Raising the Francoist flag at the Vizcaya Provincial Deputation June 19, 1937

At the end of the last Carlist War in 1876, the government abolished the special privileges (Fueros) enjoyed by the Basque provinces since the Middle Ages. At the same time, the government led by Antonio Cánovas del Castillo realized that imposing a totally new system of taxation could provoke another war and it included in the law, which also made Basques subject to military service, a provision that allowed it to adapt the way the law was applied to local conditions, in consultation with the Deputations of the three provinces. 

While, in principle, the Basque Provinces would now pay taxes in the same way as in the rest of Spain, the government and the Deputations negotiated a special arrangement known as the Economic Accord that was announced in February 1878. Originally intended to last for only eight years, the Accord was repeatedly renewed until the Civil War. 

This changed immediately after the Francoist conquest of Vizcaya. On June 19, 1937, two days after entering Bilbao, the Francoists appointed a new Deputation; and four days later it issued a decree abolishing the Economic Accord in the provinces of Gipúzkoa and Vizcaya, which weree considered traitors for having resisted the Francoists. Álava, where the uprising had triumphed immediately, was allowed to retain the Accord. 

There were a number of reasons behind the abolition of the Accord. First, in a wartime context in which the mobilization of all posible resources was paramount, the attraction of increasing tax revenues was obvious, especially in two of the most industrialized provinces in the country. Álava, on the other hand, was still predominantly rural and offered fewer potential revenues. In addition, the rebel finance team included a number of people who had negotiated the Accord and were aware of how much revenue could come from Vizcaya and Gipúzkoa. 

Francoist provincial authorities made some timid attempts to have the Accord restored, and at the end of Franco’s life, there was even a committee to study establishing a social fiscal system, but but it was only in 1981, after the transition to democracy and the approval of the Autonomy Statute in 1979, that the Economic Accrd was restored. 

EAO/ UB/ MJV