2. The Collectivization Decree[6]

[The criminal military revolt of July 19 has led to an extraordinary disruption of the economy of the country. The Council of the Generalitat must attend to the reconstruction of the damage caused to the industry and commerce of Catalonia by the treason of those who tried to impose a regime of violence on our country. The popular reaction triggered by this revolt has been of such intensity that it provoked a profound economic-social transformation, whose foundations are being laid in Catalonia. The accumulation of wealth in the hands of an ever smaller group of persons was followed by the accumulation of misery in the working class and, because the former group, in an attempt to preserve its privileges, did not hesitate to provoke a bloody war, the victory of the people will be equivalent to the death of capitalism.

It is now therefore necessary to organize production, orienting it in such a way that the only beneficiary must be the collectivity, the workers, to whom the directive function of the new social order will devolve. What is necessary is the suppression of the concept of income that does not proceed from labor.

The principle of the economic-social organization of big industry must be collectivized production.

The replacement of individual property by collective property, is conceived by the Council of the Generalitat as the collectivization of the goods of large enterprises, that is, their capital, while allowing the private ownership of consumption goods and leaving small industry in the hands of their current owners.

The revolutionary effort of the working class, which rose with arms in hand to crush fascism, poses the question of this change in the economic and social structure which endured until quite recently. One of the fundamental problems that this new situation poses is that of an organization of labor that would coordinate the sources of wealth and order their distribution in accordance with social needs.

After July 19, the openly fascist bourgeoisie deserted their posts. Most have fled to foreign countries; some have disappeared. The affected industrial enterprises cannot be left without direction, and the workers decided to intervene and created Workers Control Committees. The Council of the Generalitat must authorize and provide guidance for what the workers spontaneously enacted in their enterprises.

As a result of the situation encountered by some of them, the workers, in order to safeguard their interests, had to confiscate these enterprises, thus creating the necessity of collectivizing the various sectors of industry. The Council of the Economy, responding to the desires of the working class and complying with a program that had already been set in motion, must pay close attention to the wishes of the workers and orient the entire economic life of Catalonia in accordance with their will.

The collectivization of the enterprises, however, would be of no importance if it did not further their development and growth. For this purpose, the Council of the Economy has been assigned the task of studying the basic norms required to proceed towards the constitution of a Bank of Industrial and Commercial Credit that would distribute financial assistance to the collectivized enterprises and organize our industry into large concentrations, which would assure the maximum output and facilitate the major transactions of our foreign trade. A study is also in progress concerning the creation of a research and technical advisory body that would enable our industry to enjoy greater efficiency and progress.

In view of the above considerations, and in cognizance of the report of the Minister of the Economy and with the agreement of the Council,

It is hereby Decreed:]

“Article 1. In accordance with the standards that have been established by this Decree, the industrial and commercial enterprises of Catalonia are classified as follows:

a) Collectivized enterprises, in which the responsibility for management falls upon the workers in these enterprises, who are represented by an Enterprise Council, and
b) Private enterprises, in which management is the responsibility of the owner or manager, with the collaboration and budgetary oversight of the Workers Control Committee.

I: Collectivized Enterprises

Article 2. Collectivization will be compulsory for all industrial and commercial enterprises which, as of June 30, 1936, employed more than one hundred wage workers, as well as those enterprises that, employing fewer workers, were owned by individuals who were declared to be rebels or who abandoned their enterprises. However, enterprises employing fewer than one hundred workers may be collectivized if the majority of their workers and their owner or owners agree to do so. Enterprises with more than fifty but fewer than one hundred workers may also be collectivized at any time if three-fourths of the workers support collectivization.

The Council of the Economy may also agree to authorize the collectivization of those other industries that, due to their importance in the national economy or for other reasons, the Council considers to be advisable to withdraw from the influence of private enterprise.

Article 3. For the purposes of the preceding Article, the designation of enterprise owners as rebel elements can only be made by the Peoples Tribunals.

Article 4. As for the working class elements, for the purposes of determining the total number of workers who comprise the employes of an enterprise, every individual who is on the payroll of the enterprise, regardless of his job, whether intellectual or manual, is considered to be an employee of the enterprise.

Article 5. All the assets and liabilities of the original enterprise will be transferred to the collectivized enterprise.

Article 6. For the purposes of collectivization, enterprises composed of independent subsidiaries devoted separately to production or sales, and all other enterprises that have various outlets and factories, will continue to constitute a single organization and can only be separated with the express authorization of the Minister of the Economy, after the latter examines a report from the Council of the Economy of Catalonia.

