M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25

Do Political Conditions Matter? Nineteenth-Century : A Case Study Maria Eugénia Mata Faculdade de Economica, Universidade Nova de Lisboa,

Abstract: Do political conditions matter for the prosperity of a capital city? The present study suggests that the French Napoleonic military occupation, Brazil’s independence, and domestic civil wars indeed helped to make the first half of the nineteenth century a gloomy period for Lisbon. The city’s demographic stagnation reflected a slow adaptation to the structural changes resulting from the political challenges. The demographic growth and prosperity that characterized the century's second half, as well as the early twentieth century, were related by contrast to the peaceful foreign and national environment Lisbon’s civil society was able to enjoy. They also reflected the development of centralized state government, and the rules regulating local urban growth. Lisbon’s role as the capital city of a new colonial empire seems to have been a less important factor. © 2002 Portuguese Studies Review. All rights reserved.

y the end of the eighteenth century, Lisbon was a prosperous city of nearly B170,000 inhabitants.1 It was still recovering from the 1755 earthquake and the attendant massive material destruction and economic disruption. The plan for rebuilding the most affected areas, sponsored by the Prime Minister Pombal, provided a modern eighteenth-century architectural framework for the devastated historical zone at the city’s core.2 At the same time, “by destroying downtown Lisbon, the earthquake hurried the process of urban expansion to the flats along the river (Santos, Belém) and particularly towards the interior (Penha de França, Campo de Santa Clara, Rato, Campolide and Santa Clara).”3 Public works and private investment in the building sector encouraged urban employment and spread economic links backward and forward to other sectors and activities in the city and its surroundings. This expansion was fostered by an increase of economic activity mainly based on colonial trade, in particular Brazilian products such as sugar, cotton, tobacco, hides, gold and diamonds. In the late eighteenth century, monopolies supported by

1 M. I. Baganha and M. M. Marques, “Social Differentiation and the Formation of Labor Markets,” in Pedro Telhado Pereira and Maria Eugénia Mata, eds., Urban Dominance and Labour Market Differentiation of a European Capital City—Lisbon 1890-1990 (Norwell, Mass.: Kluwer Academic Press, 1996), 76, according to the 1801 counting. 2 J. A. França, Lisboa Pombalina e o Iluminismo (Lisbon: Bertrand, 1977). 3 L. Baptista and T. Rodrigues, “Population and Urban Density: Lisbon in the Nineteenth and Twentieth Centuries,” in Pereira and Mata, eds., Urban Dominance, 55. M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 13 the state were abolished in Portuguese colonial trade. However, the colonial pact, which required all colonial trade to call on Portuguese ports, was still in force. Lisbon was by far the most important of the Portuguese ports. It acted as a pivot between Brazil and its European customers. Late eighteenth-century prosperity soon disappeared as the new century began. Natural disasters cannot be blamed for this stagnation. Early nineteenth-century political shocks did have strong consequences. Economic analysis usually stresses the dynamic effects of belligerency on the economic situation, because of larger public expenditure for wars. However, institutional economics may help us to understand how wars may be detrimental for urban economic activities. They may be responsible for stagnation in general, as a result of economic disruption and social turmoil. This paper examines nineteenth-century Lisbon as a case study. It seeks to illustrate how French military occupation, Brazilian independence and civil wars triggered a new depressed phase in the life of Lisbon. Following an analysis of the political conditions, the paper describes the detrimental effects on Lisbon’s economic activity of inefficient allocation of economic resources, brought about by institutional disruption caused by political conditions. Lack of prosperity is posited as the explanation for urban stagnation. Contrasting this picture is the growth and embellishment of Lisbon during the second half of the century, outlined in the latter half of the paper. A peaceful globalization process brought to the Portuguese capital-city modern urban economic activities and larger literate job market opportunities.

