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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

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By: Jacqueline Carillo, Cynthia Hsieh, Tracy Huang and Leizel Lee


Background Information:

  • In the 1920s, Chileans were experiencing economic prosperity with power emerging to the middle and working class

  • 1925- 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


  • 1927- General Carlos Ibanez del Campo became president in the 1927 election


However, when the Depression came..


  • 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


  • 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 1938

  • 1938- Communists, Socialists and Radicals formed Popular Front coalition and introduced economic polices based on US New Deal

Crop diversity
Crop Diversity

Export of:

  • ¼ of GDP


  • Economy has been sustained by mining for centuries

  • Two main minerals:

  • - Nitrates  iodine is a by product

  • - Copper

  • Value of nitrate exports:

  • 1884  67 000 000 pesos

  • 1913  315 000 000 pesos

  • During WW1 the nitrate industry declined and eventually collapsed

  •  demand lowered b/c Germany invented synthetic substitutes

  •  British naval blockade closed the market

Copper mining

  • Chuquicamata

  • largest copper mine

  • 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


  • 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

Trading partners1
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 partners3
Trading partners

  • Spain  Chile's main exports were minerals (silver and copper before 1879, and nitrate after the Pacific War)

  • Mid- 19th Century  agricultural products exported mainly to Australia and California

Trading partners4
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

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
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