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⁵ This idea of ‘regulatory capture’ is associated especially with Downs, A., An Economic Theory of Democracy (New York, 1957)Google Scholar; and Stigler, G. J., ‘A theory of oligopoly’, Journal of Political Economy, 72 (1964)CrossRefGoogle Scholar; and idem, ‘The economic theory of regulation’, Bell Journal of Economics, 2 (1971).Google Scholar

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⁷ Sáez de Ibarra, L., La regulación de la banca en España (Consejo Superior Bancario, Madrid, 1954)Google Scholar; or Eguilaz, H. Paris, ‘El problema de la reforma bancaria en Espa˜a’, Anales de Economía, 26 (1947).Google Scholar

⁸ de Ibarra, Sáaez, La regulation de la banca, p. 23.Google Scholar

⁹ This institution's main function was to advise the Minister of Finance. The President of the Supreme Banking Council was Director of the General Directorate of Banks and Stock Exchanges and the Vice-President was the Deputy Governor of the Bank of Spain. It comprised one representative of each public bank, ten for the private banks and two for the Sindicato Nacional de Banca γ Bolsa.

¹⁰ Bank of Spain Archives [hereafter BoS]: Actas del Banco de España (Secretaría), 1947, file 2785.

¹¹ Lukauskas affirms that the decision to close the banking sector to new entities was politically motivated. The Franco government restricted competition, believing it a necessary condition to assure political stability: Lukauskas, A., The political economy of financial deregulation: the case of Spain, dissertation (University of Pennsylvania, 1992), pp. 177–8.Google Scholar

¹² Alhadeff, D. A., Competition and Controls in Banking, a Study of the Regulation of Bank Competition in Italy, France and England (Los Angeles, 1968), p. 189.Google Scholar

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¹⁵ There is no agreement about the existence of scale economies in the banking sector, and when the scale diseconomies appear. See Revel, J., Mergers and the Role of Large Banks (Institute of European Finance, Research Monographs in Banking and Finance, 2, 1985)Google Scholar; or Lawrence, C., ‘Banking costs: generalized functional forms and estimations of economies of scale and scope’, Journal of Money, Credit and Banking, 21 (1989).Google Scholar

¹⁶ In 1965, Banco Central and Banco Hispanoamericano tried to merge, but the Finance Ministry opposed it and in fact fixed a tax to be paid on the merger that was confiscatory. See Ruiz, J. L. García and Tortella, G., Divergent, parallel and convergent trajectories: the history of the Hispanoamericano and the Banco Central, 1901–1965, paper presented to Colloquium of the European Association for Banking History (Zurich, 1993), p. 30.Google Scholar

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¹⁸ Report of the Chambers of Commerce (1961), p. 4Google Scholar; and Report of the Supreme Banking Council (1961), p. 29.Google Scholar

¹⁹ Report of the Trade Unions (1961), p. 5Google Scholar; and Report of the Institute of Political Studies (1961), p. 8.Google Scholar

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²² Report of the Central Committee of Syndicates (1961), p. 5Google Scholar; and Report of the Institute of Political Studies (1961), p. 7.Google Scholar

²³ The poor results of this initiative meant that the distinction between the two types of banks was abolished in 1974.

²⁴ The Economist (12 May 1962), p. 586.Google Scholar

²⁵ BoS: Informe sobre el Proγecto de Ley de Ordenación Bancaria de. 1946, p. 14.Google Scholar The Supreme Banking Council donated their own archives to the Bank of Spain in 1996; unfortunately, they have not been catalogued.

²⁶ The Bank of Spain only allows consultation of private information up to 1956.

²⁷ New banks faced other difficulties as legal barriers of more than 20 years had given existing banks substantial advantages in terms of customer loyalty.

²⁸ We can speak about a ‘good’ result because bank failures impose serious costs on depositors and shareholders.

²⁹ From 1940 to 1970 there were 109 mergers; most occurred between 1940 and 1950: 52 mergers 1940–50, 38 1950–60 and 19 during the last part of the period.

