Introduction
After the Francoist coup of July 1936, the British government adopted the policy of non-intervention, serving ‘to confine the struggle within the Spanish borders and avoid confrontation with Italy and Germany’.Footnote 1 While de jure continuing to recognise the Republic, it de facto fomented a Nationalist victory by limiting the former’s right to buy arms and tolerating Italian and German support for Franco.Footnote 2 But what was the role of British economic interests in shaping that attitude? One, perhaps dominant, strain of thought – usually drawing on state papers – suggests that British economic interests played a key role in conditioning the official attitude and thus the policy of non-intervention.Footnote 3 British policy, it has often been argued, was motivated in part by an intertwined ideological and economic animus against the democratically elected though leftist Republic.Footnote 4 High-ranking officials including Robert Vansittart were especially concerned with British economic interests in Spain.Footnote 5 Accordingly, the ‘crucial importance of the United Kingdom’s attitude to the Spanish conflict derived from its large economic and strategic interests in Spain’.Footnote 6 Or, more fully, British businesses inclined their government towards a policy of Pro-Francoist non-intervention: ‘corporations doing business in Spain in 1936 favoured Franco’s victory from the beginning and advised their several governments throughout the war to recognize the Nationalists’.Footnote 7 British business and British capital were a coalition bête noir that sank the Spanish Republic.
On the other hand, there is the view that British businesses and the British state were not so closely bound together. Jill Edwards – author of the first major study of the British government and the Spanish civil war – argued as early as 1979 that it should not ‘be assumed that at a higher level, all major companies were pro-Franco’.Footnote 8 But since then, surprisingly little work has been undertaken on these companies themselves. Neil Forbes’s 2018 work using Rio Tinto’s own papers showed that the mining conglomerate – with considerable direct investments in mining in the south of Spain – did indeed attempt to influence British policy from the outset, though with more mixed success than the above-referenced scholarship may have suggested.Footnote 9 More importantly, from the perspective of potential economic motivations, was Tom Buchanan’s 2004 study of two British banks in Spain, which trod new methodological ground by looking at the records of the banks themselves.Footnote 10 Buchanan concluded that the two British banks with substantial interests in Spain were on the whole ‘no friends of the Republic’, but equally were no friends of Franco’s Nationalists, either.Footnote 11 As Buchanan points out, these two banks were relatively small concerns in a sector that had rapidly nationalised since the turn of the twentieth century.Footnote 12
There is thus a clear space for a fuller test case in the debate over the relationship between British business and the British government in the Spanish civil war. In undertaking such a study, we can consider two related questions: what was the attitude of British businesses in Spain at the outbreak of the civil war? And what was the role of British business in shaping non-intervention? This leads us to a final, broader, question: how close were state–government relations during the civil war?Footnote 13 This article addresses these questions by focusing on a substantial – but hitherto ignored – capital interest in Spain: insurance. British fire insurance companies operating in Spain underwrote around 15.1 per cent of Spanish fire insurance.Footnote 14 Their tertiary-sector business was dissimilar to the largely primary-sector interests of other British businesses. Their substantial but not dominant market share, however, was typical of British business in Spain: one estimate has suggested that 23 per cent of capital was foreign owned, and a third of that figure was British.Footnote 15 In 1935, the last full year before the war, the United Kingdom accounted for around 20 per cent of Spanish exports (around $55 million).Footnote 16 In general, British capital was in a good, but not commanding position. From an insurance perspective, the total Spanish market was worth £89 million, and their strong 15 per cent market share meant that they underwrote the substantial sum of around £13.4 million.Footnote 17 After the failed coup of 18 July, their underwritings in Spain became an immediate risk.Footnote 18
With this substantial exposure in Spain, as the coup’s only partial success became obvious, fifteen British fire insurers in Spain pooled their resources to create the Spanish Emergency Committee (SEC) in an effort to coordinate their response to the civil war and – ideally – to limit its impact on their liability.Footnote 19 The SEC’s papers reveal an ambiguous and hesitant relationship between one of the major tertiary industries of the City of London and its associated government in Whitehall. British insurers were neither a stooge of the Franco regime nor a baying acolyte of the British state: their first-rank concern was the protection of their own financial interests, not ideology or politics. To this end, they pursued co-operation with other European companies, including insurers in Republican Spain, attempting to transcend the hold of the nation-state. These attempts at transnational co-operation, despite the wildly differing official attitudes of their respective countries’ governments, adds to the uniqueness of the insurers as a case study. But as Francoist political and economic pressure ramped up, and general European circumstances worsened, this privileged distance from the international politics of inter-war Europe and wartime Spain became untenable. The insurers turned to the British state for help, blurring the distinction between private and state interests, and demonstrating the limits of their ability to act independently from the state. Ultimately, the story of the SEC shows that business and state did not have identical interests and did not act together in 1936. But it also demonstrates that the insurers could not wholly separate themselves from their national government. The insurers’ experience of the Spanish civil war contributes to our understanding of a much more heterogenous attitude toward the conflict than has hitherto been suggested and demonstrates the limits of the power of capital during one of inter-war Europe’s major crises.Footnote 20
The Spanish Emergency Committee
