning workers' living conditions, elementary school education and poor industrial development in Spain. The CEDA had only the possibility to complete the reform of the army launched by Azaña and to find an agreement with the Church, returning to the Jesuits part of their property requirements and restoring part of the teaching of Catholic religion in public schools. After it, the credibility and stability of the government were undermined by the supposed corruption of the Prime Minister's son and by the bribes received by his government from his friends in Morocco. For this reason, Lerroux was forced to dissolve the Cortes and to plan new elections279.

In the while, communist proposed to create a single anti-fascist front: the Frente Popular, composed by communists, socialists, republicans, anarcho-syndicalists and autonomists (formed in January 1936). This electoral and political coalition won the elections280 on 16th February 1936, after a hard election campaign (due to the worrying situation of the country too), characterized by violent speeches and by the demonization of the political opponent, rather than by the presentation of constructive programs for the future. The Popular Front won with only the 48% of the votes while right-wing parties obtained the 46%, but for the majority prize the leftists had the 55% of the seats. The Front had 263 deputies, right-wing parties obtained 156 places and the Centre parties 54. The President Alcalà-Zamora named again Prime Minister Manuel Azaña and he created an executive entirely formed by Republicans. It was a non-revolutionary government, with the task to end the reactionary period returning to the ideals of the first two years of the Republic. For this reason, the Republicans reapplied the

278 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 52. 279 P. Barbieri, Le cause della guerra civile spagnola, Robin Edizioni, Roma, 2006, p. 79-80. 280 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 244. - 71 - agrarian reform and protected workers, returning also to hinder the public Catholicism (schools were again secularized). The new Prime Minister proclaimed an amnesty for political prisoners and he removed some Generals that he considered potentially dangerous: Francisco Franco (removed as Chief of the General Staff281 and sent to the Canary Islands), Manuel Goded (transferred to the Balearic Islands) and Emilio Mola (moved to Pamplona, in Navarra).

From February to July 1936, there was an increasing widespread insubordination and an extensive illegality in the country. In addition, violence suddenly arose even without justified reasons: for that reason, many churches, places of worship and homes had been destroyed, while some political and trade union sites had been subjected to bomb attacks. Four months after the start of the new Azaña government, 269 victims were caused by public disorders, with 1.287 injured in clashes and political attacks; on more, 160 churches and 69 political headquarters had been destroyed.

Meanwhile, with the intention of forming a stronger government, the Prime Minister and Prieto agreed to remove from the Presidency of the Republic the conservative Alcalà-Zamora. Azaña became President but Prieto could not get the support of Largo Caballero to form a new government, so they decided to name Prime Minister Casares Quiroga282.

The CEDA was defeated as the monarchists, so their leaders (respectively Gil Robles and Calvo Sotelo) realized that there was no legal way to return to the government. For this reason, together with many landowners and wealthy people, they decided to give money to General Emilio Mola, to finance the future coup d’état283 (frightened by a future socialist revolution). In those months, the Falange284 was rapidly growing and the Falangist teams were making their best to create an atmosphere of disorder, useful to justify the advent of an authoritarian regime285. The new Prime Minister, sick of tuberculosis and oppressed by the ongoing disorder caused by Falange and left-wing extremists, was unable to prevent the degeneration of the situation.

While in Parliament there were continuous clashes between Largo Caballero and Prieto and between Calvo Sotelo and the Communists, some Generals noticed the need to take the

281 A. Forrest, The Spanish Civil War, Routledge, London, 2012, p. 40. 282 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 68. 283 Ibid., p. 70. 284 The Falange was a political movement founded by José Antonio Primo de Rivera in 1933 and with a fascist inspiration. 285 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 179. - 72 - power, eliminating a political class who had done nothing more than creating the Spanish structural and social disintegration286.

From the economic point of view, in the ‘30s, Spain was an archaic country and agriculture was still the principal productive sector. The agriculture was employing more than 40% of the working population (it had four million workers in 1931), it was accounting for 30% of total output and it was based on 22 million hectares of cultivated lands. They were characterized by a high level of aridity, which was limiting Spanish agricultural possibilities: the ratio of surface area useable for agriculture to overall surface area, which normally exceeded 90% in Western European countries, Spain achieved only 53.3%. As a consequence of this its low productive potential, the Spanish agricultural sector showed very low productivity at the beginning of 20th century. Especially in the South, agriculture became the way of salvation for many workers during the economic depression, because it reduced employment possibilities in urban areas and mining, forcing employees to be again more dependent on this activity for their livelihood287.

The presence of large estates influenced the retardation of agricultural growth by creating a social structure with a very low capacity for saving: this is why there was not a development of a modern financial network in rural areas (while in the cities the situation was better). The large diffusion of usury, the fragmentation of credit markets and the difficulty to find a way to be financed increased the cost of credit, limiting innovations and agricultural methods changes. The situation could have been better if the government had invested more in public works: unluckily, the Public sector did too few public works before the ‘50s (for example, it did not search a way to improve the availability of water for irrigations) and the highest number of interventions were concentrated in the area of the Ebro Valley.

The sector had a relatively cheap cost of labour and it could rely on the abundance of workers in rural areas, due to the low mobility of the population. Internal migration increased after the ‘20s but this exodus of people interested mainly the northern part of the country. It gave an incentive to modernize agriculture with the mechanisation of the processes and it provided workers for the development of the main industrial areas in the northeast of the country and Madrid. In the south, the rural migrations were too few to start this process. This lack of mobility was clearly the consequence of the backward industrialization in the cities, unable to

286 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 75. 287 J. Carmona, J. R. Rosés, J. Simpson, Spanish land reform in the 1930s: economic necessity or political opportunism?, in «Second Quantitative Agricultural and Natural Resources History Conference», Zaragoza, 2015. - 73 - attract rural workforces. The great availability of workers reduced the cost of labour and, considering the high price of capital, it created an obstacle to more rapid changes (it is typical of backward economies). Despite of the few investments and the implementation delay of the mechanisation of Spanish agriculture, there was a significant growth in labour productivity during the period between the First World War and the 1936: the rate of growth of TFP288 in Spain was very similar to that of the nearest European countries. During this period, the sector was characterized by the production of grain, wine and olive oil (Spain was the second major producer in Europe after Italy). About grain, the country was not competitive in international markets because of its low yield per hectare caused by the arid lands. This explain why that grain was directed mainly to the national market. At the contrary, Spain was extraordinarily competitive in Europe for olive oil and wine289.

The economic backwardness did not interest three regions: Catalonia, the Basque Country and Madrid. In Catalonia and in the Basque Country, it was achieved a considerable degree of industrial development in comparison with European standards. These regions did a structural change that advanced rapidly, mainly for the manufacturing sector. In 1930, industrial workers were 27.2%, but in the main city of Catalonia, Barcelona, there was a strong increase in the active population employed in industrial activities: industrial workers reached 60% of the total active population in 1930. Similarly, in the Basque province of Biscay, industrial active population reached 40% of the total active population. About Madrid, the city had a rapid and interesting growth of the manufacturing, construction and service sectors. In 1930, the population of Catalonia was 11.8% of the total, the population of Basque Country was 5.9% and the population of Madrid region was 3.8%, but their contribution to Spanish industrial output was respectively 34.6%, 9.3% and 9.2%.

The increasing importance of industrial sector usually is linked to increasing inequality. Simon Kuznets, an American economist, statistician and demographer, theorized that, during the early stages of development, inequality is mainly caused by the shift of the population from agriculture to the urban and industrial sectors. For industrial workers, incomes and inequality tend to be higher. The increasing of income per capita, urbanization and population density, augments also market opportunities: this is another factor that can promote inequality

288 The Total Factor Productivity is a measure of productivity at the macroeconomic level. It measures growth in gross domestic product due to technical progress and to structural reforms of the economy. It is calculated as the difference between the growth rate of value added and the growth rates of labour input and capital stock. It highlights the gap between GDP growth and input growth used in production. Clearly, an increase in TFP value means an increase in the standard of living and well-being. 289 E. Clar, V. Pinilla, Agriculture and economic development in Spain, 1870-1973: not such a long siesta, in «Conference Paper. XIV International Economic. History Congress, Helsinki» (2006), p. 21-25. - 74 -

(for its larger probable gains and risks). In Spain inequalities augmented only from the second part of 19th century until the First World War, decreasing during the ‘30s. The only positive aspect to promote inequality is that the industrial and the urban sector provide working opportunities, increasing the work demand and influencing wages. There is to underline that if incomes are growing, it is not sure that they will contribute to reducing inequality, at least during the early stages of modern economic growth. While growing incomes fostered inequality, other processes associated with economic development (rural migrations to urban and industrial centres, the demographic transition, the spread of literacy or the effect of extending political participation) helped improving the relative standards of living of the lower classes, increasing the equality among lowest classes. Another factor that influenced negatively inequalities in the country was the elimination of common lands (a process similar to the English enclosures during the 18th century).

To understand the changing of inequalities in Spain (as in other countries), Kuznets elaborated a curve290 that describes the trend of inequality in relation to the development rate, showing the evolution of income distribution over time. Kuznets curve has an inverted U- shape and it depends from the inequality index (the Gini coefficient) on the Y-axis and economic development on the X-axis. Income distribution tends to get worse in the first phase of development (represented by the point with maximum curvature), but it constantly improves with the transition to an industrial economy. This phenomenon is explainable because, during the first economic stage, wealthier classes invest their capitals, increasing their wealth. The situation changes in the later stage (characterized by a more solid industrialization): this period is more affected by taxation and, in this way, the State creates a redistributive effect.

In 1932, for the first time in Spain history, Azaña put an income tax for citizens who were gaining more than 100.000 pesetas per year. It was done to augment the tax levy and to use that money for social security. The tax provided low rates, starting from 1% (for the minimum taxable) and arriving to a limit of 7,7% (for incomes over 1 million pesetas). Even if the idea of a redistribution was socially appreciable to diminish social inequalities, the law was quite useless, because it interested only a strict minority of riches (the average of the per capita income was 1.075 pesetas, so the income tax interested people who were at least having an

290 Y. S. Brenner, H. Kaelble, M. Thomas, Income Distribution in Historical Perspective, Cambridge University Press, Cambridge, 1991, p. 57-58. - 75 - income 93 times higher than the average)291. The shy attempt to reduce inequalities had a meaning if contextualized in the political vision of the Frente. The political forces who were composing it (democrats, socialists, communists and anarchists) were trying to eliminate the old privileges kept by large landowners and by the Church. Their will was to take their proprieties to redistribute them, beginning with an increase of protection and wages for labourers. This difficult plane was made more complex by a period of natural disaster, in 1936: a drought and a period of floods in the southern part of the country ruined for two years the harvest, augmenting unemployment and discontent just among Frente supporters292. While revolts were always more and more both in rural areas and in the cities, the process ended to be completely upset after few months. After July, in the regions occupied by nationalists, there was a reactionary answer to these changes, while in some parts of Spain (as in Catalonia and in the Valencian community) it assumed communist-libertarian characteristics being supported by the most important anarchic experiment in the world history, at least from August 1936 to May 1937293.

3.2 The Civil War and the Libertarian Revolution

The military uprising of 17th-18th July was prepared with great commitment, getting ideas from the failed coup d'état of General Sanjurjo in 1932. The protagonist of the action, General Emilio Mola, had planned to occupy simultaneously the garrisons of 50 Spanish provinces294 (while in Morocco the Foreign Legion should have conquered the strongholds of Melilla, Tètuan and ) and then to eliminate the organized working class (otherwise it could have begun a dangerous general strike). For Mola, the most important issue was the conquest of Madrid, symbol of the victory of the coup. He planned that the city would have been conquered295 starting hostilities from inside it (thanks to the actions of Generals Villegas and Fanjul, two main leaders in the nationalist army), ending the enterprise with the convergence of military bodies from outside (commanded also by Mola himself).

The leader of the rebels was General Sanjurjo; Mola (brigadier General), the creator of the conspiracy, would have been the future dictator while Francisco Franco (major General)

291 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 191. 292 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 69. 293 C. Venza, Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009, p. 133-134. 294 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 74. 295 In addition, a “fifth column” should have helped the Nationalist side to conquer Madrid acting inside the city. In reality, the imagined group of soldiers did only some irrelevant acts of espionage and sabotage among Republicans. - 76 - would have played an important role without being the most relevant commanders. In addition to them, two influential politicians from the extreme right-wing parties would have played a prominent role, that should have been more influent than Franco’s one: they were Calvo Sotelo (monarchists) and Josè Antonio Primo de Rivera (as seen, the founder of the Falange).

Already on 8th March 1936, Franco had met with Mola to plain the coup, even though he initially had not confirmed his presence296. Nevertheless, the conspirators did not want to proceed without him principally because Franco had been at the head of the Zaragoza Military Academy and he had been Chief of the General Staff when Gil Robles was Minister. He enjoyed a great prestige in the Spanish Legion in Morocco and he had a strong influence among the officers in the homeland: they respected him for his determination and for the supposed invulnerability that he had demonstrated several times by escaping death. For the success of the coup, the leaders needed both him and the Spanish troops in Morocco by him commanded.

It is important to underline that, at the beginning, Franco had not been the organizer of the coup and its presence should have had a secondary role. During July, however, two unexpected events began to change Franco's position among the conspirators. The first happened on 13th July: republican Assault Guards assassinated Calvo Sotelo297. The murder costed to the rebels one of their most prominent politicians, convincing Franco to join Mola and giving to the Generals a pretext to act.

The second happened on 20th July: General Sanjurjo was in exile298 in Lisbon and he needed to return to Burgos by 20th July to lead the army to conquer Madrid. For this purpose, Antonio Ansaldo went to Lisbon to pick him up and to bring him to the destination, using a small single-engine biplane. Because of the wind and overload, the plane could not get out of the ground enough to go over some trees, falling in flames after the impact. This caused the General’s death299, leaving the rebels without a precise leader.

Despite of these heavy losses, the Generals respected their plan continuing the civil war: according to their calculations, it would have been finished in a short time300. Nevertheless,

296 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 272. 297 Ibid., p. 276. 298 Sanjurjo had been exiled after having organized the Sanjurjada, a failed coup d’etat against the Republic, on 10th August 1932. 299 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 90. 300 Ibid, p. 81. - 77 - the Nationalists had a success only in some parts of Spain. The failure of the attacks in Madrid (Villegas preferred not to act while Fanjul lost his battle in the Montaña barrack, being shot after few days), in Valencia, in Andalusia, in the southern part of the country (like in Malaga) and in Catalonia, prolonged the war far beyond expectations. The most populous and most developed regions remained in the hands of the loyalist government (led by the Prime Minister José Giral, named on 19th July 1936), which still had most of the Spanish financial and industrial resources (while the rebels had obtained the main agricultural areas). Moreover, the possession of the whole part of the country bordering France allowed the Republic to maintain foreign trades.

In July 1936, the Republic had about 46.000 soldiers and 400 aircraft, against the 44.000 militaries and the 100 aircrafts owned by the rebels301: there was not a so important difference between the two sides. On more, both factions possessed very limited weapons, few means of transport and anachronistic airplanes and cannons. The situation began to change on 5th August 1936, when African troops were moved to Spain to help the rebel side (5.000 men led by the lieutenant colonel Juan Yagüe, who were frightening republican forces for their reputation as well-trained and cruel soldiers) after the intervention of foreign States. Another fact that led to the defeat of the Republican front was the splitting of the State into various local powers after the beginning of the coup: the State power had fragmented into various revolutionary committees of local governments that had the common purpose of defeating the enemy but acting independently from the decisions of the central government.

On 21st September 1936, Franco was named Generalisimo de los ejercitos, supreme commander in lieu of the deceased Sanjurjo: this served to coordinate the military advance as well as to agree with the two foreign allies, Hitler and Mussolini. His first decision as supreme commander was to conquer the Alcàzar fortress in Toledo and this great victory convinced the Junta de Defensa National302 to appoint him Head of government and of the State, on 1st October of the same year. Right-wing militants began to nicknamed him Caudillo and from that moment he started his dictatorship303.

At the end of the month, on 30th September, the bishop of Salamanca Enrique Pla y Deniel, recalling St. Augustine, stated that in reality the civil war in Spain was like the war between

301 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 294. 302 It was a command centre created on 24th July 1936 by the rebels in Burgos. The organ worked until 31st January 1938, when Francisco Franco created his first government with eleven Ministries. 303 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 323. - 78 - the “earthly city” (that of “the Communists and the Anarchists [...] envious of those who have the cult of virtue and who therefore assassinate and martyrize”) and the “heavenly city” (that “of the children of God, elevated by divine love”). His statement wanted to emphasize the fact that the Church was officially supporting the birth of a conservative government that would have defended the Christian civilization, against anarchy and communism. For this reason, it was not a “civil war, but a crusade done to defend the religion, the homeland and the civilization”304.

The Pope, Pius XI, supported the Nationalist part and he continually denounced the aggression and violence made by Republicans against innocent ecclesiastics. There was a strong solidarity between clergy and rebels: the Nationalist victory would have meant for the Church the return to a dominant position both in politics and in economics. Obviously, the positioning of the Church in favour of rebels augmented Republican’s anti-clericalism: the Catholic worship was forbidden, many churches were burnt and destroyed (in Valencia, for example, about 800 churches had been destroyed, while almost all religious buildings in Barcelona and Madrid had been damaged) and there had been about 6.800 executions305 of priests, nuns, friars and monks.

Historians argue that the war of Spain was a sort of general test of the Second World War, not only because it interested a large number of foreign countries (and some of them took advantages trying new military techniques, like the terrorist use of air bombardments306), but also for the innovative use of all the new audio-visual media (radios, photographs that illustrated events on periodicals and daily newspapers around the world, cinemas and so on).

The Roman Catholic Church was not the only foreign institution that decided to intervene in the civil war:

• Italy begun to help the Nationalists from 28th July 1936, sending to them the first twelve bombers Savoia-Marchetti S.M. 81. Mussolini was convinced that a fascist regime in Spain would have benefited Italy in its dominant position in the Mediterranean, eliminating the British enemy from Gibraltar. For him, the defeat of a fascist Spanish movement was inconceivable: therefore, the Duce continued to help

304 Ibid,p. 405-406. 305 Ibid,p. 408-409. 306 The German Condor Legion did the famous bombardment in Guernica (in the Basque Country), on 26th April 1937. - 79 -

Franco when he was in difficulty, sending more than 100.000 men to fight in favour of his side (from December 1936 to April 1937)307; • Germany sent its first help to Franco on 26th July with the departure of 20 trimotors JU-52 (twice as much as those required by Spain), 6 monoplanes Heinker-51, 20 counter-cannons, some thousands of bombs and other equipment308. Hitler had in mind a strategic move aimed at isolating France and weakening it, so it was necessary to prevent the Popular Front from triumphing. In addition, he took advantages from the situation trying new war tactics and innovative weapons309; • Portugal did not intervene officially, also if Salazar helped Franco giving to him weapons and protection near the State boarder. On more, the Professor recruited an army composed by some thousands of volunteers to go to help the Nationalist side310; • Mexico shipped the complete reserve of its arms industry towards Republican Spain, sending to it 20.000 rifles and 20.000.000 rounds of ammunition in its support, at the beginning of August 1936; • the USSR decided to change policy in October 1936, not to allow Germany and Italy to get a new ally. Since September, the Republican government continued to call for aid to the Soviets: they sent about 400 tons of pure gold to Moscow and so Stalin decided to intervene and to give them the requisite armaments. The dictator agreed both to give defenders the chance to face the enemy and to keep Hitler busy in an expensive campaign311. Between the 4th October and November, the Soviets sent to Spain some military advisers, 69 tanks T-26, 30 Katiuskas bombers, 60 armoured vehicles, 71 light aircrafts Polikarpov, 31 biplanes R-5 and numerous rifles (with bullets)312: these armaments were indispensable for the protection of Madrid; • Poland sent 5.000 volunteers to support Republicans, organized in the "Jarosław Dąbrowski Brigade". The Polish government was the second largest arms supplier to the Spanish Republic after the USSR and it participated understanding that it was better to search a way to weaken Nazi Germany;

307 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 147. 308 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 304. 309 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 120-122. 310 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 106. 311 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 106. 312 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 330. - 80 -

• the first International Brigades313, organized by the Comintern and composed by volunteers coming from 53 different countries, supported the Republican side from 8th November 1936 to 29th October 1938314. It is estimated that in total there were about 50.000 soldiers. The first units of the International Brigades were formed by European and American volunteers and the wanted both to fight against Fascism and to help the Republic. For this reason, many Italian and German anti-fascists joined this militia; they did all what they could to avoid the birth of a new fascist State similar to their homeland, from which they had been forced to escape; • Romania sent a legion of about 2.000 volunteers from the Iron Guard to fight against communists, commanded by the politician Ion Moța; • Ireland decided not to intervene, but 700 Catholics volunteers (the so-called Blueshirts) participated to the fight supporting the Nationalists to revenge Republican persecutions against their religion. They formed the Irish battalion led by General Eoin O'Duffy315 (using a light blue uniforms). For these volunteers, as O'Duffy wrote in his book Crusade in Spain, the Spanish Civil War was “the battle of Christianity against Communism”.

Franco used Nazi-fascist aircrafts in early August to make the first air bridge in history, allowing him to move his troops from Morocco to Seville316. The foreign aids consisted also in continuous supplies of weapons and ammunitions and they became indispensable to permit to Nationalist to win the conflict. France and the United Kingdom hoped that the Spanish crisis would have ended without a winner because of the lack of armaments: both powers feared that their intervention would have caused the revolt and the beginning of a new World War. For this reason, they remained loyal to appeasement policy and, in August 1936, France proposed the creation of a non-intervention pact317 to which 27 nations participated (including Germany and Italy). As seen, some signatory States transgressed the agreement and it prevented Republicans from building an organized defence against the enemy.

While Nationalist were supported from July by Italy and Germany (adding the Irish volunteers), Republicans were alone from July to September, then in October they obtained helps by the Soviet Union and from November by the International Brigades. The fascist

313 C. Venza, Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009, p. 110. 314 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 637. 315 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 133. 316 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 300. 317 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 123. - 81 - powers had particular interests to help General Franco, but their never extended their influence in commanding the military operations of the rebels. At the beginning, Soviet aids were apparently disinterested and, for this reason, they had been welcomed with great enthusiasm from all the forces of the Popular Front (including the anarchists). The problem was that later they understood that the USSR was exploiting the dependence of the Spanish Republic to strengthen the influence of the PCE (Partido Comunista de España) and to be authorized to take military-political decisions318. The result of foreign conditioning on both sides was that there was a strong cohesion among the Francoists, while the Republican front often saw conflicts between the various political forces (principally against anarchists and communists). Even among the Nationalists there were factions competing with each other (the CEDA, the Falange, the Carlists, the monarchists) but the army was the prevailing force and the main thought was to win the war. The USSR did nothing to hide (or at least to make less evident) its intervention: it was indispensable for the Republic but, at the same time, it eliminated all probability of receiving helps from Western powers, feared by Soviet interference. France and England interpreted the Soviet intervention not only as an attempt to prevent the victory of Franco, but also to extend the Bolshevism and to complete a communist revolution319.

In addition to the different helps received from foreign country, the Republican side had to face also internal political problems. From the beginning of the Alzamiento, the central power of the Republic showed the first signs of fragmentation320. In September 1936, the process was so advanced that the Prime Minister Largo Caballero said that it was no more possible to bring the Republic into a framework of liberal democracy, in which the executive and the military commands prevailed over the other powers. Popular armed masses (made up of workers, peasants and so on) were led by two widespread unions, the CNT (Confederaciòn Nacional del Trabajo, with Anarchist ideals) and the UGT (Unión General de Trabajadores, linked to the Socialist party), which were implementing a revolution. The workers insurrection against Nationalists had created a diarchy situation321: the country was ruled by the Republican government of Madrid and by the Generalitat in Catalonia.

It was a particular revolution: revolutionary militants wanted to destroy the old social order and its symbols, eliminating the former political representatives and replacing them with

318 Ibid., p. 155. 319 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 331. 320 Ibid., p. 295. 321 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 184. - 82 - committees with local power. They wanted to abolish large and medium property, suppressing the State322 and proclaiming a new collective social order. Trade unions and local councils would have led the new society, without needing the existence of political power. These libertarian ideals came from CNT militants. This anarchist union, in May 1936 in Zaragoza, had done a congress in which it elaborated a document called “Concepto confederal del comunismo libertario”323. The paper contained several points that expressed both the political and social innovations characteristic of the new model of society (which would have been created after a revolution), as well as the remarkable differences from Republican democracy. The new "libertarian society" would have been constituted by a federation of autonomous communes. It should have:

• guaranteed to every human being what is required by his/her needs, urging each individual to make the greatest contribution (given his physical and moral conditions) to the society; • abolished private property, the State, the principle of authority and the division into social classes, socializing wealth; • looked after city hygiene; • provided education for citizens; • eliminated the existing justice system and punishment tools (prisons). According to libertarian thought, man is not bad by nature and delinquency is caused by social injustice. If an individual did not respect his duties, a popular assembly would have judged him.

The question of justice was an element completely innovative: Libertarian communism provided “corrective actions” for criminals, using methods supported by the medicine and the pedagogy. In addition, the document gave to families a fundamental significance: the Libertarian revolution should have secured economic independence for individuals, regardless of their gender. The female sex, according to the anarchists, was in a state of inferiority because of the capitalist regime, so this inequality had to disappear together with the old State.

Religion was considered as a “purely subjective manifestation of the human being”, so it had to remain in the individual private sphere. Everyone could have their own ideas, but public rites would have been abolished.

322 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 424. 323 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 34-35. - 83 -

The Communes idealized would have been the political and administrative entities, created during the Revolution, regionally federated and united in an “Iberian Confederation of Liberal Autonomous Communes”. These administrative entities would have had to take care of everything in which the individuals were interested, reorganizing and managing the places where they would have been created. The inhabitants of each Commune would have met regularly to discuss internal issues (production, consumption and education). The anarchist thinkers who worked on the Concepto confederal del comunismo libertario knew that capitalism would have fought against the new society: it was therefore necessary to defend the new organism until its international expansion. This goal could not be reached with a permanent army, because it was considered dangerous for the revolution itself: the Communes needed to eliminate professional soldiers, replacing the army with armed citizens (popular militias), regarded as “the greatest guarantee against any intent of restoring the destroyed regime that comes from inside or outside”. If needed, “people will quickly mobilize to face the enemy. [...] In this general mobilization, people of both sexes will be included in the fight”324.

The biggest problem faced by the anarcho-syndicalists was, of course, the war situation: the economy had to bear the heavy burden of ongoing battles and there were various divergences on how to handle the problem.

The city that became the symbol of the libertarian revolution was Barcelona: here the anarchists had made a strong contribution to defeat insurgents and therefore they could extend their hegemony at the expenses of the central Republican government. The libertarian revolution expanded even in other republican cities (as Valencia, Alicante, Castellòn, Alcoy and in the Asturias)325 but without reaching the results of Barcelona.

The urban collectivist movement had more success in Aragon, Castile, Catalonia, Valencia and in the northeast part of Andalucia, while the rural revolution covered almost all of the country countryside326 (creating in many areas Communes and agrarian communities, thanks to the intervention of the FAI and of the CNT). In the rural Communes, all economy was collectivized: the productive factors (lands, animals, gears) became communal, money was abolished and goods began to be obtained and redistributed “from each according to his

324 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 36. 325 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 431. 326 Ibid., p. 432. - 84 - ability, to each according to his need” and sold using the rule of the barter327. The anarchical Committees handled the expropriated proprieties and the peasants, who were working the lands, were not paid but they had free access to the warehouses in order to obtain what they needed to live.

In the areas where the revolution had more success, at the beginning, there was a general euphoria (though, for obvious reasons, the owners of the industry were opposed) but then the situation worsened. The war demanded a considerable economic effort, so the workers were forced to intensify their work rhythm and wages328 (which remained unchanged and used in town enterprises) had become too low to cope with the cost of living (augmented, for the rise of inflation). This led to protests and strikes against the Trade Unions committees, new responsible for managing companies and the economy329.

Despite of those problems, the most dangerous enemies of the collectivization were the Communists: they believed that it was not the right time to try economic and social experiments and they feared the social conflicts that collectivization was causing in the countryside (between convinced anarchists and opposed small and big owners). Already in August 1936, the Communists had begun their opposition to the popular revolution330, working to ensure that the defence of the bourgeois democratic Republic became the main objective of the war. The position of the Communists made clear to the anarchists that, if the rebels would have won the war, the libertarian experiment would have inevitably ended. Nevertheless, to win the war, the Popular Front was supposed to be supported by the PCE (and by the USSR).

In March 1937, even in Catalonia, the effects of the anarchist revolution began to disappear. Most of the CNT and of the FAI executives did nothing to block the counterrevolution, because they realized that it was necessary to collaborate with the Popular Front331, at the cost of provisionally sacrificing the principles of anarchism and of libertarian communism. The most important Communist-Libertarian reality suffered a final defeat during the Mayo sangriento, in Barcelona: the fight (famous also as “May days of Barcelona”) started on 3rd May and it ended four days after, on 7th May332. During this period of battles among

327 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 47. 328 C. Venza, Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009, p. 124. 329 J. Casanova, De la calle al frente, Editorial Crítica, Barcellona, 2010, p. 213-214. 330 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 190. 331 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 446. 332 C. Venza, Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009, p. 132. - 85 - communists and anarchists, the second formation lost its last hopes to continue the libertarian revolution, losing also two of its representatives (the Italian anarchists Camillo Berneri and Francesco Barbieri, murdered by Soviet killers333). The defeat gave to the Soviet communists the control of the city of Barcelona and it ended the libertarian experiment in the whole country (causing a strong disappointment among anarchists who fought both against Nationalists and against communists)334.

Meanwhile, on 3rd June 1937, General Mola died, like Sanjurjo, during an air crash. The news did not sadden Franco, because his relationship with Mola was getting worse: Mola was willing to end the war quickly, while Franco always showed a certain slow decision-making (because his plan was to control all the occupied areas and to do deep purges, to eliminate definitively oppositions). With his death, however, Franco lost his last rival335 and he became the absolute leader both in the military sphere and in the political one.

The civil war lasted for almost two years more, also if Republicans were fighting not only against a strong and prepared enemy but also with themselves (communists and anarchists continued their battles even after the libertarian revolution end). On 1st April 1939, the Nationalists won the conflict: in that day the Generalisimo Franco proclaimed the victory of his troops on the “Red army”, after the conquest of Madrid336. The Francoist triumph was celebrated by Pope Pius XII, who had defined the success of the General as “a gift of peace and of victory, with which God has deigned to crown the Christian heroism of your faith and charity” 337. Pope's congratulations were preceded by the enthusiasm of Nazi Germany and Fascist Italy: Ciano described the end of the war as “a new formidable victory of fascism, perhaps the greatest”. The budget of the just ended war was tragic: more than 600.000 dead in less than three years, the money cost of the conflict was estimated around 3 billion pounds in 1938, 250.000 private homes were destroyed as about 150 churches (while 4.800 were damaged) and 183 Spanish cities suffered such big devastation to require a nearly total construction338. The industrial plants of the Basque Country (in Bilbao) and Catalonia (in Barcelona) did not suffer any significant damage, contrary to the transport system, which lost more than 61% of passenger wagons, 22% of freight ones and 27% of the locomotives.

333 P.F. Zarcone, Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936- 1938), Massari, Viterbo, 2007, p. 206. 334 C. Venza, Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009, p. 138. 335 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 164-165. 336 Ibid, p. 227. 337 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 660. 338 P. Barbieri, Le cause della guerra civile spagnola, Robin edizioni, Roma, 2006, p. 593. - 86 -

With the end of the war, the Nationalist government, led by General Franco, began to exercise its power in all Spain, while the country was facing a period of profound economic and social changes, which had a great impact on all economic sectors. The economy was devastated: there was a high inflation (the government printed a lot of money to support the military expenses) and the per capita GDP in 1939 was 72% of the per capita GDP in 1935. The Nation lost 3,5% of its working force and a lot of Republicans (about 500.000 people) preferred to emigrate in France. On more, 60% of railroads cars were destroyed and 40% of the merchant ship was unusable. It is important to add to these losses also the expenses done by both sides to pay the respective foreign allies: in 1935, the country had the 4th largest gold reserve in the world, but the Republic sent about 400 tons of pure gold to the USSR339 (almost the totality of Spanish gold, to pay for its helps) while Nationalists made a debt with Germany and Italy.

The 10-15% of wealth was destroyed, 70% of Madrid factory machineries needed to be replaced. Production in the most important centres in Catalonia was reduced of 60% between 1936 and 1939340, and the Republic was increasingly affected by lack of food and raw materials. The inflation reached 300% during the war, while wages increased only by 15%. The already weak economy had also to bear the German exploitation from 1939 to 1944.

3.3 The economic consequences of the Civil War

In 1939, Spanish society was in a state of absolute discomfort and poverty. The state of emergency in which the country was located continued to persist for years (in fact, the “state of war” established in July 1936 was revoked only in 1948). The following years prolonged and accentuated the social and economic problems caused by the war, because Spain passed a period of international isolation, augmenting its economic gap with the nearest European countries. The regime was trying to avoid foreign debts and importations, but in reality it was forced the same to import grain341. The Second World War limited Spain trades with others countries involved in the conflict, reducing the exportation of Spanish agricultural goods (mainly oil and wine) and making more difficult the recovery of the sector.