The demographic and economic stagnation of Lisbon during the first half of the nineteenth-century It may be safely argued that French military occupation and Brazilian independence triggered a gloomy phase for Lisbon. Between 1807 and 1811, attempted to occupy Portugal to enforce the so- called Continental Blockade on British trade.4 The combined efforts of the and a British expeditionary force led by Arthur Wellesley (later Duke of Wellington) forced the French troops to withdraw and to proceed to Spain and Southern France between 1812 and 1814. These were the last of the campaigns against the first French Empire. The Portuguese mainland was devastated by this so- called “Peninsular War.” Lisbon was subjected to a period of occupation (autumn 1807 to spring 1808) and to siege lasting from the summer of 1810 to the following summer. Both of these periods profoundly disrupted civilian economic activity in the Portuguese capital. These might be considered transitory damages. One could argue that the return of peace would have certainly restored the old patterns of Portuguese economic activity, in the absence of other disturbing factors.5 As in the case of the earthquake,

4 Jorge Borges Macedo, O Bloqueio Continental: Economia e Guerra Peninsular (Lisbon, 1962). 5 For the recovery of a particular rural area, the Douro valley region, see N. R. Bennett, “The Vineyards of the Douro and the Peninsular War,” Journal of European Economic History 21 (1) (1992). 14 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 Lisbon could recover. Based on available studies, the French wars appear to have had short-term direct effects on Lisbon’s development, even though J. B.Macedo has qualified them as deeply injurious for manufacturing activities in the regions affected by military action.6 Another disturbing factor was Brazilian independence. As the French troops advanced on Lisbon in 1807, the royal family took refuge in the Portuguese colony of Brazil, to avoid political capitulation to Napoleon. This option transformed, for a while, the Brazilian capital, Rio de Janeiro, into the capital of the Portuguese kingdom, depriving Lisbon of this traditional role. Moreover, the city lost the demand related to the conspicuous consumption associated with the residence of the royal family and the higher Portuguese nobility. It also lost the associated benefits in terms of employment and prosperity, so typical for capital cities of Europe’s traditional society. In the wake of the French defeat in Europe, and given the British assistance to Portugal in driving away Napoleon’s troops, it might have been possible to overcome the effects of the foreign military presence within a few years, since rural areas could recover from agricultural disruption and especially from local plundering. Furthermore, the royal family returned to Lisbon a few years later (1821), and the Portuguese Court was re-established in Lisbon. This meant the recovery of political and administrative functions for the city, as it required the presence of the diplomatic and bureaucratic staff associated with central state government. Political functions, however, are not enough to ensure the demographic growth or prosperity of a capital city. Urban expansion requires healthy economic activities as a base. Economically, recovery was much slower and more difficult. The real problem was that the French occupation of mainland Portugal implied that the colonial pact rule that had forced Brazilian trade to call on Portuguese ports lost its justification. The French would seize Portuguese commercial vessels. Thus, the Portuguese government in Brazil authorized direct trade with all friendly nations, mainly Britain and the United States at the time. From 1808 onward, Brazilian ports were open to foreign ships, and it was now possible to export goods and import staples without going through Portugal. This meant that the colony was free from its traditional role. Once Portuguese ports in Europe had been definitively delivered from the French threat, it would have been possible to return to the colonial pact rule. However, British pressure and Brazilian reaction made this impossible. Britain even profited from the Portuguese difficulties during the period of 1807-1811 to negotiate, in 1810, a very favorable trade treaty that ensured permanent British access to Brazilian ports and a significant reduction of Portuguese protectionist duties. Brazilian economic independence, to all practical intents and purposes, was achieved in 1808. The formal end of the country’s colonial status followed soon afterwards, in 1815. A total rupture of political ties with Portugal took place in 1822, and Portugal’s acceptance in 1825 sealed the separation.

6 J. B. Macedo, Problemas de história da indústria Portuguesa no século XVIII (Lisbon, 1963). M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 15 These Brazilian events may be considered to a certain extent as indirect effects of the French invasions. They have given rise to a broad range of opinions among historians, but one thing is certain—the long term effects took many decades to disappear. As the Brazilian historian Jobson Arruda put it: “Brazil represented a safe consumption market for the staples produced in Portugal, which, without protection and exclusiveness, would not otherwise have had a secure place in the Brazilian market, because of their lower quality and higher prices.”7 Characterizing the relative dimension of the Brazilian market, Arruda wrote that

The Brazilian goods represented the larger part, in terms of value, of Portuguese exports, even surpassing the products of the mainland and other colonies, Africa and Asia (...). As a matter of fact, between 1796 and 1807, with few fluctuations, the Brazilian products represented, on average, 60.6% of total Portuguese exports.8