At the outbreak of war, British insurers had been operating in Spain for about eighty years. Their historical position and contemporary market share roughly resembled the position of British capital more widely. By and large, foreign insurers had entered the Spanish market after the liberalisation of joint stock companies in 1868.Footnote 21 Initially more successful than domestic insurers, foreign insurers led by British concerns dominated the Spanish market at the turn of the twentieth century, but this process went into reverse after the First World War.Footnote 22 British life insurers were forced out by the autarkical turn of the Spanish economy in the 1920s, and the complex circumstances of the Second Republic.Footnote 23 In fire insurance, domestic competition led by La Catalana, La Equitativa and above all La Unión y el Fénix Español caught up and eventually surpassed – though did not wholly replace – foreign insurers.Footnote 24 In 1936, British fire insurers retained a substantial market share along with other European companies, including French and German concerns.Footnote 25
British insurers are thus a Goldilocks size for a test case on British businesses in the civil war, being neither dominant nor peripheral in the Spanish market. Relative to their international peers, however, they did possess two key advantages. The first was easy access to a sophisticated reinsurance market through Lloyd’s of London. Reinsurance was effectively ‘the insurer’s insurance’, which allowed insurance companies to ‘pass on that portion of the risk to other insurers which they [were] unwilling to cover’.Footnote 26 The second was the Fire Offices Committee (FOC), the most sophisticated and durable of the insurance committees that had coalesced in the late nineteenth century. Formed in 1868, the FOC acted as a cartel-like body domestically and internationally, ‘attempt[ing] to regulate prices and enforce market discipline in a variety of territories around the globe’.Footnote 27 This gave the British fire insurers a worldwide pre-eminence and ensured that their response to the Spanish civil war would be particularly important. Moreover, the British insurers themselves were interested in events in Spain owing to their self-inflicted liability. British insurers had long capitalised on the political uncertainty of early twentieth-century Spain, and especially the Spanish Republic, having ‘willingly sold insurance’ to homeowners and business owners that covered loss or damage from civil commotion, policies known as motín and tumulto popular.Footnote 28
The SEC was an autonomous offshoot of the FOC, clearly operating in the model of the former. It acted as the central body in which all decisions on Spain were taken until 1941. Led by the Phoenix Assurance Company, it was headed up by the company’s chairman, R.Y. Sketch. However, it was the meticulous organisation of the industrious J. (John) L. Hodgetts, the Committee’s secretary, which gave the SEC its lifeblood. On 30 July, the SEC sent a missive to the Sindicato General de Compañías de seguros contra incendio que operan en España (SGC), the syndicate for Spanish insurers, located in Republican-held Madrid; the French Insurance syndicate, the Comité Général des Assurances (CGA), in Paris; and the Foreign Office:
Arising out of the serious situation which unfortunately has recently developed in Spain, the British Insurance Companies detailed in the attached list have constituted themselves into an informal committee.Footnote 29
That was rather an understatement, and the committee was not particularly informal. It met for the first time on 5 August 1936 and agreed on immediate guidelines that constricted the insurers’ ability to act unilaterally in Spain. There was to be no further writing of fire insurance; every claim from Spain was to be registered with the Committee.Footnote 30
The Committee’s creation and its new ground rules for business in Spain reflected the very real fear that the civil war would result in serious losses, particularly given the number of loosely written policies. But there was no indication that it leant on the British government. Indeed, the SEC appeared only to watch the British government’s unfolding policy of non-intervention, adopted in August 1936 and formalised internationally the following month.Footnote 31 The SEC did not seem to share the Foreign Office’s fear of ‘a Kerensky moment’ that would result in communist takeover.Footnote 32 It did not even seem to be particularly aware that such a fear was in government minds.
This applied the other way around, too. The British government knew very little about the SEC. To begin with, the SEC was a semi-secret committee; the Foreign Office was only to be ‘made aware’ of the Committee’s formation, not of its opinions or decisions.Footnote 33 The British government’s knowledge of the SEC remained so limited that the Treasury and Board of Trade did not even receive a full membership list until September 1938.Footnote 34 The government’s own records do show correspondence from some British companies, including Rio Tinto, right at the war’s outset. But there is no indication in the Foreign Office records of extensive correspondence with the SEC; its 30 July missive to the Foreign Office was its last correspondence with the British government in the summer of 1936, when the policy of non-intervention was drawn up.
Instead of lobbying the British government, the insurers relentlessly pursued their own immediate objective: limiting liability. Here the Spanish Republic possessed a tacit advantage: the SGC, modelled on the FOC, remained under Republican control in Madrid, as did the second most important syndicate in Barcelona.Footnote 35 Despite the obvious difficulties posed by war, the SEC sought to liaise on this issue with the Spanish SGC.Footnote 36 In August 1936, by joint agreement, the two committees agreed a temporary halt on any payments in Spain.Footnote 37 These pre-existing, legally constituted insurance syndicates provided a slight tactical advantage for the Spanish Republic from an insurance perspective in the opening stages of the war, though with pay-outs stopped this moral advantage hardly constituted any practical benefit.
The fact that the SEC could temporarily halt payments gave the insurers an advantage over British primary producers in Spain, who were unable to protect against losses in the same way. Similarly, at least one SEC member gave themselves special protection by reinsuring much of their Spanish business at Lloyd’s. The Phoenix took out facultative reinsurance from a Lloyd’s reinsurer (Price, Forbes and Co.) almost immediately, on 21 and 22 July 1936.Footnote 38 Two policies were written; the first would pay £50,000 in case net losses reached above £75,000 – that contract cost the Phoenix £500.Footnote 39 A second, costing £1000, would pay £25,000 if losses exceeded £25,000.Footnote 40 These policies covered the Phoenix specifically for ‘lines under Insurances against Riots and Civil Commotions and similar risks’.Footnote 41 Agreement with the Spanish companies and special reinsurance policies might explain why the SEC were less inclined to seek the protection of the British state.
