The importance of the domestic front as a support base for the campaigning armies was one of the major legacies of the First World War. The realisation that victories, or defeats, could no longer be constructed solely on the battlefield but were the product of a communal effort involving all society, led to an unprecedented mobilisation whose impacts and effects were also felt in Portugal. Building a war economy involves conceiving national strategies comparable in their objectives to military plans. Here, the State must play the part of the economic agent with the powers to intervene in the economy, controlling expenditure and consumption by raising taxes and regulating prices or through rationing. The functioning of economic life in situations of conflict involves an adaptation that nearly always goes hand in hand with the emergence of new methods of social organisation. Thus war economies can be considered alternative systems of power with the interaction of different structures of a political, military or social nature. The economic analysis of a war implies adopting a transverse strategy involving the identification of the various agents present; given the political and economic background to the outbreak of the First World War this means that it is important to start by weighing the role played by the interactions and by the relations of dependence between the national realities and the global economic networks to which Portugal belonged.
A war economy must always be interpreted as an exceptional economy, deviating from a ‘norm’ that must be re-established with peace.
At the request of Great Britain Portugal assumed neither a position of neutrality nor of belligerence regarding the war in Europe until 9 March 1916, when the Central Powers declared war on Portugal. However, given the limitations of national production and as a result of the effects of chronic external dependence on subsistence, fuel and transports (which the evolution of the war would contrive to highlight even further), Portugal was forced from late 1914 onwards to organise a war economy in order to minimise the effects of the European conflict on the country’s economic and financial activity.
The aims of the war economy policies as enunciated by the First Republic were nearly always guided by three specific objectives:
1. To ensure that the country received adequate supplies of essential goods needed for the population’s daily subsistence;
2. To define a price control policy;
3. To find the instruments needed to intensify and ensure the self-sufficiency of agricultural production.
So the concern of the various republican governments in power between 1914 and 1918 is quite clear, as they sought to minimise the effects of the “subsistence issue”, with a view to reducing the levels of social conflict that were inevitably associated thereto. These options demonstrate the degree of dependence of the national economy as regards foreign trade. They served to denounce a number of structural vulnerabilities that characterised the nature and composition of Portugal’s productive fabric. The State’s action pointed in one single direction: to combat speculation, a strategy achieved by the following:
- Creating central and local organisms to take measures to solve the problems of subsistence;
- Regulating maximum prices and making inventories of production and consumption;
- Creating, for the State’s account, warehouses that regulated the price of goods of first necessity.
One can understand how as the difficulties in food supplies increased, the need to produce an accurate list of the country’s economic situation grew enormously. Only thus would it be possible to foresee the quantity of imports needed to halt the decline in the population’s living conditions and standards. Note, in this regard, the lack of any accurate statistical inquiry that might constitute the starting point for the systematic and detailed calculation of the domestic economic situation, enabling the Republic to verify reserves and quantify future needs in raw materials.
Throughout this period it also became clear that as an argument the war was not enough to justify completely the worsening national economic situation. This aspect acquired a new focus when the demands made on the Government by the workers and by the industrial associations are analysed, concerning the implementation of measures condemning speculation in food prices and halting their constant rise. The intensification of the State’s interventionist action in the sphere of economic activity also showed in the specific case of subsistence, for instance, that whilst in theory it was easy to organise pricing tables, the difficulties arose when the Government was seen to be unable to guarantee the regular supply of goods and to halt the speculation and the hoarding. Furthermore, it soon became obvious that adopting a war economy policy geared to restricting the freedom of consumption (by adopting price tables) and to defending the national supply (by prohibiting exports), would have few effects on the problem of subsistence. It was also essential to find the appropriate instruments to maximise not only the development of the transport sector but also the promotion and growth of agricultural production, a strategy that had to be managed within a framework where the “hand of the State” was gaining ever more visibility.
In 1914 Portugal lived a scenario of social misery similar to the situation prior to the conflict, worsened it is true by the difficulty the poorer classes had in obtaining supplies of basic foodstuffs, such as grain and salt cod. Basically, most of the population continued to take their sustenance from the land, and did not depend on imports, which in an initial phase would prevent the domestic economy from being too affected by the international situation, as happened with the country’s financial position. This reality also raised some reflections concerning the development of agricultural hydraulics, paving the way for the use of the natural resources in broad swathes of the Portuguese territory, in particular in Alentejo. However, generally speaking, the war was only being timidly confronted by the public powers as an opportunity to transform and modernise the agricultural sector. The most interesting aspect lay in the acknowledgement that in spite of everything, the State still believed that it was most suited to collecting the best resources and the means needed to transform a structurally inefficient agriculture into a sector capable of ensuring the development of production.
The war determined a turning point in the role of the State, paving the way for a redefinition of its functions in terms of the organisation and management of economic activities and the productive fabric. The State increased its intervention, creating new administrative bodies (Ministry of Subsistence and Transports), which allowed it directly to control foreign trade, in an attempt to prevent shortages of raw materials on the market. However, the organisation of the Portuguese war economy did not lead to a great mobilisation of resources.
With the exception of the brief period under Sidónio Pais, the war scenario did not allow agriculture to invert the fall in most of its crops, accentuating a trend that had long been evident. The sector was globally affected not only due to the difficulties in access to certain production factors (seeds, fertilizers) but also by the contraction in the export of certain basic products of the agricultural economy, namely Port wine, and by unfavourable weather conditions. On the other hand, some of the measures adopted, such as price regulation and mandatory crop declarations, also ended by having negative reflexes, generating discontent in the agrarian world. The fact is that it was Portuguese industry, where the State’s intervention was barely felt, which seized this opportunity. As importing was out of the question, there was room to develop industries which under other circumstances would never have been profitable. This survival ‘strategy’ was indissolubly linked to three main factors: (i) high prices; (ii) low salaries; and (iii) the almost total absence of competition internationally. Renovation or modernisation of the productive structures was almost always left out.
To be effective, in fact, the country’s economic reorganisation would have to start from a combined development strategy, as recalled by the French politician André Tardieu: “the economic organisations of the war will persist as powerful instruments of economic action in times of peace”*.
Bibliography:
BECKETT, Ian F. W., "War and the State" in The Great War 1914-1918, Pearson/Longman, Great Britain, 2007, p.344-436.
FRAGA, Luís Manuel Alves de, Portugal e a Primeira Grande Guerra. Os objectivos políticos e o esboço da estratégia nacional 1914-1916, Lisbon, Universidade Técnica de Lisboa, Instituto de Ciências Sociais e Políticas, 1990.
*Diário do Senado, Session n.º 22, 12 February 1919, p.16.
Ana Paula Pires
(IHC-FCSH-UNL)