To sum up, Brazilian economic independence meant “a brutal reduction in the Portuguese trade”,9 sluggish movement for the port of Lisbon, and a decline in Portuguese manufacturing activity.10 In a long-run perspective, it may of course be argued that one could not imagine sustained economic growth for the country and its capital in a context of continued economic distortions resulting from inefficient production and from a reliance on protected colonial markets .11 In any case, the events of the early nineteenth-century demanded severe structural transformations. Several decades would elapse before Lisbon (and the country as a whole) found the right path to adjust to the new environment. Curiously, the Brazilian economic shocks seem to have caused deeper problems for Lisbon than for Oporto, the second-largest Portuguese city in the north. Trade in food staples to Brazil was not as deeply affected as the flow of manufactured goods.12 In particular, wine was a successful export to Brazil—a Mediterranean crop, it was impossible to grow in the tropical Brazilian climate. Port wine exports

7 Arruda, “Brasil e crise económica,” Ler História 8 (1986), 65. 8 Arruda, “Brasil e crise económica,” Ler Historia 8 (1986): 66-67. For the same period V. Alexandre, “Um momento crucial do sub-desenvolvimento Português: Efeitos económicos da perda do Império Brasileiro,” Ler História 7 (1986), 9 indicates 64.4%. 9 Arruda, “Brasil e crise económica,” 68. 10 The decline in the output of Portuguese factories may have begun before this moment, as suggested in J. B. Macedo, Problemas de história da indústria Portuguesa no século XVIII (Lisbon, 1963), 63. But, as in the meantime technical conditions had changed neither in Portugal nor in Britain, the traditional British competition against Portuguese products could only benefit from smuggling, winning out after Portugal lost her monopolistic position in Brazil in 1808, and particularly after the 1810 trade treaty. 11 On this perspective, see P. Lains, “Foi a perda do império brasileiro um momento crucial do sub- desenvolvimento português?” Penélope 3, (1989). 12 V. Alexandre, “Um momento crucial,” 38-41. The reason, in my view, is related to a more substantial improvement in industrial goods in Britain than in labour-intensive foodstuffs. Mediterranean crops could only be kept within their natural environment, which made for comparative advantages. 16 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 to Great Britain and to Brazil, because of the product’s special flavor, were naturally protected from the competition of foreign and other Portuguese wines. The specialization of the Oporto region in these less-affected sectors fostered forward and backward economic linkages with other economic activities. It encouraged wine storage and bottling in Oporto, and gave a boost to shipping in its port.13 All these activities were responsible for the stronger demographic and economic growth of Oporto during the first half of the nineteenth-century, compared to Lisbon.14 Turning back to Lisbon, besides the recovery from the disastrous earthquake in the mid-eighteenth-century, the early nineteenth-century political and economic upheavals mentioned above hampered Lisbon demographic growth. Lisbon was the capital of the Portuguese kingdom, but it was no longer the capital city of an empire. Demographic and spatial stagnation of the first half of the nineteenth- century were related to the slow adaptation of the city (and of the Portuguese economy in general) to the structural changes resulting from the independence of colonial Brazil. The first Portuguese census of 1864 numbered around 190,000 inhabitants within the new and slightly larger administrative boundaries established by the Lisbon perimeter road built in 1852. In the 1801 enumeration, the population of the same area had been around 181,000.15. The very poor growth rate left Lisbon losing importance with respect to the entire population of Portugal. In 1801 the population living in the capital represented 6.3% of the country’s mainland population and in 1864 only 4.9%.16 Two principal reasons may be suggested for this low growth: Portuguese economic stagnation and further political (domestic) problems. Quantitative knowledge of Portuguese economic evolution during the first half of the nineteenth- century is still very tentative. However, it may be confidently stated that there was no process of modern economic growth under way in Portugal at that time. It is almost certain that gross domestic production was virtually stagnant.17 Further political upheavals, this time in the form of domestic problems, were also a key factor. As Baganha and Marques state: “In the first half of the nineteenth-century the [Portuguese] political situation did nothing to encourage growth.”18 The country lived in a state of civil war through two periods, 1828-1834, and 1846-1847. For a few months in 1833-1834 this brought on another siege of Lisbon. Moreover, political instability was the rule until 1851, especially because of the high number of revolutionary movements.19