However, there was no indication that the hastily established status quo would, or indeed could, last indefinitely. An unchanging attitude of non-payment was impossible, and with that in mind the SEC meticulously compiled claims. At the first count on 14 October, most claims fell into one of two categories. The vast majority – more than four in five – of claims were for either ‘full riot’, where rioting had directly caused the fires, or ‘riot fire’, where it had indirectly caused them.Footnote 42 While this gradually declined up until September 1937, after a year of these reports, a full two-thirds of claims still owed to rioting, as shown in Table 1.
Claims against British insurers until September 1937
Given the amount being claimed under riot – both full riot and riot fire – assessing whether the insurers were liable in these cases was essential in calculating their total liability. The insurers’ liability hinged on the translation of two Spanish phrases: motín and tumulto popular. In general, most of their policies excluded claims caused by one of these two events.Footnote 43 Yet the insurers had little idea what these phrases meant, and in effect they had agreed to underwrite policies in Spain without fully understanding their legal obligations. The difficulties experienced by the insurers underscored the uncharacteristic hubris with which insurers had acted in the preceding years. In search of an answer, the SEC hastily enlisted Dr Eduardo Cobian, a Spanish lawyer in England, to give his opinion on what motín and tumulto popular meant in English, and whether events in Spain constituted those two states.Footnote 44 It was this problem – the insurers’ own financial concerns – and not the geostrategic considerations of British intervention or non-intervention in Spain that consumed the SEC’s attention until the end of 1936.
Hodgetts rather acerbically classified Señor Cobian’s report as ‘somewhat lengthy and technical’; it was ‘really the opinion of a lawyer given to lawyers’, he concluded.Footnote 45 But Cobian brought some legal certainty: motín was ‘riot’, and tumulto popular was ‘popular uprising’. This left the insurers liable in certain circumstances. Of four types of contracts, two (A and C) definitely excluded motín and tumulto popular while one (D) definitely included them.Footnote 46 That last category was far smaller than the other three, representing no more than 5–10 per cent of business, but still around £750,000 to £1.3 million of potential liability.Footnote 47 Category B, policies ‘exempting from fire caused by such events’, was more ambiguous.Footnote 48 It left insurers in the murky situation of potential liability where fires had been indirectly caused by those events. Most insurers had written at least some businesses in categories B or D, leaving them open to liability.Footnote 49 The SEC’s members quickly came to rue the imprecision with which the policies had been written.
Their difficulties in assessing liability were compounded by the difficulty of securing accurate information. In contrast to the British government, with a constant stream of protected communication, the insurers’ information from Spain was patchy, sporadic and occasionally contradictory. In need of a first-hand account, the insurers elected an old Northern agent, Edmund Eyre OBE, to tour Spain and report back. Eyre was sent out to Algeciras and Seville, in Nationalist hands, and Málaga and Barcelona, in the Spanish Republic.Footnote 50 His reports were one-sided. ‘I think the worst example is Málaga’, opined Señor Lamothe y Castañeda, the Phoenix’s insurance agent in Málaga, ‘as the mob ruled the city for a week’; ‘even house servants were about to strike!’ he added in disgust.Footnote 51
Málaga’s Revolution had been brief but bloody, and the largest British colony in Spain had been hit hard. Eyre and Lamothe conjured up visions of the incontrolado, ‘the bloodthirsty mobs and wicked rabbles conjured up by Francoist and ecclesiastical propaganda’.Footnote 52 While Eyre’s report was alarmist, there had been genuinely shocking mob violence in the city – as the insurers themselves could intuit from mounting claims. Hodgetts suggested that ‘securing first hand and veracious accounts’ from the city’s former British residents, now almost all refugees in Gibraltar, was vital.Footnote 53 Their reports, he suggested, would make sure the insurers were ‘armed against possible lawsuits in respect of claims’ – they should, however, be interviewed ‘before such refugees receive any indication that their claims are not likely to be admitted’.Footnote 54
The most worrying news was from Barcelona, an important market home to a large number of foreign businesses, and in summer 1936 a patchwork of varying forms of governmental and non-governmental control.Footnote 55 The local government, the Generalitat, had been usurped in many places by the worker-led ‘social revolution’, led by the anarchist trade union, the CNT.Footnote 56 Taking control of the city, they imposed collectivisations, rejected the city’s old class system and imposed an egalitarian social order.Footnote 57 Prior to Eyre’s visit, the SEC had systematically recorded the decrees issued by Barcelona’s power-brokers, including the Generalitat and the CNT.Footnote 58 Filled with warnings about foreign reserves, currency controls, new regulations and the ever-present spectre of nationalisation, they made for alarmist reading about the revolution in Catalonia.
Eyre’s report arrived in October 1936 and made for unpleasant reading. Every insurance company faced the imposition of an Interventor; they were subject to Comités de Control (Committees of Control) affiliated to the UGT (the socialist trade union), union-chosen staff were tasked with running the business and union-approved Asesores Técnicos (Technical Advisors) were imposed as a further check.Footnote 59 Those three points could, in effect, amount to nationalisation by stealth. In losing control of their bank accounts, their physical offices and their decision-making abilities, the insurers would have no de facto control of their businesses. Most worryingly of all, Eyre reported that there was corruption in the settlement of claims: ‘The situation regarding the settlement of losses is very serious. The companies’ assessors are usually intimidated and the full amounts of the Insured’s claims are consequently passed by the Assessors.’Footnote 60 His meeting with the British Consul in Barcelona, Norman King, only compounded his prejudices. Notoriously and ‘splenetically “anti-red”’, he confirmed what Eyre had reported in Barcelona.Footnote 61 It was a bleak outlook for the insurers.
