CHILE BY: JACQUELINE CARILLO, CYNTHIA HSIEH, TRACY HUANG AND LEIZEL LEE

CHILE ON THE MAP

THE GOVERNMENT

GOVERNMENT Background Information: In the 1920s, Chileans were experiencing economic prosperity with power emerging to the middle and working class a new constitution was drafted; second major charter in Chilean history Significant changes: official separation of church and state, legal recognition of worker’s right to organize, promise to care for social welfare of all citizens, right of state to infringe on private property for public good and increased powers for the now directly elected president

GOVERNMENT General Carlos Ibanez del Campo became president in the 1927 election His reign was based on:

GOVERNMENT However, when the Depression came.. Why he remained in office Economy was doing well Military Intervention Promoted industry, public work

GOVERNMENT Government revenues plummeted, deficits grew Chile suspended payments on its foreign debt in 1931 and took its currency off the gold standard in 1932 In fear of a civil war, Ibáñez went into exile in Argentina in July 1931

GOVERNMENT After Ibáñez, Alessandri was voted back into office in 1932 and would remain until 1938 Dealing with the Depression  Created COVENSA (Corporation of Nitrate and Iodine Sale)  New taxes, focused on public works ie: construction of National Stadium in Santiago in Communists, Socialists and Radicals formed Popular Front coalition and introduced economic polices based on US New Deal

CROP DIVERSITY CopperNitrate 80% of government revenue ¼ of GDP

CROP DIVERSITY Depends on demand of foreign market Technological advancements means synthetic substitutes for natural resources like nitrate Primary industry leaves little room for domestic market Problems with Nitrate/Copper Reliance

CHILE’S INDUSTRIES

INDUSTRIES Economy has been sustained by mining for centuries Two main minerals: - Nitrates  iodine is a by product - Copper Value of nitrate exports: 1884  pesos 1913  pesos During WW1 the nitrate industry declined and eventually collapsed  demand lowered b/c Germany invented synthetic substitutes  British naval blockade closed the market

Has world’s largest copper reserves When nitrate industry collapsed copper replaced it as Chile’s leading export Known as “Chile’s salary” Demand for copper gave Chile an advantage over other nations BUT put it at the mercy of the international market  when copper prices fell or Europe was in economic downfall, Chile felt it too Chuquicamata largest copper mine COPPER MINING

1890 – 1910  nitrate industry was increasing while the copper industry was decreasing Rehabilitation of copper industry was at the hands of foreign investors Investments from North American businesses helped the Chilean copper industry turn around  Kennecott Copper Company – 1911  Anaconda Copper Company – 1922

PREWAR AND WARTIME EXPORTS NITRATES AND IODINECOPPER %8% %17.3% Difference11.4% - decrease 9.3% - increase

TRADING PARTNERS?

TRADING PARTNERS depended too much on foreign markets the combination of export taxes and workers’ salaries  50% of the value of production remained in Chile

TRADING PARTNERS Chile  Foreign Sector: Minerals Europe & United States as Foreign Investors If investing countries were affected, Chile’s economy would be affected as well

TRADING PARTNERS Spain  Chile's main exports were minerals (silver and copper before 1879, and nitrate after the Pacific War) Mid- 19 th Century  agricultural products exported mainly to Australia and California

TRADING PARTNERS Chile’s trading  signs of collapsing with the invention of artificial nitrate, which replaced natural nitrate due to its lower price. E.g. Post- WW1, nations that traded w/ Germany or sent supplies to them go no longer do so as Allies placed a blockade

CLASS STRUCTURES B/w 1891 and 1925, Chile’s population grew by 61% from 2,600,000 to 4,200,000 The percentage of people living in cities grew 20 – 30 % The advance of the middle class depended on the growth of educational institutions; by 1920, nearly 50% of the population was literate

THE DEPRESSION IN CHILE

HOW HARD WAS IT HIT? The UN declared Chile, the country in South America to be hit hardest by the Great Depression. WHY?  80% of government revenue came from exports of copper and nitrates, which were in low demand during the depression  nitrates industry and copper mining were one of the main industries and during the great depression the demand for these products decreased substantially.  Led to complete collapse of national economy

GDP dropped 14% mining income declined 27% export earnings fell 28% By 1932 GDP had shrunk to less than half of what it had been in 1929 Had a huge impact on unemployment and business failures. the collapse of international prices had had negative consequences on the levels of import and exports, foreign loans, etc. By mid 1931 – Chile was no longer able to make their payments to cover their debt.

GREAT DEPRESSION’S EFFECT ON THE PEOPLE Students and youth, started to believe or lean towards a more sift side government, more communist in order to achieve an equal and more balanced economy Had a devastating impact on the living and working conditions of the majority of Chilean people  The most immediate consequences were the unemployment, job insecurity and the decline of wages. There was an inflation in the cost of things – everyday items such as soap – prices were raised High rates of inflation – things were more expensive – living costs increased while wages declined Did not help the people in recovering from situation

NORTHERN REGIONS Northern mining districts - families struggled from hunger and poverty Depression hit the mining regions more severely, where the nitrate and copper workers were the backbone of the Chilean economy

HOW DID IT GET OUT OF DEPRESSION? Import Substitution Indutrialization  encourage domestic industries to lessen dependence on foreign manufactured goods Mining wasn’t as hard hit as the industrial sectors, so it contributed in bringing recovery WW2 also brought about recovery b/c it increased in the demand for copper Increased intervention in the economy

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