13 C. Martins, Memória do vinho do (Lisbon: ICS, 1990), 73-152. 14 For a detailed study of this and other aspects of the rivalry between Portugal’s two main cities, see M. E. Mata, “A Century of Urbanization in Portugal and Europe: Some International Comparisons,” in Pereira and Mata, eds., Urban Dominance. 15 Baptista and Rodrigues, “Population,” 50 and 52-3. 16 Baptista and Rodrigues, “Population,” 58-9. 17 A. B. Nunes, M. E. Mata, and N. Valério, “Portuguese Economic Growth, 1833-1985,” Journal of European Economic History 18 (1989): 2. 18 Baganha and Marques, “Social Differentiation.” 19 M. E. Mata, “Actividade revolucionária no Portugal contemporâneo—uma perspectiva de longa M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 17 All aspects of Lisbon civil society, and particularly business, manufacturing, banking, and urban transportation reflected the sluggish demographic evolution. The city actually preserved a traditional manufacturing structure until the mid- nineteenth century. This is clearly stated in the industrial inquiry undertaken in 1852 for factories (defined as establishments employing more than 10 workers) throughout the whole country.20 Industrial activities in Lisbon were still incipient. Roughly half of Lisbon’s manufacturing labor force worked in the textile, cloth, and leather sector, and a quarter in the food, beverages, and tobacco sector. No other sector employed more than one tenth of the workforce, and the workshops were individual businesses usually referred to by the name of their owners. Three further aspects deserve notice. First, the number of factories and workshops employing over ten workers was only about 68. Only five establishments had a labor force over 100 workers: three of them worked with textiles, one with tobacco, and one with paper. Second, available steam power amounted only to 776 hp, a further proof of the traditional character of these manufacturing activities. Third, factories and workshops were scattered throughout the city’s various quarters, from Beato to Xabregas, Santos, Alcântara, Ajuda and Belém, reflecting more the city plan stretching along the river rather than the existence of any real industrial quarter surrounding the center. Small workshop industries were spread throughout the town, and we can even find four locksmiths and tanners in the historical center, respectively in the quarters of Rossio and . Another important aspect of Lisbon’s sluggish evolution during the troubled first half of the nineteenth-century was the absence of significant banking activities. In fact, war pressures had prompted large state spending and public loans. Urban private savings were mostly absorbed by loans to the government, which issued large amounts of paper money. The first Portuguese bank was established in Lisbon only in 1822 (Banco de Lisboa), to help the government to recover monetary normality after the problems caused by the French wars and by issues of inconvertible paper money. The Banco de Lisboa was a failure from this point of view, but it managed to survive as a commercial bank. Only in the 1840s did the situation begin to change. New banks were established in 1844: the Companhia Confiança Nacional, a joint-stock bank involved in making loans to the government, and the Caixa Económica Montepio Geral, a private savings bank. The domestic political upheavals of 1846-1847 forced the government to borrow from banks to win the civil war. This made it necessary to accept over-issuing and inconvertibility of the notes of the Banco de Lisboa, and forced the Companhia Confiança Nacional into bankruptcy. The government decided to bail out the shareholders of the Companhia Confiança Nacional by merging it with the Banco de Lisboa to form the new Banco de Portugal. For a while, the Banco de Portugal experienced a rather difficult existence, as it was duração,” Análise Social 26 (1991): 112-113. 20 As is explained in the letter of the Director Geral da Repartição de Manufacturas to the Governadores Civis, who would distribute and send back the answers. Mappas dos operarios que trabalham em fabricas 1852, Direcção Geral do Comércio, Agricultura e Manufacturas, Repartição de Manufacturas, Arquivo Histórico do Ministério das Obras Públicas. 18 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 heavily involved in loans to the government and unable to pay the notes of the Banco de Lisboa. Only calmer times in the mid-1850s helped to stabilize the Banco de Portugal.21 By that time, the banking system of Oporto was surging ahead of Lisbon, reflecting the superior economic and demographic growth of Oporto compared to the capital. Several issuing banks were being established in the north of the country. This contrast between the south, where the Banco de Portugal was the only banknote issuer, and the north, where there were several banknote issuers, would persist until the early 1890s. In the capital, the absence of prosperity meant stagnation of the urban area. The lack of modern urban transportation services reflected the confined urban space and its demographic and economic lethargy. The first urban transportation service began in 1835, with a private company, the Companhia de Carruagens Omnibus, using horse-drawn omnibuses. It provided an intra-urban network and also connections to a few peripheral places in the environs of the capital (Belém, Loures, Mafra and ). However, the company did not prosper, because of the small number of passengers. Intra-urban distances were still short. Most people lived near their workshops or could go on foot to their place of business. Purchasing power was low, and peripheral connections proved unprofitable, as only summer connections were in sufficient demand. A large fire in the company’s headquarters was responsible for the final failure of this first transportation company, in 1865.22

