The nation of Chile, just slightly larger than the state of Texas, achieved independence in 1818. Until 1830, the fledgling nation was in a state of chaos when Diego Portales ushered in the period of the autocratic republic. This period, from 1830-1861, was a time of firm-handed rule tempered by moderation. Conservative landowners and merchants were in control of a centralized government, and an 1833 constitution endured until 1925. The Conservatives, though challenged by a strengthening liberal movement begun in the 1840’s, managed to maintain control until 1873.
The Liberals, allied with the Radicals, assumed control from the Conservatives and the period from 1875-1885 witnessed ...view middle of the document...
Urban industrial expansion followed the new labor force and was geared to providing finished products for the consumer market (Pike, 2002).
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Under a new Constitution adopted in 1925, presidential rule was reestablished and the separation of church and state was imposed. New social justice codes were also established. From 1927 until 1929 (the year of the world depression), Chile flourished economically with the generous foreign investment of the United States and other foreign capital, as well as, its near monopolistic production of sodium nitrate. Then disaster struck.
Chile fell into the great world depression of the early thirties while simultaneously, newly developed synthetics drastically reduced world demand for sodium nitrate. Ironically, in 1931, then President Ibanez resigned and a brief period of political instability followed, coinciding with the depression. Exports dropped by 85% and imports by 80% between 1929 and 1932 (Loveman, 2002a). Mass unemployment swelled and the urban labor built shantytowns.
Although political chaos ended with the election of Arturo Alessandri in 1932, the scarcity of imported goods and the shortage of foreign currency from the depression and WWII , made manufacturing development a major concern. Industry expanded into the production of steel and automotives. Chile installed high import tariffs to protect these industries thus making them susceptible to loss of protection with future governmental changes. Additionally, balance of trade deficits developed along with fiscal crises, due to the continued reliance on copper and nitrates exports for the majority of foreign exchange.
Through the early seventies, Chile continued the trend toward urbanization and industrialization. Spurred by the creation of the National Development Corporation (CORPO), industry continued to expand into textiles, chemicals, locomotives, armaments, rubber and glass, among many others. Education and health care were also expanded. Chile continued; however, to ignore its agricultural industry, failing to modernize and the subsidies and tariff protections afforded to support the new industries made them uncompetitive in world trade and contributed to the spiraling inflationary problems; as high as 86% in 1956 (Loveman, 2002b). Further, foreign investment by the United States lead to non-Chilean domination of the key mining and industrial sectors.
Elected in 1964, Eduardo Frei initiated dramatic reforms to right the economy. He began the process of nationalizing Chile’s copper and mining industries, began agrarian reforms, began redistribution of wealth programs, and expansion of social programs. The administration took on large-scale construction projects, provided credit for agricultural and industrial expansion, and encouraged foreign economic investment. It also fueled the creation of farm labor unions, and the populace into cooperatives and unions. All of this...