Yet the SEC waited. Despite the harrowing front line reports from Spain, the insurers appeared content to bide their time. Eyre’s reports accepted the caveat that most ‘revolutionary’ actions in Catalonia had, at least so far, been threatening to British insurance interests but not yet actively damaging.Footnote 62 Having waited, the SEC concluded that by January 1937 just three full collectivisations or requisitions had occurred in the whole of Barcelona: the Catalana, Banco Vitálico and the Anónima de Accidentes, all Spanish.Footnote 63 Whether the SEC was aware of the machinations of the Republic’s internal power balance is unclear. One of the limits of the SEC records is that they rarely ventured opinions on the wider situation of the civil war – but there was not much evidence of animus toward the Republic nor to the Catalan government. Indeed, they welcomed the Generalitat’s growing strength in early 1937; the SEC noted that with the improvement in order the Catalan government had not given approval to the collectivisations; ‘it is doubtful’, they concluded, ‘whether they will give it at all’.Footnote 64
International Co-Operation amongst Insurers
The apparent cause of their willingness to wait was their belief that transnational co-operation with other European insurers might extradite them from their motín difficulties. All European insurers with interests in Spain ‘had a common interest in limiting their exposure’, especially since some policies ‘concerning commotion and riot were not entirely clear about the extent of the obligations involved’.Footnote 65 Moreover, the need for transnational co-operation was heightened by European insurers having, in some cases, reinsured across national borders.Footnote 66 As such, transnational co-operation between insurers was partly caused by mutual interest, and partly by mutual dependency. All this meant that as early as August 1936, the SEC wrote separately to insurance committees in Germany, Switzerland, Italy and Denmark, asking for their views on the situation in Spain.Footnote 67 The SEC’s hope was that their business problems could be resolved without recourse to any national government.
Formal European co-operation began in October 1936, when the French CGA emphasised the need for unity of action, calling for ‘concordant instructions’ to agents in Spain and proposing a pan-European meeting to agree a common policy toward the conflict, including Italian and German insurers.Footnote 68 After some difficulty, the German group replied and collaboration began.Footnote 69 Counter-intuitively, given the French government’s relative sympathy for the Spanish Republic, it was the French insurers who were the most preoccupied with their relationship with the Francoists.Footnote 70 Archibald, the SEC’s emissary to Paris, summarised that ‘the question in which the French Companies are mainly interested is as to the position which will have to be dealt with . . . when General Franco occupies Madrid’.Footnote 71 Once again there was a split between the attitude of the insurers and their associated nation-states.
In January 1937, all major European insurers met in Paris to discuss the most pressing question, which, as domestically, was motín and tumulto popular claims.Footnote 72 If the situation in Spain were to be formally considered civil war, it would give the insurers an out from paying out on these policies. Transnational co-operation had an immediate pay-off. It was a pan-European meeting of national insurers that finally characterised the situation in Spain as ‘civil war’ in January 1937:
All damage connected with the disturbances occurring thereafter throughout Spain should be considered as ‘civil war’ damage not recoverable under, inter alia, ordinary fire, riot fire or special ‘motin’ policies.Footnote 73
European collaboration finally meant that the question of motín was ‘resolved’ (though this was not to last until the end of the war). European insurers also decided ‘there should be instituted a procedure analogous to that which is in operation with the Spanish Emergency Committee in London’ for the whole of Europe.Footnote 74 It suggested the creation of a centralised permanent commission for pay-outs on life insurance policies, with exceptions only for very small amounts.Footnote 75 The success of this transnational co-operation led the insurers to believe, if only briefly, that the extent of their liabilities would amount to just the £100,000 of specific war risk insurance they had written.Footnote 76 At the beginning of 1937, the SEC’s members had reasons to feel somewhat optimistic. Their careful work with the SGC had put a moratorium on payments, and their liaison with other European insurers had possibly freed them from significant liability and loss.
The Breakdown of the SEC’s Autonomy
The mercantile neutrality and transnational co-operation that characterised the SEC’s response to the first half of the Spanish civil war, however, was not to last. Both were slowly destroyed by Franco’s relentless advance through Spain. The Francoists’ growing supremacy would profoundly change the insurers’ situation. This began with an attempt to force them to close their business in the Spanish Republic and culminated in a period of intense pressure to pay out even where claims were dubious. This would culminate in increasing recourse to the British state, British adherence to the Francoist syndicates and the breakdown of international agreement amidst the changing international situation outside of Spain.