The demographic and economic growth of Lisbon during the second half of the nineteenth-century and early twentieth-century Only during the second half of the nineteenth-century and in the early twentieth- century did Lisbon recover and resume a path of demographic growth, as Table 1 illustrates. After the almost permanent turmoil that had marked the first half of the nineteenth century, Portuguese domestic social life, under a stable constitutional monarchy regime, became much calmer and quieter from the 1850s to the end of the century. Against this more placid background, Lisbon’s civil society could now pursue those economic activities that would permit the build-up toward modern business. Within a peaceful and prosperous international European setting, it was possible to profit from the stimulus provided by international trade and globalization. Normal and healthier daily activities correspondingly promoted urban growth. The city began to recover. Representing in 1864 no more than 4.9% of Portuguese population, Lisbon accounted for 5.6% in 1878, 6.4% in 1890, 7% in 1900 and 7.7% in 1911. In 1885-1886, the administrative limits of the town were enlarged.23

21 J. Reis, O Banco de Portugal, das origens a 1914 (Lisbon, 1996), 1: 235-91. 22 See A. L. Vieira, Os transportes públicos de Lisboa entre 1830 e 1910 (Lisbon: INCM, 1982), 72-82. 23 Baganha and Marques, “Social Differentiation,” 77-79. M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 19

Table 1. Population of Lisbon from 1864 to1911

Year Census Population (thousands)

1864 190 1878 241 1890 301 1900 356 1911 435

Source: Recenseamentos Gerais da População,1864, 1878, 1890, 1900 and 1911

Free of military constraints, the government was now able to implement a policy of economic development. Periods of war offer no opportunity for political undertakings, as economic resources are mostly devoted to military aims or to survival. State policy included a large program of public works for transportation and educational facilities. Roads and railway networks helped to reduce transportation costs, and in a small country like Portugal this effort effectively brought the countryside closer to Lisbon. Subsidizing private companies to build infrastructure, and running postal, telegraph and, later, telephone facilities, the central government reduced communication and information costs across the country, benefiting civil society business ventures. Finally, the promotion of literacy in such an illiterate country had a positive effect on human capital. These government policies were advertised as being imitative of advanced countries in Europe, and promised to usher Portugal into modern civilization. The policy measures improved regional economic specialization within a growing national market, and promoted stronger links with the rest of the world, thus ensuring economic growth and modernization. Road and railway networks used Lisbon as their hub, given that it was the political capital, the principal urban center, and the most relevant economic market in the country. Soon, the city became linked by railway to Madrid in 1866, Oporto in 1877, and Paris in 1882. The harbor of Lisbon was also modernized and several lighthouses were built along the Portuguese coast. They improved navigation safety for ports, and particularly on the approaches to Lisbon harbor along the broad estuary of the . Quantitative knowledge of Portuguese economic evolution during the second half of the nineteenth-century remains rudimentary, although it is known that economic growth was occurring. The gross domestic product increased significantly from the 1860s onward, at least until the 1890s.24 National prosperity, a peaceful international background, and conditions of globalization contributed to Lisbon’s prosperity and to the spatial expansion of its urban area. Structural changes in

24 Nunes, Mata, and Valério, “Economic Growth,” 89. 20 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 manufacturing, banking, and urban transportation simultaneously created an enlarged job market. Lisbon’s total manufacturing labor force multiplied by a factor of around 2.5 between 1852 and 1890, as against a mere factor of 1.5 for the total population. Although many manufactures remained at the level of individual activities or small workshops, not only did several industrial sectors improve their factories and create employment in the capital, but Lisbon’s industrial profile also changed, as the city worked out its industrial specialization to face various challenges.25 The share of metallurgy, electrical implements, and machine production increased greatly. These industrial sectors were linked to the development of modern activities, as they supported mechanization. Their share of the employed labor force grew from less than one tenth to more than one quarter. They were the best growth performers, becoming Lisbon’s new relevant industries at the end of the century and on the eve of the First World War, as Table 2 shows.