³⁰ Clayton, G., ‘Spain’, in Sayers, R. S. (ed.), Banking in Western Europe (Oxford, 1962), p. 358.Google Scholar

³¹ Risky and bad banking practices were not the only cause of the banking crisis. Other variables, such as the oil crisis or the links between banks and industry, must also be taken into account. However, these were reinforced by the lack of prudence on the part of certain bank directors. See Cuervo, A., ‘Banca, industria y crisis bancarias’, Economía Industrial, 272 (1990), p. 66.Google Scholar

³² BoS: Informe del Consejo Superior Bancario sobre el Proγecto de Leγ de Ordenación Bancaria de 1946, pp. 8–9Google Scholar; and Infonne del Banco de Vizcaya sobre el Proyecto de Leγ de Ordenación Bancaria de 1946.

³³ BoS: Informe del Consejo Superior Bancario sobre el Proγecto de Leγ de Ordenación Bancaria de 1946, p. 8.Google Scholar

³⁴ The Superior Banking Council was used as an intermediary between the Bank of Spain and private banks. See Olariaga, L., ‘La liquidabilidad de los bancos de depósitos españoles’, Moneda γ Crédito, 38 (1951), pp. 17–18.Google Scholar

³⁵ For example, Supreme Banking Council Circular 509 (22 Dec. 1953) indicates that the Bank of Spain conceded some economic advantages to all private banks which had 35 per cent of total deposits invested in public bonds.

³⁶ Arrate, J. Prados, El sistema bancario español (Madrid, 1958), p. 97.Google Scholar

³⁷ In Oct. 1938 the nationalist authorities froze deposits taken by financial institutions after 18 Jul. 1938. For earlier deposit accounts, the authorities froze the increase after 18 Jul. 1938. After the Civil War, the Franco government estimated that the purchasing powers of the nationalist and the republican pesetas was different and used a percentage conversion scale or ‘table of equivalence’ between both coins. See BoS: Report D–6402/03, 1938.

³⁸ Sardá, J., El Banco Ae España, 1930–62. Una Historia Económica (Madrid, 1968), p. 449.Google Scholar

³⁹ BoS: Report D-6824, 1941.

⁴⁰ Fernández, V., ‘La deuda pública’, in Datos básicos para la Historia financiera de España (IEF, 1975), pp. 678–9.Google Scholar

⁴¹ HMSO, Overseas Economic Surveys for Spain (London, 1956), p. 88.Google Scholar

⁴² BoS: Report, D-6421, 1946.

⁴³ ibid., p. 6.

⁴⁴ Bank of England Archives [hereafter BoE]: OV61/4, 12 Mar. 1951, p. 4.Google Scholar

⁴⁵ González, M. J., La economía política del franquismo (1940–70) (Madrid, 1979), p. 45.Google Scholar

⁴⁶ BoS: Report, 0–6421, 1946.

⁴⁷ Eguilaz, Paris, ‘El problema de la reforma bancaria’, pp. 188–90.Google Scholar

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⁴⁹ HMSO, Overseas Economic Survey for Spain (London, 1956), p. 5.Google Scholar

⁵⁰ HMSO, Overseas Economic Survey for Spain (London, 1951), p. 17.Google Scholar

⁵¹ Anadon, R. Poveda, ‘Funcionamiento del mercado financiero español’, Papeles de Economía, 9 (1981), p. 43Google Scholar; or Rojo, L. A., ‘La política monetaria’, in Qintana, E. Fuentes (ed.), El desarrollo económico de España (Madrid, 1963), p. 98.Google Scholar

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⁵³ Eguilaz, Paris, ‘El problema de la reforma bancaria’, pp. 186–7.Google Scholar

⁵⁴ HMSO, Overseas Economic Survey for Spain (London, 1948), pp. 15–16.Google Scholar

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⁵⁷ Eguilaz, Paris, ‘El problema de la reforma bancaria’, p. 43.Google Scholar

⁵⁸ ibid., pp. 222–3.

⁵⁹ ibid., p. 197.

⁶⁰ BoS: Informe del Consejo Superior Bancario sobre el Proyecto de Ley de Ordenación Bancaria de 1946, p. 7.Google Scholar

⁶¹ Supreme Banking Council, Circular 431 (1 Dec. 1952).

