Economic problems

• Treaty of Madrid 1953


  resulted in more investment and loans from the USA and a small increase in trade. Gov used USA loans to invest in industry, but the investment had mixed results. Targeted imports of raw materials and industrial machinery led to a doubling of industrial production during the 1950's. Loans led to rising inflation. US money entered the economy, but Spain neither produced more goods nor allowed a growth in imports. Inflation increased as more money circulated, but there were no more goods to buy.
• End of 1950's inflation was increasing rapidly but wages were failing to keep up. 1957: inflation was growing by 30%, whereas wages were lagging behind by 20%. Salary increases of 1957 led to a decline in the standard of living. The standard of living, already one of the lowest in western Europe, fell further. Early 1957: Falangist officials working in the syndicates warned that unrest was growing.
• Coal miners went on strike in Asturias and engaged in mass protests against the regime.
• Construction workers went on strike in Madrid. The gov responded with promises of better conditions in the future. When these failed to end the protests the gov issued threats and when these failed it resorted to repression. Strikes were broken up by beatings and police brutality.
• Some officials within the gov recognised that the economic policies were failing.