Unlike other British business groups, who courted Franco early on and argued that delaying friendly overtures to Franco served only to prejudice future commercial relations with Spain, the SEC had held out.Footnote 77 This was despite Franco’s tantalising half-offer in August 1936, potentially extricating insurers from paying out the claims in case of a Francoist victory:
If any country clinches his claim by recognizing Franco’s forces as ‘belligerents’, then British insurance companies will automatically get off scot free from a large part of their liabilities.Footnote 78
In his earlier trip to Nationalist Seville, Eyre had found a picture of calm, military-backed order, but little was heard from the Nationalists themselves.Footnote 79 Only in January 1937 did the SEC give serious consideration to Franco’s early offer for the first and only time, with one member facing the possibility of an extremely expensive pay-out on a policy in Seville.Footnote 80 It is notable that the rest of the members rejected that proposal.Footnote 81 Later that month, the Burgos government began attempts to take over control of the insurance market in Spain. It created a new insurance syndicate in Seville to replace the SGC operating, albeit with great difficulty, in Madrid.Footnote 82 Immediately, offers were forthcoming for the British to join the parallel syndicate, but initially none did.Footnote 83 This parallel insurance syndicate, subsequently moved to Burgos, proved to be a first step. The Francoists’ ultimate aim was to force the insurers to open their main office in the ‘liberated zone’.Footnote 84
The attempt to force foreign fire insurers into the Francoist zone became known as the ‘Burgos Decree’. It presented huge difficulties for the British insurers. When the SEC discussed the Decree on 2 February 1937 it was obvious that it had generated much ill-feeling.Footnote 85 Most businesses would have not only been forced to move their main headquarters from Republican territory but also lost the bulk of their business in Spain.Footnote 86 This twin threat explained the insurers’ reticence to acquiesce and caused damage to the Francoists’ reputation with the British insurers. The already ‘Emergency’ committee held two emergency meetings in quick succession, on 12 and 15 February, with the sole purpose of dealing with the Burgos Decree.Footnote 87 The insurers were frightened by the social revolution in the Republic, but the new decree had given them reason to fear the Francoists, too. They thus took a directly opposite line to other large companies, including Rio Tinto, which actively courted the Nationalist government from the outset, believing them to be propitious to their own interests.Footnote 88
What the Burgos Decree did do was to force the SEC approach the British state. This was a major turning point. For the first time, they wrote directly to the British Ambassador, Henry Chilton, to see if he could intervene.Footnote 89 In February 1937, the SEC’s solicitor Mr Geoffrey Russell saw two senior Foreign Office mandarins – George Mounsey, Assistant Under-Secretary for Foreign Affairs, and Sir William Malkin, Legal Advisor to the Foreign Office – to ask whether co-operation with Burgos was acceptable to government.Footnote 90 The Foreign Office demurred. Malkin decided ‘after consideration and some reflection’ that ‘it was a pure question of business about which [the insurers] must make up our own minds’; ‘And if we wanted to carry on business in Franco’s territory it seemed that we should have to obey Franco’s rules’.Footnote 91 The implicit assertion was that doing business with Burgos was the insurers’ choice; it might even have been a good idea. That is an ironic reversal of the usual argument that commercial interests pressured the Foreign Office.Footnote 92 In the case of the insurers, the Foreign Office appeared to pressure commercial interests.
Pressure from Francoists continued to mount. It was by obligation rather than by desire that the insurers finally made contact with Burgos. The SEC appointed Manuel Parages, the Phoenix’s agent for the whole of Spain, as special representative. In March 1937, he wrote a report to the SEC in glowing terms: ‘The reception given to us in Burgos was extremely understanding and conciliatory and animated by the best of goodwill within the limits of the present circumstances’.Footnote 93 Despite Parages’s clear enthusiasm for the Francoists, however, he was unable to ameliorate the business situation. It was still likely that the insurers would have to close their businesses in the Republic and move them to the Nationalist zone. In July 1937, they finally turned to the Foreign Office with a more explicit request for help:
Appreciating the exigencies of wartime conditions they have refrained as far as possible from appealing to H.M. Government with a view to securing amelioration of legislation which in ordinary times would have called for such action.Footnote 94
The insurance companies’ own attempts at amelioration with Burgos had amounted to little; now they wanted the power of the state to help them. Representations were to be ‘made to the Burgos Government by the British Insurance Companies operating in Spain protesting against the terms of the communication’ in person.Footnote 95 That would involve another minor dalliance with the Foreign Office, enlisting the commercial attaché from the British Embassy at Hendaye to accompany two Spanish representatives – Parages, and the Alliance’s agent, Pequeño – to Burgos.Footnote 96
Still, the insurers attempted to push on themselves. In October 1937, the SEC’s representative met the Francoists’ representative Ernesto Anastasio, of the Spanish Union and Phoenix, in Paris. Anastasio appeared to be friendly enough with the SEC and, as a fellow insurer, to sympathise with their predicament. He underlined that life insurers had reached an agreement with Burgos; policies would pay out 50 per cent, up to a maximum of 25,000 pesetas.Footnote 97 Life insurance mattered little to the SEC, who pointed out that they ‘had not dealt with life claims’ at any point.Footnote 98 It was not the agreement that was the problem; it was the precedent, which would entail a larger pay-out than the SEC were willing to countenance. Moreover, he made clear that the British refusal to join the Francoist insurance syndicates in Seville and San Sebastián was causing immense ill-feeling from the insurgents.Footnote 99
The Francoists’ increasing pressure, coupled with the deteriorating international situation, frayed the transnational co-operation that had characterised the first half of the war. As Burgos ramped up the pressure, there was a concomitant breakdown in the transnational collaboration with other European insurers. The Francoist’s new insurance syndicate for foreign insurers, the Agrupación Española de Compañías Extranjeras de Seguros (Spanish Group of Foreign Insurance Companies) had met on 16 October 1937.Footnote 100 Twenty-three companies including Argentine, Swiss, Italian and French insurers attended; the British absence was noted, with the meeting ‘call[ing] attention to the absence of the Group of English companies’.Footnote 101 The British, fearful of pressure by the Francoists, did not join the French insurers, who were perhaps seeking advantage in the Spanish market at the war’s end. French companies began to be pressured, sometimes by the military authorities, to follow the lead of the Spanish companies in adopting a more lenient policy toward liability.Footnote 102 The SEC was caught between maintaining autonomy and having no influence. Until the end of 1937, it was alone in resisting joining the Francoists’ insurance syndicates.