⁶² In addition to these general agreements among private banks to fix interest rates, some banks concluded pacts. For example, in 1944 Banco Urquijo and Banco Hispanoamericano signed the Pacto de Jarillas to collaborate in their activities. Similarly, Banco de Valencia, Banco Central, Banco Hispano Colonial and Crédito Zaragozano created Bancor, a banking association. Unfortunately, texts of these agreements were never published and it is very difficult to evaluate their real influence.

⁶³ In part, this is the reason why the Franco authorities introduced other complementary credit controls to guarantee banking funds to some sectors.

⁶⁴ García, and Tortella, , Divergent, parallel and convergent trajectories, p. 21.Google Scholar

⁶⁵ Eguilaz, Paris, ‘El problema de la reforma bancaria’, pp. 196–7.Google Scholar

⁶⁶ HMSO, Overseas Economic Surveys for Spain (London, 1956), p. 77.Google Scholar

⁶⁷ Roura, J. R. Cuadrado, ‘Financiación privilegiada al sector privado y desequilibrios regionales’, Informatión Comercial Española, 526–7 (1977), p. 120.Google Scholar

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⁶⁹ ibid., p. 321.

⁷⁰ In non-democratic regimes, the authorities have only an incentive to supply particularistic benefits – those benefiting those groups supporting the regime.

⁷¹ Pi-Sunyer, C. Viver, El personal político de Franco (1936–1945). Contribución empírica a una teoría del régimen franquista (Barcelona, 1978).Google Scholar

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⁷³ Lukauskus, , Political economy of financial deregulation, p. 138.Google Scholar

⁷⁴ The Law of Protection and Development of National Industry (24 Oct. 1939), and the Law of Regulation and Defence of National Industry (24 Nov. 1939).

⁷⁵ BoS: Informe del Consejo Superior Bancario sobre el Proyecto de Ley de Ordenación Bancaria de 1946, p. 14.Google Scholar

⁷⁶ Following Lukauskus, the limit on dividends was politically and economically motivated. First, it was a concession to an important group in the regime, the Falangists, who were pressuring Franco to limit the dominant position of banks and to control profits. Second, it was an indirect mechanism to encourage banks to invest their profits. See Lukauskus, , Political economy of financial deregulation, p. 180.Google Scholar

⁷⁷ As García and Tortella indicate, ‘many Falangists concurred wholeheartedly, seeing the banks as bulwarks of “international capitalism” and thinking that the regime had gone soft on “plutocrats” and forgotten the “social revolution”, a vague concept that figured prominently in the Falange's programme and that the regime had supposedly embraced': García and Tortella, Divergent, parallel and convergent trajectories, p. 29. That is why many Falangists agreed with the nationalisation of the Spanish banking sector.

⁷⁸ ibid., pp. 29–30.

⁷⁹ Roman, E. San, El nacimiento de la SEAT (Fundación Empresa Pública. Documento de Trabajo, 1995), p. 88.Google Scholar

⁸⁰ Arriba (to May 1950).

⁸¹ BoE: OV61/4, 16 May 1945, p. 1.

⁸² Unfortunately, with this reform, the scope of discretion was enlarged. The Law was very ambiguous; on one hand, it remarked on the lack of financing of small- and medium-sized firms and the bad performance of the market. On the other, the authorities declared as national interest the capital goods, exports and shipbuilding sectors, where firms had the biggest average size.

⁸³ Fontana, J. and Nadal, J., ‘España’, in Cipolla, C. M. (ed.), Historia de Europa, 6 (Barcelona, 1980), p. 146.Google Scholar

⁸⁴ BoS: Report 0–1191, Informe del Comité Económico sobre la Ejecución del Plan de Estabilización del Gobierno Español, 1960, section 8.

⁸⁵ BoE: OV61, 21 Nov. 1962, p. 1.

⁸⁶ Lukauskas, , Political economy of financial deregulation, p. 515.Google Scholar

⁸⁷ Muñoz, J., El poder de la banca en España (Madrid, 1969)Google Scholar; or Braña, J., Buesa, M. and Molero, J., El Estado y el cambio tecnológico en la industrialización tardía (Madrid, 1984).Google Scholar

⁸⁸ ibid., p. 170.

⁸⁹ García, and Tortella, , Divergent, parallel and convergent trajectories, pp. 22–7.Google Scholar