339 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 145. 340 K. Rogers, J. Thomas, History: Causes, Practices and Effects of Wars, Pearson, Harlow, 2010, p. 238. 341 E. Clar, V. Pinilla, Agriculture and economic development in Spain, 1870-1973: not such a long siesta, in «Conference Paper. XIV International Economic. History Congress, Helsinki» (2006), p. 21-25. - 87 -

Since the beginning of its dictatorship, Franco acted decisively on the Spanish economy: on 10th March 1939 he created the Comisaría General de Abastecimientos y Transportes342 with the task of supplying the population and fixing the rationing for goods of primary necessities (cereals, legumes, potatoes, meat, bread, fish, tissues and so on). The General Commissariat had also the task of setting prices for certain goods. Food was rationed, to ensure a minimum level of indispensable goods to the entire population. The goods supplies were controlled also by other national institutions (like the Servicio Nacional del Trigo) with the task to establish the rationing: they had the power to assign obligatory production quotas to each producer and even the prices with which the goods had to be sold. The problem was that prices imposed were too low, so it caused problems to the development of a legal economy. The distribution of resources was inefficient and it forced consumption to a reduction under normal standards. Given that the price of agricultural commodities was low, farmers (sponsored by the State with fertilizer and machinery) began to work for the black market, gaining more. For this reason, the law provided great benefits only to large landowners who stepped out of control and fed that illegal market. Labourers’ wages fell by 40% and they did not even have the chance to organize strikes or trade unions to defend themselves (because it would have been illegal)343.

On 8th August 1939, a new law annulled the republican agricultural reform, establishing the State interventionism in any economic activity. The agriculture remained the largest economic sector but it was limited by the efforts done to develop the war industry (to protect the country in case of foreign attacks). If, in the previous decades, it was possible to see a clear urbanization, with the civil war people started again to leave cities, going to live in rural areas. This caused the increase of rural population and real wages of farmers dropped (there was more availability of labour force). The agricultural sector played a first plan role for the whole after war as a source of capital accumulation and finance.

The food production declined dramatically still in the ‘40s, due to the destruction caused by the war to the livestock sector (which lost more than 26% of gains)344, while the agriculture suffered for the shortage of machinery and fertilizers and for adverse weather conditions. Moreover, the State intervention in agriculture and the autocratic protectionism, imposed by the new economic policy, damaged agricultural production especially during that period. Interventionism and autarchy were present also in the industrial sector, which needed helps

342 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 28. 343 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 232. 344 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 29. - 88 - because it had been debilitated by the civil war (some factories had been destroyed during the bombing). To support the industrial recovery, the government created the INI345 (Instituto Nacional de la Industria) in September 1941. The INI did huge investments to boost industries, directing its efforts towards some strategic sectors (chosen by the government) and following political goals rather than economic efficiency principles. The huge expenses done by the State to finance the investments forced the government to issue bonds346 often, also because the taxing capacity was particularly weak. This way of financing the public investments through debt issuing and money-printing resulted in a very high level of inflation347.

The INI made the State a big entrepreneur, replaced imports with domestic products and it became the most important producer of cars, trucks, fertilizers and aluminium in the country348. The State intervened to protect industrialists from foreign competition and workers’ demands (autarchy removed the problem of increasing productivity to entrepreneurs), so there was a lack of business competitiveness and some oligopolies and monopolies emerged. The intervention of the public sector affected the most traditional sectors of the Spanish capitalism and the working class saw their wages reduced without being able to act through trade unions. It was no longer possible to freely create private industries without prior authorization (it was forbidden by the decrees of 20th August 1938 and of 8th September 1939) and market freedom declined. Following this political decision, wages declined (in 1951 they were 60% of salaries in 1936)349, property demand dropped and the Spanish industry went through a long crisis that allowed it only after 1950 to reach production levels of 1930350.

The fall of exportations reduced investments on production: this is understandable analysing the fall in labour productivity and in agricultural production (in 1950, they were respectively 60% and 79% of that of 1935). The lower yield of the fields was due also to the lower use of chemical fertilizers (only in 1950 it reached again the levels of 1935)351. The production

345 Ibid., p. 30. 346 This debt could be bought by private banks or private investors and immediately deposited in the Spanish Central Bank in exchange for its value. 347 Inflation rate reached 21% in 1950, 16% in 1951 and 14% in 1956. 348 M. Santamaria Monturiol, Monturiol M. S., The transformation of the Spanish economy: a success story of economic transition, 2015. 349 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 233. 350 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 31. 351 E. Clar, V. Pinilla, Agriculture and economic development in Spain, 1870-1973: not such a long siesta, in «Conference Paper. XIV International Economic. History Congress, Helsinki» (2006), p. 21-25. - 89 - levels diminished also because of the low official prices and the demand was not satisfied with the rationed quantities established by the government.

As said before, many producers began to work for illegal markets, where prices were much higher. Large landowners made more profit (they had a greater capacity to serve both markets) while other producers participated less in prohibited trades. Despite of its illegality, the black market reinforced agriculture and it supported industrial development: the availability of capital resulting from this situation was used to finance the growth in the industrial and building sectors. The important benefits generated by the black market increased the landowners’ capacity of financing. Franco permitted the transfer of capital between sectors, collecting funds generated in the rural environment and using them to finance industry and construction. In addition to the growth of the black market, bank deposits in the countryside grew substantially with the purchase of crops by official organisations who used the banks as intermediaries to pay the producers.

While the participation in the black market was increasing (reaching more than 35% of total production)352, the government introduce a legal market where producers could sell their goods (that were exceeding their obligatory quotas) at free prices. This decision reduced the importance of the black market and it favoured the extension of cultivated land area, increasing the use of fertilizers (more diffused after the end of ‘40s, thanks to the restart of international trades) and beginning a recovery in production. An effect of the increase produced was a small augment of agricultural prices.

The autarchy ended in 1951, after a worker strike caused by the continuing growth of the cost of living353 (23% more only in that year). The abolishment of set agricultural prices and the birth of a freer market maximized the production, while productivity increased thanks to the more availability of tractors in the country from 1951. In the ‘50s, the country lived an accelerated modernisation both in agriculture and in industry, taking advantages from the good international relationships354. With the mechanisation of agriculture, workers in the sector diminished and they came back to cities, resuming the urbanization phenomenon. Migrations raised agricultural wages and they incentivized the substitution of workers with new technologies. The industrial growth needed labour from other European countries, while some workers were coming from rural areas. At the beginning of the decennium, Franco’s government completed hydraulic systems to exploit even arid lands, increasing the irrigated

352 Ibid. 353 K. Rogers, J. Thomas, History: Causes, Practices and Effects of Wars, Pearson, Harlow, 2010, p. 247. 354 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 234. - 90 - fields for more than a million hectares. The effect of the new regime were positive for the whole economy and it demonstrated its ability to realize big operas that the Republic failed to do355.

3.4 The Francoism and Francisco Franco

Francisco Franco was the General who won the civil war at the head of the Nationalist army. He gained the role of Prime Minister and Head of the new Francoist Spain, keeping the grade of Prime Minister from 1st October 1936356 to the 8th June 1973 (in 12 different governments) and the grade of President still from 1st October 1936 to the 21st November 1975. The investment was celebrated in Burgos, the city where the Junta de Defensa Nacionàl had its headquarters, with a majestic, archaic ceremony, full of symbols that will be repeatedly resumed during the regime (such as the Roman greeting used by the enthusiastic crowd to welcome the Caudillo).

The support of the Church to the Nationalists side emphasized the religious aspect in the figure of Franco. Still during the fights, Generalìsimo said that the coup d'état would have protected “the Church and its holy religion”, so the civil war was a Crusade against “atheism and materialism”. The Crusade linked together sacred and devotional elements with political aspects to legitimate the regime: the constant presence of the army, the Falange and the ecclesiastical hierarchy during the celebrations represented the unity of political, military and religious powers. The new regime, called Francoism, wanted to unify masses integrating them into a Nation characterized by a traditional Catholicism, the constituent element of the imperial past of Spain357 (in complete opposition toward Fascism and Nazism). After the victory over the Republic, the Francoist Spain exalted its triumph for months: the Nationalist merged the Alzamiento with the meaning of old Crusades, while Franco was celebrated as the triumphant Christian leader (as proposed by the painter Arturo Reque Meruvia). According to him, the causes of the decline of the country were liberalism, democracy and class struggle; therefore, it was necessary to eliminate and forget them, together with all the Spanish history of the 19th century358.

355 E. Clar, V. Pinilla, Agriculture and economic development in Spain, 1870-1973: not such a long siesta, in «Conference Paper. XIV International Economic. History Congress, Helsinki» (2006), p. 21-25. 356 The 1st October subsequently was declared national holiday and named "dia del Caudillo". The other days declared national festivals were the 18th July (date of the beginning of the Alzamiento) and the 12th October (the Hispanidad day). 357 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 14. 358 Ibid, p. 25. - 91 -

On 19th May 1939, a spectacular and patriotic parade was held in Madrid and Franco, surrounded by the major authorities, was presented to the public by a special stand erected along the Paseo de la Castellana (one of Madrid main avenues). The event wanted to celebrate the victory of nationalists by showing the strength of the newborn regime while the aircraft in the sky performed by drawing the words “viva Franco”. Before the beginning of the parade, General Varela decorated the Caudillo with the Gran Cruz laureada de San Fernando: it was an acknowledgment (consisting of a cross and a plaque known as the “Cruz laureada”) for soldiers who did something particularly hard to defend their country359 and for the security of the national community, risking their lives.

On 20th May, Franco went to the Saint Barbara church in Madrid to offer the sword of the victory at the altar: the rite alluded to a medieval alliance between the throne and the altar360, resuming the symbols of the of 1492 and of the victory of Lepanto in 1571. The ceremony legitimized the leadership of the Nation by the Caudillo, making his charism holy. Francisco Franco thus obtained the power of the ancient absolute monarchs to exercise together with the army and the Falange.

The new Head of State reunited all the powers in jealously, beginning a policy of recatholization and redemption in accordance with ecclesiastical hierarchs361. The recatholization, symbolized by the evocation of the triple motto “order, homeland, religion” pronounced during Franco's speeches and present in episcopal bulletins, in the press and in the various organs of the regime, proceeded quickly without caring for the destiny of Republicans, defeat and massacred, that in those years disappeared in silence. To understand the Francoism, it is necessary to study the figure of his leader, also because he changed the destiny of Spain dedicating all his life to try to improve its condition.

Francisco Paulino Hermenegildo Teódulo Franco y Bahamonde was born on 4th December 1892 in El Ferrol362, a small town in the province of La Coruña (in Galicia, northwest of Spain) and he had received the baptism on 17th December. His family belonged to the bourgeois class and his mother, Pilar Bahamonde, was particularly religious and traditionalist363. Franco was a sensitive and introverted boy. His father had never showed him a particular affection, so he was very attached to his mother, from whom he had inherited a

359 G. Redondo, Historia de la Iglesia en España, 1931-1939: la Guerra Civil, 1936-1939, Ediciones Rialp, Madrid, 1993, p. 622-623. 360 Ibid., p. 624. 361 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 18. 362 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 19. 363 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 13. - 92 - great love for the Catholic Church and a vision of the conservative world. As Pilar Franco (the sister of the future Generalìsimo) wrote in his book “Nosotros, los Franco”, Francisco had already shown when he was young his growing and exemplary faith. After having ended the Military Academy, he had enrolled in the Night Adoration364, an activity that consisted in offering to Christ, solemnly exhibited, acts of praise and reparation during night hours, staying awake near the crucifix.

After the first communion and the confirmation, done in El Ferrol, Franco had begun his high school studies at the college led by priest Don Marcos Vàzquez. Franco's dream was to be enrolled in the Navy; however, although in those years there had been no way to have access to the Naval School, he had decided to change his goal, applying to the Toledo Infantry Academy and beginning his career as official in the army365.

In 1907, Franco had passed the test for the Military Academy. The Academy and the military career had proved to be a very favourable environment for Francisco to develop his technical and professional skills. Here, for the first time, he had demonstrated to be gifted of the retranca366, a natural gift attributed to the Galician (it consisted of a reticent farmers’ astuteness).

At 17 years old, on 22nd August 1910, Francisco had begun his military service as second lieutenant. He had done his professional experience almost entirely in Morocco, where he had received different promotions for his abilities becoming the youngest General in Europe after 16 year of service367. During his battles in Africa, he had acted with value: he had been injured several times, but he had always healed (for this reason, his soldiers thought that he was gifted of the baraka, a supposed invulnerability). Meanwhile the newspapers in the homeland had begun to make him famous.

In 1914, at the age of 21, he had been promoted, for his resolving and organizational skills, to the rank of captain368. On 29th June 1916, he had suffered the only serious injury he had reported (in the abdomen), fighting at El Biutz.

364 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 25. 365 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 14. 366 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 76. 367 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 27. 368 As Bonaño wrote, after his appointment, the Moors attacked Melilla (where there was the Franco’s army). The situation was difficult, so a frightened soldier entered the church and, seeing Franco, asked him how they could have won; Franco, who was praying in front of the altar, answered calmly: “having here the Lord we have nothing to fear”. - 93 -

In 1917, Franco had become major and he was sent to Oviedo, because there had been no free places in Morocco for that grade. Here he had met the fifteen-years-old Maria del Carmen Polo y Martinez Valdés and he had begun to be interested in economics and politics.

In 1920, he had obtained the command of the new Spanish Foreign Legion, of which he was one of the founding officials. The Legion had served him to secure the Spanish presence in the occupied Moroccan territories (with the victories at El Bintr and Malill) and there he had demonstrated his strong discipline, his value and his temerity.

In January 1923, at the age of 31, he had returned to Oviedo, where he had received the medal for military value for his victories. In addition, before leaving for Morocco, he had married Maria Carmen Polo (with whom, in 1926, he had his only daughter, Carmen Franco).

After returning to North Africa, he had continued his career defeating Sultan Ab del-Krim’s forces in September 1925 and consolidating once for all the Spanish conquests in the north of the Maghreb369. As General Juste had said, Franco’s life “had been characterized by successes. In all the moments he had a clairvoyance of the everywhere situations that left us amazed”370. He had been promoted colonel and, in 1926, he had become the youngest brigade General of Europe, at the age of 33.

In 1928, he had been named general director of the Zaragoza Military Academy. The assignment had given him the opportunity to teach his army model to new generations of officers. He had considered essential that the army was united to safeguard the country, being free from politics371.

On 14th April 1931, the republican experience had begun but Franco was in favour of the monarchy and opposed to the Republic. He feared that Republican governments, especially if led by Communists or Masons372, were a danger for the unity of the country: given the situation, he had thought that the only solution would have been to intervene firmly through the army373, so the army could have improved the situation.

Franco's opposition to the Republic had been fomented by two events:

369 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 16. 370 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 38. 371 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 17. 372 Franco had been always opposed to Masons: in 15th September 1936, by decree, he proclaimed Freemasonry outlaw. On 18th December 1938, he declared that all the offensive Masonic symbols for the Catholic Church were to be destroyed and removed even from cemeteries within two months. All the Masons in the areas occupied by the nationalists during the war were forced to flee: who decided to rest ended to be shot or assassinated. 373 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 18. - 94 -

• On 3rd June 1931, the Republican government implemented the revisiòn de ascensos (reconsideration of the promotions), questioning some of the merit promotions granted during the war in Morocco. Because of the decree, many right-wing Generals (including Franco374) risked being degraded to the role of colonel. • In July 1931, the Minister of War Azaña closed the Zaragoza Military Academy and Franco, in February 1932 (after seven months of expectation), obtained the command of the 15th Infantry Brigade of Galicia, allocated to La Coruña375.

In 1933, he had been sent as general commander to the Balearic Islands and, in 1934, he had been called back from the CEDA to Madrid to collaborate with the new War Ministry (after being appointed Chief of Staff): in October of that year, he had been sent to Asturias to repress the revolting miners376. With the elections of February 1936, the political landscape had changed: the Popular Front gained the majority of votes and Franco had decided to meet the President Alcalá-Zamora to convince him not to allow the formation of a government composed by Front’ politicians, because the army would have been ready for a revolutionary action if it had happened.

The President had not accepted Franco's request and, in March 1936, the new Prime Minister Azaña had decided to neutralize the suspected nationalists, sending Franco to the Canaries as commander of the archipelago377 and removing him from the Chief of Staff.

On Tenerife Island, Franco had feared that there could have been a Communist coup in Spain led by the Third International, but he had preferred to stay away, spending his free time playing golf and trying to learn English. His calculated but exasperating hesitation prompted General Sanjurjo to assert that the insurrection would have proceed with or without him. On 12th July, Franco had sent a message to Mola in which he stated that he would have not participated to the coup; he changed his mind only after the assassination of Calvo Sotelo (Monarchic leader of Renovaciòn Espanola), which took place on the day after.

Taking advantage of General Amado Balmes' funeral378, Franco had moved from Tenerife to Las Palmas of Gran Canaria (the transfer permit had been denied by Quiroga a few days earlier but Franco had needed it to leave the archipelago). Through an English Dragon

374 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 35. 375 Ibid., p. 36. 376 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 19. 377 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 272. 378 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 75. - 95 -

Rapide, sent by conspirators, he had been secretly transferred to Morocco to begin the Alzamiento.

On 19th July, he had arrived in Spanish Morocco after a prudently slow trip: at this time, the General had not proved yet to have either the charisma that characterized him during his regime, nor the same determination.

Franco's role in civil war can be distinguished in two phases: one that goes from the evening of 17th July 1936 to 21st September 1936 and the other from 1st October 1936 to the end of the war, on 1st April 1939. During the first phase, as commander of the Moroccan army (separated from the Spanish territory), he had few offensive abilities: the Navy remained faithful to the Republic and it controlled the Strait of Gibraltar (preventing the transfer of Moroccan troops). Then Franco decided to seek help from Mussolini and Hitler, obtaining the collaboration to create the air bridge (to carry his Moroccan troops from Morocco to Spain)379. Once the troops were transferred, Franco was the leader of the strongest army in the conflict. At the beginning of the war, however, he had a position as primus inter pares among Generals Mola, Queipo de Llano, Fanjul and Sanjurjo (which would have been even above him) and among the politicians Calvo Sotelo and José Antonio Primo de Rivera. The fate made him a primus super pares after the death of Sanjurjo, the execution of Fanjul (17th August 1936, after the defeat in Madrid), the assassination of Calvo Sotelo, the shooting of José Antonio Primo de Rivera ( 20th November 1936, killed by Republicans in Alicante, where he was imprisoned) and the mortal incident of General Mola (3rd June 1937, on a plane trip near the front)380. He had also tried to persuade Hitler and Mussolini to send him some help before the other Generals made it, thus gaining a big advantage over them.

Mussolini was really an ideal model for Franco, who admired him and esteemed him until 1945, but the fascist aspect of the Francoism underwent a brutal change during the Second World War. Different was the relationship with Hitler: there was a completely formal friendship between them, but after their first meeting, the Führer admitted that he would have preferred to do everything else except speaking again with Franco381. Moreover, the General was suspicious of Hitler and he feared that he was preparing a German invasion in Spain, from 1944 to 1945.

To understand some of Franco’s successes and decisions, it is essential to analyse also his relation with the professor Salazar. With the treaty of Friendship and Non-Aggression (the

379 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 22. 380 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 91. 381 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 86. - 96 -

Iberian Pact382, signed on 17th March 1939), the two dictators formalized their alliance: it was born a climate of friendship and cordiality that was sanctioned in the agreement to maintain the Iberian relationship and to improve them, obtaining a series of mutual benefits and compensations over the following two decades. Franco and Salazar did seven meetings from 1942 to 1963, during which the two leaders showed a great friendship and cohesion. That cohesion, reflected on the Iberian Peninsula, was essential both for the survival of the two Iberian regimes and to improve the internal support to themselves383.

Coming back to the civil war, during his second phase, Franco acted as Generalìsimo and so as supreme commander of the rebel army384. Following the basic idea of Mola (conquering Madrid to win the war), Generalìsimo always directed the majority of troops to the capital, keeping it under siege even when he changed his goals. In October 1936, he freed Toledo and, from June to October 1937, he decided to conquer the northern territories (the provinces of Vizcaya, Santander and the Asturias) in order to strengthen his army and to deprive the loyalists of the major war industries in Bilbao. After the conquest of Barcelona, he concentrated the army near Madrid, which fell on 28th March 1939.

During the conflict, Franco did not hide that his war of attrition strategy served to achieve long-term political goals: its purpose was to eradicate socialism, communism, anarchy and freemasonry in Spain for centuries, but he never talked about a millennial regime (as Hitler did). Caudillo's long times had to serve him to consolidate his political power, which required a dramatization of the war and not a quick solution.

The new Caudillo was a particular political character: historians had discussed a lot about his regime, trying to understand if he was a fascist dictator, a military dictator (like Augusto Pinochet in Chile) or another kind of State leader. Manuel Azaña, in 1946, defined the Francoism as a “traditional military and ecclesiastical dictatorship”. The historian Javier Tusell emphasized the modernity of European fascisms and the lack of the same modernity in Franco's regime; Gino Germani took this distinction classifying Francoism as an “authoritarian fascism”385. Viola said that Francoism was a military regime supported by the Church and by the industrial and financial capitalism. Sánchez Bella stated that “the Francoist regime was neither fascist nor totalitarian: it was liberal-authoritarian, with a profound sense

382 The Iberian States agreed to respect each other’s borders and territories solving a problem that was lasting for centuries. For Franco, it was indispensable to build a connection with a country that enjoyed a privileged relationship with Great Britain and that could act as a mediator for the relations with the Allies. 383 M. I. Rezola, The Franco-Salazar Meetings: Foreign policy and Iberian relations during the dictatorships (1942-1963),in «e-Journal of Portuguese History», 2008, vol. 6, n.2, p. 58-68. 384 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 23. 385 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 30. - 97 - of Christian humanity”386. Orwell (2002) also contributed to explain Franco’s figure and his regime: in his opinion, he was not comparable to Hitler or Mussolini, because in reality he was trying to restore the feudal system387. Placido Pulgar even defined Franco as a “great Marxist”, because he used public money to create large companies (industrializing the country and employing thousands of workers), an advanced social security system and thousands of homes (payed with State finances and distributed by Trade Unions to workers)388.

Moreover, the Francoist regime was initially closer to the fascist model, given the importance of the Falange; then the Falange was overwhelmed by the Church's interference and Franco himself was more and more similar to traditional Catholic kings rather than to Mussolini. At the same time, there were several factors that showed similarities between the Nazi-fascist regimes and the Francoist regime (as the cult of the dictator's image, the Roman greeting and the imperialist ideas)389.

A characteristic trait of his regime, in the ‘40s, was to demand popular consensus by mobilizing citizens. In this, Francoism acted like fascist regimes: when he considered his power in danger, Franco resorted to popular mobilizations. However, since the ‘50s, it worked to build a society completely out of politics (at least 50% of the population remained at the margin of politics, without favouring or preventing Franco). In the early years of the dictatorship, the Falange tried to be the only entity in the political scenario but this claim was stopped by Franco. The Falange could not have a militia, it could not dominate the administration, the justice or diplomacy as the Nazi party did in Germany. It was bureaucratized and it became part of the State apparatus that provided social services to the population. It always had an influence on the political sphere, but never an absolute hegemony.

Francoism had been generated by a classic military coup: it was always marked by a military, clerical, and reactionary soul390. The regime was characterized by political repressions similar to German and Italian policies and by the strong influence of the Church and of the army. Nazism and Fascism were mass movements, popular and populist. Mass dictatorship is, by its nature, dynamic and dramatic. Military dictatorship is conservative, static and more propitious to an immobility controlled by soldiers armed specially to fight an “internal war”. This

386 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 90. 387 The English writer fought voluntarily in favour of Libertarians on Aragon front, leaving a witness of that experience in his book “Homage to Catalonia”. 388 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 73. 389 G. Ranzato, L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004, p. 502. 390 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 32. - 98 - explains why Mussolini’s public speeches were frequent and well-liked by the dictator, while Franco preferred to avoid them, at the same time avoiding purely political issues (delegated to Cuñadisimo Serrano Suñer)391. He was totally opposed to the rebellion of the masses, trained and exploited by Nazi-fascist dictators: they conquered power by showing themselves as political leaders, while Franco exploited his army and the Spanish tradition of coup d’états.

Franco was very sceptical (a characteristic of people from Galician), cold, silent and stingy of promises: his features made Mussolini and Hitler nervous during their meetings. Generalìsimo was always calm and moderate: the demonstration of his calmness was when a General met him to expose his complaints about the situation of the army, showing them resolutely and nervously. After the speech, Franco asked him calmly “why do not you wear the ordinance gloves?”, and then he dismissed him. Unlike Mussolini, Hitler and Stalin, he had a vintage vision of the world, nostalgic of the union between throne and altar that had made the Spanish empire great. Franco was therefore hostile not only to communism but also to liberalism that, as he wrote in 1950, was “the denial of the Spanish spirit, the questioning of our faith, the degeneration of our essence”.

According to many critics, he always remained a Generalísimo, a more comfortable military commander in the Major State than in the Council of Ministers or in party meetings. At the beginning of his dictatorship, he had not so clear political and government capacity. His brother-in-law Serrano Suñer, in the first phase of regime, became his precious counsellor and in reality he had been the true builder of the regime, while Franco was increasingly acting as an absolute Catholic ruler, sure to have been sent in Spain by the Providence to save the Spanish people (for which he had a sincere paternalist love)392. For Catholics, the new sovereign appeared as a saviour and the abetment of Pius XI and later of Pius XII assured him a Catholic international support393.

The ceremony of the Great Collar of the Supreme Order imposition took place in the chapel of the Royal Palace, on 25th January 1954. Before the imposition, the Caudillo did a creed of Catholic religion, adding that he would have preserved and professed his Catholic faith even making it taught, professed and practiced by his compatriots. Pope John XXIII also proclaimed him on several occasions, as Pope Paul VI394. From the beginning of his regime, Franco settled permanently in Madrid at the Royal Palace of El Pardo, behaving more and

391 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 57. 392 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 41. 393 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 170. 394 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 56-58. - 99 - more like an absolute king. At its appearance during the official ceremonies, the royal march was played.

According to Father Manuel Garrido Bonaño, Carmen Franco (daughter of Generalìsimo) and other officers who had spent several moments together with Franco, the Caudillo was, firstly, a man of deep faith: he devoted all his life to Catholicism. In their opinion, Franco was a churchman who loved his homeland and sacrificed his life to serve Spain, a Caudillo por la gracia de dios sent by God himself395 to lead the Spanish State out of the deep crisis that has been a constant since the late '800396.

The cardinal Goma affirmed to know that Generalìsimo was a practicing Catholic who recited the Holy Rosary every day and did not conceive a Spanish State out from the traditional lines of Catholicism397. Franco had, among his prerogatives, the power to grant the indult to the prisoners: in 1937, he exercised his power saving lives to seventeen people but respecting the monarchical according to which the king could give freedom to prisoners condemned to death only during the Good Friday. Another particular fact that demonstrated Franco's deep faith is his admiration for relics. In Malaga, in 1937, the nationalist army found a relic: the left hand of Saint Teresa d'Ávila398, dead in 1582. Generalìsimo, as soon as he saw that hand, asked a special ecclesiastic authorization to conserve it. He was very devoted to this relic and he used to carry it with himself during his travels (or in holiday), entrusted to a guardian hired to protect it. He made a kneeling in his bedroom, where the famous hand was kept. He never lost sight of it: he had become his talisman, because in his opinion that was the hand that protected him and helped him to carry out his duties.

3.5 Political and economic situation during the 1940s-1960s

From 1939 until its end, the regime needed the support of four important institutions: the army, the Falange, the Church and the monarchists. The Falange had a particularly influence during the first part of the Francoism (the years in which there was a stronger link among Italy, Germany and Spain), but after 1945 it began to be shelved by Franco.

395 S. G. Payne, The Franco Regime, 1936–1975, University of Wisconsin Press, Madison, 1987, p. 235-236. 396 M. G. Bonaño, Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014, p. 4. 397 Ibid., p. 44. 398 D. Zurdo, A. Gutiérrez, La vida secreta de Franco: el rostro oculto del dictador, EDAF, Madrid, 2005, p. 50. - 100 -

As for Portugal, clearly the ‘40s were a particularly hard period also for Spain. While the government was punishing all the Republicans remained399, the beginning of the Second World War caused the birth of two different opinions in the Francoist Spain: Serrano Suñer (the real political constructor of the regime) and the Falange wanted a Spanish intervention to support the Nazi-fascist allies, even transforming the military dictatorship in a real fascist regime. The interventionist party had a particularly strong influence in the Nation, but Franco's caution, the opposition of military officers and the disastrous economic situation in the country pushed the government to remain firmly neutral. Franco would have participated in the Nazi-fascist side to realise one of his dreams (a new Spanish empire, glorious as the old one), but he was perfectly conscious of the situation of his country and of the dangers. He chose the neutrality because he knew that an early intervention would have meant that Great Britain and France would have prevented his country from supplying food and fuel using their navies400.

In Spain, bread was rationed to 120 grams per day and they were looking for cheap partners everywhere to get grain (bought also from Argentina). To understand better the food shortage, it is useful to compare the weekly average food availability in Italy and Spain in 1942: every Italian could get 1050 grams of bread, just 100 grams of meat, 125 grams of sugar, 500 grams of pasta, 60 grams of cheese, an egg and 3,5 litres of milk. The Spanish rations were even smaller (although Spain was not in war), while in Germany the inhabitants had at least a double amount of food. The Spanish economic situation was so dramatic that in November 1940 Britain decided to unlock the supply of grain from Argentina and Canada. In January 1941, the US Red Cross sent flour and dairy products to Spain, using governmental funds: that aid policy had a great success already since February of the same year, when 500.000 tonnes of grain and 1.500 tonnes of meat came from Argentina401.

In June 1940, when it seemed that Germany was winning the war, Mussolini decided to go to war supporting Hitler402 (sure to win losing only a few soldiers). Spain, meanwhile, on 14th June 1940, had occupied Tangier and Franco was also tempted to declare war, at least against France, but he did not, declaring only his "non-belligerency" (until September 1942). As the historian Ángel Viñas wrote, Franco was characterized by that "myth of skilful prudence"403

399 People imprisoned increased from 12.500 in 1936 to 270.000 in 1940. From the beginning of the regime to its end, more than 200.000 people had been executed, while more than 300.000 individuals had been jailed. 400 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 32. 401 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 91-92. 402 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 248. 403 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 17. - 101 - which, for his fortune, made him desist from the temptation. In the Francoist State, in May 1939, there was an intense debate between the Interior Minister Suñer (strongly in favour of the fascist powers) and the Foreign Minister Jordana (who wanted a rapprochement of Spain to France and Great Britain). Franco's maximum propensity to entry into war came between June and September 1940: the fall of France offered him a chance to think less to defend the Pyrenees border and the opportunity to expand his empire in North Africa (this explains why he attacked Tangier). After September 1940, seeing the British defence and counter-offensive, Generalìsimo's attitude became more cautious.

The meeting between Franco and Hitler (Hendaye, 23rd October 1940) and between Franco and Mussolini404 (Bordighera, 12th February 1941) ended with the failure of the Axis allies to involve Spain in war. Franco asked for too much aids to the Nazi-fascists: in Bordighera, the Caudillo brought with him a piece of paper where he had written: "España no puede entrar por gusto. Canarias Sahara Guinea aviaciòn gasolina transportes trigo y carbòn"405. These where all his claims in exchange for his active participation in the war (but clearly the Axis powers had not been able to satisfied them).

While Italy and Germany were trying to convince Franco to join their alliance, the Allies (mainly the United Kingdom and the USA) were hoping that he would have continued his neutrality. The interests of the Allies in the conditioning of Spain were exemplified on 1st December 1940, day in which a commercial agreement between Spain and Great Britain was signed for the import of wheat. Subsequently, Franco made an agreement with the United States: the American country gave him one million tons of grain but in return he would not have helped anymore the Axis, declaring his neutrality to the conflict. For this reason, on 10th December, Suñer was forced to make known the pact recently signed to Nazi-Fascist powers, saying that he could no longer allow transit beyond Pyrenees406 of wheat, phosphates, manganese, semi-finished metals and other foodstuffs.

After the failure of the two meetings, Spain stayed definitely out of the war. Franco, however, continued to help secretly Italy and Germany until the end of the war in various ways (Spanish situation was defined, by some critics, as of "active non-belligerency"). In addition to the logistic facilities for the navy (in Tangier and Ceuta) and for Italian and German aviation (Luftwaffe had bases in Lugo and Seville), Franco sent to the Axis powers technical

404 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 37. 405 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 101. 406 G. Carotenuto, Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005, p. 89. - 102 - assistants and collaborators for the espionage services. Spain started also a trade, mainly with Germany, offering tungsten, pyrite and oil (received from the Allies)407.

The growing distance between Spain and the Axis caused an important internal changing: taking advantages by the conflicts between the Falange and the army, Franco eliminated his brother-in-law Suñer from every Ministerial and political assignment408, naming as Foreign Ministry General Gomez Jordana (who did not want a war intervention, searching for an agreement with Allies), in September 1942.

With Suñer's dismissal, Falange's "totalitarian" sector lost power and this had direct repercussions on Spain's foreign policy. From that moment, Spanish diplomacy directed its efforts to establish relations with the Vatican (which was contrary to Germany Nazi) and to sign a treaty with the United States. This explain why Franco concluded an agreement with the Anglo-American forces with which he promise to minimize trades with Germany, closing down the German consulates and calling back the Divisiòn Azul409 (May 1944). Caudillo added to his neutrality that his regime was "neither Fascist nor Nazi, but exclusively Spanish": he exalted the anti-communist character of his new State410 and of his interventions in war, together with the catholic characteristics of his government.