The SEC’s legal advisor – Mr Archibald – finally visited San Sebastián (where the Francoists’ main syndicate was based) in January 1938. It was agreed that members were free to join the Francoists’ syndicates, in addition to ‘some form of permanent liaison or contact with the Spanish companies’ from the SEC.Footnote 103 This marked the beginning of the insurers’ official recognition of, and parallel co-operation with, the Francoist state. Burgos rewarded that commitment to permanent liaison by attempting to force the SEC to hand over a breakdown of its claims in February 1938, which the SEC appeared to resent and attempt to resist. They agreed to hand over total numbers, but not specific information.Footnote 104 Questions over Burgos’s attitude remained. When the decision was made to join the San Sebastián Committee, the Royal Exchange wrote that:
We are most anxious to co-operate with the Spanish Companies in all matters – but that when it comes to attempting to negotiate with their Government we cannot overlook the fact that we are ‘foreigners’ and feel some diffidence in associating ourselves directly with such negotiations.Footnote 105
Partly by virtue of agreement with Burgos, and partly due the Royal Exchange’s concerns, in April 1938, Edmund Eyre was appointed as the permanent representative to the San Sebastián Committee.Footnote 106 A Chicago insurance journal, the National Underwriter, published an article stating that Eyre was in ‘Spain to negotiate with the Franco Government’.Footnote 107 The SEC immediately cabled for publication ‘that the object of Mr. Eyre’s visit is not, as stated, to negotiate with the Franco government but merely to discuss insurance problems with the Spanish companies’.Footnote 108 This might have been a question of pure semantics, but it did demonstrate that the SEC did not want to give any impression of formally recognising Franco.
After several relatively inconsequential meetings, on 28 October the Agrupación de Compañías Extranjeras de Seguros (Syndicate of Foreign Insurers in Spain) elected a new board.Footnote 109 The SEC had hoped that, together with the French, they could take a qualified majority of the ten-man board, but the desired Anglo-French voting majority did not materialise. Of a ten person executive, two were French and two were British; five Spanish companies and one Italian made up the ten-person executive.Footnote 110 They were treated to Nationalist theatrics in extremis: ‘the occult forces of the world against Spain’ had been halted only by Franco, who had ‘defended Spain from international marxism’ and defended ‘occidental civilisation’; there was a minute’s silence for those who had ‘suffered under the inconceivable tyranny of the Red Zone’.Footnote 111
The worsening of the situation in Spain was marred still further by the breakdown of trans-European co-operation, where increasingly nationalistic recriminations tainted further co-operation. On 16 May 1938, the European insurers held a meeting that demonstrated how frayed the transnational relationship had become: ‘The French and Italian Delegations, and the German representative argued that a purely negative attitude was unpractical and impolitic.’Footnote 112 With one eye on the future under Franco’s rule, the European insurers felt that the British had ‘ignored altogether the request of the Spanish authorities to know what the Companies were willing to do for the restoration of Spain’.Footnote 113 The European companies felt a more lenient position on motín claims was essential to doing business after a Nationalist victory. Only the British maintained a hard line against concessions on claims. Despite spending ‘a very long time . . . in the effort to find a formula’ that worked for all groups, the problem seemed intractable.Footnote 114 As transnational co-operation faltered, the certainty afforded by that support was replaced by turning to the British state; ten days later, the insurers wrote to the Foreign Office ‘to solicit [their] advice and assistance’.Footnote 115
Endgame
The primary problem facing the insurers had changed twice. Initially it had been the twin question of how to deal with the conflict and how to avoid pay-outs; then it became whether to co-operate with Burgos. By spring and certainly by summer 1938 it appeared to be how much the insurers would have to pay, and having exhausted their options elsewhere this increasingly involved the semi-official British delegation in Burgos.Footnote 116 Who, now, was representing who? Were approaches to Burgos being made by the government, or by the insurers, or by both in concert? Clearly, the distinction between the government and the insurers was becoming unclear.Footnote 117
In June the SEC sent yet another delegation to Burgos and San Sebastián, once again having sought the Foreign Office’s help with diplomatic logistics.Footnote 118 Both Hodgetts and Archibald went to the two cities, primarily to meet Señor Sunyer, head of the Junta Consultiva de Burgos, with a view to normalising relations with the Burgos government. When meeting Sunyer, along with other notables of the Spanish insurance circle on the Nationalist side, they ‘received an impression of faith and honesty’.Footnote 119 It demonstrated their still-mistaken ignorance of Franco’s belief in an ‘economic national self-sufficiency’ that would determine ‘that which would endure and that which had to perish’.Footnote 120
Somewhat ignorant of this, the SEC’s representatives approached the task with some optimism. For nominally their aims were achievable. Burgos were in full agreement with the British insurers on motín claims and Ernesto Anastasio agreed that the question of motín would not be brought up at any Francoist syndicate.Footnote 121 On 1 December 1938, it was announced that Eyre was to be leaving Spain; with Anastasio’s support and positions on every syndicate in the Nationalist zone, there was no further need for his amelioration efforts on the ground.Footnote 122 It was accepted that with a total Francoist victory impending, some claims would have to be paid. So, the SEC recommended that a ‘delegation representing the British Group should proceed to Burgos to confer with the Treasury Officials there as soon as possible’.Footnote 123
