Three features of the nineteenth century formed the critical background to Basque nationalism. The first two were instrumental for the development of Basque nationalism in the first place. The third factor helps explain why it emerged specifically in Bilbao in the 1890s.

First and foremost, Spanish nationalism was a failed nationalism. It was incapable of overriding local and regional loyalties. Because of the economic and political failures of nineteenth-century reforms, an economically stagnant and politically corrupt and unstable centre was unable either to inspire or control Spain's more vigorous peripheries. Moreover, the creation of a national market came late and in any case was insufficient. Secondly, the Basque country had never been a ‘regular’ part of Spain in the sam sense as Extremadura or Andalucia. It enjoyed a foral regime and, therefore, economic and administrative autonomy considerably longer than other Spanish regions. Also, parts of the Basque country were characterized by a culture markedly different from other Iberian cultures. This ‘fact’ of political and cultural differentiation provided the raw material which Basque nationalism drew upon to construct its ideology. Thirdly, although Basque industrialization helped merge the interests of important sectors of Basque society and the financial and political apparatus of the state, in Bilbao industrialization generated extremely high social costs and created two new and powerful social classes, the Basque oligarchy and the non-Basque proletariat. In contrast Navarra and Alava remained rural and in Guipúzcoa industrialization was confined mainly to small-scale producers.