The Second World War ended in September 1945 and totalitarianism had been defeated, but Francoism and Salazarism were still authoritarian countries. Generalìsimo understood that he was in great danger, mainly for his previous links with the Axis powers. While Stalin would have organized an attack to eliminate the Francoist Spain, Churchill (the British Prime Minister, the hero of the strenuous defence against Nazi airships) told that Allies should have not intervened, because after Franco Spain would have been a reconstituted Monarchy411: the violent end of the Francoism, in his opinion, would have only favoured the USSR expansion. The Allies decided to opt for the British Prime Minister's proposal, only excluding Spain from the UN (despite his Security Council did not consider the Francoist regime dangerous to maintain the peace in the world).

407 Ibid., p. 10. 408 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 30. 409 It was an army of volunteers, created on 24th June 1941, following the Foreign Minister Suñer’s idea and sent to support the Nazi army to fight against the USSR during the Barbarossa Operation (started in the same month). The Division took its name from the uniform: the soldiers could not use the uniform of the Spanish army, so they adopted a symbolic uniform, consisting of a Carlist red cap, Spanish Legion trousers and Falangist blue shirts. The idea of Cunadìsimo had a great success, attracting a large number of volunteers (45.000 Spanish and 2.000 Portuguese citizens). 410 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 35. 411 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 42. - 103 -

To improve his situation, Franco promoted seven412 Leyes Fundamentales del Reino, both to “constitutionalize” his power and to provide some civil, political and social rights to citizens.

The first Fundamental law, the Fuero del Trabajo, was promulgated already on 9th March 1938. It was composed by 16 articles and in the preamble it defined the State "nacional en cuanto es instrumento totalitario al servicio de la integridad patria, y sindicalista en cuanto representa una reacción contra el capitalismo liberal y el materialismo marxista"413.

The most important articles were the following:

• Article 1: people had the right and duty to work, because it was considered as imposed by God as way to achieve both individual and national prosperity. Work was therefore a social duty and, in this sense, strikes were forbidden. • Article 2: the State was the worker's defender: it made Sunday holiday, it prohibited the night work of women and children and it sanctioned the right of every worker to have paid vacations. The first comma excluded from factory works married women and, in the third comma, it declared national holiday the 18th July (day of the beginning of the civil war). • Article 3: it affirmed that remuneration should have been adequate to allow workers and their families to live with dignity. • Article 9: usury was forbidden and loans were incentivized to “create and support small farms, fisheries, industries and trade”. • Article 11: it declares the State "not an entrepreneur": it recognized the private sector as a "fruitful source of the national economic life" and the country task was to protect competition and to act if there were any problems. • Article 12: it recognized families as the primary cells and foundations of society. • Article 13: it established a vertical and unified Union, managed by the Falange and called Organización Nacional Sindicalista del Estado. Following this article, the Falange decided to integrate all the productive forces into vertical unions, led by falangists. These organizations united workers and entrepreneurs in the same organization and the Unions were linked to the State, thus becoming economic policy tools.

The second Fundamental law, called Ley Constitutiva de las Cortes, was promulgated on 7th July 1942. It provided the creation of the Spanish Parliament (Cortes) to give a parliamentary

412 The seven laws were followed by an eighth one after Franco’s death, the Ley para la Reforma Política (4th January 1977). 413 “National State, considered as a totalitarian instrument created to serve the integrity of the homeland, and unionist State, because it represents a reaction against liberal capitalism and Marxist materialism”. - 104 - image to Franco’s regime. The new Parliament was unicameral, without legislative power (it was defined as a supreme organ for citizens’ participation in political issues)414 and formed by Procuradores (kind of deputies) named by the Head of the State or by the corporations (only from 1967 a part of deputies began to be elected by citizens). The members were the Ministers, the national councillors, university rectors, some bishops, mayors of provinces, the Presidents of the Supreme Court of Justice, of the Council of State, of the Supreme Council of Military Justice, of the Court of Accounts of the Kingdom and of the Council of National Economy, 150 representatives of the Trade Union Organization and two representatives of the Family for each province (elected by citizens)415.

The third Fundamental law, published on 18th July 1945, was the Fuero de los Españoles, composed by 36 articles. In that year, Franco eliminated the fascist symbolism and that law was necessary to declare the fundamental rights of Spanish people416. It established the equality before the law for all citizens (adding the freedom of thought and the possibility for everyone to have public affairs) but it contained rules also about religion (Catholics were protected by the State, while it was forbidden to do public ceremonies for other beliefs) and taxation (all people had to contribute considering their wealth).

The fourth Fundamental law was the Ley del Referéndum Nacional, created on 22nd October 1945 and deepened in 1947. This law augmented the democratic aspects in the regime417, establishing that there was the possibility of submitting to popular referendum some law of those conceived by Franco and his government. Only the Head of the State could have programmed a referendum (for particularly important issues) and people who were at least 20 years old could vote418.

The fifth Fundamental law, the Ley de Sucesión en la Jefatura del Estado of 26th July 1947, described the most important features of the Francoist State: a Catholic Kingdom, with Franco appointed Head of the State for the rest of his life (with the title of "Caudillo of Spain and of the Crusade and Generalìsimo of the Armies"). The law gave to Franco the supreme legislative power, shared with the Cortes, the Council of the Kingdom, the Council of Regency and with the Council of Ministers. In this way, Caudillo re-institutionalized the

414 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 37. 415 Cf. Ley Constitutiva de las Cortes de 1942. [online], 17 July 1942, [Accessed 15 July 2017]. Available from:http://ficus.pntic.mec.es/jals0026/documentos/textos/leycortes.pdf 416 Cf. Fuero de los españoles [online]. 18 July 1945, [Accessed 15 July 2017]. Available from: http://www.boe.es/datos/pdfs/BOE/1945/199/A00358-00360.pdf 417 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 40. 418 Cf. Ley del Referéndum Nacional[online]. 22 October 1945, [Accessed 15 July 2017]. Available from: http://www.e-torredebabel.com/leyes/constituciones/ley-referendum-nacional-1945.htm - 105 - monarchy in Spain, declaring himself Regent to the throne, with the power to appoint its successor419 at his own discretion.

The Law of Succession also proclaimed the "Fundamental Laws of the Kingdom", grouping them all in the article 10. Clearly, in 1947, there were only five Fundamental laws but they were followed, on 17th May 1958, by the Ley de Principios del Movimiento Nacional and, on 1st January 1967, by the Ley Orgánica del Estado.

The Ley de Principios del Movimiento Nacional underlined the importance of homeland, family and religion for the regime (Patria, familia y religion) and it definitively established the replacement of the name "FET de las JONS" (Falange) with "Movimiento Nacional". The law reinforced the link between the State and the Catholic Church, explaining that the Spanish country would have followed God’s rules. The army received the task to defend the independence of the State and its unity and all people had to consider as most important the national good (superior to the individual one). At the end, the law confirmed the existence of the single party and the denial of political and social pluralism420.

With the Fundamental laws of the Nation, Franco was trying to realize the project of "organic democracy": the rise of Catholics in power, the "de-fascistisation" of the regime421, the criticism of Nazi’s racism and anti-Semitism (which arose during the War) and the popular support through referendums changed the appearance of Francoism not only within the country but also in the eyes of Western powers. The United States and Great Britain interpreted Spain as an organic democracy: General Franco became an excellent intermediary in anti-communist terms, because he conceded to the United Kingdom and to Americans to create strategic bases in his State (useful to limit the expansion of Soviet influence and to contrast the enemy).

In 1947422, the beginning of the Cold War favoured Franco's persistence: until 1948, some countries (as France, the USA and the United Kingdom) preferred to avoid the Iberian country, augmenting its isolation and its economic problems. France reopened the borders on 10th February 1948423 and in May, together with Great Britain and Italy, it signed a trade agreement with Spain. In 1949, even if the country was still excluded from NATO, from the

419 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 52. 420 Cf. Ley Orgánica del Estado, n. 1/1967 [online], 10 January 1967, [Accessed 15 July 2017]. Avaialble from: https://www.boe.es/buscar/doc.php?id=BOE-A-1967-5 421 All fascists symbols had been eliminated, while Franco’s catholic and transcendental aspects began to be common in everyday life (an example was the inscription “Caudillo por la gracia de Dios” engraved on coins from 1947). 422 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 274. 423 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 56-57. - 106 -

UN and from the Marshall Plan aids, the United States decided to grant loans to promote its economy. In the summer of 1950, following the outbreak of the Korean War, the American approach to the Spanish State began to be even friendlier and the UN General Assembly decided to cancel the removal of ambassadors (adopted four years before). With this new opening, Spain was admitted to FAO and UNESCO424.

The end of isolationism came after two agreements: the Concordat with the Vatican (27th August 1953) and the agreement with the United States of America (26th September 1953).

The Concordat with the Vatican accredited the confessional image of the regime on an international level, recognizing Franco's new peculiar National-Catholic regime. Caudillo himself was sacred and, in January 1953, Pope Pius XII granted him the highest honour of the Papal State425 with the honorary title of the Supreme Order of Christ. The recognitions of the Church to the Spanish State continued in May 1954, when Generalìsimo received the honorary degree in canon law for his Christian spirit and his religious influence in legislation.

The agreement with the United States of America allowed Americans to use naval and military bases in Spanish territories: this was necessary to ensure to Franco the political, economic and military support of the most powerful country in the world. The treaty recognized the Francoist regime securing to Caudillo the continuation of his regime. The legitimacy of Franco's power, according to the US, had two solid foundations: the first was the victory of the Alzamiento, the second was the consent of Spanish citizens, who legitimized the power through national referendums426 announced by Franco. The problems between the USSR and the US pushed the American President Dwight Eisenhower to break Spanish isolation during his visit to the Iberian country, demonstrating the new harmony by exchanging a sincere hug with Franco (in 1959).

The highpoint of the new friendship between Spain and the Western powers took place in 1955, when even the UN General Assembly agreed to accept the new European ally as a member of the organization.

In this period, the only defeat for the regime was the forced decolonization of Morocco, which occurred in 1956. Spain lost its North African colonies427, keeping only the territories of Ceuta, Melilla and Ifni. Franco tried his best to regain the glories of the old Spanish empire, but he was ruling in a period characterized by strong independent movements and by the

424 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 43. 425 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 44-45. 426 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 44-45. 427 Ibid., p. 46. - 107 - general decolonization. He understood that the circumstances were too negative for the pacific continuation (and enlargement) of the empire428, so he decided to avoid expensive military campaigns in Africa, giving the independence to the Morocco without opposition. This policy had two main benefits for Spain: the country had not to fight an expensive conflict in the colonies and, on more, the decision made satisfied the international powers.

In the early ‘50s, despite of the new positive international relationships, the Francoist economy had still serious problems: the income per capita429 was below the level of the ‘30s (because wages had decreased), agricultural production had dropped, industry was in crisis and the whole economy was blocked by the State intervention (while black market was more and more growing). The government was deeply worried about the low level of investment in the economy and about the need to carry out a national industrialization plan: this explains why, in that period, the process of industrialization had begun in the country430. Workers’ malaise was rising and they organized various waves of strikes, firstly in Barcelona and then in Madrid and in the Basque Country. The government, however, decided always to stop the demonstrations using the army and this decision prevented the spread of dissatisfaction.

The autarchic period (of Fascist inspiration) ended in 1949: the alliance with the US started an opening process that ended the period of isolation. The change happened in a gradual way: Franco always avoided drastic variations of direction431 and he always controlled not to marginalize any of the forces that were supporting his regime. The Ministry of Foreign Affairs was the constant indicator of the group exercising the greatest influence on the government, so it was not permanently assigned to any faction. In any case, some faithful Franco’s collaborators432 (particularly close to him, such as Carrero Blanco, Lòpez Rodò and Navarro Rubio) played an important role for the whole regime.

The sixth government of the Francoism, created by Caudillo in July 1951, acted decisively in the agricultural sector: the new Agriculture Minister Rafael Cavestany wanted to abolish the State intervention and then he raised the prices of agricultural goods (to make works in the

428 Until 1956, reminders to Imperial Spain were evident and continuous. In November 1939, Franco instituted the Consejo Superior de Investigaciòn Cientìfica (in order to reach the cultural goal of restoring the classical and Christian vision of the seventeenth-century sciences) and he worked to build relationships with South America, to bring Spain back to the role of "spiritual guide" of those countries. 429 The Spanish growth would have been reached only in the following decades. While between 1950 and 1959, despite a great effort of public investment, the GDP per capita less than doubled, between 1960 and 1975 it almost tripled. The Spanish GDP per capita was 30% of the US one in 1950 and, in 1970, it reached 50% of the US value. 430 M. Santamaria Monturiol, Monturiol M. S., The transformation of the Spanish economy: a success story of economic transition, 2015. 431 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 64. 432 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 47. - 108 - countryside more profitable). It also established colonization and afforestation plans to increase production and modernize rural areas (even introducing new irrigation methods). These political decisions increased the cultivated lands and the productivity of fields. On more, the government acted a recovery of the industrial sector that helped the GDP to grow, finally reaching a national GDP higher than in the ‘30s. From 1940 to 1950, the pace of growth was 1,9%, while from 1950 to 1958 it became 7,8%. The development was boosted by new imports and the trade liberalization led to a significant increase in demand for imported products (such as fuels and raw materials). The value of imports between 1951 and 1957 increased by more than 100%433: they grew from 427 million to 862 million dollars. The effects of the new collaboration with the United States were very positive (also thanks to 1.500 million dollars sent by the USA in donations or loans to Spain).

The rationing of basic products ended only in 1950434. The economic recovery of the ‘50s and the decision, taken by the Minister of Labour José Antonio Giròn, to raise wages of 25% contributed, in the ‘60s, to the creation of a strong inflationary tendency in the country. This tendency caused problems also to entrepreneurs (who had already to overtake the difficulties to start a firm, very high in Spain during this period) because, when there are fixed costs to pay435, a high volatility in inflation could create negative profits. The new government436 (the eighth Francoist one), named in February 1957, had to find a solution to this problem: it was an executive formed by technocrats (coming from the Opus Dei)437. They were responsible for the State administration, for the economic policy and for development plans until 1973; their legitimacy in exercising power derived from their technical-juridical-economic knowledges. The government of the technocrats had to solve the problem of the coexistence of some autarchic elements, now obsolete, with the liberalization measures of 1951.

The first political change implemented was an important administrative reform with the Ley de Régimen Jurídico de la Administración del Estado on 26th July 1957. The public administration was renewed and made much more efficient. Spending increased from 10% of the national GDP in the ‘50s to 20% of GDP in 1975, increasing investment in infrastructure,

433 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 65-67. 434 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 56. 435 M. Santamaria Monturiol, Monturiol M. S., The transformation of the Spanish economy: a success story of economic transition, 2015. 436 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 70. 437 It is a personal prelature of the Catholic Church. It was founded on 2nd October 1928 by Josemaría Escrivá. Following the Genesis (which states that human being is made to work), Escrivá considered the work as a primary way to meet God. The members of Opus Dei did not have to act in groups but individually, with their own freedom and responsibility. Opus Dei is therefore not a closed organization. The believers, just because they must sanctify themselves in the world, always cooperate with all the people they are in contact with through work, leading an active participation in civic life. - 109 - in State universities (which lived an exponential increase of students, from 76.500 in 1960 to 205.600 in 1970), in primary education (made generalized), in health care (which came to cover 80% of the population)438 and in and some economic sectors that were underdeveloped (like manufactures and energy sectors). In comparison with the model in force before the technocrats’ government, spending for the Armed Forces was reduced and the influence of the Army, of Falange and of the Church in the political management of the country decreased.

That happened because the former representatives (selected at Caudillo's discretion) were joined by more technical and specialized figures (the number of officials increased and objective criteria were put in public entrance exams). On more, the technocrats understood that the previous public investments were causing high level of inflation, depressing private initiative and reducing the growth in productivity: it was necessary to introduce financial discipline in the national budget, to stabilize inflation, to reduce the distortions439 and to increase the participation of the private sector in the economy (creating a better environment of economic competition). The private investors started to be concentrated in the service sector and their boost to the Spanish economy would have become indispensable after a few years.

At the end of 1959, thanks to the Liberalization and Stabilization Plan, the Spanish economy grew faster than the average of other Western European countries. With the plan, the technocrats wanted to eliminate economic nationalism, protectionism and State interventionism (characteristic of the previous autarchic period) to create an economy market- based and the opening of Spain to international trade and foreign investments.

The economic growth was obtained thanks to some important policies, as the ones acted to increase revenue (augmenting the tax base through indirect taxes440), to limit public spending (within a maximum of 80 billion pesetas) and to eliminate the right to obtain advances on government securities. The government changed also legislation regarding foreign investment in Spain: any company (except for the army, the information and public services) had the possibility to be owned up to 50% by foreigners (with exceptions that even reached 100%). The government set a new exchange rate (for the peseta) with the dollar, increasing from 42 to 60: this decision boosted exports and restricted imports. In order to avoid other inflation,

438 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 71. 439 M. Santamaria Monturiol, Monturiol M. S., The transformation of the Spanish economy: a success story of economic transition, 2015. 440 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 75. - 110 - wage increases were bound to a real increase in productivity441. In addition, in January 1963, a decree allowed the freedom of installation, expansion and transfer of foreign companies into Spanish territories and, in 1964, a Plan stimulated private investment through public investment.

The results of the new economic policy were the definitive end of autarchy and an intense rise in national GDP of 7% per year, from 1960 to 1974, while international currency reserves augmented from 199 to 1.045 million dollars442 (from 1960 to 1962) and the budget deficit disappeared. The deflationary policy of the Plan eliminated inflation443 and did not increase unemployment, even because 1.5 million Spanish (from 1960 to 1972) moved to France, Switzerland and Germany for their strong demand for labour. Emigration was for the Spanish economy both a solution to an inability to meet all the new job demand and another boost to growth: emigrants (often men who left their families in the homeland) went to work abroad and then they sent the remittances to their native country. The value of earnings sent to Spain by emigrants is estimated around 720 billion dollars444 (in the period 1960-1974). Thanks to the economic development, the country lived the so-called Desarollo, which allowed the birth and development of a dominant bourgeoisie, the basis of the future democracy. Spain enjoyed the second highest growth rate in the world (the first one was in Japan) and it became the ninth World Economy, just after Canada.

In that period, the country had a strong industrialization and an evident urbanization: the secondary sector surpassed the production of the primary sector and a great part of the new manufactured goods was exported. In addition, the density of urban population increased from 52% in 1950 to 66,5% in 1970445. For this reason, exportations increased their value from 44 billion pesetas in the ‘60s to 479 billion in 1975. Clearly, workers in the primary sector (mainly in agriculture) constantly declined, ranging from 5.4 million workers in 1950 to 4.9 million in 1960 (41.6% of the active population) and then falling to 3.7 million in 1970 (29.1% of the total workforce)446. The rural exodus was indispensable both for industrial development447 and for ending traditional agriculture (which was modernized): the lower

441 G. Di Febo, J. Santos, Op. Cit., Ibid, p. 76-77. 442 Ibid, p. 78. 443 L. Prados de la Escosura, J. Rosés, I. Sanz Villarroya, Stabilisation and growth under dictatorships: New lessons from Franco's Spain, 2010. 444 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 83. 445 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 57. 446 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 79-81. 447 In 1972, manufacturing contributed more than 75% of total industrial income and industries of transport, construction materials, chemicals and basic metallurgy recorded the largest gains. Capitalist good industries had a good growth, mainly the ones occupied in automobiles and machine tools markets. - 111 - demographic pressure increased wages, so for landowners it became profitable to invest in modern technology. The modernization of agriculture caused an increase of the demand for industrial products for agriculture, such as fertilizers and herbicides, changing also the land use system (from massive use of workers to general use of technology). The spread of tractors increased considerably: from 56.800 vehicles in the ‘60s to 500.000 units in 1980448. This resulted in a significant increase in productivity, followed by an increase in farmers' income (1,7% per year from 1964 to 1973). While in the previous year, people diet was based only on cereals, legumes and vegetables, the Spanish population (from the ‘60s) began to consume double quantities of meat, fruit, milk and eggs. The great industrial development permitted to increase a lot the production of cars, ships, industrial vehicles and machine tools (in 1972 they were respectively fifteen, seven, five and fourteen times higher than in 1960)449; the growth period was particularly favourable even for industries which incorporated into their production processes new sophisticated technologies.

Table 2: Industrial productivity levels per The Francoist Spain was experiencing a inhabitant in 1960. period of general euphoria: the economy was growing strongly thanks to new agricultural technology, new industrial plants and remittances coming from abroad (mainly from the United States, Switzerland, Germany, Great Britain, France, Italy, the Netherlands, Belgium and Sweden). Generally, the Desarollo was Source: S. Lieberman, Growth and Crisis in the Spanish Economy: 1940- 1993, Routledge, London, 2005, p. 141. characterized by a rapid increase in the productivity of the Spanish industrial labour (8,4% per year, a great result compared to the growth rate of 4%-6% in the other Western European countries): these productivity gains were made possible by expanding imports of capital goods450, permitting the modernization of already existing industries and the creation of new ones451.

In addition, Franco's anti-communism (he was defined the centinela de Occidente) and his alliance with the Western countries made large foreign capital flows into Spain. In the years

448 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 82. 449 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 139-142. 450 Spanish imports of capital goods were paid by the growing net earnings from tourism. 451 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 143-145. - 112 - of the boom of European capitalism, crowds of tourists452 visited the south of the country, while the industrial triangle Madrid-Barcelona-Bilbao was constantly increasing its population (from 1956 to 1973, because from 1939 to 1956 Franco had interrupted the urbanization process trying to repopulate the campaigns). New middle classes went to those cities and they changed the metropolis, continuing the process of creating ensanches (urban extensions)453.

On 14th December 1966, Caudillo programmed a national referendum for the last Fundamental law promulgated during his governments: the Ley Orgánica del Estado. Almost the totality of voters (95,6%) answered positively to the referendum, so on 10th January 1967 the law became effective. This law modified the text of the six previous Fundamental Laws of the Nation (eliminating the fascist and Catholic vocabulary) and it is focalized on the description of the functions, attributions, and relationships of the various State organs. The Organic Law of the State defined Spain no longer as a Catholic, social and representative monarchy but as a "supreme institution of the national community"454. Franco remained the only possessor of the legislative power and he even exercised the executive one; considering that he had a strong influence on the judicial power and the power to grant amnesty, some historians defined him a sort of absolute king. In addition, the law prescribed that after him the powers of the Head of State and the Head of Government would have been separate. The Head of State would have been named by Franco, while the Head of Government was to be appointed by the Head of State from a list prepared by the Council of the Kingdom.

Political parties were forbidden and their illegal existence was considered a crime sanctioned by the Criminal Code; association and reunion rights were only legitimate if exercised inside the structures of the National Movement, strikes continued to be illegal (the penalty was the detention) and freedom of expression was subject to the rules of the Press Law.

3.6 The end of the Francoism

Already from the ‘60s, Franco began to intervene less in purely political issues. Economic- administrative questions were requiring technical solutions that were hardly understandable for Caudillo, who in 1962 was 70 years old. In the early ‘70s, the crisis of the regime became evident: it was a deep crisis, which lasted until the death of Generalìsimo (and which led the

452 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 234. 453 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 84. 454 Ibid., p. 72-73. - 113 - regime itself to the end). The weakness of the regime was caused by several factors and it followed the process of physiological decay in which the dictator was, at that time near to the 80 years of life455. On 29th October 1969, the vice-President of the government, Carrero Blanco, created the "unicolour government": he had decided to generate a strong and disciplined executive without internal divisions, thus giving a vast majority of ministries to the technocrats of the Opus Dei. Actually it was not a good decision, because the new government excluded the most important forces that were supporting the regime (Church, army, monarchists and National Movement), so it faced insoluble problems456 and it caused a struggle among these old privileged factions (as the tensions between National Movement and technocrats and between the government and the Spanish church).

Meanwhile, internal oppositions were increasingly organized and composed by workers, academics and independents: the censorship (also if reduced), the catholic rules and the limit imposed by the regime were more and more inadequate in a country that was living a strong economic growth and an international openness. This was added to the opposition of the Movement (silently expelled from the power) and to the strong independent sentiments in Catalonia and in the Basque Country (where, in 1966, the terrorist and secessionist organization ETA had begun its armed attacks).

In 1973, Franco decided to leave the head of the government at Carrero Blanco, who took advantage of it to create a new executive. The new government limited the number of Ministers linked to Opus Dei by re-entering the representatives of the Movement among Ministers (trying to solve the problems caused by the unicolour executive). This experience ended on 22nd December 1973, when the ETA killed the Head of the Government Blanco457, during a terrible attack: his car was blown up and the admiral died after some hours in the hospital. This tragic end terminated also the project prepared by López Rodò, who was trying to concentrate in the hands of the future king the legislative power as it was with Franco (according to the Organic Law of the State). In January 1974, Franco formed a new government, led by Carlos Arias, which was deprived of Opus Dei Ministers. The new executive wanted to maintain the regime, ensuring a controlled openness to democracy, seen as needed by everyone (including Juan Carlos, the heir to the throne named by Franco in 1969).

455 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 49. 456 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 100. 457 L. Bruni, ETA: historia política de una lucha armada, Txalaparta, Tafalla, 1993, p. 166-167. - 114 -

Generalìsimo, in the last years of his life, had lost his tenacity in managing power458. His last appearance on the balcony of the Royal Palace in the Plaza de Oriente took place on 1st October 1975. A few days earlier he had sentenced five ETA terrorists to death (causing internal strikes and international disapproval)459. In 1974, Caudillo's health suffered a severe worsening caused by a thrombosis (which was added to the Parkinson that was troubling the dictator for some years). In that worrying situation, Franco temporarily left his power to Juan Carlos, being urgently hospitalized. As soon as he recovered, he returned to power despite his obvious weakness. At the end of September 1975460, his health began to get worse again: on 15th October, he suffered a severe heart attack that was followed by a severe digestive disorder. Franco's agony lasted more than a month: at the beginning of November, while he was hospitalized in Madrid, his conditions were ruinous. He died in the morning of 20th of November 1975 at the age of 82, after 39 years of dictatorship. He was buried in the Valle de los Caidos461, inside the altar of the basilica (in front of Josè Antonio Primo de Rivera’s grave).

Two days after Franco's death, Don Juan Carlos of Bourbon, on 22nd November 1975, became the new Head of State, proclaimed king following Caudillo’s will and the rules contained in the Law on Succession in the State Command462. Until that day, the prince Juan Carlos had remained discretely in the background, following the model of Franco. The disappearance of Caudillo, however, allowed him to facilitate the introduction of a democratic political system in the country avoiding violent revolutions.

While the Francoism was ending, the best economic period for the country ended too. From 1960 to 1974, the Spanish economy grew of 7% per year (except in 1967 and in 1970, when the economy improved “only” of 4%) industrial production augmented of 10% (the best growth in the world after Japan) and foreign investments had a strong expansion, from 3 billion in 1960 to 65 billion in 1973. From 1968, the exportations volume was a few higher than the importations one (it multiplied by six from 1959 to 1973) and this particularity exposed the country to eventual problems linked to the world economy. In the last years of the regime, the foreign investments were becoming more and more important for the trade

458 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 50. 459 Viola S., Franco: la lunga agonia del dittatore, La Repubblica [online], 18 November 2005, [Accessed 5 August 2017]. Available from: http://ricerca.repubblica.it/repubblica/archivio/repubblica/2005/11/18/franco-la-lunga-agonia-del-dittatore.html 460 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 51-52. 461 It is a monument built near Madrid for Franco’s will, from 1940 to 1958, inaugurated by himself in 1959. It was conceived for the burial of 33.872 soldiers of both factions of the civil war. 462 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 102-103. - 115 - balance (they were about 6.000 million dollars)463. The production of cars passed from 23.500 unities in 1957 to 700.000 ones in 1973, while the production of home appliances multiplied on average by eight from 1960 to 1968. The country was having problems only with technologic goods, that were mostly imported (but the tourism covered 80% of these expenses, from 1966 to 1973).

In 1960, the first sector was occupying 39,8% of workers, the secondary sector 28,6% and the tertiary 27%; in 1970, the development of the secondary and tertiary sector absorbed employees from the primary sector, so the agriculture rested with 24,9% of workers, the industries with 37,3% and the services with 36,5%. The trend continued during the ’70s, in fact in 1975 the first sector had 21,9% of the workforce, the secondary 38% and the tertiary 40,1%.

The 1973 oil crisis caused economic problems in the whole Europe: in 1974 and in the following years, the tourism decline and many emigrants (who had been to foreign country to work in the past) come back to Spain, clearly ending the transfer of remittances. The country was already suffering a strong inflation that had begun in 1971 (in 1973, the prices of common goods grew of 11,4%) and, in 1973, oil was 70%464 of the primary energetic products used: in that situation, an augment of the cost of oil of 500% in one year caused a strong stress for the Spanish economy. In 1977, the inflation reached 30%: the economic crisis was worsened by the political crisis, which prevented the creation of a policy to limit the market demand. Workers organized a series of strikes to obtain higher wages (at least higher than the inflation) but the wage increases augmented the inflation again, causing also an internal impoverishment. Industrial wages grew of 287% from 1964 to 1972 (while the cost of living grew of 70%) and the per-capita income passed from 300 dollars in 1960 to 2.000 in 1973. Thanks to this increase, the Spanish per-capita income was 50% higher than the Portuguese one.

Clearly the country had a strong economic development, but it was not equilibrated and richness was distributed unequally465. The State had not an adequate tax system, so it could not finance infrastructures useful to limit illiteracy or inequalities. This was the economic

463 C. Adagio, A. Botti, Storia della Spagna democratica: Da Franco a Zapatero, Mondadori, Milano, 2014, p. 32. 464 G. Di Febo, J. Santos, Il Franchismo, Carocci editore, Roma, 2014, p. 108. 465 Cf. F. Alvaredo F., E. Saez, Income and wealth concentration in Spain from a historical and fiscal perspective, in «Journal of the European Economic Association» vol. 7, n.5 (2009), p. 1140-1167. - 116 - background in the years during which the king Juan Carlos466 began to lead Spain towards the Transición democrática.

466 P. Preston, La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009, p. 235. - 117 -

- 118 -

4 Czechoslovakia

4.1 The economic situation before 1938 and the Nazi occupation

Czechoslovakia was born after the First World War, on 28th October 1918, from four territories that belonged to the Austro-Hungarian Empire: Bohemia, Moravia, Slovakia and Subcarpathian Ruthenia. On 18th November 1918, the National Assembly adopted a provisional Fundamental Law, choosing as President Tomáš Garrigue Masaryk who named Karel Kramář as Head of the provisional government.

On 29th February 1920, the National Assembly approved a definitive Constitution. The new Constitution was elaborated taking example from Constitutions of already established Western democracies; for this reason, Czechoslovakia resulted a democratic Republic too. Masaryk was elected as first President. He was re-elected in 1927 and 1934467 (obtaining a derogation from the law), continuing his mandate until 14th December 1935, when he was forced to resign due to health problems and to his age. The new democratic Republic had a series of different parties and the most important were the socialist party, the communist party, the National socialist party, the Catholic party and the agrarian party (which represented the interest of large landowners and rich industrials).

The Parliament of the new Republic was elected from citizens with a proportional system, which allowed the existence of many small formations. Women had the same rights of men to vote and this particularity was one of the modern aspects of Czechoslovakia468. Clearly, the proportional system was a warranty of democracy but it could have caused a political instability, perfectly avoided by the State institutions and its solid administrative organization (inherited from the Habsburg Monarchy), that shown a great ability to give firmness to the political scenario. This goal was reached also thanks to the wide presidential powers that could compensate for the structural weakness of the system: the President had a strong influence and he played a first role in the State administration. Masaryk, before the war, was considered only an important charismatic political figure and a prominent intellectual, while after 1918 he became the symbol of the national independence. Sometimes he overcame the constitutional limit of its powers but he never undermined the democratic principles of the

467 G. Kovtun, Spirit of T.G.Masaryk, 1850-1937, Springer, Berlin, 1990, p. 20. 468 C. C. Bryant, Prague in Black: Nazi Rule and Czech Nationalism, Harvard University Press, Cambridge, 2007, p. 20. - 119 -

Fundamental Law, creating one of the most democratic State in the Central and Eastern Europe.

In the ’20, the national administration was reorganized using the old Habsburg management. The country was divided into four provinces (Bohemia, Moravia, Slovakia and Ruthenia) and then divided into districts. The various districts were ruled by officials chosen by the government, while the control of the four provinces (which corresponded to the historical regions) was entrusted to a president named and controlled by the Interior Minister. This organization worked efficiently and helped to give stability to the country.

Geographically, the new State had restricted dimensions, with only about 15 million inhabitants and a territory landlocked469. Nevertheless, it was one of the ten most industrialized countries in the world (in the ‘30s). The territory of the new Nation included some of the most industrialized regions of the former Austro-Hungarian Empire470: the 70% of companies, belonging to the old Empire, became part of the Czechoslovakia (in those areas, the employment rate in the secondary sector was reaching 39%)471. In this way, the State had a florid economy based on some industrial products who rested the base of its wealth for centuries (as porcelain, cars, trains, beers, sugar, alcoholics and machineries). Clearly, the various companies were not homogeneously split in the whole areas: they were mainly concentrated in the two western provinces (in Bohemia and in Moravia, which used to produce for a market of 67 million people), while the eastern parts of the country (Slovakia and the small part of Ruthenia) were poorer. In Bohemia, Moravia and Silesia, 39% of the population was employed in the secondary sector and 31% in agriculture; in Slovakia, people were employed mainly in the primary sector (the agriculture occupied 57% of workers, while the industry less than 20%). The Subcarpathian Ruthenia was still more focused on agriculture (almost the totally of employees were working for the first sector): for this reason, the economic gap among the various regions was evident and, in the case of Slovakia, it caused great problems for the unity of the Republic.