This remaining optimism about the Francoist syndicates’ intentions toward the British insurers slowly subsided through 1939. In February 1939, the Burgos government decreed that payments made in the Republican half were worthless; those payments would have to be ‘revalorised’, and to be paid out in Nationalist pesetas.Footnote 124 The SEC poured scorn over the decree; ‘Where payments of premium have been made by cheque’, a minute asked, ‘how can it be said whether the payment was made in illegal currency or not?’Footnote 125 Anastasio, meanwhile, performed a volte-face. Having promised to steer any discussion away from the topic of motín claims, Hodgetts discovered on the first day of his trip that ‘it was Sr. Anastasio himself who had, at the Meetings, introduced the “Motín” claims position into the discussion’.Footnote 126 Hodgetts, barely disguising his frustration, called Anastasio out; he in turn protested that discussion of the claims was necessary, even harmless; after all, all parties conceded that eventually some claims would have to be admitted.Footnote 127
Anastasio’s change of heart was probably explained by the fact that most Spanish insurers were coming under intense pressure from their own government to definitively settle the motín question.Footnote 128 However, it also revealed a degree of naivety that the SEC believed Anastasio had their best interests at heart. The situation again worsened significantly when the war came to an end on 1 April 1939; in July 1939, things went from bad to worse. In a bruising letter to Hodgetts, Anastasio rubbished the SEC:
I cannot ignore the experience which I have acquired in these last three years, which has taught me and proved to me the inefficacy of the agreements adopted by the Conferences of Insurers, whenever such agreements are not made concrete in petitions which officially are sent to the government.Footnote 129
In other words, though the British insurers had decided their position, it was for naught. It was the Spanish government, not the SEC, that would decide how much was to be paid out. The transnational backbone that had underpinned this hard line had disappeared; the insurers were at the mercy of the Spanish state. Most seriously, motín losses were once again up for discussion.Footnote 130 Anastasio’s personal betrayal was only unfortunate; the potential financial losses he could cause the SEC as a result were far more serious. But the binary choice was now obvious: pay out and continue business in Spain or avoid pay-outs and face exclusion from the market. Choosing the former, the SEC embarked on an even deeper embrace of the British state, this time with the government’s financial departments: the Treasury, Bank of England and Board of Trade. In summer 1939, at the outbreak of the Second World War, the SEC’s ability to take ‘positions independent from those of their originating nation-state’ had been definitively nullified.Footnote 131
The question was how much the insurers would lose. Calculating figures is difficult; a circular from June 1939 opined that ‘if the British Insurance Companies were at the present time to be asked’, ‘it would be difficult, if not impossible, in the case of the majority of the Insurance Companies, for this question to be answered’.Footnote 132 The complexity of claims coupled with the insurers’ penchant for industrial secrecy.Footnote 133 That was compounded by the insurers’ occasional interest in hiding losses. In Málaga, for example, 5.38 million pesetas were lost on motín and riot fire; ‘We do not propose to minute this figure’, Hodgetts wrote in the margin.Footnote 134 Some figures do, however, exist. In July 1938 insurers had reckoned losses of 11,246,205 pesetas from claims of 63,863,788 pesetas, just over £1 million.Footnote 135 By July 1939, that figure was looking optimistic and estimated losses had risen dramatically, to 20,875,242 pesetas, with perhaps more to come.Footnote 136 Faced with paying out a substantial but not yet settled figure, the SEC was forced into an ever deeper entanglement with the British state.
The first hurdle was the Anglo-Spanish Clearing Office. Having entered into force in January 1936, it was designed to deal with the £3 million debt that Spanish traders owed British traders.Footnote 137 The Clearing put payments in both countries into holding accounts, in Madrid and London, and paid out to traders ‘in order’ of debts.Footnote 138 With the outbreak of war, the Bank of England suspended the scheme, arguing that the situation would have to settle before a new payments system between the two countries could be created.Footnote 139 Its suspension created a crisis for Anglo-Spanish traders, but which the SEC had largely avoided through its moratorium on payments.Footnote 140 Even when it re-opened it was far from straightforward. Nominally the insurers could use pesetas in the Clearing account in Madrid, from premiums paid during the civil war, but the new government, considering them ‘red’ pesetas valid only in the defeated Republic, ‘blocked’ the account and refused access to the funds.Footnote 141 The other option was to get approval to transfer funds in sterling.Footnote 142 The Bank of England, along with the Foreign Office, was diametrically opposed to such a move. ‘The transfer of free sterling’, argued a missive, ‘should only be a measure of last recourse’.Footnote 143
The difficulties of moving funds to Spain underlined the extent to which the insurers had become completely dependent on the state. It was the Treasury’s Edward Playfair, something of a cheerleader for the SEC’s cause, who finally persuaded the Board of Trade that the two departments should make a concerted effort to support the insurers.Footnote 144 By 17 August the SEC received the good news that both supported the insurers’ access to the blocked Clearing Funds; he subsequently wrote to bring the Financial Office on board, imploring them to ‘do whatever we can to help the companies to get the use of their Pesetas in the Clearing Account’.Footnote 145 Still the insurers, no doubt in part due to the outbreak of war in Europe, were forced to wait until December 1939 for a final resolution.Footnote 146 By that time, the issue had passed through no fewer than five government departments; the insurers’ plight was now the state’s problem.