Table 2. Manufacturing in Lisbon in 1890

Sector Labor Force (# Workers) Structure (Percentage)

Food, beverages, and tobacco 2,721 19 Textiles, cloth, and leather 4,462 31 Wood, cork, and furniture 1,020 7 Paper, and typography 862 6 Non-metallic materials 662 5 Chemicals 585 4 Metallurgy, electrical implements, machines, and transportation devices 4,214 29 Miscellaneous 49 +0

Total 14,575 100

Source: Inquérito Industrial de 1890, Vol. 4 — Indústrias fabris e manufactureiras, 15-38.

25 J. Reis, “A industrialização num país de desenvolvimento lento e tardio: Portugal 1870-1913,” Análise Social 23 (97) (1987). M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 21 At the same time, traditional sectors such as textiles, clothing and leather, and food, beverages, and tobacco lost part of their relative weight, though remaining very important.26 The manufacturing sectors whose role in Lisbon’s industry expanded during the peaceful period of the second half of the nineteenth century were those requiring higher technical knowledge, greater precision, accuracy, and more frequent use of machines. Correspondingly, they required a higher level of literacy. The average literacy rate of Lisbon’s manufacturing labor force was 46 %.27 Above the average were the rates prevalent in the sectors of metallurgy, electric implements, machines, and transportation (60 %), the sectors of wood, cork and furniture (47 %) and the sectors of paper and typography (95 %), because of their particular nature. This finding is very telling. The Portuguese literacy rate was very low in the whole country: only 21 %, far below the rates of Northern European countries, and also below the norm for the Mediterranean countries. 28 Lisbon was clearly ahead of the Portuguese countryside. In the government-operated factories the labor force was highly literate, particularly in the occupations of armory, shipbuilding and coinage, because of the technical character of those industrial activities.29 In the areas of food and beverages almost half of the labor force was literate. Bakers and sweet confectioners were always highly literate, probably because production and sales usually went hand in hand. Almost one half of the labor force was literate among quarrymen and stone cutters, as well as among lumbermen and carpenters. Measuring and machine manipulation required literacy. Personal business management also demanded literacy. The resulting 46% literacy rate for the industrial labor force in Lisbon in 1890 stands far above the 21% literacy rate for the entire Portuguese population and the 24% rate for adult literacy.30 Easier access to education in the city because of local facilities, and the strong correlation between literacy and migration into the city may explain the higher concentration of literate people in the industries of the Portuguese capital. Lisbon was endowed with a significant number of schools during this peaceful second half of the nineteenth-century. The number of high schools in the town grew from one to five (four for the male population, one for the female population). The number of university schools increased from two (for the army and navy officers)

26 Boletim do Trabalho industrial, Ministério das Obras Públicas, Comércio e Indústria, 2 (Lisbon: Imprensa Nacional, 1891). 27 According to the enquiry Inquérito Industrial de 1890 —Indústrias fabris e manufactureiras, Ministério das Obras Públicas, Comércio e Indústria, 4 (Lisbon: Imprensa Nacional, 1891). 28 J. Reis, “O analfabetismo em Portugal no século XIX: Uma interpretação,” Nova Economia em Portugal. Estudos em homenagem a António Manuel Pinto Barbosa (Lisbon: Universidade Nova de Lisboa, 1988). 29 C. Bastien, “Para a história da Casa da Moeda de Lisboa: Aspectos técnicos e organizativos da produção da moeda metálica,” Estudos de Economia 18 (1) (1991). 30 That is to say, percentage of literate persons aged ten or more. For the relationship between literacy and economic development in Portugal from 1890 onward, namely the strongest impact of the former on the latter, see (Nunes 93), 197. 22 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 to nine. The seven new schools taught the fields of natural sciences, medicine, letters, veterinary, agriculture, engineering, and commerce.31 These university schools were later organized into two still existing universities, the so-called Classical University,32 and the Technical University.33 One other aspect should be noted: the success of the financial sector from the 1860s on. The first step was the establishment of the Lisbon branch of the London & Brazilian Bank in 1863. The Banco Nacional Ultramarino followed in 1864. It was an issuing bank for the Portuguese overseas territories, supported by the government. The Companhia Geral do Crédito Predial Português was a mortgage bank. The Banco Lusitano was the first private Portuguese joint-stock bank with its headquarters in Lisbon, but went bankrupt in the early 1890s. Lisbon gradually moved ahead of Oporto as the main financial center. At the beginning of the1890s, it already played a dominant role in financial services, as Table 3 shows. Lisbon banks accounted for less than one third of Portuguese banks, but held more than three-quarters of Portuguese bank deposits.