The industrial plants in Czechoslovakia were 720.000, with variable dimensions: only 2,2% of them were employing more than twenty workers, while seven big companies472 were producing 90% of the coal of the State and one factory mined almost the totality (99%) of the

469 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 97. 470 Considering that Czechoslovak industries, during the Empire, were producing for a population four times larger, it is easily explainable the Czechoslovak trend to augment the exportations of processed products. 471 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 12. 472 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 101- 103. - 120 -

National iron. In 1929, the secondary sector was producing 38,8% of the total GDP, while in 1939 it represented 44,7% of the gross domestic product. The employees in the secondary sector were organized in free syndicates and they were enjoying a quality of life superior to the farmers’ one. In addition, the country had an advanced workers’ protection system and a modern social welfare: already from December 1918, a law imposed the working day of eight hours (instead of the previous eleven), night jobs were forbidden for women and children, unemployment benefits were provided, pensions were introduced and health care and paid holidays were guaranteed.

The depression of 1930-35 caused a decline in GDP of 18.2% but the western provinces continued to increase their industrialization and their international competitiveness473, thanks to a series of positive factors: new industries were born in Bohemia and Moravia, exportations augmented and Slovakia (still with less developed industries) was a perfect supplier of labourers for Czech territories and a source of cheap agricultural products474. The eastern part of the Republic, in fact, was evidently underdeveloped: Slovakia was not considered a region where to invest to open factories because the territory was poor of coal, the transport system was undersized (its infrastructures were a half of the Bohemian one), rural people was particularly poor and there was not a sufficient internal market475.

Despite of the economic differences, the most important problems were caused by the different ethnic groups who had to live together in the new State. Considering that Czechoslovakia was created after the Treaty of Versailles, this instance might seem impossible. The winners of the First World War used the principle of self-determination as criteria for the post-war division of Europe. Following that principle, the territories and the boarders of the European States should have been based on the free acceptance of the peoples interested and on the principle of nationality (according to Wilson's statement476, it should have met the national aspirations of peoples, avoiding old or new ethnic problems that could have undermine peace in Europe again). In the case of Czechoslovakia, the principle of self- determination had been disregarded: the annexation of areas where Czechs were only a minority had been demanded and this had been justified as a compensation for the impossibility of reunite all Bohemians who lived in areas too far from the borders.

473 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 13. 474 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 98. 475 Ibid., p. 127. 476 S. Gupta, Dynamics of Human Rights in the US Foreign Policy, Northern Book Centre, New Delhi, 1998, p. 60-61. - 121 -

The largest ethnic groups in the country (Germans, Slovaks, Hungarians and Polish) were unsatisfied by the governmental policies: they complained about the Czech economic and political domination. In fact, the strong nationalism of the western regions was a fundamental characteristic of Czechoslovakia. Kramář and Tusar (the first two Prime Ministers of the State) tried to impose the Czech model all over the country (sending Czech bureaucrats in all the regions to manage the public institutions), at the expense of the rights of other ethnicities nationalities in the State477. This political goal had consequences even in the economic sphere (the nationalization of German-controlled companies was a clear example). On the contrary, the President believed that, to consolidate the bases of the State and to avoid rivalries between the various groups, it was indispensable to create a policy of reconciliation among nationalities.

The Czech ethnicity represented only 51% of the total population; Slovaks were 14% of the inhabitants and the largest minority was the German one (formed by 3 million of citizens). The Hungarians and the Ruthenians represented respectively 6% and 4% of the population. Jews and Poles formed the last two minority groups. The idea of a Czechoslovak nationality and political theory (that identified Czechs and Slovaks as two components of a single national group) was necessary to strengthen in the State the numerical supremacy of the slave population of similar ethnicity, reaching about 70% of the totality478. The old Austria- Hungarian Empire had always had an overwhelming supranational character (despite the dominance of the German element), without identifying itself with any of the nationalities included. Czechoslovakia, on the contrary, considered itself a national State and this difference created the most crucial complications.

Many citizens, belonging to the German or Hungarian community, never accepted willingly the creation of the new State, while all these ethnic groups had always the perception of being disadvantaged (also because the central government never allowed a political autonomy for the various ethnic groups). The State tried the same to adopt advanced liberal policies to find a solution for the socio-economic problems and it demonstrated a great political vision. It gave to all ethnic minorities a series of extended rights (as the freedom to use the own language and to work in public offices), it introduced free elementary education in Slovakia

477 C. C. Bryant, Prague in Black: Nazi Rule and Czech Nationalism, Harvard University Press, Cambridge, 2007, p. 21. 478 J. Rotschild, East Central Europe between the two World Wars, University of Washington Press, Washington, 1974, p. 89. - 122 -

(to reduce decisively illiteracy) and it promoted an agrarian reform479 (already on 10th November 1918).

The goal of the agrarian reform was to divide properties that were bigger than 150 hectares (for agricultural fields) or 250 hectares (for general fields, so including also forests). That policy had a strong impact in Bohemia and Moravia: their agriculture had already developed (at the level of Germany) and the reform redistributed a series of fields to middle landowners. Unluckily for the government, the agrarian reform had not good results in Slovakia, were the large estates continued to exist. From 1918 to 1937, the reform interested 10% of all agricultural fields and 18% of forest areas480; 1,2 million people had asked for a portion of land but the law had been able to please only a half of them.

Until 1935, Czechoslovakia had stable governments and majorities. The various parties had divided for political, religious and social principles and there were no coalitions: for this reason, at the beginning, the socialist party and the communist party had the majority necessary to lead the State while, in the following years, the agrarian party began to obtain more vote than the oppositions. From 1935, the Sudetendeutsche Partei (Sudeten German Party)481, founded by Konrad Henlein, began to obtain almost the totality of votes of the German electorate in the country. In the same year, the government had to face an economic crisis and a period of recession, while Slovakia was displeased by the strong political centralization in Prague and by the Czech bureaucrats employed in Slovakia instead of natives. Slovaks complained of their exclusion from the life of the State, because in their region the recruitment procedures of State officials favoured bohemians. During the empire, officials in Slovakia had been Hungarians and, with the beginning of the Republic, the government substituted them with Czechs, explaining that natives were not politically and culturally adequate to manage public offices, so it was necessary to replace them with Czech experts (while Slovaks would have had the necessary time to learn the technics and to take the indispensable qualifications)482.

The situation for the country became dangerous after the Anschluss of 12th March 1938: Germany started to require the annexation to its territory of Czechoslovakian Sudetenland. That area was inhabited mainly by German speaker people and Hitler supported its

479 J. Krejcí, P. Machonin, Czechoslovakia, 1918-92: a Laboratory for Social Change, Springer, Berlin, 1998, p. 152. 480 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 99. 481 G. Capoccia, Defending Democracy: Reactions to Extremism in Interwar Europe, JHU Press, Baltimore, 2005, p. 39-40. 482 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 106. - 123 - requirement affirming that they were discriminated by Czech citizens483 and that his will was completely in accord with Wilson’s Fourteen Points.

On 15th September 1938, Hitler met Chamberlain to ask for the annexation of the Sudetes to the Third Reich, under threat of war. Following the policy of appeasement484, the English and the French governments agreed. The Czechoslovak government resisted, arguing that Hitler's proposal would have ruined the economy of the whole nation and, in addition, it would have led to German control all Czechoslovakia: the area was of immense strategic importance for the Republic, both for defensive and economic reasons (some heavy industrial districts were there).

The United Kingdom and France issued an ultimatum and on 21st September Czechoslovakia capitulated. The capitulation caused the indignation of the Nation: people demanded a strong military government to defend the integrity of the State and the new government, led by General Jan Syrový, on 23rd September prepared the Czechoslovak army to fight. The new President Edvard Beneš (the successor of Masaryk), however, refused to go to war, because western powers would have not supported him.

To resolve the dispute peacefully, Chamberlain organized the Munich Conference, on 29th- 30th September 1938. Only the United Kingdom, France, Italy and Germany received the invite for the conference485: Czechoslovakia had been neither invited nor consulted. At the end of the meeting, the participants granted Germany the occupation of the Sudetes and Czechoslovakia had to surrender. In exchange for the territorial loss, the United Kingdom and France promised to create an international guarantee of the new Czechoslovak frontiers against illicit attacks. On 5th October, Edvard Beneš resigned as President of Czechoslovakia, realizing that the occupation of the whole State was unavoidable. On 2nd November 1938, the young Republic lost also the southern part of Slovakia (one third of the Slovak territory) in favour of Hungary, after the First Vienna Award.

In the while, after that Beneš resigned, the Second Czechoslovak Republic486 was born and its new and only President was Emil Hácha (in office from 30th November 1938 to 14th March 1939). The Second Republic was clearly weaker than the first one: Bohemia and Moravia had lost about 38% of their territories in favour of Germany (inhabited by about 3 million of

483 O. Pinkus, The War Aims and Strategies of Adolf Hitler, McFarland, Jefferson, 2005, p. 32-34. 484 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 211. 485 E. Goldstein, I. Lukes, The Munich Crisis, 1938: Prelude to World War II, Routledge, London, 2012, p. 101. 486 J. Krejcí, P. Machonin, Czechoslovakia, 1918-92: A Laboratory for Social Change, Springer, Berlin, 1998, p. 28. - 124 -

Germans), Hungary received 11,882 km² of southern Slovakia (with the entire Subcarpatian Rutenia) and Poland occupied the city of Český Těšín and other two smaller Slovakian border areas. At that time, the country had no natural defences and the government decided to move all its soldiers from the western part of the State to the east: it was an extreme strategy to try to block the Hungarian expansion. In addition, the new ruling party (the Agrarian party of Rudolf Beran, Prime Minister from December) introduced a pressing censorship and a law permitted to the government to legislate without the Parliament.

Hitler planned a German invasion of Czechoslovakia for the morning of 15th March 1939. His will was to create a Protectorate of Bohemia and Moravia487, while Slovakia would have been independent and ruled by the priest Jozef Tiso (leader of the Slovak Popular Party): for this reason, on 13th March, he met Tiso to purpose to him the Slovak independence. The day after, Bratislava proclaimed its independence. Solved the problems represented by Slovakia and by the Hungarian territorial requests, Hitler called the President Hácha to Berlin informing him of the imminent German attack. Threatening a bombing of the capital (Prague), Hitler forced him to order the capitulation of the Czechoslovak Army. On 15th March, the German Wehrmacht conquered Bohemia and Moravia without fighting. Hitler arrived in Prague on 16th March488 and he proclaimed the Protectorate of Bohemia and Moravia.

After 21 years, the history of Czechoslovakia ended, overpowered by foreign aggressions and internal conflicts. It was the conclusion of the democratic Republic surrounded by authoritarian States. Slovakia became an independent country and Bohemia and Moravia began to be a German protectorate. Germany wanted to conquer those two regions because its economy, strained by the strong militarization, urgently needed foreign currencies. He set up a high exchange rate between the Czechoslovakian crown and the Reichsmark: in this way, the monetary system encouraged German citizens to buy foreign goods but it weakened the Czech economy489, creating poverty.

In 1939, the Protectorate was a strong Nation that owned important factories as the Škoda (producer of weapons, tanks, cars and artillery). The Nazis conserved in good condition both the workforces and the companies, even if their financial measures imposed to the State ruined its monetary resources. Then, they applied the racial laws also in the old federation, so

487 J. Scherner, E. N. White, Paying for Hitler's War: The Consequences of Nazi Economic Hegemony for Europe, Cambridge University Press, Cambridge, 2016, p. 348-349. 488 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 14. 489 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 107. - 125 -

Jews started to be persecuted490. During the Second World War, the Czechoslovak companies ended to produce for the internal market, converting their production for German needs. In addition, some of them (mainly chemical and steel factories) were dismantled and reassembled in Austria, in the city of Linz.

The autonomous Slovakia lived a period even more florid: the secondary sector expanded and the government never imposed the rationing of food (and the ration book). From 1944, the situation began to be critic even there, because in the eastern part of the country groups of partisans created a revolt against Tiso’s government491 and, in the whole State, the taxation and the requisitions increased decisively.

4.2 The liberation and the Third Czechoslovak Republic

After his resignations on 5th October 1938, Edvard Beneš (the last President of the First Republic) had decided to leave the country with a group of collaborators, creating the Czech National Liberation Committee. In October 1939, the Committee had become the Czechoslovak government-in-exile, recognized by France and the United Kingdom. Beneš was the Head of the State, while Jan Šrámek was the Prime Minister. Their goals were to obtain the independence of Czechoslovakia, to find a solution for the German minorities in the Sudetenland and to build good relations with the USSR. Ex-Czechoslovak citizens supported this government-in-exile and its friendship with the USSR permitted the signature of a treaty, on 8th May 1944, that ensured to Beneš the State control after the liberation.

From 21st September 1944, the Red Army (helped by the soldiers of the Czech and Slovak Resistance) began to attack the occupied Czechoslovakia to free it. Slovakia surrendered on 4th April 1939, while in the Protectorate the fights continued until 5th May 1945, when a revolt in Prague permitted to the USSR soldiers to conquer the city. On 9th May 1945, Czechoslovakia was again free.

While the Soviet army was advancing, Beneš and the political groups of the freedom movement approved a series of principles, contained in the Košice Program492, purposed by the communists as basis for the new government. It enshrined a close alliance between Czechoslovakia and the Soviet Union on foreign policy while, about domestic politics, it

490 C. C. Bryant, Prague in Black: Nazi Rule and Czech Nationalism, Harvard University Press, Cambridge, 2007, p. 50. 491 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 108. 492 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 15. - 126 - provided the nationalization of the most important industries and a wide range of reforms (focused on the problem of land and on the taxation and fiscal system).

Already on 4th April 1945, the Third Republic was born (with the capital city in Košice, changed in May for Prague): the new State had to face an economic situation surely in better condition, in comparison to other countries that had been forced to suffer the Nazi occupation. With the GDP per capita highest among all nations in Central and Eastern Europe after the war, the federation was on a par with many countries in Western Europe. The Czechoslovak GDP per capita, in 1948, still ranked 13th just after Belgium and France and before Finland, Germany and Austria493.

Despite of it, the war stressed the economy and caused poverty the same: some areas of the State (as the eastern part of Slovakia) suffered heavy destructions and, already in 1941, it happened a fall of production by 5% in comparison to 1939. The new government had to provide subsidies to recover the economy and the society, beginning a period based on self- sufficiency, Slavonic fundamentalism, State capitalism, nationalisation and State interventionism, because it understood that the situation was too bad to wait for private investments494.

All properties belonging to the Nazis' collaborators were confiscated without compensation: their lands were distributed to peasants and labourers, while their industries (16.4% of the entire Czechoslovak industry, which were employing 61.2% of the industrial workforce) were nationalized. In addition, the government had to take a decision to solve the ethnic problems: about 2,9 million Germans and 600.000 Hungarians were expelled from Czechoslovakia, with the approval of the Allies. When the State solved the problems linked with the emigrations, it distributed also properties that had belonged to Germans and Hungarians. The decisions about the management of these possessions derived directly from the Košice Program495: it sanctioned that German and Hungarian industries should have been put under the governmental control, as all the most important factories, the insurance and financial system and the energy sources.

In 1945, the country was ruled by a National Front coalition496, which included the three biggest parties: the Communist Party (KSČ), the Social Democratic Party and the National

493 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 494 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 109. 495 J. Bartl, Slovak History: Chronology & Lexicon, Bolchazy-Carducci, Mundelein, 2002, p. 256. 496 The National front was created to avoid the rebirth of the most popular party of the First republic Republican party (of peasant and farmers) and to catch its voters. - 127 -

Socialist Party. Beneš (leader of the National Socialist Party)497 had reached a compromise with the communists to avoid a coup after the war, trying to make the new Republic as link between Eastern Europe and Western Europe. The communists accepted the compromise and their leader, Klement Gottwald, continued his work to enlarge his party and to gain the power in democratic ways. Gottwald was facilitated by the popular enthusiasm that followed the Soviet liberation: people began to vote for the KSČ and the party gained a strong representation in the National Committees (the new local government bodies498, elected by citizens). Beneš had recognized these local bodies already in 1944 and, during the Third Republic, they had a great political importance (as the trade unions). In addition to the creation of National Committees, the government decided to exclude from politics the old upper bourgeoisie (considered traitorous), to purge the State apparatus499 and to create solid links with the Soviet Union.

In May 1945, the members of the KSČ were 27.000; after one year, they were more than one million. This strong popular support explain why the Communist Party won the national elections of 1946500, obtaining 40% of votes in the western regions (while, in Slovakia, the Democratic Party501 had 62% of preferences). Beneš continued his mandate as Head of the State, while Gottwald became Prime Minister. In October, the government emanated a decree502 to continue the nationalization of companies, interesting industries with more than 300 employees (and all mining, electricity and steel factories). The ex-owners received a compensation adequate to the market, while enemies or ex-collaborationists did not benefit from these payments. The effect of the decree was that about 60% of workers in the secondary sector resulted in nationalized entities503 and, already in 1947, only 30% of GDP was produced by the private sector. The nationalizations interested also land ownerships: the Local Land Committees managed the distribution of the confiscated fields in favour of poor classes even if only in 1947 the government worked for a new land reform504.

After the election of 1946, the communist party showed its intention to rule the State alone: their goal was to be the single party in the country after an electoral round won with a strong

497 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 110. 498 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 72. 499 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 111. 500 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 16. 501 In Slovakia, there was a large majority of Catholics, still coming from Tiso’s government. The Democratic Party gathered all communists’ opponents and that is why the party was in conflict against the KSČ. 502 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 113. 503 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 17. 504 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 116. - 128 - majority. In that way, the communists would have ruled without searching for agreements with the National Front505.

In July 1947, with the approval of the KSČ, the Czechoslovak government accepted the Anglo-French invitation for the preliminary discussions of the Marshall Plan. Gottwald would have needed the American helps but the Soviet Union imposed to him to refuse the cooperation506. After that moment, Czechoslovak policies started to be more influenced by the USSR: for this reason, the communists continued their work to nationalize the economy and, in January 1948, the Parliament promulgated the land reform and a new law for industries nationalization. The land reform limited private ownerships to 50 hectares (and to 0,8 hectares507 for people who were not direct growers), abolishing the rent of fields and reducing labourers. The reform to nationalize industries508 imposed the total public control in others industrial sectors; consequently, food factories, distilleries, beer companies and the pharmaceutic sector were nationalized and the State began to be the producer of 90% of the total Czechoslovak industrial production. The nationalization of small factories (with more than 50 workers) caused the problem of their instability: to make the small realities productive and efficient, the State decided to regroup509 and to merge them, creating bigger entities specialized in a particular productive branch. After the various mergers, the first 2.000 factories nationalized had been blended in 250 bigger entities. It is important to notice that, with the nationalization of all big factories, ex private industrial owner lost their economic and political influence. Then, there were questions linked with the localization of the production centres: the syndicates preferred not to move factories already set in undeveloped districts, therefore some of them were transformed according to their locations and nearness of natural resources, being managed from the local government.

The Program of Košice contained indications also to solve another great problem of the old Czechoslovakia: the Slovak question. Following the Program, Czech and Slovak should have created two different nations, at the limit included in a Czechoslovak Federation (creating two National Councils and one central government). The government followed the idea of the

505 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 80. 506 Stalin interpreted the Marshall Plan as a way to isolate his country, so he imposed to Gottwald to refuse it, respecting the treaty signed in 1943 (with which the two countries promised not to act against the interest of one of them). 507 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 122- 123. 508 The new nationalized factories had to be different from the old State monopolies existing after 1938. Laws about the nationalized industries explained that they had to be organized as public entities operating on commercial basis: State factories should have paid taxes and the country would have not covered their debts. 509 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 131. - 129 -

Program510 and a direct consequence was the substituting of Czech public officials in Slovakia with natives: it caused inefficiency but Slovaks were satisfied by their participation. With the Biennial Plan511 (begun in 1946), Slovakia received by Bohemia and Moravia some factories moved to give a job to 26.000 Slovakian workers. Considering that industrial workers in Slovakia were 140.000 and that the population was 30% of the Czechoslovak one, the improvement was important. About the workforce, workers received the same wage of Czech employees (even if in Slovakia the diffused black market was increasing the living cost), but the eastern part of the country was rich of unskilled staffs, while specialized workers were too few: for this reason, the government had to send again qualified personnel from Bohemia.

The Biennial Plan was particularly important because it contained the rules to adopt to recover quickly the economy after the war (solving all the problems within 1948). The Plan, approved by all Czechoslovak political parties, prescribed six goals to reach in two years512:

• The industrial production should have exceeded of 10% the level reached in 1937, reinforcing its ability to export, being more competitive internationally and hiring 270.000 more workers; • The agriculture should have obtained a production equal to the values of 1939 (and it was firstly necessary to repopulate Czech countryside and to introduce production machineries), giving a job to others 230.000 workers; • The building industry should have repaired or built 125.000 houses; • The transport system should have reached again the pre-war levels; • Regions particularly undeveloped513 (such as Slovakia and south Bohemia) should have been helped to improve their situation; • The “key industries” should have increased their production of 50% in comparison with the level of 1939. They belonged to four groups: industries producers of energy (coal, oil and electricity), metallurgical industries (iron and steel), producers of instrumental goods (material for railways, machines and tractors) and producers of consumer goods (mainly in the textile sector).

Evidently, these goals were particularly hard to achieve and the drought (that hit the country in 1947) made more difficult to have good results in agriculture and breeding (losing about

510 Ibid., p. 124. 511 T. Judt, Postwar: La nostra storia 1945-2005, Laterza, Roma, 2017, p. 242. 512 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 140- 143. 513 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 43. - 130 -

125 million pounds)514. At the end of the Plan, the standard of living of citizens got better, the agriculture improved its efficiency (but in a more modest way) and the building industry ended a half of the houses planned. The industrial production (mainly from heavy factories) satisfied completely the program, exceeding the target pre-set: the government considered it as a great success and it declared the goals of the Plan perfectly reached. It was a success also because the Biennial Plan had been conceived in a democratic way (all political parties, syndicates, professional organizations, Union of industrials and Union of labourers participated to its definition)515. In the same year, the State considered the reconstruction to be over and it elaborated the first Quinquennial Plan (from 1949 to 1953) to transform the economy in a planned model inspired by the Soviet communist economy516.

The nationalization plans, united with the agrarian reform, had a strong impact on Czechoslovak economy. The old large estates, bad managed, were finally better organized and exploited; woodlands were protected and reforested; Slovakia was beginning a solid industrialization and its workforce was gaining qualified personnel (thanks to the State decision to promote training courses and temporary migration of Slovak employees in Czech lands to learn a profession). Still in Slovakia, the new industrial settlements had the possibility to buy advanced machineries (while in Czech industries some machineries were on average 50 years old517) and, in this way, in 1949, the textile production518 of the region reached the 10% of the whole country. The government understood that Slovak territories were particularly favourable for textile, hemp and rayon factories, so its plan was to concentrate there 25% of those productions.

On 9th May 1948, the State voted a new pro-communist Constitution with which Czechoslovakia became a popular democracy519 (even if it did not change its name until the Constitution of 11th July 1960, when it assumed the denomination of Czechoslovak Socialist Republic). People interpreted this changing as the victory of low classes in their battle against upper classes, also because workers were declared co-owners of the socialist assets520. In reality, the government had to take this decision, because it was obliged by the new international relationships and by the USSR. This change ended the period of the

514 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 144- 146. 515 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 130-131. 516 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 23. 517 The government decided also to close some private companies with too old machineries (giving the same an indemnity to the private owners and even a subsidy when they were particularly poor). 518 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 134. 519 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 18. 520 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 132. - 131 -

“Czechoslovak specific way to the socialism”521, characterized by the nationalization decided in October 1945 and by the political plurality, even if the Socialist parties of the National Front (Communist Party, Social Democratic Party and the National Socialist Party) had always the necessary majority to control the country alone.

The Czechoslovak Socialist Republic was a popular democracy, constituted by three social classes: labourers, farmers and intellectuals. It was different from a capitalist or a socialist regime, because the political power was no more kept by capitalists or large landowners522, but at the same time there was more than one social class (as in a pure socialist model). In the popular democracy, people should be more motivated to cooperate523 and labourers had the task to lead the alliance between the three social classes (because they were more organized and they were the only class with a precise program). For the communist party, the popular democracy was an intermediate step in the process to create a socialist society: workers were already the holders of the power, so it was not necessary to establish a dictatorship of the proletariat to eliminate a State structure already defeated: the socialism would have born without fights.

4.3 The first Quinquennial Plan and the centrally planned economy

The “Czechoslovak way to socialism” ended while it was obtaining perfect results, showing that it had been able to create a model adequate for an industrial developed and historically democratic country as Czechoslovakia. To explain the end of this successful economic strategy, it is necessary to underline the international changes that caused the refusal of the Marshal Plan, the revolution in February 1948 and the importation of the Stalinist model of socialism in the country524.

On 5th March 1946, Churchill had already spoken about the Iron Curtain that was dividing Europe in two different influence spheres. In 1947, the coalition among the Allies against fascism ended to exist, causing not only the rivalry between the USA and the USSR, but also

521 The term was used, for the first time, by Gottwald to speak about a different way to obtain the socialism. There should have been no fights (unlike what happened in the USSR) and the socio-political evolution should have been slower, obtaining a socialist State that could have been different from the Soviet one. In Gottwald’s opinion, the communist party had to take the power in a parliamentary way, without revolutions. 522 The socialism was extended also to agriculture, with the goal to eliminate private competitors (through the action of cooperatives). 523 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 436. 524 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 61-62. - 132 - political conflicts inside all the European countries (among communist parties and right-wing parties). In Czechoslovakia, it meant that the three parties in the National Front had no more ways to collaborate. The communists, supported by the USSR, had the possibility to continue alone the socialist plan begun, importing many aspects of the Marxist-Leninist model. Gottwald (Head of the communist party) admitted already in 1945 that his party had, as last goal, the achievement of the Soviet Republic525. Then, in 1947, he showed again the communist idea to change the Czechoslovak economic structure, saying that it was necessary to develop mainly chemical and heavy factories, while the textile industry was considered less important526.

Clearly, the “pure” socialist parties (Social Democratic Party and the National Socialist Party) were in complete disagree, because they wanted to keep the plurality inside the national economy and inside the political system (considering the Parliament as the fundamental aspect of the democracy). They did not want the dictatorship of the proletariat and the one- party State, refusing also the Stalinist model. Socialists were imagining a socialist economy in which there was space for private business initiative and a democratic multiparty regime with National committees (directly elected by citizens)527. The private initiative was supported because they considered it necessary to develop the economy and its technics: private investors would have introduced inventiveness, competition and control, avoiding the economic stagnation.

The socialism introduced in the country after the revolution in February 1948528 did not spread in western States because the USA would have not permitted it and, on more, it produced lower results in comparison with the capitalist economies529 (economic aspects were subordinated to politics interests and there was less production, less efficiency and higher costs). From the political side, there were no more liberties or rights, for the reason that the communist party had the monopoly of the political power and there were no warranties or controls against the abuse of power530. The model was not adequate for a developed and democratic State as Czechoslovakia, but the general direction of the communist party was

525 The communists, at the beginning, approved the original socialist ideas because the Comintern (Third International) had thought manly about a way to take the power and to realize the dictatorship of the proletariat. It had not taken care about the concrete form of socialism to impose in the various countries, because it took for granted that the Stalinist model was the best socialist model. 526 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 147. 527 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 66-68. 528 The revolution was caused by a Ministerial crisis and it was followed by a change inside the government. The communist party gained importance and it absorbed even the socialist party. 529 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 14. 530 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 63. - 133 - abroad, so the KSČ had to follow the orders (even if its members understood that it was not the best way to continue the economic evolution). The predominant position of the communist party531, in comparison with the others, meant that the country was no longer a real democracy, so it was losing all the advantages of a plural political system (as the parliamentary expression and defence of all social groups’ interests). The KSČ was the leader party and its will was to follow the Marxist-Leninist idea to rule the country: the economy would have been completely nationalized and other parties would have had no way to decide the State policies532.

The two first political purposes of the KSČ caused, in the ‘50s, serious problems of corruption and illegality in the country, because the new electoral law purposed the formation of a unique list (even if Beneš was in disagreement) and the new Constitution (of May 1948) contained no specifications about civil rights and not enough freedom for the judiciary system533. The new Fundamental law signed an important change for the country: in May 1948, Benes decided to give the resignations and, on 14th June 1948, the National Assembly named Gottwald as President of the Republic. His nomination coincided with the formal end of the Third Republic and with the beginning of the government led by Antonín Zápotocký (co-founder of the KSČ).

From the economic point of view, the government decided the creation of a Quinquennial Plan534, lasting from 1949 to 1953 and checked every three months by an economic committee, the planning commission (to understand if the directives were followed and if the quality of products was optimized)535. It was composed by a regional planning536 and by a general planning (some decisions of the program arrived directly from the local needs). As written inside it, the Plan was the way to eliminate all the capitalist elements still present in the economy, being assimilated inside the nationalized economic structure537. It caused the end of a market based on a true free competition, so economists understood that it was necessary to control the efficiency and the profitability of the national factories (also to avoid unjustified prices variations). The elimination of the private entrepreneurship had to be extended in all economic activities: at the beginning, the government thought about big

531 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 148. 532 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 103. 533 Ibid., p. 108-109. 534 In its history, Czechoslovakia did eight quinquennial plans (the last one would have ended in 1990). 535 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 165. 536 The regional planning was a part of the general economic development for the long-run, referred to a single region. 537 Actually, the survived private factories were already controlled by the State: they were depending by nationalized industries and they had to bear the rigid national control on bank accounts, prices and credits. - 134 - factories and big estates but, in the ‘50s, it wanted to intervene also in the retail trade. To defeat the private organizations, the national cooperatives acted a strong economic pressure preventing the private owners to get goods for sale538. In addition, privates had no ways to change the prices following the market trend (because national cooperatives were selling always at the same price, so they would have lost all their customers). When private owners gave up, they had to enter in cooperatives and the cooperatives named them managers of their old private activity, giving them a wage plus a premium for their sales and a rent for their shops.

According to the Plan, in 1953 Czechoslovakia should have been a more industrially developed country, with less difference among its regions and with a stronger position in international trades. In reality, the beginning of the Cold war limited the trades between east and west Europe and Czechoslovakia suffered too for this problem (because the State was having strong commercial relationships with west Europe until 1948). The USSR began to be the most important supplier of raw materials, exchanged for processed products. The Soviet Union was mainly asking products of textile and heavy factories539 and, for this reason, in Czechoslovakia those two industries developed particularly.

The planning included measures to control prices, taxes, consumes, trades, production costs and distribution expenses and it programmed the development of industrial production, handicraft, international trades, agriculture and, in general, of backward regions. Theoretically, workers had the possibility to influence the decisions540, through the syndicates and the action committees (created after the revolution and with a direct impact on the National committees); in the new socialist economy, they would have become part of a society based on the totality (so no more on individualism). In this way, workers would have ended their contrasts of interests541 and they would have acted as a unique economic subject. In reality, after the ‘50s workers began to lose their power to influence decisions, also because the factories themselves were completely submitted to central orders (that contained, for example, rules to manage the production, to choose the quantity of workforce for every activity and to give less or more priority to different sectors)542.

538 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 449- 451. 539 Ibid., p. 146. 540 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 140. 541 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 168. 542 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 133. - 135 -

About industries, the Plan wanted a huge augmentation of 57% of the National industrial production (75% in Slovakia), considering the heavy industry as the most important to be incentivized, in order to take advantage from the temporary absence of Germany from commercial trades and to substitute its predominance. Mechanic industry had to double its results but the Plan asked a strong effort to grow even to iron, steel, electric, chemical and coal industries: iron, steel and electric production should have augmented of 50%, chemical production of 60% and coal extraction of 35%. Even the textile and gum industries had to grow considerably (respectively of 60% and 40%, despite of Gottwald’s declarations in 1947). The building industry was considered as an exception: because of its failure to reach the goals of the Biennial Plan, the government decided to reorganize it, to obtain the strongest industry development in the country543 (they programmed an increase of 130%, to reach using more work machines, more workforce and more prefabricated buildings). About handicraft, the Plan programmed a lower production increase (20%) and, for the international trades, it was supposed an augmentation of 40% principally with other States with a planned economy544.

For the agriculture, the Plan programmed a growth of 37% of its production, giving a specific importance to the cattle breeding (reputed the most profitable part of the first sector but particularly damaged during the war). After having obtained this result, the agricultural production would have contributed for 20% of the national GDP. The Plan included also some directives for the regional development (with particular interest for Slovakia). Within 1953, Slovak factories should have hired other 90.000 employees while its agriculture should have augmented its mechanization. Even if the region had improved its economic situation (thanks to the Biennial Plan), the new Plan destined to Slovakia more financial founds545 than to the western regions (in proportion to the inhabitants). The fundamental idea was to industrialize homogeneously all the Republic, because this would have improved the standard of living of citizens (even if unit costs at the beginning were higher). Thanks to the various efforts, in 1950 the Slovak industrial production exceeded the agricultural one.

Unlike the period 1946-1948 (the one of the Biennial Plan), the international situation was limiting the possibility, for Czechoslovakia, to trade freely with the western part of Europe

543 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 149. 544 In Gottwald’s opinion, the increase of trades with other planned economies would have given more stability to the Czechoslovak market: to follow this directive, it was necessary to improve the national heavy industry. 545 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 150. - 136 - and this was a problem mainly for the importation of raw materials. The COMECON546 contributed to limit the Czechoslovak opportunities to trade with the West, forcing the State to do the necessary investments to be independent from the old needs547. For this reason, in 1950, the President Gottwald decided to boost the production of the mining, the heavy and the chemical industries. In the following years, some Czech economists understood that here there was one of the biggest mistakes of the planning: factories were not doing an own production plan, because there was a planning commission with the task to control all industries (and to find the necessary raw materials)548.