The SEC continued to circulate information, but the full Committee did not meet between 22 September 1939 and 28 March 1941.Footnote 147 This period was taken up by ‘much tedious negotiation’ with the autarkical intransigence of the victorious Franco regime against the backdrop of general European war.Footnote 148 On 21 December 1940, the Nationalist government created the Laudo (Award), with the aim of reaching a final settlement.Footnote 149 The suspicion was that the Laudo was a scheme designed for the benefit of Anastasio’s Spanish Union & Phoenix.Footnote 150 But short of other options, at one of its final full meetings on 4 April 1941, the SEC agreed to be bound by the Laudo, stating that ‘the British Offices must fulfil their obligations thereunder and continue paying claims in accordance with its provisions’.Footnote 151 The Committee subsequently drew up an apportionent statement of its presumed or possible losses (see Table 2).
Total claims against British companies, 1941Footnote 155
In 1941, the Laudo was superseded by the creation of the Consorcio de Compensación para los Aseguradores de Motín (Insurance Compensation Consortium for Insurers of Motín) to definitively deal with the issue of civil war payments.Footnote 152 Again, the SEC agreed in August 1941 to adhere and effectively handed over power to the Consorcio.Footnote 153 The SEC’s last ever circular, on 22 December 1941, noted the Consorcio’s make-up and its powers in deciding claims going forward.Footnote 154 Thus the SEC disappeared in rather a whisper at the very end of 1941. In many ways, its agreement to adhere to the Consorcio’s regulations demonstrated the limits of the British syndicate system. Partly, however, its decision was predicated on the understanding that the Consorcio was unlikely to cause significantly higher losses for the British insurers than the SEC’s own settlements with claimants. The SEC’s extremely careful consideration of claims meant that there was little legal basis to hit the British insurers with further claims.
It was finally agreed ‘100 million pesetas [would] be paid in installments by the insurance companies involved as a consortium, 40% immediately in June 1941, 30% in October, 20% in December, and 10% by the reinsurers when final obligations had been calculated for them’.Footnote 157
‘Until the middle of 1956 it was impossible to put a final figure on the settlement of losses caused by motín in the Civil War’.Footnote 158 Certainly, overall, they were not as severe as had been feared (see Table 3). The fire insurers accepted paying 100 million pesetas on claims of 537.65 million pesetas.Footnote 159 The life insurers – who Anastasio noted had settled early in 1937 – had agreed to pay 40 million pesetas against claims of 70 million pesetas.Footnote 160 There are two important take-aways. Firstly, the British companies were hit far less severely than the Spanish companies. Anastasio’s own company lost just shy of 47 million pesetas on the war – and did not have the benefit of hard currency reserves.Footnote 161 Secondly, these losses were severe, but not catastrophic. They were, as we have seen, lower than the SEC’s own calculations for what would be owed. That explains, at least in part, their willingness to accede to the Francoist demands.
Actual losses against total claims (in pesetas) 1940–56Footnote 156
Conclusion
The Spanish civil war did not, in the end, create serious financial losses for the insurers.Footnote 162 The bottom line was that losses never amounted anywhere close to £13 million; the final figure of around £600–700,000 was a significant loss, but not an existential threat to the insurers’ balance sheets.Footnote 163 Nonetheless, the Spanish civil war, never directly involving the United Kingdom, created an animus in the insurers’ minds that rendered war risks uninsurable right on the eve of the Second World War. Having already instituted two war risks exclusion clauses, fire and marine, negotiation began with the British government to create a government-backed scheme for war risks across all forms of insurance.Footnote 164 In 1939, the War Risks Insurance Act was introduced to insure shipping risks, followed two years later by the War Damage Act for damage on land.Footnote 165
What, then, was the attitude of British businesses in Spain at the outbreak of the civil war? What is clear is that the insurers, usually remote and dispassionate, far removed from the intricacies of the conflict, focused obsessively on the effects of the war on their business. The primary aim of British insurers in Spain was the preservation of their own financial interests; their motivations were economic, not political. That is not to suggest that the British government did not incline against the Republic but rather that the SEC was not a stakeholder in British governmental policy toward Spain in 1936; they played no role in shaping non-intervention. While themselves wary of events in the Republican zone, particularly in Barcelona, there is furthermore scant evidence that British insurers were institutionally anti-Republican. The SEC were, of course, representative of all British capital: their business and their organisation were both particular. But the history of British insurers in the Spanish civil war does tell us that this substantial concern – with a great deal to lose in Spain – was not involved with the development of the British government’s own tacitly pro-Franco policy. It supports the hypothesis of Edwards and Buchanan that businesses themselves were not inherently pro-Franco. The British government’s prejudices were its own.
This detached mercantile neutrality, however, did not last in the face of increasing Francoist pressure. The Burgos Decree and subsequent moves by the rebel Burgos government forced the SEC into a much closer relationship with the British state – and into increasing accommodation with the Francoist rebels. The SEC’s experience from around 1938 onwards demonstrates the limits of what transnational co-operation without the power of the state could achieve.Footnote 166 The Francoists’ eventual demands, which roundly ignored the insurers’ agreements of 1936 and 1937, underscored how impotent such international co-operation was if not supported by the nation-state. The insurers initial preference was for capitalistic autonomy, free from both the British state and the Francoists’ government. Their eventual dalliances with both were belated and somewhat reluctant. Ultimately, the SEC’s experience in the Spanish civil war shows that the state–capital relationship was much more complicated and ambiguous than has previously been suggested.
Acknowledgements
I am grateful to Pedro Ramos Pinto for his guidance and to the two reviewers for their comments on this manuscript. I am also grateful to John Wells at Cambridge University Library for his help with the Phoenix archive, and to the Phoenix Group for permission to cite these papers.
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