5.6: The Industrial Revolution and Nation-Building in the Americas - The South American Model Republic Falters

Nation-Building and Racism

In contrast to Mexico, Chile was regarded as a model Latin American republic during the 1800s. The new nation had no powerful generals such as Mexican General Agustin de Iturbide to challenge civilians. At the same time, there are some major similarities. After independence, the USA, Mexico, and Chile had white elites who sought to increase primary product production by seizing land from those that they deemed racially inferior. In all three countries, the indigenous population lost land to make way for commercial agriculture.  As with Mexico, the powerful leaders of Chile did not support policies that would make Chile a modern industrial nation. Chile during the first half of the 1800s was stable, because the elites all supported a more centralized system rather than federalism. Much of the warfare in early independent Latin American nations was over states’ rights and whether a powerful centralized government should be established. The elites also agreed that Chile should promote exports of primary products and import manufactured goods.  

Figure \(\PageIndex{1}\):  Inquilinos en el Rancho, US Library of Congress, in the Public Domain

However, Chile was far from democratic, because there was no secret ballot in Chile until 1958. Most of the land was controlled by the white elites who had large estates called haciendas. The majority of voters were workers on estates called inquilinos (seen in Figure 5.6.1) who were instructed by the hacienda owner to vote for their candidate. Chile, much like the USA, was a country established on racist foundations. Chilean inquilinaje was a rural labor system similar to debt peonage. Chilean elites considered themselves white and inquilinos tended to be darker mestizos. On the wheat estates, the hacienda owners had almost complete dominance.  The mestizo laborers were given a small subsistence plot but had to labor on the estate of the large landowner. The threat of eviction was frequently used to control inquilinos. Additionally, the hacienda owner controlled the local police forces and local government. Oftentimes, he would order the overseers to whip inquilinos. Agriculture relied on cheap labor, and there was little use of modern technology in crop production. Racism was rampant in Chile at this time. For the most part, being mestizo and having indigenous ancestry carried a stigma. They were called rotos (broken ones) or Huachos (illegitimate orphans). Figure 5.6.1 shows the squalor of the inquilinos. Figure 5.6.1 shows a male inquilino wearing a hat seated on a low chair, with female members of his family and children behind him outside their small dilapidated shack. Two women and a young child are standing, a woman and two children are sitting on the ground. Agrarian reforms eventually eradicated the system in the late 1960s. What problems did a large inquilino population represent for Chile?

One of the reasons why Chile was so stable was due to economic prosperity. Like the rest of Latin America, Chile exported primary products which included copper, silver, and wheat.  Chile had geographic good luck because it was the only producer of wheat on the west coast of the Americas during 1830-1850. After the Mexican-American War, there was a gold rush in California, and Chile exported wheat to the US until railroad construction was completed.  Mining also brought substantial economic growth. Large silver mines were discovered during the 1830s and 1840s and Chile was also one of the world’s leading copper producers. So, international trade created an economic boom in Chile during 1840-1860. With all of this prosperity, the Chilean government had money to improve infrastructure and education to bring greater unity as part of its nation-building project. Literacy rates in Chile were among the highest in Latin America. 

Similar to the USA, the Chileans felt a strong sense of racial superiority. During the War of the Pacific (1879-1884), Chile took nitrate fields from Bolivia and Peru. The USA, Western Europe, and Japan used nitrates as fertilizer and for explosives. Chileans saw their country as a racially European, orderly, and united nation-state. The Chilean public perceived Peruvians and Bolivians as inferior Indians and Blacks.  After defeating the Peruvians and Bolivians, modern technology such as guns, artillery, trains, and the telegraph was used to take land from the Mapuche Indians in southern Chile. 

Although Chile did not experience an industrial revolution, the War of the Pacific stimulated industrialization.  Factories were set up in the cities and nitrate workers provided a large market for consumer goods.  However, Chile only had low-tech light industry such as textiles and glass. These manufactured goods were also of low quality. Therefore, Chilean manufactured goods were not exported. There was also growth of a small middle class because economic growth and massive wealth from nitrates created a demand for professionals and white-collar workers. Compared to the middle class in the USA and much of Western Europe, the Chilean middle class was small. The middle and working classes had some political power as well, but the inquilinos made up the majority of voters. 

Economic Underdevelopment and Radicalization 

The consensus among the elite broke down in 1891 and a civil war erupted. The Civil War of 1891 revolved around the economic and social policies of the government. By the mid-1800s, the elites were no longer united. Hacienda owners of the Central Valley were like the US southern cotton producers. They wanted a continuation of export-led growth of primary products. These elites were opposed by the copper and silver miners in the Norte Chico region of Chile who supported government policies that would stimulate manufacturing through protective tariffs, direct state investment, and a national bank.  

The civil war began when the hacienda owners and their allies rebelled against President Jose Balmaceda.  As an ally to the Norte Chico elite, President José Balmaceda sought to make Chile a modern and industrial nation and spent more than any other president on infrastructure and education. Balmaceda wanted to increase taxes on the nitrates to push economic development programs which included an improved railway system, protective tariffs, and a national bank. The problem was that the nitrate miners formed a cartel and limited production. The government was reliant on taxing nitrates, and this reduction in nitrate production reduced government revenues. When Balmaceda attempted to break up the nitrate cartel, the nitrate owners rebelled and were joined by the hacienda owners and the banks.  These three groups were tied together economically and all felt threatened by Balmaceda’s nitrate policies.  The hacienda elites won, and Balmaceda killed himself.  The 1891 Civil War had profound social, political, and economic consequences in Chile.  The forces which defeated Balmaceda did not promote economic modernization. So, there was no industrial revolution in Chile.  In Western Europe and the US, industrialists set government policy, but in Chile, well into the 1900s the landowners remained politically dominant.

By 1900, Chile had serious problems. Not only was there no significant industry, but agriculture was neglected and no longer competitive enough to be exported. Chilean leaders by the 1890s believed that Chile should remain a mining economy that imported manufactured goods from Europe and food from Argentina. Another problem was that nitrate workers and factory workers became more radical because they were impoverished and the government did not help them. Workers had no loyalty to their employers or the government which was dominated by the elites and middle classes.  Unions were at first not legal and the government would repress workers when they went on strike. By 1900, more and more workers supported a violent revolution.

Review Questions

• How was Chile’s policy of nation-building based on racial exclusion?
• How did the Industrial Revolution affect the USA and Latin America differently?