The essential goal of the program was to reach the maximum economic efficiency, permitting to citizens to increase of 35% their consumptions. In addition, it was programmed an important increase of productivity of the secondary sector (32%), of the primary sector (20%), of transportations (30%) and of the building industry (50%). In 1951, all these improvements seemed to be easily obtainable in only three years: in Slovakia, the industrial production was already 69% more than in 1948, so the government decided to change goals and to try to reach better results. The national industrial production growth should have reached no more 57% but 98% (in comparison with 1948) while, for agriculture, the workforce should have included 780.000 new workers (and so not only 486.000 as programmed in 1949)549.

In the new socialist economy, the initiative of fundamental financial policy was a task of the State while the banks were controlling directly the economic apparatus (through their activity in the credit sector and in investments), trying also to interfere in the production. The most important control that the banks were able to do was about the financial economic plan that was approved for each factory550: the banks had the task to study the plan551 (and the financial and technical abilities of the industrial unit) to understand if it was compliant with the National plan. After this study, the bank expressed its opinion about the plan, indicating the capital needed for its realization; in addition, it took the permanent control of the factory itself, adjusting its production following the financial policy of the country. The planned control required the distinction between investment credits (the managers of each nationalized factory could have invested more than necessary, obtaining results not included in the Plan)

546 It was an economic and commercial organization of the communist States established in 1949 and dissolved in 1991, with the task to manage the trades among planned economies. 547 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 45. 548 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 183- 184 549 Ibid., p. 152. 550 Ibid, p. 196. 551 The industrial councils had the prerogative to prepare the economic and financial plans for the single factories. - 137 - and credit for the year (to avoid that the managers would have bought more than needed). For this reason, the banks were divided in two groups: the former for investment credits and the latter for credit for the year. This model was necessary to understand the various expenses done by the factories. In 1951, all credits transactions were concentrated in the various branches of the only national bank (the one in charge to coin money), because all the old credit banks had been already absorbed; the same happened with investments banks552 (in 1951, there was only one national bank even for investments).

The functioning of the investment sector was easily understandable: the State had the task to plan and to choose the order of importance for the investments (deciding what industries and what factories was necessary to privilege), while the national investment bank553 managed all the technic aspects. The national bank was the manager of the industries: without the State plan, it would have given no money to the factory (and all investments coming from investment funds were composed by State credits and budget subsidies)554. Before financing a factory, the bank checked the efficiency of its director, to understand his ability to maximize profits: in this way, directors were interested only in their results for the short-medium term, at the expenses of more efficient investments for the whole society. This technocratic system555, in comparison with the capitalist system, had the problem to give little importance to the long-run and, on more, to discourage interests in collective results.

After having received the credits, the factory would have undergone the financial control of the bank: the finances provided by the plan should have used in a precise way and in a certain period, so the whole production was monitored. If the factory had saved too money in its account, the bank would have understood that it was not working properly. In addition, from 1950, the banks had extended their controls also on private dealers and producers (to obtain credits they had to enter in cooperatives).

Clearly, the important changes in the industrial sector brought other modifies: industrial executives’ wages (in nationalized factories) decreased considerably compared to before, even if at that time the directors were the direct managers of the nationalized companies (helped by a control commission, named by them)556. On the contrary, workers’ wages increased a lot (sometimes they doubled or tripled): this phenomenon is evident analysing the wages payed

552 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 198- 200. 553 The investment bank was controlling a series of private or National banks: in 1951, it had 400 branches. 554 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 201. 555 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 164. 556 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 227. - 138 - by the Bat’a, one of the most famous enterprise in Czechoslovakia (from 1949 nationalized). In 1948, 11.000 women that were working in that factory (producing mainly shoes for internal and external market) received augments that arrived at 400%, while the remaining 43.000 workers had the same increases of the salaries of 200-300%.

With the Quinquennial Plan, Czechoslovakia reached the final goal of the full employment, in 1950 the totality of industries were nationalized and the State realized the Soviet principle “equal pay for equal work”557 (even for women and young workers), increasing the assistance for women and the cost of their job. Workers gained protections and the strong presence of trade unions representatives made more difficult to dismiss them. All profits of the nationalized industries rested in the State to strengthen the economy (while before it was possible that a non-Czechoslovak private owner would have brought his profits abroad)558 and producers should have stopped to work only to obtain the highest profits in the short-run, thinking more about the minimizing of resources wastes, health dangers and damages for the environment. To be efficient, the economic system had to think about the cost minimization (even for salaries) and to promote the workers’ interests for the results of the economic activity559: in the technocratic and collective system, those two requirements were not satisfied, so the development of the society was in a precarious situation.

All the issues correlated with jobs (as salaries560, layoffs and recruitments, security, work conditions and work rules) were discussed by factories commissions, government and syndicates, always considering that wages had to be proportioned with the production (to avoid inflation). Respecting this principle, usually the syndicates and the Ministry of Labour purposed to use the piecework system (individual or for group of workers) and salaries depending on individual’s results: this rule was contained in the Constitution of 1948. The only derogation to this consolidated system was about the “socialist emulation in production”561: it was an organized form of overtime work (common in planned economies and already existing in the USSR) with which workers were trying to increase the production and to improve its quality. At the beginning they were payed only following the piecework system (so a bit more but only because they were producing more) but in the ‘50s the central organization created a special fund to reward them and the best workers started to receive

557 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 12. 558 Ibid., p. 219. 559 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 168-169. 560 The government simplified considerably the regulation about salaries, introducing collective contracts that established wages, holiday and apprenticeship pay, overtime limits and health care conditions. 561 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 142. - 139 - particular recognitions and tax exemptions. The system of labour and wages was centralistic, for the reason that everything was imposed by the top. For this reason, workers were no more interested in their colleagues’ works, because they had only to think about themselves562 and they lost their affection for the workplace.

Important hard works (as in mines) received higher wages than less dangerous works considered less essential. This situation led to a system of wages completely different from the one used by liberal or authoritarian economies: there was a complete horizontal justice but no vertical justice563, so a non-qualified work was very often more paid that a qualified one. The concept of “horizontal justice” could have been discussed too, because in the regulation of salaries based on the productivity some workers (the one working in less productive industries) could have been discriminated. All people had the right and the duty to work: if someone did not work without a reason, he would have been obliged to work in a labour camp for a certain period (according to a law of 1948). The positive part of this organization was that Czechoslovakia was particularly modern in aspects concerning workers’ conditions: the welfare included an insurance system for disability and old age564 and a free sanitary system (even for dependent family members, covering 95% of the population) that costed to the country 13% of the national GDP565. As considered by the philosopher Spirito, another positive feature of the socialist work organization was that the quinquennial plans were regulating even salaries and working relationships: in this way, strikes were absent, useless and incomprehensible in a planned economy (because it was possible to modify the plan but a single revolt would have changed nothing)566.

There was only one big problem related to workers: there was no job market in the State and it caused an immobility and a security of workforces that prevented the necessary adaptations and upgradations to face new jobs or new complications567. About trade unionism, there were different trade unions but the party organs took a direct part to solve problems which should have been pure responsibilities of the trade unions: these organizations ended to be subjected to the decisions of the party.

562 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 304. 563 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 140-141. 564 Workers received a pension (corresponding on average to 50% of their salary) when they were 60 years old, after 20 years of work, while women in maternity received for 18 weeks the totality of their wage. 565 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 334- 335. 566 U. Spirito, Critica alla democrazia, Luni, Milano, 2000, p. 84. 567 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 136. - 140 -

In 1953, when the Plan ended, the government elaborated the currency reform: its aim was to eliminate the imbalances born in the economy decreasing the real wages and changing the system of prices (the costs of living increased more than salaries) and it expropriated citizen´s savings for helping collapsing economy (through an exchange of money particularly discretionary)568.

During the ‘50s, the government decided to separate the sphere of the production from the commercial one569. It divided the Industry Ministry from the Trade Ministry and the first one (composed by a series of ministries corresponding to the principal industrial sectors) began to be decisively more efficient. After the division, the industries lost their commercial responsibility, while the State planning commission had the task to assign the raw materials, to manage the workforce and to choose the prices570.

The planned economy of the Czechoslovak Socialist Republic had as main target the augmentation of the production, even exploiting at the maximum level the resources to obtain an additional production at higher costs (in order to avoid trades with western States)571. To increase the efficiency, the communist party searched for a way to eliminate all bureaucratic obstacles: for this reason, the State faced also an administrative reorganization, useful to centralize the setting of the economic plans and to decentralize their executions. The government modified the territories of the cities, trying to link their industrial centres and to unify their administrative apparatuses572; in the countryside, it decided to regroup the smallest villages to create new municipalities (with about 3.000 inhabitants). For the communists, the best way to control the State was to create a direct link between the organs managed by the party (that decided everything) and the industries (that had to follow the orders), eliminating all intermediate structures. In reality, this system did not work as imagined, because all fundamental problems (linked with foreign trade, foreign policy and economy, organization of the Czechoslovak communist party, army and security) were depending on the decisions of the Soviet communist party573. The political influence of the USSR restricted the autonomy of the KSČ and the authority of the Parliament (that could not intervene also when there were

568 J. Adam, W. Hamm, W. Neumann, Wage, price and taxation policy in Czechoslovakia, 1948-1970, Duncker & Humblot, Berlin, 1974, p. 93-94. 569 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 234. 570 After that the State planning commission had decided the price, the goods produced were bought by the factories authorized to do the foreign trades and they sold them in the entire world for the government. In this system, the producers had no idea about prices, concurrencies, gains or losses. 571 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 298- 299. 572 Ibid., p. 237. 573 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 120-122. - 141 - clear Constitutional violations), limiting the society freedom (with censorship and prohibitions of manifestations) and causing a great social and political tension.

While the Republic was doing all these changes internally, even the international economic relations changed. In a planned economy, obviously, the foreign trades were planned too: exportations were programmed to cover the importations necessaries to realize the national economic plan. Foreign trade was a State monopoly, supervised by the central Ministry of Foreign Trade. The ministry oversaw the operation of about thirty intermediary foreign trade enterprises (mediators among the domestic export producers, the import purchasers and the external market), responsible for arranging contracts, for financing and for supervising Czechoslovak foreign trade.

In Czechoslovakia, exportations had to be at least sufficient to cover the expenses done for importations, to have always the balanced budget. To simplify the system, the government decided to promote medium/long-term trade agreements (specifying the goods to exchange for a long time). For a capitalist State, it was difficult to sign similar agreements; for this reason, Czechoslovakia preferred to enter into agreements only with States based on planned economies. The bilateral agreements fixed rules about financial conditions, amount of imported and exported goods and prices to be respected until the end of the agreements themselves. In 1947, the country did 80% of its trades with western States, but the percentage decreased574 at 63% in 1948 and at 55% in 1949. In 1952575, trades with other planned economies represented 70,6% of importations and 68,1% of exportations and 25% of the total foreign commerce was done with the USSR. The trades with the Soviet Union were particularly important, because Czechoslovakia received huge quantities of raw materials, metals and cereals, having the possibility to exchange its textile products.576 All trades with foreign countries were managed by commercial enterprises with a branch in each trader foreign State and with the task to absorb the possible price fluctuations; despite of it, the Council for the mutual economic assistance was the principal commission to manage the commerce among Eastern countries. The member of this council were the USSR, Poland, Czechoslovakia, Hungary, Romania and Bulgaria: these States used the organization to manage the bilateral agreements and to plan other developments for their economies.

While the planned economies were discouraged to trade with capitalist economies, the States of the Western Europe had few interests in those trades (because they represented at the limit

574 In 1949, the total volume of trades between West and East was 42% of the business volume in 1938. 575 D. W. Douglas, Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956, p. 398. 576 Ibid.., p. 421. - 142 -

10% of their total commerce). In addition, they had to respect the limits577 put by the USA to avoid exportations of goods usable for military purposes (as chemical goods and agricultural and industrial machineries).

4.4 The economic problems during the 1950s-1960s

The planned economy permitted to Czechoslovakia to have a global vision of its economy and to use its resources according to the specific goals set with the quinquennial plans. The centralized economic structure was parallel to the government and to the communist party and this model gave the party a firm control over the government and the economy578. The government had the possibility to check the international conditions (and demands), so it could allocate strategically large investments to obtain higher growth rates579 (reducing the social impact of the production and consumption process). Considering that the demand was planned too and that prices were controlled, it was particularly difficult to undergo the effects of the economic cycle; in addition, the absence of a true job market and the planned job allocations (based on production needs and workers’ abilities) avoided high rates of unemployment or workers’ oppositions to the model. That situation permitted to control the national income and to distribute it in a fairer way580, based on individual needs.

Despite of all these positive aspects, there were also negative features that, already from 1948 but in particular in 1956 and then in 1963-1964, caused economic stagnation581 in the country. The most important problems were:

• The planned economy needed a very complicated and problematic programming. The economic plans required a huge bureaucracy to be created and even the experts could not program precisely the various resources and finances needed by all the nationalized industries;

577 Ibid., p. 406-407. 578 I.Y. Gawdiak, Area Handbook Series: Czechoslovakia: A Country Study. Library of Congress Washington DC Fedeal Research ivision. 1989. 579 As already explained, Ministries prepared general directives (concerning the desired development of the economy) for the economic advisory body, the Central Planning Commission, which elaborated the long-term targets of the economy (expressed in the five-years extensive economic plans). 580 Brandolinie A., La Disuguaglianza dei redditi . Treccani [online]. 2009. [Accessed 8 August 2017]. Available from: http://www.treccani.it/enciclopedia/la-disuguaglianza-dei-redditi_%28XXI-Secolo%29 581 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 170. - 143 -

• Factories were forced to produce more and more reducing costs (without observing the quality of their products), and they knew that the central authority wanted always a total production that was impossible to realize with their facilities. To reduce this problem, they used to show projects depreciating their abilities and overestimating their necessities: it was a mechanism based on frauds that caused the loss of information582 about the true needs, reserves and capabilities of the economic system; • Following the Soviet socialism, the State developed principally classic industrial sectors (mining industry, heavy mechanical industry and the metallurgical one), ignoring the importance of technic-scientific sectors particularly financed by western countries (chemical industry, electronic industry and the precision mechanical one)583. While the Czechoslovak economy was thinking only about the most important industries of the previous century, it forgot to find a way to face the new economic challenges; • The system created for the foreign trades (administrative monopoly of factories for the foreign trades and the price agreements done by factories and State organs) caused an increase of corporate income and a lack of the State budget, with a consequent inefficiency584; • As explained before, workers were less interested both to their efficiency and to the factory they were working in; on more, their intuitions and their creativity was completely refused. This forced the State to hire some production managers, but it increased the staff costs (already augmented because of the supernumerary workers). Even if there were these corrective measures, the productivity of Czechoslovak workers was less than in capitalist States585; • Public and centralized control over the allocation of resources caused a significant reduction in individual freedom, because consumers could not decide freely the quantity to buy and workers had to work as decided by the national organizations. The government had the prerogative to regulate all the economic system (thinking only about the quantities of goods, not about their quality): it could decide what resources were to be assigned to the various industries and it could control the production of the factories and the uses of the goods and services they produced;

582 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 132-134. 583 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 53-54. 584 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 175. 585 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 21. - 144 -

• The system of fixed prices did not permit to understand the market needs and incentives: this means that the resources of the various industries could be used in inefficient ways, because planners could not perceive consumer preferences and production surpluses as in a free market.

The old politicians had created a socialist democracy vertically organized: there was a vertical system captained by the central committee and ending with the inferior organizational entities. Despite of their democratic intentions586, the bases of the system had lost their influence on the central decisions while the whole structure was becoming more and more complex. After having lost its power, the bases had begun to be passive and to be forced to accept all the decisions coming from the summit of the system587.

In the ‘60s, Czechoslovakia was in the ranking of the ten more productive States in the world for the production of electricity, coal, iron, cotton, wool and other natural tissues, but its national GDP and the standard of living of citizens (per capita income) were 30-40% less588 than in the West Europe. The socialist economy was not giving the hoped results but it was difficult to understand its performance and to purpose the right changes, because the official propaganda was hiding the economic data and people had no clear ideas about what to correct. In addition, the economy was progressing the same (for example, more goods were available on the market) even if machineries were no more renewed, technologies were not improved and the structure of the market was limiting the production. While the communist party was purposing confrontations with the past589 (to show the economic improvement of the country), some economists noticed that other capitalist States, that after the Second World War had economies weaker than the Czechoslovak one, were now stronger590.

The economic potential of the State was high, while the economic consumptions and the efficiency were low; Czechoslovakia did for sure a great structural transformation and important improvements, but it did not consider nether the internal market needs, nor the external market ones. The various industries increased their production as planned (even if there was over-employment) but they knew nothing about the results of their goods sold abroad. To change this situation, the central committee of the communist party, from 1965,

586 Di Giuliomaria writes about “democratic intentions” because after 1945 the common idea was to create again a democratic State. 587 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 43-45. 588 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 171. 589 The most common affirmation was that the Czechoslovak production in 1958 had doubled in comparison with the one in 1937. 590 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 18-19. - 145 - searched for a way to do an economic reform. The economic reform wanted to create an open economy more interested in the needs of the society, showing the internal and external market demand to industries (to permit to them to take decisions knowing the will of the society). It was also necessary to transform the concept of economic plans from management instrument to coordination instrument, eliminating their task to distribute sources and making them tools to highlight economic policy changes591. Obviously, the economic reform caused the opposition of some socialist elements that did not admit the problems of the socialist Republic, considering the economy already maximized (but it was evident that some factories were surviving only because the centrally planned prices were kept high to cover their too high production costs)592.

Clearly, the situation was worrying. The wrongness was the effect of the extensive system of the economy applied in Czechoslovakia from 1948: the economic development, in fact, had based on the mobility of new workforce and on the use of new machineries (without exploiting more the already existing industrial activities or the pre-existent workers). In reality, this model caused stagnation, because the economic system was no more able to renovate the production technics and even the new machineries593 were too little better than the old ones. Considering that the new workforce were usually not qualified, sometimes there was the paradox that the performance of old factories were higher than the newer ones594. This problem limited so much the production that, during the ‘60s, Italian and Austrian workers were having a productivity 50% higher than the Czechoslovak ones (the Federal Republic of Germany and the United Kingdom reached 100% more and Americans workers even 400%). Here there was another paradox: the State, to increase further its production, could have decided to build other industrial plants but still or for metallurgic production, or to extract more coal.

The investment would have required many finances, so the State would have paid reducing the National income for consumes and to produce something not so useful for common needs595. This was a clear waste of money and it was followed by a waste of workforce and a waste of materials. The waste of materials was comprehensible considering that, to produce

591 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 173-174. 592 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 22. 593 Sometimes, directors decided not to implement new technologies in their factories because they knew that, in the short period, they would have reduced the total production (because workers would have needed time to learn to use the new machineries). 594 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 52-54. 595 Ota Šik calculated that, from 1956 to 1960, to increase the National income of one crown, it was necessary an investment of 2,50 crowns. The situation became even worse from 1961 to 1965, when it was necessary to invest 9,50 crowns to have the same effect of some years before. - 146 - the same value of global production, Czechoslovakia needed the double quantity of the one used by the USA (and the 60% more in comparison with the capitalist Europe States); the waste of workforce596 meant that, to do the same operation, Czechoslovakia needed three or four times more workers than the USA (and it was clearly causing higher production costs).

Then it was useless to plan continually the built of new factories, because the construction companies were not able to follow the governmental orders597. Still in the same period, even the textile products of Czechoslovakia had problems to be sold in international markets: the Federal Republic of Germany and the United Kingdom were increasing their productions of synthetic tissues, while in the socialist federation this kind of productions were just 6,4% of the total textile production. Other Czechoslovak products had no problems to be exported, but they were paid less598 than the same goods offered by West Germany or Italy because the Czechoslovak quality was lower and assistance and after-sale was more inefficient599 (for example, in 1966, German mechanic products were paid one time more than the Czechoslovak ones).

From 1961 to 1965, the government invested 200 billion crowns in the economy, creating 300.000 new workplaces. Despite of it, the National income registered a long period of stagnation and the market had serious problems to refurnish the State of the raw materials requested and of the necessary machineries (and piece to fix them). In the while, exportations were growing more and more to cover the cost of importations that were constant600. It was true that in Czechoslovakia there was an enormous productive potential (one of the biggest in Europe), but the lack of technological innovation was making the economy backward. The quantities produced were growing and growing but the quality was not considered (both from industries and from the total production index). In a capitalist State, a similar system would have not worked because the market would have rejected these goods; on the contrary, the socialist system was defending its inefficient factories. Prices were decided by central organisms, so factories could not understand if their products had been requested (and sold) or just stored. For the whole industries, there was only a hypothetical offer to satisfy, without

596 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 74-77. 597 The building industry was so late that sometimes industrial plants were already old before that they were ended. While an industrial plant was requiring on average five years to be completed in Czechoslovakia, in the Western Europe the building industries would have taken one or two years; while a residential construction in 1938 in Prague required five or six months, in the ‘60s it was necessary to lose eleven months to have the same result. 598 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 89. 599 The State was specialized neither in the mass-production, nor in high quality productions. Trying to be the most possible independent from foreign trades, Czechoslovakia was trying to producing everything (with obvious bad results). 600 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 91. - 147 - demand and without feedbacks on their work: they could have had a high profitability or high losses, because the State would have financed them the same to pay raw materials, workers and for investments601. The results of Czechoslovak industries were that citizens were not satisfied by the available goods in the market and there were more and more stocked goods unsaleable (for a value of 200 billion crowns).

The economic problems of the State were not only linked with the industry, but also with the agriculture. The extensive economy forced the country to find an immense workforce for its factories, so a lot of young workers left the first sector to go to work into industries; then, as seen before, the chemical sector was not developed and consequently the country had a low availability of chemical products even for the agriculture (for example, there were a half of fertilizers per hectare in comparison with West Germany and less than one third in comparison with Belgium and Holland). The results of almost twenty years of socialism were that agricultural workers were almost one million less than before, the production of industrial facilities for agriculture were not augmented, labourers were in average older than during the ‘40s (more than 20% of them were over 60 years old)602 and the diffusion of tractors was just begun (on average, there was one tractor every twenty four workers, while in West Germany there was one tractor every three workers). Machineries to simplify and to make more efficient the job were a few and, on more, not efficient as the one used by the capitalist States. For all these reasons, the old structure of the Czechoslovak agriculture produced a few and with a bad quality.

The inadequacy of the economic system limited the improvement of the standard of living. The real wages (so the quantity of goods that citizens could buy with their salaries) had grown of 37,5% from 1954 to 1965, while in Austria they had grown of 54% and in West Germany of 93%. In 1966, the per capita income in Czechoslovakia was 1.038 dollars, while in the United Kingdom it was 1.652 dollars and in West Germany 1.740 dollars. In addition, the national income of Czechoslovakia was lower than the majority of the capitalist States, as the share of private consumption on the gross national product. Consequently, Czechoslovak workers had to work three-four times more than the West German ones to buy the same goods603. Foodstuffs were more expensive than abroad, so people used 50% of their money for feeding (reserving less finances for cars, holidays abroad and home appliances). The only positive aspect for citizens was that services (like electricity, heating, water and also rents)

601 Ibid.,p. 66-69. 602 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 78-81. 603 Ibid., p. 110-113. - 148 - were cheaper than in the capitalist States, but these countries had better communication networks, houses of higher level and more adequate public services (especially schools and hospitals604, including the equipment)605. In addition, Czechoslovakia was the European State with less residential building (in comparison with its population).

Despite of this situation, the population was having good standards of living because the families had the tendency to engage in work activities more and more members (58,6% of married women were working606, while in the USA they were just 33,6%). In this way, even if the real salaries were lowering, the women’s contributions balanced that trend. Clearly, it was not a valid solution: the State should have done a technic-scientific revolution607, using its workforce no more for other industrial plants but for the service sector.

4.5 The “Prague Spring” and the Soviet occupation

On 22nd March 1968, the Czechoslovak President Antonín Novotný had been forced to resign and Czech and Slovak citizens had elected Ludvik Svoboda as new Head of the State. Some month before, the Stalinist Novotný had lost also his office as First Secretary of the communist party of Czechoslovakia, substituted by Alexander Dubček (on 5th January 1968). The end of his secretary had been caused by an ideological change inside the Central Committee of the party608, which followed the economic problems of the country (evidently produced by the errors of the old political class, captained by Novotný and Gottwald).

Dubček was not Stalinist and he believed that the country had to abandon the Soviet model. From 1948, in fact, the country had suffered the Stalinist imposition to create a dictatorship of bureaucracy (instead of a dictatorship of proletarians, even if they were the majority of the population). The dictatorship of bureaucracy609 had imposed its predominance using a terror strategy, the elimination of oppositions, the oppression of workers and students’ manifestations, the manipulation of the State apparatus using the corruption and the electoral frauds. Fortunately for the Czechoslovak situation, Stalin had died on 5th March 1953 and the new First Secretary of the communist party of the USSR, Nikita Sergeevič Chruščëv, during

604 In Czechoslovakia, the health care was completely free, even if there were less health personnel than in the USSR and in the USA (basing the calculation on the personnel for every one hundred beds in hospitals). 605 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 116. 606 From 1948 to 1964, jobs in Czechoslovakia increased of 865.000 unities and 86,5% of them were women. 607 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 124. 608 Ibid., p. 140. 609 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 27. - 149 - the 20th Congress of the Communist Party of the Soviet Union610 (done from 14th to 25th February 1956) started the destalinization process. For the Eastern Block, the destalinization was particularly important too because Chruščëv wanted to remove from key institutions people who helped or followed Stalin and his ideas, abolishing the cult of his personality and the Stalinist political system.

Following his program, first of all Dubček accelerated the destalinization process (that in Czechoslovakia was developing slower than in the rest of Eastern Europe, because of Novotný) and then he planned a new political-economic structure called New Course611 (with the fundamental help of the Czech politician and economist Ota Šik). The period in which the Czechoslovak New Course was applied was named the Prague Spring: the reforms implemented in those months were a strong attempt done by Dubček to grant additional rights to the citizens of Czechoslovakia (ending the previous illegal persecutions)612, realizing a partial decentralization of the economy and a true democratization. The new Head of the government wanted to follow some requests that directly arrived from the population and from circles of intellectuals, who demanded more freedom of the press, greater decentralization of the administrative powers and the division of the Nation into the Czech Republic and the Slovak Republic. The freedom of the press permitted to publish in the country some essays of opponents of the Marxism-Leninism with Trotsky and Bukharin’s images613 (while in the USSR, in the rest of the Eastern Block and during Novotný’s government they were completely forbidden). Even for this fact, the Soviet leaders did not see these reforms as a slow inevitable historical change but as a dangerous and too radical breakthrough in the policy of alignment of the Warsaw Pact.

The first decisions took, to boost the economic efficiency, were a reform of the income tax (to make it homogeneous), a variation of wholesale prices (to grant the market equilibrium), some actions to link again the production with the internal and external market (reducing prices) and an attempt to eliminate monopolies614. The economists understood also that it was necessary to force the Czechoslovak industries to match capitalist enterprises, solving their problems of backwardness in the productivity of work, in the production costs and in the quality of products. The State should have helped temporary only new industrial installations

610 A. Graziosi, L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008, p. 186. 611 Inside the communist party and among citizens there were clearly request to obtain a liberalization of the political system, but the politicians of the New Course did not consider the obvious opposition of the USSR. 612 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 36. 613 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 6. 614 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 176. - 150 - or factories with serious problems of raw materials supply, while permanent helps should have been acted to protect productive sectors with a particular social importance (whose production was not replaceable with importations). In this way, industries would have been more stimulated to develop and if a production had been too inefficient, they could have begun other productive programs (so the enterprises would have not closed the same).

Industries were clearly not working efficiently but the problems were coming from their vertices. There was a strong link between old politics and economy: it was necessary to eliminate the executive apparatus. The central organs named directors without considering their knowledge, their experience, and the needs of the factory or the workers’ opinions. The directors had only to be faithful to the communist party and usually they were chosen because they were the majority shareholder of the factory (or the proprietary). These figures were often not able to manage the enterprises, so their errors ended to disadvantage workers and consumers. In the while, Western countries had understood that it was necessary to provide a specific preparation to obtain adequate managers, because they would have needed to improve their knowledge and experience before being prepared for such a complex work615. For this reason, the capitalist States chose as directors only the best graduates (who would have begun their job after a special course, improving their experience also abroad).

Even the nomination of directors was a consequence of the most important political problem: the State was less and less democratic, because the communist party chose everything616 (obeying to the Stalinist rules). The fundamental idea was that the Socialist Czechoslovak Republic could rest the same a socialist State, even if it was necessary to change some part of the economic structure to fight against its crisis. For example, the centre of the planned economy could have understood the necessary structure of production, the division of national income and the structure of the market demand only if there was an evolved market and clear data about the real commercial needs of citizens, indispensable to correct the economic plans617. Until 1968, these economic plans were just done by the central politic organ (while the market, the directors and the public opinion were completely ignored).

The necessity of the change was caused also by an increase of wages that happened in 1968 (a potential breeding ground for inflation). Workers began to spend more (around 12,4% more) and the economy had to concentrate its production for internal needs, increasing a bit the prices. The fear of the inflation brought many consumers to buy more than the necessary, so

615 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 136-138. 616 This situation was common in the Soviet Block (the States members of the Warsaw pact). 617 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 27-28. - 151 - the internal market had problems to refurnish itself while people were spending more than their earnings. The increase of consumes was followed by an increase of investments (at the expenses of the total value of savings, that had been forced to grow from the ‘50s because of the great investments in defence production and because of the continuous shortages of consumer goods)618. To solve temporary the problem, the government decided an increase of prices and a restriction of investments.

In this situation, Dubček and Šik started the New Course, deciding to reform all the previous existent executive apparatus, reducing the economic ministries and trying to eliminate the gigantic bureaucratic system born after 1948. Introducing gradually again the normal market rules, the economic sphere would have modified also the political sphere, making the State democratic as in the past: this meant that the autocratic system would have been deleted and industries would have had no more strong political influences. In their project, after these changes, directors had to be named by workers (using the factory councils), for sure more conscious of economic activities in the industrial plant in comparison with old politics: this was a concept based on the democratic self-management of workers619, which would have limited the bureaucratic decisions. To give a political representation to the workers, the socialist self-management State would have given to the workers’ councils the possibility to create a sort of parliamentary chamber: with this political organ, workers would have participated to political questions particularly important for the economy (without being paid more). This idea was in perfect agreement with the pure socialism: in a true socialist democracy, it was necessary to give the power to the workers (following the Lenin’s program) and ideally creating a Congress of workers’ councils (the Soviets), elected in factories in all the country620. For Czechoslovakia, it meant only to defend the achievements of 1948, preserving the collective propriety of means of production.

The New Course policies gave a huge responsibility to workers’ councils, because they received a series of powers determinants for the enterprise. Workers’ councils obtained the power to elect and dismiss the director of their factory and the prerogative to have a clear report of the production. Proletarians, farmers, intellectuals and soldiers were reputed the principal actors of the cultural and political revolution621. In the moment in which they were choosing their director, they would have kept attention not to elect a person that was only promising to them a higher wage, because they needed to consider the economic prosperity of

618 C. Boffito, L. Foa, La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970, p. 179-180. 619 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 141-143. 620 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 28-29. 621 Ibid., p. 14. - 152 - their enterprise622, remembering that the State could no more defend the inefficient factories from the free market. In addition, Dubček and Šik permitted to the population to understand the paradoxes of the Czechoslovak economy, defining as a “State capitalism”623 the previous economic and non-democratic system: the situation was worrying but not disastrous, so it was necessary to act in a rational way starting to eliminate the old errors.

The goal of the New Course was to come back to the Marxist-Leninist theories because, following their ideas, they would have realized a true socialist direct democracy with a comprehensible functioning (Dubček used to define his ideology as "socialism with a human face"). While the capitalist democracy was based only on the occasional participation of citizens for the election of the Parliament, in a socialist regime the democracy needed to be realized already inside the factories (and so during the daily life, among the same producers and where people went to do economic activities). The consolidation of the socialist democracy624 meant that the government wanted to give more freedom of criticism, press, organization and of manifestation for all tendencies and for all parties that respected the socialist Constitution and that wanted to defend the socialized production mode. Following Marx625, the socialist democracy needed a society controlled by the “self-government bodies of the producers”626 (in which the political power was kept by the revolutionary proletarian class). The first indispensable political action was to remove the central economic organs and their bureaucracy, substituting them with a strong economic council no more with the task to give orders but with the goal to organize the economic life of the State. The industries, in this way, would have had no strict rules from the central organs: they would have developed more abilities to decide credits, prices and salaries627. After having solved the problem related to executives, the economy had to stop funding for industries that were producing unsalable goods and for buildings built too slowly to have an efficient social purpose. The State had already destined 100 billion crowns for buildings still not ended, so it was necessary to finish the old commitments before thinking about new ones, also to avoid inflation: in this way, all the money saved would have helped to reach the budget balance.