Article 7. The former owners or managers of the collectivized enterprise will be adapted to serve the latter, and they will be assigned to a job where, due to their managerial or technical skills, their collaboration would be most advantageous to the enterprise.

Article 8. Once collectivization has been implemented in an enterprise, no workers in that enterprise may be laid off, unless they are transferred to another workplace within the same industrial category, if circumstances so require.

Article 9. In those enterprises that are wholly or partly owned by foreign interests, the Enterprise Councils or the Workers Control Committees, in each instance, will notify the Minister of the Economy of this fact, and the latter will convene a meeting of all the interested parties or their representatives in order to address the matter and decide what measures should be undertaken for the purposes of the due safeguarding of those interests.

II: The Enterprise Councils

Article 10. The supreme management of the collectivized enterprises will be the responsibility of an Enterprise Council elected by the workers, from their own ranks, in general assemblies. The assemblies will determine the number of workers who will form the Enterprise Council, whose numbers will be no less than five and no more than fifteen, and the Enterprise Council will be subdivided into various departments: Production, Administration, Technical Services and Commercial Exchange. Where the size of the enterprise permits, the various trade union federations to which the workers belong will also be proportionally represented on the Enterprise Council.

The term of service in these positions will be two years, and elections will be held every six months to confirm the mandates of the delegates. Delegates to the Enterprise Council may serve more than one term.

Article 11. The Enterprise Councils will assume the functions and the responsibilities of the former Boards of Directors of Corporations and Partnerships.

The Enterprise Councils will be responsible for their management to the workers of their enterprises and to their respective General Councils of Industry.

Article 12. The Enterprise Councils must ensure that, in the execution of their duties, the process of production is adapted to the general plan promulgated by the General Council of Industry, coordinating their efforts in accordance with the principles that regulate the development of the industrial sector to which they belong, considered as a single whole. With regard to the establishment of profit margins, fixing the general conditions of sales, acquisition of raw materials, and in connection with the rate of amortization of the fixed capital and formation of circulating capital, a reserve fund and the distribution of profits, they will also act in accordance with the rulings of the General Councils of Industry.

In the social order they will exercise vigilance to see to it that the rules affecting this domain are strictly complied with, suggesting any other rules that they believe would be advisable. They will take the necessary measures to guarantee the physical and moral health of the workers; they will carry out an intensive cultural and educational labor, and will foster the formation of clubs, recreation centers, sports, cultural events, etc.

Article 13. The Enterprise Councils of the industries that were confiscated before the publication of this Decree and those that will be collectivized henceforth, will submit their constitutions to the Secretary General of the Council of the Economy within fifteen days; a template for these constitutions will be sent to the various offices of the Enterprise Councils.

Article 14. In order to assure continuous monitoring of the overall progress of the enterprises, the Enterprise Councils will elect a Director, to whom shall be delegated, in whole or in part, the functions that are incumbent on the Council.

In enterprises employing more than fifty workers, or in those whose capital exceeds one million pesetas, or which manufacture or assemble products related to national defense, the election of this Director must be approved by the Council of the Economy.

Article 15. Each collectivized enterprise will be subject to mandatory oversight by an Inspector from the Generalitat who will be a member of the Enterprise Council, and who will be nominated by the Minister of the Economy with the approval of the workers.

Article 16. The legal representation of the enterprise will be exercised by the Director, and his signature will accompany the signatures of two members of the Enterprise Council chosen by the Enterprise Council. The names of the nominees will be communicated to the Council of the Economy, which will verify them for banks and other institutions.

Article 17. The Enterprise Councils will post the minutes of their meetings and will send certified copies of the resolutions they adopt to their respective General Councils of Industry. When these resolutions require it, the General Council of Industry will intervene as necessary.

Article 18. The Councils will have the obligation to take note of the demands or suggestions formulated by the workers and these demands or suggestions shall be included in the minutes of the Enterprise Councils, so that they may be brought to the attention of the General Council of Industry where practicable.

Article 19. The Enterprise Councils will be obliged, at the end of each fiscal year, to provide an account of their conduct to their workers, meeting in a general assembly.

Furthermore, the Enterprise Councils will also produce copies of their balance sheets and semiannual or annual reports for submission to their respective General Councils of Industry; these reports will provide details concerning the business status or business plans.

Article 20. The delegates to the Enterprise Councils may be dismissed from their positions by the workers meeting in general assemblies and by their respective General Councils of Industry, in case of manifest incompetence or refusal to abide by the rules established by the latter.

