A “revolutionary bourgeoisie” little revolutionary in matters of Public Finance (1808-1874)

Abstract

The article focuses on the transition from the absolutist Treasury to the liberal Treasury, analysing central state spending, debt management and tax reforms. First, permanent expenditures increased because the army became professionalized and because the liberal state assumed new functions (law and order, education and public works) and had to pay high debt burdens and subsidies to the clergy. Second, during the liberal revolution, the Spanish Treasury was bankrupt, due to the fall in revenues and the increase in war expenses, which generated large budget deficits, which created a deep debt crisis. To finance them, the Treasury had to resort to expensive loans lend by big lenders and financiers. Third, fiscal irresponsibility and defaults arose from the resistance of absolutist and liberal elites to tax reforms and tax compliance after the tax reform of 1845. To compensate for the financing of bankers and debtholders, the Treasury had to pay high interest rates and pass legislation favourable to creditors. These financing needs of the Treasury determined the measures of the liberal revolution and created the bases of the failure of the industrial revolution and the social unrest and political instability of nineteenth-century Spain. In the conclusions, it is explained how the ruling elites resorted to the creation of the Debt State, displacing the tax burden towards peasants and consumers and perceiving the budget debt interests, as off the debt arrangement of Bravo Murillo. In liberal Spain, there continued to be a transfer of income, through taxes and debt, from the taxpayers to the owners.