622 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 145. 623 State capitalism meant that the economic structure was owned by a single body (the State itself) while the proletarians were the exploited majority without decisional power. 624 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 28. 625 Marx had written about the need of the “self-consciousness of the working class”, of vital importance in the political sphere. 626 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 39-41. 627 Factories and cooperatives would have needed to develop their entrepreneurial skills, while before they had only to follow orders from central organs. - 153 -

The production would have had a limit: factories would have received the finances only for marketable goods and, if they had always negative balances, the State would have let them fail. The most efficient factories (the ones that were able to obtain conspicuous gains)628 would have received bigger State financing and incentives to improve more and more their productive potential: this was the fundamental prerequisite in order that the Czechoslovak economy could have had the possibility to access freely to international markets. The major openness would have boosted the competitiveness of Czechoslovak factories, which would have improved their productive structure to be able to offer goods of higher quality. About importations, the government would have given a priority to raw materials used by industries to produce consumer-packaged goods. For exportations, it would have reduced the sale of goods coming from mechanic industries, increasing the sale of cars.

In opposition to the past tendencies, the State would have invested firstly in the most modern and technological sectors, reserving also more importance to unproductive investments (as for transportations and communications, scholastic and scientific organization, housing, health care and public services). The economic directives would have changed: the government wanted to abolish the old directives that were asking a mandatory report about the relation between increase of productivity and increase of wages (because it had no meaning to continue to boost the quantity without thinking about the quality)629. A series of new economy directives, related to 1969, were destining huge financing to industries that were producing consumption goods, food, construction materials and houses. The new politicians would have transformed completely also the system of prices, eliminating both the ones kept unjustifiably high (adding taxes) and the ones that were too low to permit to cover their production costs630. While the high prices of some goods were sometimes increasing the storage of goods otherwise sailable, the low prices of other goods were producing a too big demand (that the State was no more able to satisfy). Considering that some prices were kept higher with taxes, to eliminate the system of fixed prices even the taxation had to change: for this reason, it was necessary to unify trade taxes.

Dubček and Šik understood also that the American concurrency was too strong, so Czechoslovak factories should have taken advantages from cooperation with other European enterprises: French, German, Austrian and Belgian factories showed a great interest to cooperate with Czechoslovak enterprises and this project would have created a stronger

628 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 156-158. 629 Ibid., p. 163. 630Ibid., p. 160-161. - 154 -

European industry. For Czechoslovakia, it was the right possibility not only to modernize its work processes and to reach new productive levels631 (more profitable) but also to enter again in capitalist market with its products. This openness would have permitted to Czechoslovakia to produce bigger quantities at lower costs (without losing quality).

Clearly, some of the measures adopted during the Prague Spring (or the Czechoslovak Spring) caused discontent among workers632, who had to tolerate the increase of some prices and the reduction of certain salaries. The revision of wages had been done to eliminate egalitarianism in the wage structure (the goal was to begin a system based on individual work performance and on results obtained by the employing enterprise). Nevertheless, their worst fears were unemployment, higher cost of living and a higher social inequality. The proletarians did not approved Novotný and his political class, but they were not sure about the new technocrats’ intentions633. They were not considering that the socialist State, through its State budget, would have not left unemployed people without assistance. Instead of financing passive factories, the government would have been available to help financially and morally its citizens while they were searching for an alternative job, giving them a compensation for the lost earnings and an insurance for their quickly readjustment634. The politicians of the New Course knew that workers had no responsibilities for the Czechoslovak economic problems, because they could not influence the behaviour of their factory (its programs or its investments): the only responsible were the previous politicians. Frictional unemployment would have grown to qualify the employees of factories dismissed and to adapt the economy to the time needs. This was not a refusal of the right to work: people would have attended free requalification courses and then their wages would have been higher.

To finance the various changes, the politicians of the New Course purposed to apply for a long-term foreign loan of 300-500 million dollars to accelerate the technic reconstruction and the modernization635 of the Czechoslovak companies. The loan would have helped the State while it was eliminating the inefficient sectors, avoiding to be forced to export at the maximum level possible without taking care of the prices of sale (because the currency

631 Ibid., p. 165-166. 632 The previous political class had done nothing to change the situation even because it had known that some policies would have been unpopular. 633 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 31. 634 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 170. 635 The modernization was necessary even to substitute old industrial machineries: still in 1986, the average age of industrial machinery and equipment was 12 years old (and 10% of them was more than 25). These problem contributed to the low productivity of Czechoslovak workers (compared with the Western Europe results). - 155 - reserves636 were too few to do other big investments). In the economists’ calculations, after two years the more free market would have given the necessary innovation to the business activity (protecting consumers): industries and cooperatives would have had a direct passage to enter in the market637 and so they could have understood perfectly the national and international demands.

The Czechoslovak counterrevolutionary did not consider that the situation was extremely dangerous for them, because there were not the necessary international conditions to continue such a hard change. The Soviet army started a series of movements near the Czechoslovak boarders, while from the Kremlin politicians were trying to dissuade the action of Dubček and his government. The President Chruščëv and his bureaucracy were afraid of the spread of the ideals of the socialist democracy Czechoslovakia among proletarians in other socialist States (mainly in Poland, East Germany and Soviet Union). His government had been already faced international problems with the Chinese Popular Republic of Mao since 1956 and, in the ‘60s, other socialist countries (as Vietnam, Korea, Cuba and Albania) began to refuse the political theories of Moscow638: this was enough to push the USSR to control more severely the remaining socialist countries.

The central committee of the Czechoslovak communist party itself prepared a reform program for the structure of the party, based on Lenin’s ideas and analysing Rosa Luxemburg’s observations against the bureaucracy. The party had to act complementary with the society, to realize a true democracy in which proletarians would have had the predominance. The communist party, after the reform, would have had the same a leading role but its structure would have been adequate to understand the problems of proletarians in a democratic way, respecting the collective and individual interests. Workers would have received the essential power to eliminate all social privileges (also the one that the old bureaucracy had unfairly taken) and to establish as only value criterion the quality and the quantity of the work done. This was a warranty for the free development of individuals and the social progress. The party policy would have been freely showed and political minorities would have received the necessary freedom to boost the development of the society. The executive organs ended to be named by the USSR and the new system provided a democratic election with secret vote, to eliminate abuses and political monopolies639.

636 Losses of industries were always covered by the State budget, so using money coming from taxes. 637 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 172-173. 638 S. di Giuliomaria, Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969, p. 30. 639 Ibid., p. 71-74. - 156 -

In the while, the Soviet Union was analysing the evolution of the Prague Spring. It knew that it was having problems to follow the development abilities of the USA (except for traditional sector, less and less important in the 20th century) and it understood that the revolutionary changes purposed by Dubček and Šik could have modified even the political structure of the USSR itself. The Soviet politicians believed that the situation in Czechoslovakia was worrying also for its influence on young people640: in the USSR, they were not recognized as a particular category, while in the capitalist States (and in the reformed Czechoslovakia) they were receiving more attentions (there were more attractions for them). After a reunion on 9th April 1968, the USSR considered the New Course as a danger not only for the socialism in Czechoslovakia, but also for the continuation of the Warsaw Pact: in their opinion, the reforms would have built a capitalist and bourgeois State641 and those ideas could have spread in other socialist countries (as Poland and Romania). When Brežnev conjectured that diffusion, he considered that Ceaușescu and Tito were supporting Dubček for his idea to create an independent State with an independent communist party642 (as in Yugoslavia), while the executives in East Germany and Poland were asking the USSR to block the reforms.

In May, the diffusion of youth protest in all Europe bothered the Soviet leaders, more and more determined to stop the New Course (even if they had been restrained by the Czechoslovak refusal showed to Novotný’s ideas). The USSR was feeling the effects of the freedom of the Czechoslovak press, which was spreading also in the State-Continent materials forbidden, while the university students in Moscow were beginning to support Dubček’s innovations643. After that Brežnev understood that the Czechoslovak army was developing in an anti-Soviet way, he summoned a series of reunions among the members of the Warsaw Pact, highlighting that it was necessary to act quickly in the federation before that it would have left the alliance.

Dubček refused to negotiate with the Soviet communist party a revocation of his reforms, so on 21st August 1968 the Soviet Union decided to attack Czechoslovakia (having the support of all Eastern State, except for Albania and Romania). The invasion had been planned with

640 A. Graziosi, L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008, p. 346. 641 In reality, Czechoslovak reformers did not intend to introduce free enterprises or to permit free play of market forces: they were still socialists and their will was to improve economic management under continuing party control, reducing only the rigid controls at that time existing. 642 F. Guida, L'altra metà dell'Europa: dalla Grande Guerra ai giorni nostri, Laterza, Roma, 2015, p. 113. 643 A. Graziosi, L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008, p. 354. - 157 - attention and 200.000 soldiers644 occupied in a few hours Prague. Dubček and the reformists were arrested645 (while Šik was in Yugoslavia on holiday, starting a long exile) and they had to sign a treaty in which they removed all the changes by them implemented in the State: for this reason, the military occupation was a victory for the old communist class, even if the population was particularly disappointed by the Soviet decision.

On 17th April 1969, the Soviet command imposed Husák as new secretary of the Czechoslovak communist party (he remained in office since 17th December 1987), creating a series of disagreements between party and workers. Thousands of intellectuals, citizens and reformists, united with 500.000 members of the communist party, left the country, showing clearly the disappointment of citizens and their refusal of the new impositions. In 1970, a new treaty of Soviet-Czechoslovak friendship enshrined the right of the Red Army to remain in the territory of the Republic (to defend the socialism). In May 1971, the fourteenth Congress of the Communist Party formalized the standardization with the political decisions taken by the party itself. Still in the same year, on 28th January 1970, in Czechoslovakia there had been the traditional political elections (based on a unique list as always): the National Front list, monopolized by the communist party646, in its two versions (Czech and Slovak). The citizens chose as new First Minister Lubomír Štrougal, supported by the USSR. With him the reformist current stopped his movement and, after that the conservative Gustáv Husák substituted Svoboda as President of the Republic (in 1975), Czechoslovakia became one of the most faithful allies of the USSR (he received the title of Hero of the Soviet Union in 1983 for his loyalty). With him, the offices of the Secretary of the communist party and of the President of the Republic were again in the hands of the same person: it was a sort of return to the years before the New Course.

The government encouraged citizens' political passivity by committing to achieve good economic results, permitting an increase of consumption and availability of goods on the market. The fourth quinquennial plan was completed in advance and the centralized system received again its full strength, while the industry-leading primacy came back to the heavy industry. The “normalization” eliminated also the idea of separating the federation into two separate Nations, recovering the project of industrialization of Slovakia and of the other backward regions. It is clear that the economic results obtained were still not satisfactory.

644 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 814. 645 A. Graziosi, L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008, p. 356. 646 F. Guida, L'altra metà dell'Europa: dalla Grande Guerra ai giorni nostri, Laterza, Roma, 2015, p. 114. - 158 -

There was a slight economic recovery with the fifth (1971-75) and sixth (1976-1980) quinquennial plans647, which provided great investments in mechanical production, a reduction of wages and a reduction of stocks eliminated part of the shortage of consumer goods. Notwithstanding the minimum recovery, in the ‘70s, the prices of fuels and raw materials648 (the main importations of the country) increased much more than the prices of exported manufactured goods649 and this phenomenon caused a growing trade deficit. Other difficulties included insufficient technological improvement, failure to meet the conservation goals for energy and materials and a disappointing performance of agriculture650 (after a series of severe winters and spring flooding in 1975-1976 and a constant lack of machineries and fertilizers)651.

Only with the seventh quinquennial plan, the government decided to increase investments in the chemical and electronic industry, understanding that the gap with the Western countries was too big. In addition, still in the period 1981-1985, personal consumption declined (because the cost of living grew more than wages) and the party increased its interest in environmental protection. In 1982, after fourteen years of “normalization”, the economy grew constantly until 1985 at a rate of 3% per year. In 1972652, the per capita income in Czechoslovakia was 7.000 dollars: it was the second best result in the Eastern Europe (after the 8.559 dollars of East Germany) but it was not comparable to the average of capitalist countries (for example, in Italy the per capita income was 11.475 dollars and in Germany was 12.981 dollars)653. Knowing the problems of the socialist economy in the country from 1948 to 1967 and considering that, after the Soviet invasion in 1968, Czechoslovak had to follow again the old political-economic model, it is perfectly understandable why, at the end of the ‘80s, the standard of living of the country were lower than in capitalist market economies (also because the gap between the federation and the OECD countries grew quickly during the

647 J. Prust, The Czech and Slovak Federal Republic: An Economy in Transition, International Monetary Fund, Washington, 1990, p. 6. 648 Czechoslovakia was rich of coal, but after the ‘70s in the most modernized countries the primary energetic material were oil and natural gas (of which the territories of the federation were particularly poor). 649 The prices increased because the Czechoslovak oil and gas were coming from Siberia (so there were high transportation costs) and coal was beginning more and more costly to be produced. 650 Agriculture received much less investments than industry and the prices of farm goods had been kept low to extract workers and investment for the expansion of industry). Only in the ‘70s, the average farm income reached the same level of urban workers, thanks to higher prices from the ‘60s. 651 I. Gawdiak, Area Handbook Series: Czechoslovakia: A Country Study. Library of Congress Washington DC Fedeal Research ivision. 1989. 652 S. Broadberry, A. Klein, Aggregate and per capita GDP in Europe, 1870-2000: continental, regional and national data with changing boundaries, in «Scandinavian Economic History Review», vol. 60, n. 1 (2012), p. 79-107. 653 F. Guida, L'altra metà dell'Europa: dalla Grande Guerra ai giorni nostri, Laterza, Roma, 2015, p. 117-118. - 159 - last twenty years of Communist regime)654. Even if citizens had a secured job655 and so more than sufficient financial resources, they had to work more than in capitalist States to earn the same quantity of money (for example, 11,5% more than in Austria). In addition, because of the chronic shortages of the market, sometimes workers were not able to spend their money to acquire desired consumer goods and services at the officially set prices. These shortage created a series of problems, like queuing, long researches (considered one of the causes of the low birth rate in the country656), tipping, bribery, forced substitution and forced saving. This phenomenon, added with the low quality and the outdated design of consumer goods and services, reduced the utility derived from household income and expenditure, forcing people to use personal connections or second economy suppliers (at higher prices) to obtain the same the necessary goods657.

654 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 655 Almost 88% of the population of working age was employed in 1985 and about 37,4% of the workforce was in industry. 656 O. Šik, La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969, p. 121. 657 J. Porket, Unemployment in Capitalist, Communist and Post-Communist Economies, Springer, Berlin, 1995, p. 64-65. - 160 -

5 The economic and politic situation at the end of the 20th century

5.1 The end of the Portuguese dictatorship

After the felt of Salazar, on 27th September 1968, the President of the Republic Américo Tomaz decided to name Marcelo Caetano as First Minister of Portugal658, forcing him to confirm the Ministers chosen by Salazar for at least six months. The President decided to choose him for his prestige and because he was supported by the upper monopolist bourgeoisie and by the middle classes. In the country there had been no strong oppositions to his nomination even if the integrationists, a part of the National Assembly and of officials of the army, the most conservative part of the União Nacional and the traditionalist agrarians were not satisfied by him. Tomaz also disagreed with Caetano, because he was thinking about a way to reform the Salazarism, refusing its conservatism.

Caetano wanted to liberalize the State but he had always to treat with the extreme right-wing members of the regime, losing his prerogative in the management of the political power (also because the President, the ministries and the military officials were blocking him). His idea was to realize an “evolution in the continuity”659, searching the support both of liberals and conservatives. During the so-called Primavera Marcelista (from 1968 to 1970), Caetano had operated a discreet economic and social modernization and a sensible political liberalization, ending the exile of some moderate opponents of the Salazarism and creating the expectation of a real political change in Portugal. The reforms started six months after Caetano’s election, because he had the possibility to change the old ministries with more reformist ones.

The new government transformed the Salazarist National Union in the Ação Nacional Popular (ANP) and it eliminated the political police (PIDE), introducing the Direção-Geral de Segurança (DGS), with less repression power. About the economy and the society, the government opened the country for foreign investment, abolished industrial licensing requirements for firms and promoted large public works, beginning the process to join the European Economic Community (EEC) and signing with it, in 1972, an important free trade agreement. The agreement, which took effect at the beginning of 1973, established that Portugal had time until 1980 to abolish its restrictions on most community goods: the membership in the EFTA and the growing foreign investor presence contributed to the

658 N. J. Kritz, Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995, p. 283. 659 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 170. - 161 - industrial modernization of Portugal and to the increase of export diversification between 1960 and 1973. In addition, the new government improved social assistance (including pensions for farmers) and mass education (mainly for the less developed rural areas), removing also some restrictions on trade union activity and reducing the censorship (for press, cinemas and theatres). To diminish illiteracy, Caetano tried to build a primary school in every village, to ensure education for all children.

During these two years, the government invested to improve the Portuguese infrastructures, protected the bourgeois monopolists660 (who were controlling the industries and the trades through banks), supported the large landowners and continued the colonial war, even if it understood that it was necessary to end it (in 1974, 45% of Portuguese national budget was absorbed by the army expenditures)661.

The middle classes were particularly pleased by the reformism of Caetano, who showed his intention to create a State of law with a modern welfare (not necessarily democratic) to redistribute wealth through social reforms and to boost the activity of constitutional and administrative institutions through political reforms. During the legislative election of 1969, Caetano permitted to the opposition to have electoral commissions662 (only in the homeland, in Madeira and in the Azores) and renewed the lists of the National Union candidates, including in the movement a large group of young reformist people. The participation of this group of liberal people in the ruling party could have been the way to transform the regime starting from the governing party itself. In reality, the opposition had not the necessary means to compete against the regime propaganda and voters were still only 1,8 million (while the total inhabitants in the homeland were 8 million). The electoral law gave the Parliamentary seat to the most voted list per electoral circle and, considering that the unorganized oppositions did not obtain majorities, the 120 seats of the National Assembly ended to be again all occupied by the candidates of the National Union.

After the election, the National Assembly was still controlled by conservative and integrationist sectors of the dictatorship, even if the young reformist in the National Union created a weak opposition called Liberal wing (eliminated in 1973)663. The conservative elements forced Caetano to end its reformist period and prevented him to give the possibility to the oppositions to create a real party. In addition, the conservatives boosted the repressive

660 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 172. 661 N. J. Kritz, Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995, p. 284. 662 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 173. 663 Ibid., p. 174. - 162 - apparatus of the regime (against Caetano’s will), so the oppositions started to be again persecuted and damaged by the censorship. They completed their project to stop the reformism of the new regime in 1973, after the legislative election, when the majority of liberal members had been expelled from the government and from the National Union. Considering that Tomaz had been elected again President in 1972, Caetano had remained the only reformist among a dictatorial and conservative political structure.

Still in 1973, even Portugal suffered severe problems due to the petroleum shock. With the increase of the petroleum prices, the big public projects based on the petrochemical and the naval industries underwent a stop, while the colonial war stressed more and more the economy. The crisis disappointed the middle classes (who wanted more equality and a significant role in the political administration of the State)664 and the bourgeois monopolists (who required to end the colonial war) and it increased the economic disparities in the society, creating social tensions.

The failure in the management of the colonial war would have brought the Estado Novo to its end: Caetano was a colonialist (and one of the most important idealist of the Portuguese Empire) but he believed that it was necessary to give the independence to Angola665 and Mozambique only if it was required by the white colonists in those two settlements666. Following this idea, black natives could have not wanted the separation from the homeland, while white colonists had the right to ask about the independence of their settlement. When he was Minister of the colonies (during Salazar’s government), he had already spoken with the Professor about the creation of a federation among Portugal, Brazil and freer Angola and Mozambique. Because of the refusal of Salazar and of the conservatives, he elaborated the idea to establish a sort of Portuguese Commonwealth, giving a “progressive and shared autonomy”667 to the colonies, where white settlers would have obtained the power respecting the natives; in reality, the new governments should have protected the interests of Portuguese capitalists impeding the birth of autochthonous economic opponents.

Clearly, both the conservatives and the guerrilla movements did not accept that plan. For this reason, Caetano’s project was blocked and he could only enlarge the right to vote in the colonies. He had no way to impose his decision to the political class, because the President was integrationist and he would have removed him from his role. The colonies continued to

664Ibid.,p. 175. 665 Unlike Salazar, Caetano spent a long period to visit the colonies and in Angola he proclaimed his project to develop progressively the Ultramarine Provinces, giving to them an increasing autonomy. 666 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 176. 667 Ibid, p. 177. - 163 - be politically and economically dependent by the homeland and the economic planning of Portugal forced the colonies to sell to it raw materials at low prices, sold again to the colonies after being processed at higher prices (as it happened with the petroleum, the cotton and the diamonds of Angola)668.

At the beginning of 1973, mainly in Angola, the white settlers were tired of the Portuguese submission and of receiving only a small part of the immense earnings given by the raw materials of the country. In addition, they understood that Caetano could do nothing to change the situation. In the while, Guinea proclaimed its independence from Portugal (recognized by ninety members of the United Nations) and also in Mozambique the Army understood to be near to the defeat.

One years later, the Army was all against Caetano669, because low-grade officials did not want to continue the colonial war, integrationist officials desired to reinforce the dictatorship radicalizing the war against African nationalist and liberal officials were no more supporting the Prime Minister (because of his forced failures). The situation had been worsened on 23rd July and on 20th August 1973, when the government, through two decrees law, decided to reduce the military expenses and to integrate the soldiers and the officials of the military academy in the army. The two decrees would have been effective only after one year but there was a so strong discontent that Caetano presented more than one time his resignations to the President (who always refused them).

On 14th March 1974, Caetano reunited all the military officials to renew their loyalty to the government and, two days later, he had to face an attempted coup (failed). Despite of the victory of the regime against the rebels, on 25th April 1974670 morning a new coup permitted to the Army to occupy the whole Portugal without fights: the dictatorship was too weak to try a defence, because the political internal divisions did not permit it. After having taken the control of the airports and of the mass media, the Movimento das Forças Armadas publicized its victory and people took to the streets671 to support the revolutionary movement against the dictatorship. While the citizens were surrounding Caetano, closed in the Quartel do Carmo in Lisbon, women began to offer flowers (mainly carnations) to the soldiers. In the afternoon,

668 Ibid, p. 180. 669 Ibid, p. 184-185. 670 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 245-246. 671 N. J. Kritz, Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995, p. 287. - 164 -

Caetano signed the surrender, leaving the power to General António de Spínola672 (removed from the Chief of staff on 14th March because of his opposition). With the exile in Brazil of Caetano and Tomaz673, the reached its goal: the Army triumphed against the dictatorship, terminating the long period of the Estado Novo.

The Junta de Salvação Nacional (JSN) eliminated the political and social elements of the Estado Novo (the youth organizations, the National Assembly, the most important executives and the political police), following its idea to create a democratic regime and to stop quickly the colonial war. The seven officials who were forming the Junta legalized all political parties (including the communist and the socialist party) and gave the possibility to workers to create free trade unions.

On 26th August 1974, Portugal recognized the independence of Guinea674, on 7th September 1974, even the independence of Mozambique and finally, on 15th January 1975, of Angola: in almost two years, the Portuguese Empire vanished.

In 1976, the new Constitution made Portugal a democratic country, giving to it a socialist role in the economic regulation. The State was a semi-presidential Republic, even if in reality the Parliament obtained the primary role in the country. The President of the Republic was elected directly by citizens, so he was independent by the Assembly (and the Assembly too was directly elected by voters)675. As in all liberal States, even in Portugal the main powers were clearly separated and balanced: the Assembly received the legislative power and the government had the executive power (but its decisions needed the approval of the Assembly and of the President). The judicial power belonged to the courts (while a Constitutional court had the task to ensure the constitutionality of the various laws). In addition, the Fundamental Law named autonomous regions the Azores and Madeira676.

All citizens over 18 years old received the right to vote (without considering ethnicities, sex or religion) and the warranty of the respect of all the rights contained in the Universal Human Rights Charter.

672 De Spínola had been the governor of Guinea (from May 1968 to August 1970) and then he became President of the Republic (from 15th May 1974 to 30th September 1974) and President of the JSN (from 25th April 1974 to 30th September 1974). 673 N. J. Kritz, Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995, p. 294. 674 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 201. 675 Ibid., p. 227. 676 Ibid., p. 228-229. - 165 -

The end of the Estado Novo had strong negative effects on the Portuguese economy. The rate of growth of the GDP passed from 11,2% (in 1973) to -4,3% (in 1975)677, the first negative result after the Second World War. The inflation grew continually until the ‘80s and wages were augmenting but not enough to follow the increase of the cost of living. Unemployment augmented from 2,6% in 1973 to 6,2% in 1975 (also because half a million settlers came back to Portugal from the old colonies)678. The bourgeois monopolists had lost their economic and political power and the State budget was in deficit, while the foreign trade balance was not equilibrated. Investors preferred to move their finances abroad and the government, to avoid a recession, decided to use the golden reserves of the State to stabilize the situation. Salazar left the country with a public debt lower than 20% of the GDP, while in 1985 it reached 60% of the national product. In addition, while in 1970 the balance of the public administration was positive (+3%), in 1985 it was negative (-10%).

The Third Republic had an important recovery only after the Presidential elections in 1986, when citizens elected for the first time, after sixty years, a non-military President (the socialist Mário Soares). In that year, the State normalized definitely its political situation and it joined the European Economic Community (1st January)679. The Community gave the possibility to the country to improve its economic structure, modernizing its technology and its society: huge financial sources entered in Portugal and the government used them to build fundamental infrastructures (as hospitals, bridges, schools and roads) and to boost some economic activities. The gross national product680 grew annually of 4,2% on average, from 1985 to 1990. The production was increasing even if, following the idea of an economic reconversion, farmers, fishermen and entrepreneurs received incentives to reduce decisively their production. With the adhesion to the EEC, the ratio of foreign trade to GDP increased681 from 30% to 55% (from 1986 to 1994).

The growth of total factor productivity felt from 2,64% per year (from 1952 to 1973) to 0,31% (from 1973 to 1991): this decline was due to the reduction of the efficiency of the second and third sector. On more, the growth of income per capita continued constantly for the whole Estado Novo, decreasing only in 1974 and continuing its growth from 1975 to the

677 P. Lains, Catching up to the European core: Portuguese economic growth, 1910-1990, vol. 40, n. 4 (2003), p. 14. 678 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 214. 679 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 397. 680 It is an economic indicator obtained summing, for each enterprise, the difference between the value of the goods sold and that of the goods acquired. The net domestic product is obtainable if depreciation is deducted from the GNP. 681 A similar increase happened from 1960 to 1973, after that Portugal had joined the European Free Trade Association (EFTA): the ratio of foreign trade to GDP had grown from 17% to 30%. - 166 -

‘90s. During the Salazarism, the expansion of the external and internal demand (after having joined the EFTA) permitted to obtain high levels of industrial growth. Industries improved their situation also thanks to the governmental protection from the foreign concurrency and to the fiscal incentives682.

The upper bourgeoisie was the class that earned more from the European integration and, from 1989, they took advantages from the privatization of the banks and of the biggest factories (gaining again the control of the most important industries, of the banks and of the trade). This situation led to an increase of inequality in the society: the lack of social safety nets did not avoid the spread of poverty among the lower classes, while upper classes were accumulating richness even through stock market speculation and real estate speculation.

The fragility of the Portuguese economy would have been showed clearly from 1992-1993, after a period of international recession. Only in that period, the new socialist government introduced some social safety nets (as the granted minimum wage) even if the upper bourgeoisie continued to take advantages from big public works, communitarian subsidies and privatizations. Despite of it, the huge communitarian finances permitted to the middle classes to live a period of wellness683, while the country was considered the fourth most open economy in the European Union.

The democratic transition in Spain

During the Spanish democratic transition, the country abandoned in a pacific way the Francoist autocratic regime (thanks to the death of Franco himself and to Juan Carlos’ decisions)684 to create a new democratic and constitutional political system. The transition had begun with the proclamation of Juan Carlos I de Borbón as King of Spain, on 22nd November 1975, and it had lasted until the promulgation of the Constitution, on 29th December 1978 (or until 28th October 1982, when the government of the Union of the Democratic Centre party ended, after having elaborated and approved the Constitution of 1978)685. Its main protagonists were two: Juan Carlos and the First Minister Adolfo Suarez.

Juan Carlos facilitated the introduction of a democratic political system in the country because he understood that the Western countries, an important sector of Spanish and international

682 P. Lains, Catching up to the European core: Portuguese economic growth, 1910-1990, vol. 40, n. 4 (2003), p. 15-16. 683 F. Tavares Pimenta, Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011, p. 232-234. 684 L. Bonanate, N. Nesi, Democrazia e diritti nell'opera di Bobbio. Italia e Spagna a confronto, Franco Angeli, Milano, 2009, p. 117. 685 C. Adagio, A. Botti, Storia della Spagna democratica: Da Franco a Zapatero, Mondadori, Milano, 2014, p. 64. - 167 - capitalism and the oppositions to the Francoism wanted the end of the dictatorship in the State (substituted by a democratic and liberal regime). Nevertheless, extreme left-wing radicals and extreme right-wing Francoist groups (led by el bunker and supported by the army)686 were contrary to the change (and, for this reason, they were threatening a coup as the one organized by Generals Tejero and Armada, on 23rd February 1981).

The king wanted to avoid the idea to establish a democracy with a revolution (as hoped by two political party associations, the Democratic Jury and the Democratic Convergence Platform). He preferred to follow the opinions of some reformist members of the Movimiento Nacional (such as Fernandez Miranda and Fraga Iribarne), supporting the reforming of the Fundamental Laws in a legal way, achieving the same the democracy even if slowly687. Following this political plan, Juan Carlos began his reign respecting the Francoist laws and confirming Arias Navarro as prime Minister of the regime (as Franco had wanted). The timid political reform promoted by this cabinet was limited to the introduction of the freedom of assembly (without authorizations) and the possibility of creating political groups (all political parties were again legalized, excluding the communist party).

The government of Arias Navarro688, very sensitive to the Francoist pressures, refused to introduce real political reforms; for this reason, the king, on 1st July 1976, forced the First Minister to resign and replaced him with Adolfo Suárez.

Suarez created a series of reforms689 to satisfy the demands of the opposition, normalizing the political situation and legalizing the communist party (the most organized political group with the largest number of militants among the opposition), despite of the opposition of the army commands. To complete the democratic transition, the government had to complete the difficult political operation to persuade the Cortes Españolas to dismantle the system itself.

The new government had a clear political program based on two points, that were enough to end formally the dictatorship and to realize a true democratic State690. The first point was about the Ley para la Reforma Política which, once approved by the Parliament and by Spanish citizens with a referendum, would have allowed the appointment of a constituent assembly in order to create a system of liberal democracy. The second point was the convocation of democratic elections on 30th June 1977.

686 O. G. Encarnación, Spanish Politics: Democracy After Dictatorship, Polity, Cambridge, 2008, p. 3-5. 687 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 136-138. 688 Ibid., p. 154. 689 M. M. Resende, Catholicism and Nationalism: Changing Nature of Party Politics, Routledge, London, 2014, p. 43. 690 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 167. - 168 -

From the beginning of its political activity to 1977, Suarez691 promoted a political amnesty and, in March 1977, after a necessary reform of the Criminal Code, he introduced the right to strike. In April 1977, union freedom was granted and, in the same month, the government created an Electoral Law similar to the ones current in countries with a liberal and democratic political system.

The Law on Political Reform692 (formally the eighth and last Francoist Fundamental Law) was promulgated on 4th January 1977. This law, composed by five articles, contained the tacit derogation to the Francoist political system. The approval of it transformed politically the country, making Spain a democratic, parliamentary and monarchic country and making the law as one of the fundamental principles of the State. It recognized the fundamental human rights as inviolable (article 1), it conferred the exclusive legislative power to popular representation (article 2) and it created an electoral system inspired by democratic principles and proportional representation.

The approval of this law gave the possibility to Spain to have again free democratic election. The government organized them on 15th June 1977693. The Unión de Centro Democrático was the most voted party and Adolf Suárez had the possibility to form another government. This result enabled a series of democratic reforms (amnesty for political offenses, abolition of the Tribunal of the Public Order, of the "vertical union”, and of the General Secretariat of the National Movement, recognition of workers' unions and freedom of press and association).

The democratic transition had its highpoint in October 1978, when the Parliament and the Senate (in joint session) approved the new Constitution694. The Fundamental Law was characterized by a liberal ideology: the form of State provided was a Constitutional Monarchy695 with Juan Carlos I de Bourbon as King (the legitimate heir of Alfonso XIII, succeeded to Juan de Bourbon after his abdication). The powers of the monarch were limited and enumerated in the Constitution696. The division of powers (fundamentals for the liberal system) was the base of the new political system (while before they were concentrated in Franco’s figure). National sovereignty allowed the election, by universal suffrage (men and

691 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 248. 692 G. Ranzato, Il passato di bronzo: L'eredità della guerra civile nella Spagna democratica, Laterza, Roma, 2006, p. 85. 693 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 7. 694 M. M. Resende, Catholicism and Nationalism: Changing Nature of Party Politics, Routledge, London, 2014, p. 45-46. 695 N. J. Kritz, Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995, p. 298. 696 C. Adagio, A. Botti, Storia della Spagna democratica: Da Franco a Zapatero, Mondadori, Milano, 2014, p. 149. - 169 - women over the age of 18), of representatives of the sovereign people in the Parliament. The Constitution imposed a very low personalization relationship between elected and voters, because citizens voted for closed lists whose only reference was the leader. The Parliament (expression of the citizens’ power) was divided in two Chambers: the Congreso de los Diputados and the Senado; the two Chambers gave the confidence to the President of the government, proposed by the King, and they could control the action of executive power.

The President of the Government exercised the executive power with the help of his council of Ministers. Judicial power was kept by judges, hired through a public competition. In addition, the Constitution avoided the birth of a federal State but it eliminated also the Francoist concept of a “unique Spain”, granting wide local autonomies (that did not include the taxation autonomy, if not for a very small extent and, initially, not even the linguistic one). Recognized historical nationalities were Catalonia697, the Basque Country, Galicia and Andalusia.