Table 3. Deposits in Joint-Stock and Savings Banks

Location Number of banks Deposits (contos) Deposits (percentage)

Lisbon banks 13 23, 324 77 Oporto banks 10 3, 305 11 Other banks 22 3, 781 12

Total 45 30, 410 100

Source: Anuário Estatístico de Portugal, 1892

This means that under normal peaceful conditions the banks of the capital were, on average, bigger than the banks of the second-rank city of Oporto and other cities. The seven largest joint-stock banks for savings were all based in the capital and (aside from some mergers) all of them are still operating today. The economic recovery and prosperity of Lisbon during these peaceful times, the establishment of railway links between the town and the rest of the country, and the expansion of the job market created new needs for urban mass transportation. The failure of the Companhia de Carruagens Omnibus opened the way for the appearance of several small omnibus companies that operated throughout the period and ran fiercely competitive services.34 One of the new operators, the Companhia

31 In 1899-1900 there were 480 students in natural sciences, 225 in medicine, 92 in letters, 114 in agriculture and veterinary, and 130 plus 207 in engineering and commerce, respectively. Military schools had 145 students. See Rómulo de R. Carvalho, História do ensino em Portugal (Lisbon: Fundação Calouste Gulbenkian, 1986), 638. 32 With natural sciences, medicine, letters, and the new schools of law and pharmacy. 33 With the veterinary, agriculture, engineering, and commerce schools. 34 A larmanjat system also received permission to operate public transportation, but failed because of financial speculation and corruption. This was the Lisbon Steam Tramways Company, extensively studied in António Lopes Vieira, “Investimentos britânicos nos transportes urbanos e suburbanos em M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 23 Carris de Ferro de Lisboa, founded in Rio de Janeiro in 1872, began a rail network of horse-drawn vehicles in Lisbon in 1873. After having been reorganized in Lisbon in 1888 this tramway company monopolized this service in1892, under a favorable contract with the city authorities. The adverse tax conditions imposed by the latter on the small omnibus companies brought about their failure, because they were unable to merge in order to face their biggest competitor. This represented a deliberate choice on the part of the city authorities between bad services from low-capital small companies, and good service from a single large-scale operator. Although Vieira has suggested in this context that monopoly was a bad choice, and has expressed regrets about the inability of the survivors to merge in order to face the Companhia Carris de Ferro de Lisboa, he acknowledges that the small operators provided poor service.35 Small operators had undernourished traction animals and inappropriate uniforms for drivers, the conditions were unsafe for passengers, and high-speed accidents were caused by the need to make up for frequent delays. The monopolist, on the other hand, could offer lower ticket prices, affordable for a low-income clientele. High ticket prices had meant that only white-collar workers, civil servants, and the middle class used the omnibus. The larger company was able to provide service on useful but less-profitable lines. It could survive economic downturns, and it could afford current know-how and implement new technology. With political protection, the company enlarged the network to 64 kilometers before the end of the century, making it the largest urban network in the Iberian Peninsula.36 Soon, in 1901, the company would introduce electric power to the network, making the tramways very popular. The availability of more and better urban transportation also created opportunities for developing new residential areas. The housing situation in Lisbon reflected the city’s demographic growth throughout the period.37 The housing sector is a very sensitive measurement indicator of Lisbon’s prosperity, reflecting the demand for dwellings and the influx of people into the city. New housing played a very important role in attracting labor to the urban center because of the jobs it could create. It was a labor-intensive sector using large numbers of unskilled workers who might eventually acquire some professional specialization. Moreover, this sector had important links with its suppliers. Housing construction provided opportunities to invest available capital, either from domestic sources (savings), or from emigrants’ remittances, particularly from Brazil, the main outlet for Portuguese emigration.