When their dismissal has been confirmed by their respective General Councils of Industry, if the workers of the enterprise, meeting in a general assembly, agree, they may direct an appeal to overturn this decision to the Minister of the Economy, which appeal, should it then be rejected, with the prior notification of the Council of the Economy, is unappealable.

III: Concerning the Control Committees in the Private Enterprises

Article 21. In the industries or businesses that have not been collectivized, the formation of Workers Control Committees will be mandatory, in which all the departments of the enterprise will be represented—production, technical support and administration. The number of delegates composing these Committees will be freely decided by the workers, and the representation of each trade union federation will be proportional to the number of their members in the enterprise.

Article 22. The mission of the Control Committee shall be as follows:

a) Exercise control over working conditions, that is, to ensure strict compliance with the legal standards affecting pay, working hours, social benefits, hygiene and safety, etc., as well as to enforce strict discipline on the job. All warnings and notices that must be issued by the manager of the enterprise to its personnel will be passed on to the Control Committee.
b) Administrative control in the sense of inspection and control over income and expenditures, both with regard to cash on hand and cash advanced by banks, with the object of responding to business requirements, and also intervening in all the other operations of a commercial nature.
c) Control of production, consisting in close collaboration with the employer in order to improve the process of production. The Workers Control Committees will seek to maintain the best possible relations with the technical personnel in order to assure the smooth operation of the work process.

Article 23. The employers will be obliged to present to the Workers Control Committees the account books and annual reports of their enterprises, and the Committees will send summary reports of the same to their respective General Councils of Industry.

IV: The General Councils of Industry

Article 24. The General Councils of Industry will be constituted in the following manner:

Four representatives of the Enterprise Councils, chosen in a manner that is most convenient for the Councils.

Eight representatives of the various trade union federations, each federation to be represented in proportion to the number of members it has in the industry. This proportion will be established by a procedure that the trade union federations shall agree upon in advance.

Four technicians nominated by the Council of the Economy.

These Councils will be presided over by their respective delegates on the Council of the Economy of Catalonia.

Article 25. The General Councils of Industry will formulate the general outlines of the operational plans of their respective industries, helping the Enterprise Councils to carry out their functions and, in addition, they will oversee: the regulation of the total production of their respective industries; the standardization of cost prices in those industries to the greatest possible extent, in order to avoid competition among the enterprises; study the general needs of the industries; study the requirements of consumption of their products; examine the opportunities for domestic and foreign markets; observe, furthermore, the general trends in the industries and establish in each case the limits and rate of production for each kind of product; propose the closure of factories or their expansion depending on the needs of industry and of consumption, or recommend the merger of certain factories; submit proposals concerning the reform of certain methods of labor, means of obtaining credit and circulating products; suggest modifications in the levels of customs duties and the terms of trade agreements; organize purchasing consortia and institutions for the acquisition of equipment and raw materials; administer certain commercial agreements with the industries of other parts of Spain or foreign countries; manage bank and credit transactions; organize joint laboratories for technical research; compile statistics for production and consumption; supervise efforts to replace imported materials with domestic sources. Furthermore, the General Councils of Industry will be able to study and adopt those measures that they deem necessary and to be of interest for the improvement of the labor process for which they are responsible.

Article 26. The accords that will be adopted by the General Councils of Industry will be compulsory, they will have the force of law and no Enterprise Council or private enterprise may refuse to comply with them under any pretext that cannot be fully justified. Their only recourse will be an appeal to the Minister of the Economy, whose ruling, after consultation of the report of the Council of the Economy, will be unappealable.

Article 27. The General Councils of Industry will be in constant contact with the Council of the Economy of Catalonia, and will comply with the rulings of the latter at all times, and when necessary these two institutions will undertake joint action.

Article 28. The General Councils of Industry must submit to the Council of the Economy of Catalonia, within a time limit that will be established for each particular case, a detailed document in which the general progress and status of their respective industries will be analyzed and summarized and in which plans for future improvements will be set forth.

V: Classification of Industries

Article 29. For the purpose of promoting the formation and organization of the General Councils of Industry, the Council of the Economy will draft, within fifteen days after the promulgation of this Decree, a proposal that will include a classification of the different industries and their duly structured organization, in accordance with their respective specialties and requirements of coordination between the sections into which each of them will be divided.

Article 30. For the purposes of this classification, attention will have to be devoted to raw materials, the totality of industrial operations set in motion up to the sale or the industrial consumption of the product, the technical unity and opportunities for commercial management, with the goal of the complete concentration of industries in order to overcome disturbing factors.