Clearly, the democratic transition brought deep changes also in the economic sphere of Spain: after 1975, the country had begun a process to enter in the European Economic Community (already existing from 1957)698. The government understood that it was necessary to substitute the industrial sectors no more efficient, preparing the Spanish market to face the international concurrency. In a period of 15 years (from 1960 to 1975), Spain’s GDP per capita more than tripled699: while the ‘50s had been characterized by a slow growth, high and very volatile inflation rates and economic isolation, at the beginning of the ’60s the country was facing a transition700 that permitted an increasingly open and competitive economy. Despite of it, the economic growth that had been realized during that years was ended and the signs of the economic crisis were particularly evident.

The crisis, followed to the increase of petroleum prices, hit firstly the industries, reducing their contributions to the formation of the national GDP701 from 40% (in 1970) to 35,7% (in 1985). The secondary sector demonstrated not to be able to overcome the augmentation of production costs (caused by higher prices of energetic sources and derivate raw materials) and, with the legalization of syndicates, workers received higher wages and more social care that made some factories fail. The phenomenon was not so abnormal: Spanish industry was

697 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 175. 698 VV. AA, La storia: dalla guerra fredda alla dissoluzione dell’URSS, Mondadori, Novara, 2007, p. 381. 699 M. Santamaria Monturiol, The transformation of the Spanish economy: a success story of economic transition, 2015. 700 Spain faced a transition from a protectionist autarkic system to a liberalized, market-based economy, where the role of the Public Sector changed from main economic agent to regulator. 701 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 150. - 170 - specialized in labour-intensive sectors, where workers were receiving low wages. When the unique syndicate started to ask higher salaries, these sectors went into a deep crisis. The government had to grant workers requests to avoid strikes, so it allowed salaries to grow at the same rate of inflation plus two-thirds. The increasing wages helped not to have other social problems and to prevent a collapse of the internal demand, even if they caused a growing inflation from 1976 and uncertainty among investors.

For this reason, many factories had closed and the unemployment grew continually702 (in 1970 it was 1,1%, in 1985 it reached 21,9%). The new democratic government had to face also a worrying inflation, that was growing more than in the rest of Europe (because of the great dependence of Spanish economy on imported petroleum and of the growing labour costs), a low industrial productivity (caused even by old machineries) and an excessive financial dependence from abroad (so a growing external deficit). Internal demand decreased and, to sustain the importation expenses, the country had to export technological goods (obtaining favourable results, also because importations were reduced by the lower internal demand703). In 1974, the Ministry of Industry affirmed that the rate of growth of the real gross industrial production was 5,7%, while in 1973 it was about 10%. In addition, the generalized European crisis after 1973 reduced the number of foreign tourists that were going to Spain704 (in 1974, they were 12,2% lower than in 1973) and the decline of Spanish emigrations caused a growing unemployment.

The effects of the crisis were particularly evident in 1976: Navarro had to face a devaluation of the peseta in February that caused an increase of 14,2% in the prices of Spanish imported goods, while exportations increased their price of 10,3%, making the balance of trade deficit increase of 5,6 billion dollars. The deficit grew even because importations were 9,5% more than in the previous year. The weakness of the currency permitted a great augment of the cost of living (19,8%). The GDP grew the same at the rate of 2,4% and private consumptions spending augmented of 4%, while investments in fixed capital declined by 2%705: the decline of investments and the increasing inflation were two of the biggest problems at that time.

In the ‘80s, after having ended the democratic transition, the government acted to solve the industrial problems, stimulating the business activity and helping factories to solve financial and productive difficulties. Generally, the policies obtained bad results; the only improvement

702 Ibid., p. 319. 703 The rise of the costs of living, in 1974, reduced the growth rate of real consumer demand (from 7,6% in 1973 to 4,7% in 1974). 704 S. Lieberman, Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005, p. 152. 705 Ibid., p. 171. - 171 - had been in the most powerful industrial cities (Madrid, Barcelona and Bilbao, where, in the 1983, there were 77% of the biggest Spanish factories).

The economic recovery started from 1st January 1986, when Spain entered into the European Economic Community706. At that time, Spanish GDP was 70% of the average European GDP. The adherence to the community modernized deeply the Spanish economy, representing the end of its closed economy and the great augmentation of its importations and exportations. Thanks to the integration process, in the ‘80s the Spanish economy lived a recovery (from 1985, the growth of Spanish GDP was higher than the European average) that lasted until the ‘90s: factories created many workplaces (more than the EU average) and the government liberalized the international economic transactions, supporting a huge technologic progress and augmenting the competitiveness of factories. With the EU financings707, the country received the necessary money to modify its economic and social system (increasing foreign investments, economic growth and the economic and social cohesion).

After these modifies, Spanish industry ended to be specialized in labour-intensive sectors, destining important investments for technological and innovative productions: it was necessary to increase the productivity, so factories made efforts to develop the human, physical and technological capital. The country was more and more important for the European abroad policy mainly for its relations with the South America and its influence in the European dynamics was increasing: it was clear that, thanks to the participation to the European Economic Community, the State was facing an economic development and a regional strengthening708 that was unthinkable without the Communitarian helps in 1975, after Franco’s death.

5.2 The capitalism in Czechoslovakia

After the failure of the “Prague Spring”, Czechoslovakia had no way to reform its economic and political situation for more than twenty years, because if not the USSR would have invaded the federation again. This affirmation was true until the beginning of Michail Gorbačëv’s government (General Secretary of the Central Committee of the Communist Party of the Soviet Union from 11th March 1985 to 24th August 1991) and his declaration to be

706 G. Vacca, L'unità dell'Europa: rapporto 2003 sull'integrazione europea, Edizioni Dedalo, Bari, 2003, p. 215- 216. 707 Spain took advantages particularly from the common agricultural policy (PAC, created in 1962 among EEC countries and accounting for 70% of the total EEC budget), being one of the country that gained more from this communitarian policy. 708 G. Lizza, Integrazione e regionalizzazione nella CEE, FrancoAngeli, Milano, 1991, p. 214-215. - 172 - firmly opposed to new attacks against the socialist countries, showing his openness firstly with Latvian politicians who were asking for the independence709. The rejection in the use of force to keep the system intact made possible a quick and peaceful end of the Socialist block.

The crisis started on 4th June 1989 in Poland (with the victory of the anti-communist movement Solidarność during the elections) and continued on 11th September, when Hungary opened its boarders with Austria (giving the possibility to East Germans to go to the Western Germany). Understanding that the Soviet Union was not reacting to these decisions, also East Germany (on 9th November, with the fall of Berlin Wall), Hungary, Bulgaria, Estonia, Lithuania, Latvia and Romania decided to abandon the socialist block.

This situation gave the possibility to Czechoslovakia to refuse the Soviet control and to reform its structure: for this reason, from 17th November to 29th December 1989, mainly students and old political opponents organized a series of demonstrations against the single- party government of the communist party. The “Velvet Revolution”710, inspired by Vaclav Havel (leader of the clandestine democratic opposition organized in the Civic Forum and then President of the federation from 29th December 1989 to 20th July 1992), spread in the whole federation creating strikes, disorders and occupation of theatres and being supported by a general strike in the end of November. The goals of the protestors (united in the Civic Forum) were the dismissal of the federal government, the creation of a State of law, a new Constitution, the equality of conditions for all political and civil groups (eliminating the leading role of the communist party), the beginning of the negotiations to join the European Economic Community, a major openness with the Western culture and a free and democratic education711. The communist government had no way to block the protestors and it refused to use the army to kill the strikers (who were about half a million): for this reason, the President Gustáv Husák, the Prime Minister Marián Čalfa and the Secretary of the communist party Karel Urbánek had to resign (respectively on 10th, on 29th and on 20th December). On 29th December 1989, Alexander Dubček was named Prime Minister and, with his government and with the beginning of Havel’s presidency, the revolution ended.

709 A. Graziosi, L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008, p. 594. 710 R. Shepherd, Czechoslovakia: the Velvet Revolution and Beyond, Springer, Berlin, 2000, p. 35. 711 The socialist system of education was based on learning by rote and students were accepted into universities if they had working class backgrounds, if they were supporting the communist party and if they had participated in youth organizations of the regime. - 173 -

The government organized free elections in June 1990712 and citizens confirmed Havel as President: for this reason, Dubček and him became the protagonists of the end of the communism in the country, restoring freedom and transforming an economy in bad conditions (Czechoslovakia was poorer than Portugal, even if in the ‘40s it was one of the ten richer States in the world)713. In the period from 1990 to 1992, the two States in the federation discussed about their separation (already programmed in 1968): Havel was firmly contrary to it and, when he understood that the federal Parliament would have voted for the secession, he resigned (20th July 1992). The Czechoslovak Parliament voted on 25th November 1992 in favour of the division of the federation, creating the Czech Republic and Slovakia. The division, official since 1st January 1993, was conducted without planning a popular referendum and only through negotiations between the Prime Ministers of the two countries (the Slovak Vladimír Mečiar and the Czech Václav Klaus). Czech people were considering the separation from Slovakia as a way to free themselves from the old unsuccessful Eastern legacy and as way to conclude quickly a Western convergence. In reality, that decision has given no advantages to the Czech political scene and the disintegration of Czechoslovakia was detrimental to both countries714 due to their reduced market size and increasing transaction costs in their mutual trade. In addition, by decreasing the domestic Czechoslovak competition, the pressure for efficiency in both the Czech government and domestic firms has declined. Despite of this decision, the two States demonstrated to be able to manage their society and to create democratic and free political regimes715: with the democratic transition, the inefficient and counterproductive State apparatus had been eliminated in both countries, together with the previous communist authoritarianism and its weak institutions.

After defeating the communist party, the government had to face the socialist economy and to find a way to give freedom also to the economic sphere, introducing the capitalist and liberal market as in the West Europe. The clear conviction to introduce the liberalism followed the common idea, in the end of the ‘80s, that liberalism would have been the best standard in politics and economics, and its ideas strongly influenced the internal developments of individual countries (also thanks to the considerable resources available to international institutions). Following the failure of the Keynesian economic model, people was sure that

712 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 32. 713 A. Tarquini, “Repubblica Ceca, è morto Havel, eroe della rivoluzione di velluto”, La Repubblica, 18th December 2011. 714 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 715 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 24. - 174 - neoliberal theories716 were the most appropriate in any economic context (so both for capitalist developed States and for socialist and backward ones).

As in the other socialist regimes, in Czechoslovakia there was a general anti-capitalist ideology (characterized by hostility to democracy and by a risk averse mentality), a dictatorial communist party at the head of socio-economic transformation that made a fusion between politics and economy (with the merging of resources and hierarchies of the two domains) and a dominant position of public on private owners. The socialism had been able to generate an exceptionally high education rate, to reduce workers in the agricultural sector717 and to distribute in a relatively egalitarian way the income. Despite of it, there were persistent political and economic difficulties, high levels of corruption and of crime rate, a slow crystallization of the political system, a significant popular dissatisfaction related to the work of the ruling class718 (and to the functioning of the political and economic institutions) and a weak, disorganized and demotivated working class.

The end of the communist system (characterized by huge distortions, low labour productivity and general wastes) caused a huge decrease in production and an augment of unemployment rate719, with a consequent decline in standard of living standards: as supposed, the transition from a planned economy based on nationalization and absence of market to a capitalist economy had strong negative consequences in the short-run. The resulting cost of transition was represented by a GDP loss of approximately 22% in 1993 relative to 1989720. Some economics explained that firstly there were costs of disintegration (from the old alignment, associated with a sudden destruction of real resources inefficiently allocated under the new circumstances) and then costs of the build-up of new integration.

Even if there were high risks, the change was indispensable, because the communism caused a too strong economic backwardness, an inefficient system and a decline in central political control over the economy and society721, while people believed that capitalism was the only economic structure that would have given prosperity and openness toward the West. Furthermore, the decline of production was necessary to stop to produce unsaleable goods, but

716 Ibid, p. 9-10. 717 In 1995, in the Czech Republic only 11% of the total workforce was employed in the first sector. 718 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 13. 719 L. Gudkov, V. Zaslavsky, “Una rivoluzione silenziosa. La fase decisiva della transizione postcomunista russa”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 51. 720 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 721 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 11. - 175 - this drop led to lower employment, real gross domestic product and investments. In the while, the sharp rise in inflation reduced the purchasing power of wages and greatly increased consumer goods prices.

The economic recovery722 took place only at the end of the '90s, when productivity grew (thanks to the emerging private sector) even if unemployment continued to increase (given that highly unproductive enterprises had been closed)723. The post-socialist economy was for sure more efficient than the communist one, but it caused a growing increase in inequality of income and well-being. The dynamism of the private sector allowed an effective conversion of several State-owned enterprises, laying the foundations for a future increase in employment. Democracy and capitalism coexisted and sustained each other, with successes of political stability and sustained economic growth, after the sharp initial decline: considering the first period of severe crisis and the subsequent recovery, economists compared the Czech case to the process of "creative destruction" theorized by Schumpeter724.

Clearly, to eliminate the socialist economy, it was indispensable to begin a huge privatization plan, to promulgate trade and price liberalization policies and to reduce public aids. The dismantling of the single-party was not a sufficient condition to eliminate the socialist risk, because behavioural models of paternalism were so rooted in the bureaucracy of government and in the society that could have been dangerous even with a pluralistic electoral system725. The State was forced to remain neutral on all property issues: it could not discriminate against companies on the basis of their ownership structure. Companies to be privatized were transformed in joint stock companies or limited liability companies and equity rights were transferred to the new Ministry of Privatization (representing the State). State aids and governmental subsidies were abolished and, in 1992, a strict bankruptcy law726 was promulgated (on the basis of Western accounting principles and judicial proceedings).

Privatization was presented as the only way to enrich the Nation, because managers would have been more responsible and more interested to reach an efficient and effective performance. Privatization thus would have increased both national income and private

722 L. Gudkov, V. Zaslavsky, “Una rivoluzione silenziosa. La fase decisiva della transizione postcomunista russa”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 52. 723 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 19-20. 724 Schumpeter alluded to the evolutionary process of the capitalist economy, in which technological and managerial innovations transform the production cycle, upsetting the balance of markets and eliminating companies unable to innovate. 725 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 81. 726 Ibid., p. 82-83. - 176 - wealth. Practically, for the privatization of State properties, Czechoslovakia had to evaluate its factories, to decide which companies was necessary to close and who could have bought the remaining ones, choosing also which resources should have been used to acquire the ownership rights727. The economic assessment of a company was made by computing the performance of the company itself and observing the market (limiting administrative valuations).

The Ministry of Privatization and the Ministry of Finance did the direct market valuation of assets, deciding to involve the whole citizenship: the method chosen was based on the use of vouchers, owned by citizens and necessary to buy, during public auction, shares of large State-owned enterprises. They purposed this innovative system because internal savings were too limited to cover all properties value728, so more than 50% of the net capital of more than 1.000 large public companies was distributed through the voucher trade. All Czechoslovakian citizens aged 18 and over received 1000 "investment points", usable to buy shares of the companies to be privatized under this program. Even if each citizen had the right to receive the vouchers, only those who would have paid a registration fee of 1.000 crowns729 (about a half of the average worker wage) had the opportunity to use such vouchers at public auctions. Clearly, the government wanted to inform citizens about the risks inherent shareholding and it searched only people who were really interested to buy the shares by designing a scheme that combined citizens’ participation and the involvement of monetary resources. To explain the exchange between shares and vouchers, the Czechoslovak authorities prepared an education program for all people interested, starting the lessons in February 1992 (taking also the opportunity to show the list of companies selected by the Ministry of Privatization for sale through public auctions).

Selling State-owned enterprises through vouchers, Czech politicians favoured a kind of popular capitalism among citizens' investors. In reality, millions of citizens registered their investment points in Privatization Investment Funds (which, to reduce their risk aversion, bought their vouchers by promising gains of around 1000% after one year).

Following this scheme, the Ministry set a starting price for shares not in monetary units but in investment points (the exchange was between vouchers and shares) for each company. Obviously, the shares of prosperous businesses required more vouchers to buy a single share,

727 D. Stark, B. Grancelli, “Le strategie di privatizzazione nell’Europa orientale”. Stato e mercato, n. 34, 1992, p. 98. 728 Ibid., p. 128. 729 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 111. - 177 - while less promising companies were cheaper: for this reason, in this simulated market, citizens could decide or to spend their 1000 investment points in a few actions of efficient companies or in many actions of companies in crisis (and, if they wanted, they could diversify). The starting price derived from the Ministries of Privatizations (Czech and Slovak) after the evaluation of the performance of the companies; this price was essential only for the shares in the first round of bids, but the final price was chosen from the meeting of demand and supply.

The government decided to use the principle of the French economist Léon Walras for the public auctions, creating in this way a series of walrasian auctions. In Walras' theory, an auctioneer announced a price to start trading on the market. At the end of bargaining, the auctioneer verified the equality between demand and supply in the market. In the event of non-equality, the guarantor changed the price (this took place on average three or four times per company and the next rounds were programmed after two weeks) and started trading again. After continuous adjustments, the process ended when the balanced budget price730 was found.

Once that private individuals acquired the shares, they could have been resold for money: the government wanted only to transfer shares in private hands, because it was necessary to create a previously non-existent trading. It was a simulated market created specifically to stimulate the real market731. The Ministry accepted a relatively dispersed property at the beginning, hoping that successive real-money capital transactions would have caused a rapid concentration of ownership in the industrial sector (including also the old proprietaries). Despite the possibility to fragment the properties, at the end of the first round of auction, 75% of the total investment points732 were already in the hands of Investment Funds and half of the total investment points were owned by less than ten big investment companies. For this reason, privatizations by vouchers did not eliminate the previous links among the State and the economic institutions but they reorganized them (considering that the founders of six of the nine largest funds were State financial institutions, as banks and insurance companies). This produced a series of connections across a variety of major players (businesses, banks, investment companies, government and state bureaucracy), which created new conditions to

730 D. Stark, B. Grancelli, “Le strategie di privatizzazione nell’Europa orientale”. Stato e mercato, n. 34, 1992, p. 107-109. 731 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 112. 732 D. Stark, B. Grancelli, “Le strategie di privatizzazione nell’Europa orientale”. Stato e mercato, n. 34, 1992, p. 111. - 178 - restructure businesses, to understand which companies to save and to develop new economic strategies733.

Workers did not program any resistance to the privatizations, even if private companies depended on their market success and, in times of economic crisis, did not guarantee any job security. In addition, owners refused collective bargaining and were firmly opposed to the idea that their employees belonged to the trade unions. Despite of it, the private sector wages and working conditions were considerably better than those of the public sector: following this better work conditions, from the beginning of the economic transition, private companies attracted the most productive and enterprising individuals734, who attribute more value to success than to employment security. In the while, qualified workers who have remained in State-owned enterprises took advantages from the new market conditions, trying to strengthen their already significant contractual burden on executives (monopolizing their control over a particular sector of the economy through their skills as experience, practical knowledge and professionalism).

The transition to the market caused a growing disappointment in 1993, because production collapsed and unemployment had increased, as tax evasion and corruption735. According to the liberal economist Václav Klaus’ theories (a prominent figure in the Czechoslovakian political landscape, the protagonist of the economic transformation736 that followed Dubček and Havel’s political transformation), it was necessary to eliminate the subsidies that linked the companies to the State, the intersecting credits and the informal attachment that anchored the companies to their places of origin. This practice had eliminated the risks, but also the dynamism of investments (typical of liberal markets). In addition, during the development of the privatization program, Klaus explained that there was the need to create opportunities of gain for non-State companies, including the small-scale private ones, while the government would have improved the management of its last State-owned companies.

In spite of the bankruptcy law of 1992, the government preferred to act more delicately against firms in difficulty (suspending the law for a year and then postponing it). For this

733 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 114-115. 734 L. Gudkov, V. Zaslavsky, “Una rivoluzione silenziosa. La fase decisiva della transizione postcomunista russa”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 63. 735 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 105-106. 736 Václav Klaus had been Minister of Finance of Czechoslovakia from 10th December 1989 to 2nd July 1992, then Prime Minister of Czech Republic from 1st January 1993 to 2nd January 1998 and President of Czech Republic from 7th March 2003 to 7th March 2013. - 179 - reason, while Hungary instituted more than 10.000 bankruptcy and liquidation proceedings between 1992 and 1993, only 993 small companies were declared failed in the Czech Republic: this will to minimize bankruptcies was a sign that the Czech State was doing its best to pursue a moderate policy737, aimed at maintaining social peace and protecting the political support for the liberal program. The Minister of Commerce and Industry repeatedly intervened to avoid bankruptcy of dozens of large companies with poor prospects of privatization, creating also specific Funds and banks738: the most important were the National Property Fund and the Konsolidacni Bank. The National Property Fund used the money obtained by the participations to the public auctions to subsidize State-owned companies ready for privatization, to prevent them from failing; the Knosolidacni Bank acquired many of the debts that the old societies had inherited from the socialist period and it continued to move money to restructure corporate debt through major commercial banks739.

In 1990, the GDP per capita in Czechoslovakia was 8.464 dollars, the best result in the old Eastern Block (including also the USSR, that ranked second with a value of 6.888 dollars), while the average in North-western Europe was 16.800 dollars and in Southern Europe was 12.788 dollars. The Czechoslovak result was worse than the Portuguese (10.862 dollars) and the Spanish ones (12.157 dollars). Even in 1996, in the year of Czech economic stabilisation and growth, the estimates of GDP per capita in the Czech Republic ranged between 4.700 dollars and 11.000 dollars, that it was not comparable with the Austrian range of 22.000– 28.000 dollars for Austria740.

The percentage of the workforce in agriculture was, respectively, 11% and 12% and the GDP growth rate (from 1990 to 1997) was -0.4% in the Czech Republic and -0.4% in Slovakia. In 1997, the combined GDP of the Czech Republic and Slovakia was 95% of Czechoslovak GDP in 1989, while in 1998 it accounted for 98%741 of the old federation GDP. As noted by the World Bank, in the 1990-1995 period, annual GDP growth in southern Europe (and thus also Spain and Portugal) was about three times higher than that recorded by post-socialist

737 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 109-110. 738 Czechoslovak banking system was particularly weak: in 1991, the OECD estimated that the outstanding debt of Czechoslovakia to banks was 66% of the GDP. 739 L. Bruszt, D. Stark, F. Gatto, “Le reti di imprese nella trasformazione post-socialista”. Stato e mercato, n. 46, 1996, p. 107. 740 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 741 V. Bunce, C. Gallo, “Dinamiche e dilemmi del postcomunismo”. Ventunesimo Secolo, vol. 1, n. 2, 2002, p. 17. - 180 - countries in general. Unemployment, virtually non-existent before 1990, rise to 8,4% in April 1992 (12,7% in Slovakia)742.

In 1999, the private sector accounted for 80% of GDP743 in the Czech Republic and 75% in Slovakia, the poverty rate was below 1% (although in 1987-1988 it was 0% in Czechoslovakia) while, analysing the Gini coefficient, it was possible to note an increase in inequality bot in the Czech Republic (it grew from 0,18 to 0,28 between 1988 and 1996) and in Slovakia (from 0,18 to 0,26 in 1996)744.

742 V. Benáček, History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 743 Ibid, p. 18. 744 Income Distribution data review – Slovak Republic, OECD [online] 2012. [Accessed 10 September 2017]. Available from: https://www.oecd.org/els/soc/OECDIncomeDistributionDataReview-SlovakRepublic.pdf - 181 -

- 182 -

Conclusion

The historical period of the Salazarism, of the Francoism and of the Czechoslovak Socialist Republic is definitely ended, as the authoritarian and conservative economic models of Spain and Portugal and the centrally planned economy of Czechoslovakia. With the end of this old economic and political system, the four States (considering the Czech Republic and Slovakia) are nowadays endowed of fully democratic regimes and liberal economies; in addition, after the adhesion of Spain and Portugal to the EEC (in 1986) and of the Czech Republic and Slovakia to the EC (in 2004), the four States are committing to ensure the free movement of goods, services, workers and capitals, abolishing cartels and inefficient monopolies, and to contribute to the development of joint and reciprocal policies in the field of labour, welfare, agriculture, transportations and foreign trade. Considering that these four States are nowadays part of the European Union, all of them are respecting the Copenhagen criteria: for this reason, politically they must have stable institutions capable of guaranteeing democracy, the rule of law, the protection of human rights and minorities and, economically, they must have a functioning market-based economy capable of competing with the concurrencies inside the Union market. As explained in the last part of the paper, after the Petroleum shock of 1973 the public opinion believes that the only way to obtain a solid and prosperous State is to have a democratic regime and a liberal market, considering impossible to have a constant growth or efficient economic results in a dictatorial country or in a State in which the public interventionism is promoted. In reality, my research demonstrates that this affirmation is not true: even if it is difficult to define the regimes of Salazar and Franco as pure dictatorships (the two politician always affirmed not to be dictators, but there were the same some evident undemocratic signs in the institutions by them implemented), Portugal and Spain had been able to obtain interesting economic results during the ‘50s-‘60s. Unluckily, Salazar’s great error to begin and to continue the colonial war ruins his economic successes and all his work: as seen, the GDP per capita in Portugal passed the same from 38% of the EEC average in 1960 to 56,4% in 1973, but the colonial war had reached the consumption of 7% of the National GDP subtracting resources from the three development plans and so its effect had been catastrophic on the whole economic system. Franco did not make the same error of Salazar and, thanks to his decision to avoid any war, the results by him obtained are for sure more interesting and more evident. If the first policies adopted into the country (from 1939 to 1958) caused strong distortions, after the Liberalization and Stabilization Plan (of 1959) the country lived a great economic recovery.

- 183 -

The graph shows easily the GDP trend and the growth that the three States analysed had from

Graph 4: Add the name of the graph 1913 to 1990. On the y-axis, there are

values in US

dollars, while on the x-axis there are seven different years. It is important to notice some part of it, to understand quickly the different growth between the three different economic Source: S. Broadberry, A. Klein, Aggregate and per capita GDP in Europe, 1870-2000: continental, regional and national data with changing boundaries, entities: https://pdfs.semanticscholar.org/6a21/bc7cd8703ba7b263149435e1e867d562c503.pdf

• First of all, the data about Czechoslovakia in 1913 is taken from the results of the regions of the former Austro-Hungarian Empire, because the federation was born in 1918. The red line (about Czechoslovakia) ends in 1990, considering that in 1992 it was consensually divided in the two current States (the Czech Republic and Slovakia, following an idea already shown in 1968)745; • As shown in the graph, the red line of Czechoslovakia shows a GDP per capita higher than Spain and Portugal from 1913 to 1955: this is explainable by the strong industrialization of the country (as said before, 70% of all enterprises of the old Empire were in Czechoslovakia and therefore the secondary sector occupied about 39% of the population); • Portugal GDP per capita (green line) has been gradually increasing746 until 1950, while Spain from 1929 to 1939 had a strong decline due to both the Republican phase and the civil war; • Since the 1950s, the Portuguese Salazarist regime and the Spanish Francoist regime have been able to create strong economic growth (because of lower State

745 A. De Bernardi, S. Guarracino, La conoscenza storica: il Novecento, Mondadori, Milano, 2008, p. 451. 746 M. Sacco, Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014, p. 55. - 184 -

interventionism in the economy747, reduction of the black market, the end of the autarchic periods etc.). This growth is even more evident in the case of Spain, especially after the 1959 Stabilization and Liberalization Plan of the 8th Francoist government; • Since 1973, however, there has been a fall in the growth of all three countries (caused by the 1973 Oil Shock and the great dependence of the three countries on oil importations)748. What is really interesting to see, however, is that the socialist economy in Czechoslovakia has not been able to follow the economic successes of Portugal and, least of all, of Franco’s Spain, even if the federation had a great initial economic advantage.

The consequences of the Desarollo, as the GDP growth of 7% per year (from 1960 to 1974), the strong industrialization, the urbanization, the modernization of agriculture and the high increase of exportations changed completely the economic situation of Spain. Some researchers (as Prados de la Escosura, Rosés and Sanz Villarroya) have studied this phenomenon, understanding that the growth until 1975 could hardly be realized in another political context: following their demonstration, the economic growth had taken advantages even from the previous period of wrong policies and macroeconomic distortions. They demonstrated that the only counterfactual that would have performed better than the Francoist one was representing the case in which an ideal Spain would have been a democratic country (characterized by a perfect liberal market and by free trades with the Western Europe) but, despite of it, they did not consider the international panorama during the year of the Francoism and the difficulties that Franco had to face firstly for the internal situation (the economic disasters caused by the civil war) and then for the international relationships (with the beginning of the Cold War and the decade of diplomatic-economic isolation). The uncertainty caused by the counterfactual could be the starting point for a new research but, for sure, we can assert with confidence that the Francoist Spain is the perfect example to demonstrate that even in a dictatorship there could be a strong economic recovery, in the interest of the whole society. It is necessary to add that a dictatorship could hide more dangers than a democracy: considering the importance of the dictator, his powers and his immovability, the State should face risks that are almost always too big749 to prefer a

747 M. Astarita, Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009, p. 57. 748C. Marcellini C., La crisi del 1973. Novecento [online]. [Accessed 2 November 2017]. Available from: http://www.novecento.org/dossier/le-grandi-crisi-del-mondo-contemporaneo/la-crisi-del-1973/#crisipetrolifera

749 The cases of Saddam Hussein (from 1979 to 2003, in Iraq), Kim Jong-il (from 1994 to 2011, in North Korea), - 185 - dictatorship instead of a democracy750. In the case of Franco and Salazar, Spain and Portugal have solved their problems of political instability and they have had the luck to begin a dictatorship led by two responsible and competent people. Salazar was a professor of economic science, so in that specific period was for sure the Prime Minister needed by Portugal (considering the economic problems of the country and the military dictatorship); Franco was neither an economist nor a politician, but his merit had been to understand his limits and to delegate his enormous powers to people who were adequate to control the economic, political and social sphere of the country. In this way, he continued formally to rule and to permit to the country to have a solid political system751, resting only a sort of “reference figure” (even if he always decided on his own about military issues and about giving grace to the condemned).

If the researches on the Salazarism and Francoism permit to understand that it is possible to reach an economic recovery also in particularly moderated dictatorships with conscious and rational dictators, the study about Czechoslovakia demonstrates the objective problems caused by the old socialism influenced by the Soviet-style. Socialism is able to grant to every citizen the access to education and health care and it promotes a balance in wealth and earnings, reaching the goal of the equity and equality in the society. In general, central planning can make it possible for producers to take advantage of economies of scale, eliminating superfluous and wasteful activities. If planning is really effective, the system should result in virtually full employment of resources. In addition, the system of fixed prices and the nationalization of the whole productive sectors (including not only factories but also agriculture and animal breeding) eliminates private monopolies752 and cartels, avoiding

Omar Hasan Ahmad al-Bashir (from 1989, in Sudan) and Saparmurat Nyýazow (from 1991 to 2006, in Turkmenistan) are only some of the recent cases in which a dictatorship has damaged politically, economically and socially its country. 750 Following Spirito’s theory, in reality a dictatorship is not the antithesis of a democracy but only a type of it. As in a commonly defined democracy there is a minority that rules a majority, in a dictatorship the dictator should decide alone but he is always subjected to the citizens’ will and judgments. The Francoist plebiscites were a clear sign of Franco’s dependence on citizens’ decisions. The philosopher adds that a decision taken by a majority (as in a common democracy) causes other two problems: a distinction between sovereigns and subjects and the command of a majority that is often not more competent than the rest of the population (forced to obey with the use of quantitative force and violence). 751 During the Francoist regime, even the independent claims of Catalonia and the Basque Country were firmly denied. According to the calculations elaborated by economist Mikel Buesa in his study of 2015, the independence of Catalonia (nowadays increasingly wanted) would cost the region 16,4% points of its GDP and it would cause a loss of 2,1% points for the GDP of the rest of Spain. Because of this, Catalan citizens should wait almost half a century to obtain again the current level of income and the reduced GDP would lead to a fall in tax revenues coinciding with an increase in public spending. This would cause an unsustainable budgetary deficit (around 10% of GDP) and with such deficit Catalonia would certainly not be admitted as a member state in the European Union and in the Eurozone (where one of the conditions is that the annual public deficit remains within 3% of the annual GDP). 752 Socialism eliminates private monopolies, but it creates a State monopoly (cf. State capitalism). - 186 - speculations or unjustified prices. Despite of it, a socialist economy gives too much power to the public sector (which ends up being unmanageable) and its system of fixed prices and limited trades eliminates the benefits given by a free market (causing for some goods an excessive demand and for others an excessive supply). Additionally, it separates the production sphere from the commercial one (so factories cannot understand if their products are sold or not in the market), workers increase their power so they can ask for more rights (because trade unions are more influent on the industrial management) and this situation creates a general economic inefficiency inside the means of production: inefficient and inadequate factories survives the same thanks to the public finances, the quality of goods worsens and the only target rests to augment more and more the quantity of goods produced. The assignment of production quotas is another problem related to industries: planners use to calculate these assignments on the past performance of enterprises, but factories managers, knowing that planners valuate enterprise performance according to the fulfilment of assigned tasks, underestimate the production potential of their organizations (to obtain easier tasks, so they have also no incentives to try to exceed the goals of the plan753). The consequence of this malfunction is that the government receives false information about the capacity of enterprises. For this reason, the government is forced to pay the debts of its factories, importing surplus goods, stocking a great quantity of unsalable goods and increasing taxes to the whole population to bear the expenses. Considering the appreciable social results that the socialism is able to obtain, even if in Czechoslovakia the Soviet system reached disastrous macroeconomic results, it is easily understandable the reason why, in 2013, 33% of Czech citizens754 affirmed that they would prefer to have again a socialist planned economy. As expected in 1989, Capitalism has permitted to the previous Czechoslovakia to improve its overall economic and political situation (creating democratic government, a free market and a good growth rate), even if it has created social problems less present before (for example, nowadays more than 400.000 people in the Czech Republic live below the poverty line and the suicide rate in 2013 was almost double of that in 2012).

