Among the many problems which faced his government, perhaps the most urgent was the proclamation of an amnesty, following prison riots in Burgos, Cartagena and Valencia. The government could not wait until the Cortes was assembled. On 23 February it re-established the Generalitat of Catalonia and also the socialist councils suspended throughout Spain after the revolution of October 1934. At the same time Azaña embarked on a reorganization of the army command, appointing generals loyal to the Republic to key posts and sending those suspected of plotting to appointments far from Madrid.
The government then reanimated the work of the Instituto de Reforma Agraria, with the minister of agriculture himself, Mariano Ruiz Funes, overseeing the process in Andalucia and Extremadura. The president of the Generalitat, Lluís Companys, left the prison of Puerto de Santa Maria and was welcomed in Barcelona by an enormous demonstration as he reopened the Catalan parliament. On 16 March Azaña announced that the confiscation of land belonging to aristocrats involved in the Sanjurjo rising would be reactivated. And all those workers who lost their jobs as a result of participating in the October revolution would be reinstated.
The economic situation was not good. Since 1931 private investment had plummeted and in 1936 it dropped to the level of 1913. Not surprisingly, with the new government’s programme, capital left the country at an increasing rate. Juan March, the Mallorcan multimillionaire, who had amassed an enormous fortune through tobacco smuggling, fled Spain to avoid prison. Once out of the country, he concentrated on speculating against the peseta on the foreign exchange markets. From his own pocket he provided a tenth of the twenty million pesetas collected by the anti-republican group of whom the Count de los Andes was the president.22
Far more serious than March’s financial chicanery were the economic consequences of the left’s electoral victory. Workers put in huge wage demands, far beyond what the factory or farm could sustain. Strikes multiplied, unemployment rose and the value of the peseta fell sharply on the foreign exchanges. The real problem facing the centre-left government of Azaña was the result of its Faustian pact with the hard left of
No group on the right did more to cause disorder, and thus to provoke a military coup, than the Falange. It was subsidized from a number of sources–10,000 pesetas monthly from Renovación Española, money from the Banco de Vizcaya, and later from Juan March, and 50,000 pesetas a month from Mussolini passed through the Italian embassy in Paris.23
The Nazis, however, had little confidence in them and refused them the million marks of support which they had requested. The Falange needed the money because it was growing at an astonishing rate, largely due to an influx from the youth movement of Acción Popular–some 15,000 of them in the spring of 1936, effectively doubling the size of the Falange to 30,000.24