Article 31. At the same time that it will be working on the classification of industries with a view to industrial concentration, the Council of the Economy will propose regulations with which the constitutions and functioning of the industries will have to comply.

VI: The Obligations of the Industries

Article 32. In every collectivization or socialization of an enterprise, whether domestic or foreign interests are involved, and regardless of the size of the enterprise, an inventory-balance sheet will be compiled in each case, based on the account books of the enterprise, duly verified, accompanied by a detailed and itemized summary of the goods, both real property and other goods of every description that belong to the enterprise.

Article 33. The inventories submitted in accordance with the previous Article will be revised by a commission formed of six technicians and accountants named by the Council of the Economy, presided over by a Chairman who is a specialist in such enterprises, and this commission carry out its investigation and submit its report for the approval of the Council.

Article 34. The Council of the Economy of Catalonia, once it has studied the report mentioned in the above Article, will be authorized, if it deems that it is advisable, to undertake a second revision of the document, issuing a final ruling and submitting its report to the Minister of the Economy of the Generalitat, against whose ruling no appeal of any kind will be permitted.

Article 35. Once the inventory of social assets has been compiled and debts and liabilities are deducted, and in the event that the result shows a positive balance, it will be filed in the Council of the Economy of the Generalitat for the purpose of determining the identities of their legitimate claimants and the social compensation to which the latter are entitled.

Article 36. For the purposes of calculating the compensation mentioned in the above article, there will be a breakdown of the part represented by the contribution or the participation of foreign assets, what part pertains to the people’s savings and loan institutions, as well as credit establishments, and which corresponds to individuals or other domestic enterprises, and the corresponding announcements will be published in each case by the Council of the Economy, always understanding that all such participation must refer to a date prior to the July 19 just past.

Article 37. The social compensation that corresponds to the first case mentioned in the above Article will be completely recognized by the Generalitat. Its value will be estimated in the national currency of the claimant.

Article 38. The compensation that corresponds to the second case mentioned in the Article 36 will be subordinated to other considerations, in view of their volume.

Article 39. For those small industries and commercial enterprises that have already been subjected to collectivization prior to the publication of this Decree, the Council of the Economy will study their status and propose a just social compensation.

For this purpose, the Council of the Economy will proclaim an open period for information that will conclude on November 30 so that interested parties may present their petitions.

Barcelona, October 24, 1936.—The Prime Minister, Josep Tarradellas.—The Minister of the Economy, Joan P. Fàbregas.”

One may observe that the decree reproduced above did nothing more for the most part than legalize a situation that already existed in most industries and the transport system. It contains no special initiative that goes beyond the framework of the action carried out by the workers.

Practically the only enterprises that preserved their status as private enterprises were artisans and some small industrial workshops, but even in these private enterprises the regulations on workers control and the requirements that these enterprises must comply with the directives of the Councils of Industry left little leeway for the “employer’s authority” and the other characteristics of capitalist property.

By means of this Decree, a “new economy” is legally established in all Catalonian production. For the enterprises, it is the Councils elected by the workers that are responsible for commercial, technical and social management functions; the workers councils themselves, however, consult with each other, and observe the general directives of their trade union federations and of their new institution, the General Council of Industry.[7]

The collectivized enterprises function almost just like the stock corporations of the capitalist economy. The general assemblies, the workers, proceed to elect the Council within which all the phases of the activity of their workplace are represented: production, administration, technical services, etc. The representatives of the trade union federations are also represented and thus assure a permanent connection with the rest of the industry.

The workers councils, however, are practically limited to the control over management, which is entrusted to a director elected in the largest enterprises, whose election is subject to ratification by the General Council of Industry. This director is often the former owner, manager or director of the enterprise, and the Decree authorizes the employment of these former “captains of industry” if their competence and loyalty permit.

This is more often the case than one would like to think. Many directors and employers, formerly full of a ferocious hatred and an extreme intransigence with regard to the workers and their demands, were compelled to render homage to the constructive effort displayed by those same workers in all the collectivized factories. They had to acknowledge the order and the common sense with which they regulated their affairs and the numerous improvements introduced by the new system, both from the economic as well as the social point of view, and a good number of them voluntarily placed themselves at the disposal of the workers, and the latter, more interested in assuring the future of the common labor than in avenging past injuries, almost always accepted collaboration that was spontaneously offered.

One may observe in this Decree that foreign interests represented in the Catalonian enterprises were respected. One Decree pertaining to this issue, not reproduced here, regulates the various modalities of compensation, of collaboration, etc., with these foreign owners, who are invited to discuss, in each particular case, with the Council of the Economy, the regulation of their participation in these enterprises.