Chilean History: Crisis, Political Evolution, and Economic Development

Posted on Jul 2, 2025 in History

Economic and Social Impact of the 1929 Crisis

  • Closure and massive breakdown of nitrate mines and mining industries in the north of the country.
  • Increase in unemployment rates, which by 1931 reached a 50% increase.
  • Increased migration of workers seeking new jobs to cities in the central and southern regions, particularly Santiago. The arrival of large groups of people exacerbated health problems and urban public health, leading to strong social unrest. The spread of epidemics, hunger, and begging formed the backdrop of the economic crisis.

Political Consequences of the Crisis

The political order was affected almost immediately. In July 1931, the situation was untenable. Nationwide indefinite strikes were initiated, including students at the University of Chile, physicians in Santiago and Antofagasta, and other workers. Unions of engineers, teachers, dentists, pharmacists, and bank employees threatened to join if Ibáñez did not grant broad freedoms. In this climate of pressure, the president resigned on July 26 of that year.

In October 1931, Juan Esteban Montero was elected President. Meanwhile, the economic situation continued to worsen. The government announced a 50% cut in salaries for public employees, including the military, which led to the uprising of the fleet in Coquimbo on September 1 of that year. Among other demands of an economic nature, the proposed motion included:

  • Land division
  • Creation of new industries to employ the unemployed
  • Reformulation of the wage and promotion policies of the Navy.

Period of Anarchy: Political Instability (1823-1829)

  • Abdication of O’Higgins (1823)
  • 1823: Moralist Constitution (Mariano Egaña)
  • 1826: Federal Constitution (José Joaquín Infante, influenced by U.S. model)
  • 1828: Liberal Constitution (José Joaquín de Mora)
  • Battle of Lircay (1829): Liberals (Ramón Freire) vs. Conservatives

Conservative Period (1831-1861)

  • José Joaquín Prieto (1831-1841): War against the Peru-Bolivian Confederation, led by Andrés de Santa Cruz. Santa Cruz claimed Chilean territory occupied by the Incas up to the Maule River. The Treaty of Paucarpata was signed but later rejected. Manuel Bulnes achieved victories at Matucana, Buin, and Yungay. Chile won, gaining unity and prestige, though not territories.
  • Manuel Bulnes (1841-1851)
  • Manuel Montt (1851-1861)

Liberal Period (1861-1891)

  • José Joaquín Pérez (1861-1871)
  • Federico Errázuriz Zañartu (1871-1876)
  • Aníbal Pinto Garmendia (1876-1881): War of the Pacific. Chile gained Regions II, I, and XV. Patagonia was lost.
  • Domingo Santa María (1881-1886): Enacted secular laws, including civil marriage, civil registration, and lay cemeteries.
  • José Manuel Balmaceda (1886-1891)

Key Initiatives of CORFO

  • Development of energy and fuel, essential inputs for industrialization.
  • Development of import-substitution industries, such as metallurgy, textiles, chemistry, and timber/fisheries.
  • Mining development, through improved techniques and public investment.
  • Increased agricultural and fisheries production, by incorporating modern techniques.
  • Investment in trade and transport services (air, sea, and land).

After this initial momentum towards providing the basic elements required by industrialization, a second stage began, aimed at encouraging more specific plans for the development of basic industries and infrastructure. These included:

  • 1944: Creation of the National Electricity Company (ENDESA), which, based on hydroelectric construction, enabled electricity supply throughout the country.
  • 1946: Creation of the Pacific Steel Company (CAP), which generated an indispensable resource for future industrial installations.
  • 1947: Foundation of the State Technical University.
  • 1950: Creation of the National Oil Company (ENAP), which monopolized the country’s oil production. Also in that year, the Huachipato steel plant was launched.
  • 1952: Implementation of several major corporations, such as the National Sugar Industry (IANSA), Manufacturing Copper S.A. (Madeco), and the Paipote Smelter, which allowed the country to refine copper and gold.
  • 1954: Creation of the National Public Transport Company and the Concón Refinery.