The Spanish State declared its neutrality in the war because its political leadership was divided between francophiles and germanophiles, and possibly because a neutral Spain was useful to France and England as supplier for their armies. Neutrality meant commercial paradise for the bourgeoisie. All the industrialists received contracts to supply the belligerents. Shipbuilders appeared overnight and amassed great fortunes. Mines, most abandoned, were reactivated and still could not keep up with demand. New industries were created and old industries were converted for war production. The Bank of Spain reaped a harvest of gold.
The demand for labour brought a flood of immigrants to Barcelona from other regions. Exporters sold even the food that would normally have been consumed in Spain. Prices of essential goods rose sharply due to speculation and shortages, causing large-scale social unrest. In mid- 1916 the Socialist Party adopted a program of political agitation bringing it closer to the CNT. Both movements declared a general strike against the rise in prices. Syndicalism gained great power and even a certain cachet.
Lower ranking army officers, in an effort to get rid of the nepotism of the military hierarchy, formed their own union known as the Juntas of Defence. Liberal politicians took this as evidence of a new mentality among younger officers and demanded that parliament be reconvened and a new federal constitution drawn up. A united front of members of Parliament held a meeting in Barcelona, but government forces broke in and quickly dispersed it. However the CNT and the UGT had agreed upon a revolutionary alliance, and on August 12, 1917, they proclaimed a general strike throughout Spain. The Juntas of Defence quickly showed their true colours and soldiers entered the streets of Barcelona firing at will. Within seven days the revolutionary outbreak was stifled. Four Socialist leaders, Largo Caballero, Saborit, Besteiro, and Anguiano, were held responsible. They were imprisoned, but were freed the next year because of the parliamentary elections. Referring to the strike, Socialist leader Prieto declared to the new parliament: "It's true that we gave the people weapons. But we didn't give them ammunition."
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