Portugal na segunda metade do século XIX — fracasso e sucesso. A Lisbon Steam Tramways Company e a Lisbon Electric Tramways Company,” Revista de História Económica e Social (7) (1981) and Vieira, Transportes públicos. 35 Vieira, Transportes públicos. 36 According to Vieira, Transportes públicos, 125, who compares Lisbon with Spanish cities: Barcelona, Bilbao, Cartagena, Madrid and Santander. 37 On this subject, using the Municipality construction permits, see A. F. Silva, “A construção residencial em Lisboa: Evolução e estrutura empresarial (1860-1930),” História empresarial em Portugal (Évora: Universidade de Évora, 1995). 24 M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 Although Portugal had lost political control over Brazil, emigration to the ex- colony continued. Financially, the ex-colony continued to be much more significant than the Portuguese possessions in Africa. Only toward the end of the century did crop plantations and mining activities assume some importance in the Portuguese colonial empire in Africa. The volume of business, however, was still too small to entail positive effects for the growth of Lisbon as the capital of an empire. The increase in Lisbon’s urban area was much more closely related to domestic factors, such as the local construction-permit policy for residential building.38 Silva has concluded that residential construction accelerated in Lisbon between the 1860s and 1881 (the yearly average was 55 permits). Although the financial crisis of 1891 reduced the rate of construction until 1896, a return to the 1890 level was achieved on the eve of the Republican revolution of 1910. A brief downturn around 1910-12 was reversed before the onset of the First World War. Residential building went hand in hand with Lisbon’s productive specialization and with labor market differentiation. Additional jobs and successful urban policies also fed into the process of laying out of new avenues, squares and places for social gathering. The economic activities of a healthy civil society always mean the growth and embellishment of urban spaces. With calm and peace prevailing, the city was touched by economic prosperity and by the romantic ideals of progress. It grew from the historical center, rebuilt earlier under Pombal, where there was a concentration of office space, lawyers and notaries, and elegant shopping facilities. The Stock Exchange was also located there. 39 Many banks, as well as insurance companies and other firms chose this area for their head offices. The main axis of the new urban framework was the large avenue, Avenida da Liberdade, inaugurated in 1879, which was bordered by palaces, well-to-do homes and commercial buildings. Later a large roundabout was added, from which a new avenue ran toward the North through agricultural lands, to support a modern and elegant new bourgeois residential area. This avenue40 inaugurated in 1887 was named Fontes Pereira de Melo, after the politician who had initiated the development economic policy of the 1850s. Several new roads soon crossed it, enlarging the city area greatly. All of the streets were named after nineteenth- century politicians. The newly enlarged and embellished city acknowledged her political leaders. During the first half of the nineteenth century, as Silva has documented,41 only minor public works were undertaken, such as cemeteries, occasional road improvements, road paving, and tree planting. One marketplace was built, of the three that had been planned. During this period Lisbon lacked an overall urban plan, although a commission had been appointed in 1837 for that purpose. A few public works were completed amidst complaints about lack of funds. By contrast, the

38 Silva, “Construção residencial.” 39 See (Justino 93): 5-28. 40 Avenida Fontes Pereira de Melo 41 (Silva 88) M. E. MATA, PORTUGUESE STUDIES REVIEW 10 (1) (2002): 12-25 25 second half of the century was the moment for building palaces, theatres and gardens,42 for gas production and lighting, 43 railroad stations, electric tramways and a modern slaughterhouse. 44 All these public works reflected elegance and welfare. However, among the most impressive benefits of the expansion toward the city’s western quarters (Alcântara and Belém) was the large road along the Tagus running beside the railroad, and the modernization of the port of Lisbon to accommodate international trade. These were the best symbols of Lisbon’s modernity and monuments to nineteenth-century engineering ability.

Conclusion International background, foreign threats, and domestic politics really do matter. The 1755 earthquake had been Lisbon’s largest natural disaster. Although the destruction represented a deep setback, it was eventually overcome within a few decades. In the first half of the nineteenth century, foreign invasions and unfavorable general political conditions imposed constraints on Lisbon’s framework. The demographic growth of the second half of the nineteenth century and of the early twentieth century was related to the rise of modern economic activities. After the turmoil that had marked the first half of the century, the international political scene had become placid, the country had a stable constitutional regime, and there was a rising tide of international globalization. Within fifty years the Portuguese capital city moved quickly toward expansion and modernization. Favorable international events and the effects of positive Portuguese domestic policies helped Lisbon to grow demographically and to assume a significant economic and financial role as the capital city of a European peripheral country.

42 The most significant were the gardens of Estrela and Príncipe Real. See (Silva 88), 30. 43 The gas production was the main branch of the chemical industry. It included one single factory employing 340 workers (the Companhia Lisbonense de Iluminação a Gaz). 44 It employed 268 persons, as prosperity and economic growth had brought more generalized meat consumption in the capital. On the estimation of meat consumption per capita in Lisbon, see (Justino 86).