The consideration about the possibility to obtain a great economic development also in an authoritarian State and the reasons that prove the capability of a capitalist system to reach better economic results in comparison with a socialist system are, in my opinion, the best

753 To be sure to fulfil the tasks of the plan, managers used to exaggerate their material and labour requirements (stocking also big quantities of inputs, especially if the State was having problems to satisfy their demands). 754 Walker R., Czech Republic: 25 Years of Capitalism. What Freedom? In Defence of Marxism [online]. 7 January 2015. [Accessed 15 August 2017]. Available from: https://www.marxist.com/czech-republic-25-years- of-capitalism-what-freedom.htm - 187 - demonstrations that my work is able to explain, in an objective and scientific way. For this reason, they could be the starting point for at least three researches more focused on these theories. The first interesting research could be started to try to understand if, from 1950 to 1970, the same political and economic system present in Spain would have boosted or worsened the economy of liberal and fully democratic States as Italy, France or the United Kingdom, to understand if Franco’s positive effect had been only the result of a Spanish natural development or if they were really linked with his decisions. To comprehend also if Franco’s results had been only the positive consequences of the general Western European growth of ‘60s-‘70s, the research could be expanded trying to imagine an application of the Liberalization and Stabilization Plan directly in 1939, and conjecturing its economic effects on the State (in this case, Spain would have not suffered the initial macroeconomic distortions that caused a huge inflation and a diffusion of the black market). The second interesting research, completely different, could analyse the revolutionary system purposed in Spain by the Catalunya Libertaria and by the Libertarian revolution during the years of the civil war: economists usually affirm that it was a failure and that its end was more than obvious. Despite of it, for almost one year the Commune in Barcelona survived, having a great popular support and facing the difficulties of a war (against a too strong and capable enemy). The research could begin creating an ideal model in which the various Communes would have not had to face the particular conjecture of the war, to understand if the anarcho-syndicalist dream could obtain social and economic wellbeing, if it would not be able to give wellness to a territory or if it would even fail the same after a short period.

The third research could be done to understand how Czechoslovakia would have performed in a counterfactual 1948-1989 Europe composed only by planned economy States. In this way, Czechoslovakia would have benefited of the possibility to trade with the Western and Northern countries and it would have been particularly important for it (because of its need to export great quantities of industrial products and its necessity to import almost the totality of the raw material needed for the economy). In this imaginary system, Czechoslovakia could have performed better, maybe reaching better results than nowadays, even if now it has a free market and a new capitalist system.

The already huge quantity of materials by me studied, weighed and analysed and the already vastness of the arguments by me presented did not permit to include in this work the right space to face also the arguments of the researches purposed above. Despite of it, I hope that I have reached my goal to present to all my readers my best objective and scientific explanation

- 188 - not only of the most important political and economic transformations happened before, during and after the regime of General Franco and of Professor Salazar respectively in Spain and in Portugal and, from 1918 to 1992, in the territories of the former Czechoslovakia, but also a brief introduction of the most influent international events that have changed definitely the whole world (as the First and Second World War, the Cold War, the separation of Europe in two influence spheres, the Petroleum Shock and the end of the Eastern Block). In this way, I have tried to obtain results that are the pure product of a precise and unbiased study, which has refused the diffused demonization of certain difficult periods and the spread subjectivity that prevent to remember that “historia magistra vita [est]”.

- 189 -

List of graphs

Graph 1: World industrial production in 1929 ...... - 7 - Graph 2: Industrial production variation from 1923 to 1939 ……………………..………………- 7 - Graph 3: Add the name of the graph…...... - 184 -

List of tables

Table 1: Portuguese trade ratios...... - 48 - Table 2: Industrial productivity levels per inhabitant in 1960...... - 112 -

- 190 -

References

List of literature: 1) Aalders G., Wiebes C., The Art of Cloaking Ownership. The secret collaboration and protection of the German war industry by the neutrals: the case of Sweden, Amsterdam University Press, Amsterdam, 1996. 2) Adagio C., Botti A., Storia della Spagna democratica: Da Franco a Zapatero, Mondadori, Milano, 2014. 3) Adam J., Hamm W., Neumann W., Wage, price and taxation policy in Czechoslovakia, 1948-1970, Duncker & Humblot, Berlin, 1974. 4) Alvaredo F., Saez,E., Income and wealth concentration in Spain from a historical and fiscal perspective, in «Journal of the European Economic Association» vol. 7, n.5 (2009), p. 1140-1167. 5) Astarita M., Francisco Franco: un caudillo alla corte di Spagna, A&B Editrice, Roma, 2009. 6) Barbieri P., Le cause della guerra civile spagnola, Robin edizioni, Roma, 2006. 7) Bartl J., Slovak History: Chronology & Lexicon, Bolchazy-Carducci, Mundelein, 2002. 8) Benáček V., History of Czech economic and political alignments viewed as a transition, in «Small Countris in a Global Economy», Palgrave Macmillan UK, 2001, p. 133-154. 9) Bender G. J., Angola: mito y realidad de su colonización, Siglo XXI, San Ángel, 1980. 10) Berend I. T., The History of European Integration: A New Perspective, Routledge, London, 2016. 11) Bevans C. I., Treaties and Other International Agreements of the United States of America, 1776-1949. Multilateral, Department of State. 1968. 12) Bidwell P. W., Latin America, Germany and the Hull Program, Foreign Affairs, New York, 1939. 13) Boffito C., Foa L., La crisi del modello sovietico in Cecoslovacchia, Einaudi, Torino, 1970. 14) Bonanate L., Nesi N., Democrazia e diritti nell'opera di Bobbio. Italia e Spagna a confronto, Franco Angeli, Milano, 2009. 15) Bonaño M. G., Francisco Franco cristiano esemplare, Effedieffe, Viterbo, 2014.

- 191 -

16) Bordo M., Eichengreen B., A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, University of Chicago Press, Chicago, 1993. 17) Brackman R., The Secret File of Joseph Stalin: A Hidden Life, Routledge, London, 2000. 18) Brancati A., Pagliarani T., Voci della storia dell’attualità: l’età contemporanea, La Nuova Italia, Milano, 2012. 19) Brenner Y. S., Kaelble H., Thomas M., Income Distribution in Historical Perspective, Cambridge University Press, Cambridge, 1991. 20) Broadberry S., Klein A., Aggregate and per capita GDP in Europe, 1870-2000: continental, regional and national data with changing boundaries, in «Scandinavian Economic History Review», vol. 60, n. 1 (2012), p. 79-107. 21) Bruni L., ETA: historia política de una lucha armada, Txalaparta, Tafalla, 1993. 22) Bruszt L., Stark D., Gatto F., Le reti di imprese nella trasformazione post-socialista, in «Stato e mercato», n. 46, (1996), pp. 77-121. 23) Bryant C. C., Prague in Black: Nazi Rule and Czech Nationalism, Harvard University Press, Cambridge, 2007. 24) Bunce V., Gallo C., Dinamiche e dilemmi del postcomunismo, in «Ventunesimo Secolo», vol. 1, n. 2, (2002), pp. 9-49. 25) Capoccia G., Defending Democracy: Reactions to Extremism in Interwar Europe, JHU Press, Baltimore, 2005. 26) Carmona J., Roses J. R., Simpson J., Spanish land reform in the 1930s: economic necessity or political opportunism?, in «Second Quantitative Agricultural and Natural Resources History Conference», Zaragoza, 2015. 27) Carotenuto G., Franco e Mussolini, Sperling & Kupfer editori, Milano, 2005. 28) Casanova J., De la calle al frente, Editorial Crítica, Barcellona, 2010. 29) Churchill W., The Sinews of Peace. in « Kishlansky M.A., Sources of World History», New York, Harper Collins, 1995, p. 298-302. 30) Clarence-Smith W.G., The Third Portuguese Empire, 1825-1975: A Study in Economic Imperialism, Manchester University Press, Manchester, 1985. 31) Clar E., Pinilla V., Agriculture and economic development in Spain, 1870-1973: not such a long siesta, in «Conference Paper. XIV International Economic. History Congress, Helsinki» (2006), p. 21-25. 32) Corkhill D., Development of the Portugese Economy: A Case of Europeanization, Routledge, London, 2002. - 192 -

33) Costa R., From Dictatorship to Democracy in Twentieth-Century Portugal, Springer, Berlin, 2017. 34) Coverdale J., Una fede straordinaria: i primi anni dell’Opus Dei dal 1928 al 1943, Scepter Publishers, New Rochelle, 2002. 35) Crow J. A., Spain: The Root and the Flower. An Interpretation of Spain and the Spanish People, University of California Press, Berkeley, 2005. 36) De Bernardi A., Guarracino S, La conoscenza storica: il Novecento, Mondadori, Milano, 2008. 37) De La Escosura L. P., Rosés, J., Villarroya, I. S., Stabilisation and growth under dictatorships: New lessons from Franco's Spain, 2010. 38) De Meneses F. R., Salazar: A Political Biography, Enigma Books, New York, 2009. 39) Di Febo G., Santos J., Il Franchismo, Carocci editore, Roma, 2014. 40) Di Giuliomaria S., Cecoslovacchia. La sinistra nel nuovo corso, Samonà e Savelli, Roma, 1969. 41) Dyke C.V., The Soviet Invasion of Finland, 1939-40, Routledge, London, 1997. 42) Douglas D. W., Sistemi economici di transizione in Polonia e Cecoslovacchia, Einaudi, Torino, 1956. 43) Edwards S., Esquivel G., Márquez G., The Decline of Latin American Economies: Growth, Institutions, and Crises, University of Chicago Press, Chicago, 2007. 44) Eichengreen B., Ritschl A., Understanding West German Economic Growth in the 1950s,in «Cliometrica» vol. 3, n. 3, (2009), p. 191-219. 45) Eliade M., Salazar e la rivoluzione in Portogallo, Edizioni Bietti, Milano, 2013. 46) Encarnación O. G., Spanish Politics: Democracy After Dictatorship, Polity, Cambridge, 2008. 47) Ericson E. E., Feeding the German Eagle: Soviet Economic Aid to Nazi Germany, 1933-1941, Greenwood Publishing Group, Westport, 1999. 48) Eyck E., Storia della Repubblica di Weimar (1918-1933), Einaudi, Torino, 1966. 49) Forrest A., The Spanish Civil War, Routledge, London, 2012. 50) Franchi G., La seconda guerra mondiale, Alpha Test, Milano, 2015. 51) Gawdiak I. Y., Area Handbook Series: Czechoslovakia: A Country Study. Library of Congress Washington DC Fedeal Research ivision. 1989. 52) Gallagher T., Portugal: A Twentieth-century Interpretation, Manchester University Press, Manchester, 1983.

- 193 -

53) Gentilucci C. E., Storia economica della Guerra, Società Italiana di Storia Militare, Roma, 2007. 54) Goldstein E., Lukes I., The Munich Crisis, 1938: Prelude to World War II, Routledge, London, 2012. 55) Graziosi A., L’URSS dal trionfo al degrado. Storia dell’Unione Sovietica 1945-1991, il Mulino, Bologna, 2008. 56) Gudkov L., Zaslavsky V., Una rivoluzione silenziosa. La fase decisiva della transizione postcomunista russa, in «Ventunesimo Secolo», vol. 1, n. 2, (2002), p. 51- 84. 57) Guida F., L'altra metà dell'Europa: dalla Grande Guerra ai giorni nostri, Laterza, Roma, 2015. 58) Gupta S., Dynamics of Human Rights in the US Foreign Policy, Northern Book Centre, New Delhi, 1998. 59) Harrison M., The Soviet Union after 1945: Economic recovery and political repression, in «Past and Present», vol. 210, (2011), p. 103-105. 60) Heywood L. M., Contested Power in Angola, 1840s to the Present, Boydell & Brewer, Woodbridge, 2000. 61) Hubbard J. P., The United States and the End of British Colonial Rule in Africa, 1941– 1968, McFarland, Jefferson, 2010. 62) Iannaccone M. A., Persecuzione. La repressione della chiesa in Spagna fra seconda repubblica e guerra civile (1931-1939), Lindau, Torino, 2015. 63) . 64) Judt T., Postwar: La nostra storia 1945-2005, Laterza, Roma, 2017. 65) Kalinovsky A. M., Daigle C., The Routledge Handbook of the Cold War, Routledge, London, 2014. 66) Keynes J. M., A Tract on Monetary Reform, Macmillan and Co., London, 1924. 67) Kimberly A., Stock Market Crash of 1929 Facts, Causes, and Impact, in «The Balance», (20th February 2017). 68) Kovtun G., Spirit of T.G.Masaryk, 1850-1937, Springer, Berlin, 1990. 69) Krejcí J., Machonin P., Czechoslovakia, 1918-92: a Laboratory for Social Change, Springer, Berlin, 1998. 70) Kritz N. J., Transitional justice: how emerging democracies reckon with former regimes, US Institute of Peace, Washington, 1995.

- 194 -

71) Lains P., Catching up to the European core: Portuguese economic growth, 1910-1990, in «Explorations in Economic History», vol. 40, n. 4 (2003), p. 369-386. 72) Lains P., Portugal's growth paradox, 1870-1950. Universidade do Porto, Faculdade de Economia do Porto, 2003. 73) Lee S. J., Hitler and Nazi Germany, Routledge, London, 2005. 74) Lieberman S., Growth and Crisis in the Spanish Economy: 1940-1993, Routledge, London, 2005. 75) Lizza G., Integrazione e regionalizzazione nella CEE, FrancoAngeli, Milano, 1991. 76) Minter W., Portuguese Africa and the West, Penguin Books, London, 1972. 77) Monturiol M. S., The transformation of the Spanish economy: a success story of economic transition, 2015. 78) Nunes B., Bastien C., Valério N., Sousa R.M.D., Costa S.D., Banking in the Portuguese Colonial Empire (1864-1975), 2010. 79) Orwell G., Omaggio alla Catalogna, Mondadori, Milano, 2002. 80) Palermo L., Storia del commercio, Laterza, Roma, 2014. 81) Pinkus O., The War Aims and Strategies of Adolf Hitler, McFarland, Jefferson, 2005. 82) Porket J., Unemployment in Capitalist, Communist and Post-Communist Economies, Springer, Berlin, 1995. 83) Preston P., La guerra civile spagnola 1936-1939, Mondadori, Milano, 2009. 84) Prust J., The Czech and Slovak Federal Republic: An Economy in Transition, International Monetary Fund, Washington, 1990. 85) Ranzato G., L’eclissi della democrazia. La guerra civile spagnola e le sue origini 1931-1939, Bollati Boringhieri, Torino, 2004. 86) Ranzato G., Il passato di bronzo: L'eredità della guerra civile nella Spagna democratica, Laterza, Roma, 2006. 87) Redondo G., Historia de la Iglesia en España, 1931-1939: la Guerra Civil, 1936- 1939, Ediciones Rialp, Madrid, 1993. 88) Resende M. M., Catholicism and Nationalism: Changing Nature of Party Politics, Routledge, London, 2014. 89) Rezola M. I. The Franco-Salazar Meetings: Foreign policy and Iberian relations during the dictatorships (1942-1963), in «e-Journal of Portuguese History», 2008, vol. 6, n.2, p. 58-68. 90) Rittenberg L., Tregarthen T., Principles of Macroeconomics, Flat World Knowledge, Washington, 2012.

- 195 -

91) Rogers K., Thomas J., History: Causes, Practices and Effects of Wars, Pearson, Harlow, 2010. 92) Rotschild J., East Central Europe between the two World Wars, University of Washington Press, Washington, 1974. 93) Sacco M., Salazar. Ascesa e caduta di un dittatore «tecnico», Besa, Lecce, 2014. 94) Salazar A. D. O., A minha resposta no processo de sindicância à Universidade de Coimbra, 1919. 95) Saraiva J. H., Storia del Portogallo, Mondadori, Milano, 2007. 96) Schmidt-Nowara C., Nieto-Phillips J. M., Interpreting Spanish Colonialism: Empires, Nations, and Legends, UNM Press, Albuquerque, 2005. 97) Scherner J., White E. N., Paying for Hitler's War: The Consequences of Nazi Economic Hegemony for Europe, Cambridge University Press, Cambridge, 2016. 98) Schwendemann H., German-Soviet economic relations at the time of the Hitler-Stalin pact, 1939-1941, in «Cahiers du monde russe: Russie, Empire russe, Union soviétique, États indépendants», n. 36, (1995), p. 161-178. 99) Serapiglia D., Il fascismo portoghese. Le interviste di Ferro a Salazar, Pendragon, Bologna, 2014. 100) Serapiglia D., La via portoghese al corporativismo, Carocci, Roma, 2011. 101) Shepherd R., Czechoslovakia: the Velvet Revolution and Beyond, Springer, Berlin, 2000. 102) Schreiber G., Stegemann B., Vogel D., Germany and the Second World War (3rd volume), Oxford University Press, Oxford, 1995. 103) Smith W. D., The Ideological Origins of Nazi Imperialism, Oxford University Press, Oxford, 1989. 104) Solsten E., Portugal: A Country Study, in «Washington: GPO for the Library of Congress», (1993). 105) Spirito U., Critica alla democrazia, Luni, Milano, 2000. 106) Stark D., Grancelli B., Le strategie di privatizzazione nell’Europa orientale, in «Stato e mercato», n. 34, (1992), pp. 97-129. 107) Šik O., La verità sull’economia cecoslovacca, Etas Kompass, Milano, 1969. 108) Tavares Pimenta F., Storia Politica del Portogallo Contemporaneo, Le Monnier, Firenze, 2011. 109) Vacca G., L'unità dell'Europa: rapporto 2003 sull'integrazione europea, Edizioni Dedalo, Bari, 2003.

- 196 -

110) VV. AA, I mondi dell’uomo, (1969), Milano: Mondadori. 111) VV. AA, La Storia, (2007), Milano: Mondadori. 112) Venza C., Anarchia e potere nella guerra civile spagnola (1936-1939), Eléuthera, Milano, 2009. 113) Wylie N., Britain, Switzerland, and the Second World War, Oxford University Press, Oxford, 2003. 114) Zarcone P., Spagna libertaria: storia di collettivizzazione e di una rivoluzione sociale interrotta (1936-1938), Massari, Viterbo, 2007. 115) Zurdo D., Gutiérrez A., La vida secreta de Franco: el rostro oculto del dictador, EDAF, Madrid, 2005.

Website citations: 1) Agreement for UNRRA. Ibiblio [online]. 9 November 1943. [Accessed 28 August 2017]. Available from: http://www.ibiblio.org/pha/policy/1943/431109a.html 2) Brandolinie A., La Disuguaglianza dei redditi . Treccani [online]. 2009. [Accessed 8 August 2017]. Available from: http://www.treccani.it/enciclopedia/la- disuguaglianza-dei-redditi_%28XXI-Secolo%29 3) Constitución de la República española (1931). [online]. 19 December 1931. [Accessed 10 June 2017]. Available from:http://www1.icsi.berkeley.edu/~chema/republica/constitucion.html 4) How Bad Is the Best? Time The Weekly Newsmagazine [online]. 22 July 1946. [Accessed 10 June 2017]. Available from: https://https://www.scribd.com/doc/6485455/Portugal-e-Salazar-Time-Magazine- 1946.scribd.com/doc/6485455/Portugal-e-Salazar-Time-Magazine-1946 5) Fuero de los españoles [online]. 18 July 1945, [Accessed 15 July 2017]. Available from: http://www.boe.es/datos/pdfs/BOE/1945/199/A00358-00360.pdf 6) Ley Constitutiva de las Cortes de 1942. [online], 17 July 1942, [Accessed 10 June 2017]. Available from:http://ficus.pntic.mec.es/jals0026/documentos/textos/leycortes.pdf 7) Income Distribution data review – Slovak Republic, OECD [online] 2012. [Accessed 10 September 2017]. Available from:

- 197 -

8) https://www.oecd.org/els/soc/OECDIncomeDistributionDataReview- SlovakRepublic.pdf 9) Ley Constitutiva de las Cortes de 1942. [online], 17 July 1942, [Accessed 10 June 2017].Available from:http://ficus.pntic.mec.es/jals0026/documentos/textos/leycortes.pdf 10) Ley del Referéndum Nacional[online]. 22 October 1945, [Accessed 15 July 2017]. Available from: http://www.e-torredebabel.com/leyes/constituciones/ley-referendum- nacional-1945.htmLey Orgánica del Estado, n. 1/1967 [online], 10 January 1967, [Accessed 15 July 2017]. Avaialble from: https://www.boe.es/buscar/doc.php?id=BOE-A-1967-5 11) Mussolini B., Discorso per la celebrazione del ventennale del fascismo. Wikisource [online]. 26 March 1939. [Accessed 15 June 2017]. Available from: https://it.wikisource.org/wiki/Italia_-_26_marzo_1939,_Discorso_ per_la_celebrazione_del_ventennale_del_fascismo 12) Oliviera M. J., Micas A herdeira de Salazar. PÚBLICO [online], 2007. [Accessed 1 July 2017] Available from: https://micas-a-herdeira-de-salazar-237563 13) Marcellini C., La crisi del 1973. Novecento [online]. [Accessed 2 November 2017]. Available from: http://www.novecento.org/dossier/le-grandi-crisi-del-mondo- contemporaneo/la-crisi-del-1973/#crisipetrolifera 14) Tarquini A., Repubblica Ceca, è morto Havel, eroe della rivoluzione di velluto, La Repubblica [online]. 18 December 2011. [Accessed 10 August 2017]. Available from: http://www.repubblica.it 15) Viola S., Franco: la lunga agonia del dittatore, La Repubblica [online], 18 November 2005, [Accessed 5 August 2017]. Available from:http://ricerca.repubblica.it/repubblica/archivio/repubblica/2005/11/18/franco-la- lunga-agonia-del-dittatore.html 16) Walker R., Czech Republic: 25 Years of Capitalism. What Freedom? In Defence of Marxism [online]. 7 January 2015. [Accessed 15 August 2017]. Available from: https://www.marxist.com/czech-republic-25-years-of-capitalism-what-freedom.htm

- 198 -

Appendix 1: Additional sources of information

References

1) Beevor A., La guerra civile spagnola, Rizzoli, Milano, 2006. 2) Boletín Oficial del Estado Español, núm. 505, 10 de marzo de 1938. 3) Franzo G., Division Azul, i volontari spagnoli al fronte dell’est, Novantico editrice, Pinerolo, 2005. 4) Jackson G., La repubblica spagnola e la guerra civile (1931-1939), Il Saggiatore, Milano, 2009 5) Malandrino C., Da Machiavelli all’Unione Europea, Carocci editore, Roma, 2003. 6) Payne S. G., Il fascismo: origini, storia e declino delle dittature che si sono imposte tra le due guerre, Newton Compton, Roma, 2006. 7) Payne S. G., The Franco Regime, 1936–1975, University of Wisconsin Press, Madison, 1987. 8) Preston P., Francisco Franco, Mondadori, Milano, 1997. 9) Simonis D., Spagna centrale e meridionale, EDT, Torino, 2009.

Website citations

• The Great Depression: http://www.history.com/topics/great-depression • “Third political way”: https://www.britannica.com/topic/third-way • Organization for Economic Co-operation and Development: https://www.britannica.com/topic/Organisation-for-Economic-Co-operation-and- Development • The Marshall Plan: http://marshallfoundation.org/marshall/the-marshall-plan/ • United Nations Relief and Rehabilitation Administration: http://www.treccani.it/enciclopedia/unrra_%28Enciclopedia-Italiana%29/ • World Bank: http://www.worldbank.org/ • Keynesian economics: https://www.britannica.com/topic/Keynesian-economics • International Monetary Fund: http://www.imf.org/external/index.htm • The Bretton Woods Conference:

- 199 -

https://2001-2009.state.gov/r/pa/ho/time/wwii/98681.htm • GDP per capita for different countries: https://knoema.com/pjeqzh/gdp-per-capita-by-country-statistics-from-imf-1980- 2021?country=Italy • Lend-Lease Act: http://www.history.com/topics/world-war-ii/lend-lease-act • Trades in the ‘40s: http://www.explorethetrades.org/trades-through-the-years/ • War economy: http://www.investopedia.com/terms/w/war-economy.asp • Generational Accounting in Portugal: http://www.jbmacedo.com/papers/ga.html • La "República Nova" de Sidonio Pais: https://dialnet.unirioja.es/servlet/tesis?codigo=52467 • The British Ultimatum of 1890: http://portugalresident.com/the-british-ultimatum-of-1890 • History of the Portuguese empire: http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=ab48 • Portugal GDP per capita 1960-2017: https://tradingeconomics.com/portugal/gdp-per-capita • Migrants’ remittances in Portugal: https://www.econstor.eu/bitstream/10419/139964/1/v20-i02-a06-BF02928459.pdf • Salazar’s honoris causa degree: https://www.britishpathe.com/video/oxford-in-portugal/query/Salazar • Francisco Higino Craveiro Lopes: http://www.presidencia.pt/?idc=13&idi=27 • Estatuto do Trabalho Nacional (1933): http://www.academia.edu/6744743/Estatuto_do_Trabalho_Nacional_1933_ • Portugal Balance of Trade 1950-2017: https://tradingeconomics.com/portugal/balance-of-trade • Colonial reform of the Estado Novo in Angola: http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-90742014000200250 • Saint Augustine: http://www.philosophiedudroit.org/ottonello,ama%20e%20fa%20cio%20che%20vuoi. htm • Salazar and his charismatic leadership: http://visualizingportugal.com/religion-texts/2014/2/6/salazar-and-charismatic- leadership-catholic-nationalism-and-the-portuguese-new-state • Spanish history: http://www.homolaicus.com/storia/spagna/franco.htm • Franco: Caudillo de España por la Gracia de Dios: - 200 -

http://www.angelfire.com/extreme/genio/franco.html • InStoria, online journal: http://www.instoria.it/home/spagna_contemporanea_II.htm http://www.instoria.it/home/spagna_contemporanea_III.htm http://www.instoria.it/home/spagna_contemporanea_IV.htm http://www.instoria.it/home/spagna_contemporanea_V.htm http://www.instoria.it/home/spagna_contemporanea_VI.htm • Gold and silver: Spain and the new world: http://mygeologypage.ucdavis.edu/cowen/~gel115/115ch8.html • The Francoism and its institutions: http://ospitiweb.indire.it/~copc0001/demo/comm.html • Spanish civil war: https://limun.org.uk/FCKfiles/File/Spanish_Civil_War_Source_1.pdf • Total factor productivity: http://www1.worldbank.org/prem/PREMNotes/premnote42.pdf • Francoism: • http://ita.anarchopedia.org/franchismo • The libertarian tradition: http://latradizionelibertaria.over-blog.it/article-inediti-augustin-sauchy-le- collettivizzazioni-in-spagna-1937-32440034.html • The Spanish revolution (1936-1939): http://ita.anarchopedia.org/la_Rivoluzione_spagnola_(1936-39) • Economic development in Spain, 1850-1936: https://e-archivo.uc3m.es/bitstream/handle/10016/815/simpson-EHR- 1997%3Bjsessionid=37742DCE20E43E71B8CE1A44C197A5BB?sequence=1 • The Kuznets’ curve: https://www.intelligenteconomist.com/environmental-kuznets-curve/ • Autarky in Spain: http://iberianature.com/spain_culture/culture-and-history-of-spain-a/autarky/ • The Franco Era, 1939-75: http://countrystudies.us/spain/51.htm • Fuero del Trabajo: http://ficus.pntic.mec.es/jals0026/documentos/textos/fuerotrabajo.pdf • Ley de Sucesión en la Jefatura del Estado: http://ficus.pntic.mec.es/jals0026/documentos/textos/leydesucesion.pdf • Ley de Principios del Movimiento Nacional de 1958: http://www.teresaterrades.com/wp-content/uploads/ley-fundamental-Movimiento- Nacional.pdf • OPEC Oil Embargo: Causes and Effects of the Crisis: https://www.thebalance.com/opec-oil-embargo-causes-and-effects-of-the-crisis- 3305806 - 201 -

• Assessing economic progress in Spain, 1850-2000: http://www.helsinki.fi/iehc2006/papers1/Prados.pdf • Tourism and Political Change in Franco’s Spain: https://link.springer.com/chapter/10.1057%2F9780230592643_3 • Economic Reforms and Growth in Spain the Franco’s Spain: https://e-archivo.uc3m.es/bitstream/handle/10016/11810/wp%2011- 07.pdf?sequence=1 • Tomáš Masaryk: https://www.britannica.com/biography/Tomas-Masaryk • Development of Czech economy: http://www.czech.cz/en/Business/Economic-facts/Development-of-Czech-economy • The first Czechoslovak economic five-year plan: https://catalog.hathitrust.org/Record/006827733 • Czechoslovakia: the eighth five-year plan, 1986-90: http://www.country-data.com/cgi-bin/query/r-3712.html • Czechoslovak industry after nationalization: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0084.1946.mp8003003.x/abstract • Gottwald and the Bolshevization of the Communist Party of Czechoslovakia: https://www.jstor.org/stable/3004097?seq=1#page_scan_tab_contents • The Košice Government Program: https://icv.vlada.cz/en/media-centrum/tema/the-kosice-government-programme- 70409/tmplid-676/ • Land Reform in Czechoslovakia: https://www.jstor.org/stable/4201592?seq=1#page_scan_tab_contents • Czech Republic – Industry: http://www.nationsencyclopedia.com/Europe/Czech-Republic-INDUSTRY.html • The armament industry of Czechoslovakia: http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0084.1943.mp5012004.x/abstract • Life during the Communist era in Czechoslovakia: https://www.private-prague-guide.com/article/life-during-the-communist-era-in- czechoslovakia/ • The Prague Spring: http://www.historyinanhour.com/2013/01/18/the-prague-spring-summary/ • The Breakup of Czechoslovakia: http://www.slovakia.org/history-topics • Earnings Disparities in the Czech Republic: the History of Equalization: http://sreview.soc.cas.cz/uploads/581fcabdabac0ea3a004c40dca2509f744229a36_447 _211VECER.pdf • Personal Consumption in Czechoslovakia, Hungary, and Poland, 1950-1960: a comparison:

- 202 -

https://www.cambridge.org/core/journals/slavic-review/article/div-classtitlepersonal- consumption-in-czechoslovakia-hungary-and-poland-1950-1960-a- comparisondiv/3178D21618F35C511AC828947A557E07 • Soviet Invasion of Czechoslovakia, 1968: https://history.state.gov/milestones/1961-1968/soviet-invasion-czechoslavkia • Czechoslovakia: economic policy and performance: http://www.country-data.com/cgi-bin/query/r-3705.html • Analysis of Centrally Planned economics in Czechoslovakia until 1968: http://econc10.bu.edu/economic_systems/Economics/Command_Econ/planning/come c_plan_czechosl.htm • The Czechoslovak Trade Unions: http://library.fes.de/pdf-files/netzquelle/a-14574.pdf • Czechoslovakia: economic structure and its control mechanisms: http://www.photius.com/countries/slovakia/economy/czechoslovakia_economy_econo mic_structure_a~776.html • Warsaw Pact invasion of Czechoslovakia: https://en.wikipedia.org/wiki/Warsaw_Pact_invasion_of_Czechoslovakia • Marcelismo no Estado Novo: http://www.premioiberoamericano.cz/documentos/16taedicion/2doPremioXVI_Micha lKovac.pdf • A formação da Junta de Salvação Nacional: http://www.citi.pt/cultura/politica/25_de_abril/junta_salvacao.html • Portugal: Economic Recovery, massive debt and fragile bank system: http://daytradingacademy.com/portugal-economic-recovery-massive-debt-fragile- banking-system-remain/ • : https://flagspot.net/flags/ao-pt.html • The Post-Franco Period, 1975-1980s: http://countrystudies.us/spain/52.htm • La ley que obligó al franquismo a suicidarse: http://cadenaser.com/ser/2016/11/18/politica/1479459818_207348.html • Spain GDP 1960-2017: https://tradingeconomics.com/spain/gdp • 10 Biggest Pros and Cons of Socialism: https://greengarageblog.org/10-biggest-pros-and-cons-of-socialism • The Velvet revolution: a peaceful end to communism in Czechoslovakia: https://tavaana.org/en/content/velvet-revolution-peaceful-end-communism- czechoslovakia-0 • Ten Lessons from the Ten Years of the Czech Way: http://www.cnb.cz/cs/verejnost/pro_media/konference_projevy/konference/download/ mmf_mlcoch.pdf • Alexander Dubček: - 203 -

https://en.wikipedia.org/wiki/Alexander_Dub%C4%8Dek • Vaclav Havel’s death: http://www.repubblica.it/esteri/2011/12/18/news/morto_havel_cecoslovacchia_ex_pre sidente_vaclav-26811751/ • Excess demand and price formation during a Walrasian auction: http://www.sciencedirect.com/science/article/pii/S0927539807000862 • Gross Domestic Product (GDP) in Czechoslovakia: http://ivanstat.com/gdp/cs.html • Spain. The secession of Catalonia threatens to cost its people forty years of misery: http://www.tempi.it/spagna-secessione-catalogna-minaccia-di-costare-alla-sua-gente- quaranta-anni-di-miseria#.WbESAbJJbIU

- 204 -