Banks and Railways: From Boom to Bust

In the summer of 1854, a protracted pronunciamiento by General Leopoldo O’Donnell toppled the Moderado government of Luis Sartorius, count of San Luis; new elections produced a Progressive Cortes; the new government was headed by none other than Espartero, who reluctantly gave Leopoldo O’Donnell, a Unionist general, the Ministry of War. The Unionists were centrist liberals, who wanted to end the division between Progressives and Moderates. They were inspired by a young journalist, Antonio Cánovas del Castillo, who was to become the undisputed leader of the centre-right in the last quarter of the nineteenth century. The success of the rebellion was partly due to its promises to put an end to the corruption of the moderate governments, whose railroad concessions to their cronies, especially Salamanca, had scandalized public opinion (on Salamanca’s railroad combinations, López-Morell, 2002) and to do away with the circle of right-wing buddies (camarilla) who surrounded the queen, particularly her mother and her morganatic husband. Unionists and Progressives had repeatedly denounced that, due to the speculative character of railroad concessions, very little actual construction had taken place during those years. In addition, the Crimean War, while enriching grain producers and exporters, had produced bread price increases which had caused deterioration in the standard of living of the poor and thereby fomented unrest. The rebels had also raised hopes by promising to lower taxes.