Industry and the Missing Bourgeoisie: Consumption and Development in Chile, 1850-1950

In the last decade of the eighteenth century, two observant and reflective men, the first an enlightened creole, the second a recent arrival from Spain, shook their heads in collective concern over the state of Chile, How was it possible, they asked, that a region with such potential richness should be so poor? Wrote Manuel de Salas,

For his part, José Cos Iriberri wrote, “What a delicious sight it is to enter through any of the ports of this land and see the multitude of streams, verdant fields, the flocks and herds. What a notion of opulence and richness fills our mind! Who would think that in the midst of this abundance there should be such a scant population groaning under the heavy yoke of poverty, misery, and vice.”¹

Like a great many people since then, these two men were aware of backwardness and interested in development. They had little patience for their contemporaries who blamed the climate or the “innate sloth of the Indians which has contaminated everyone horn in America.” They were less inclined than we are to seek the cause of poverty and stagnation in imperialist rule. In fact, our two eighteenth-century observers—one a mercantilist, the other a physiocrat—were little interested in history at all, or how Chile got to be the way it was. They were interested in creating new products and industries. If their solutions seem overly optimistic and even ingenuous, the subsequent lineal descent from Salas and Cos Iriberri to Raúl Prebisch and André Gunder Frank shows, nevertheless, that we are all children of the Enlightenment, and comparison of Chile with Western Europe is always implicit in the discussion. Despite stylistic differences among conservatives, liberals, Cepalinos, Marxists, neo-Marxists and neoliberals, we have come to share vocabulary and standard assumptions, and, within those, a broad consensus has emerged. Everyone agrees on the terms of the debate and on the notion that Chile, to some extent at least, has “lagged behind” the performance of Western Europe and the United States. This has meant not only that the larger world in which Chileans became integrated warped their society in peculiar ways at the time, but that ideas and models drawn since from the “developed” world have distorted the interpretations of the process itself

Until fairly recent decades, industrial development has naturally been linked to social class. In the conventional interpretation, technological change and industrial organization created an accompanying bourgeoisie, but others have noticed that in some cases an urban middle class preceded industry and, indeed, brought it into existence. It is easier now to see the many roads to industry, including the capitalist, socialist, democratic, authoritarian, and, perhaps in China today, even a kind of Smithism-Leninism. In the case at hand, it is important to disentangle industry from bourgeoisie, not to insist that the two go together, or to explain the failure of the former by the absence of the latter. This problem, I believe, has confused our understanding of Chilean history, and its examination, I hope, will sort out a few things while at the same time reintroducing the importance of patterns of elite consumption as an important element in economic underdevelopment. This is linked to the multiplicity of historical times present at once; that is, Chile’s development occurred within a world that had already undergone the process that Chileans were embarking on. The consequences of uneven economic development at a global level were compounded by the sharply segmented nature of Chilean society.

The Chilean Path to Industrialization

Early opinion on Chilean industrialization rested not on empirical investigation of industry itself, but on inferences from governmental policy. As recently as 1965, a standard survey outlined three main stages: the first, running to midnineteenth century, was characterized by incipient growth encouraged by the government; the second, from 1850 to around 1900, represented a period of governmental neglect and regression; and the third, after 1900 and especially after 1930, was the real beginning of industry in Chile as a result of the import-substitution policies of an interventionist state.² According to this view, Chile certainly did “lag behind” Western Europe, the United States, and many other countries as well; but since then the work of Carlos Hurtado, Oscar Muñoz, Henry Kirsch, and Cabriel Palma, based on assiduous archival and statistical work, has completely altered the earlier picture.

In Kirsch’s view, the War of the Pacific (1879-84) gave an initial push to local industry, and, together with intense urban population growth and railroad construction (from 210 kilometers in 1860 to 8,000 kilometers by 1913), industry in fact grew at a steady rate from the 1880s to World War I.³ This industry produced consumer goods, shoes, clothing, flour, and so on, not capital goods. But, as early as 1887 when 6 locomotives and 30 freight cars “that would be creditable to any maker in the United States or England” were under construction in Valparaíso, some heavy industry was present as well.⁴ The first locomotive was built in Chile in 1886 by the state-owned foundry in Santiago, and by 1914, 190 were built by private firms, including the 22-ton engine “José Manuel Balmaceda.” Hundreds of trolleys for the new urban rails, the first Portland cement factory in South America (which became, for a time, the largest in that continent and the fifth largest in the world), steel bridges, textiles, and food-processing factories all contributed to a robust growth that, by 1909, employed some 75,000 in manufacturing. This figure, which does not include thousands of artisans in shops of less than 5 workers, represented 18 percent of the labor force at that time.⁵

Kirsch’s research established an early origin for Chilean industry, and it supplements Muñoz’s 1966 Yale dissertation (published in Chile in 1968) which treated the years 1914-65. Muñoz examined industrial growth in Chile in relation to the models and findings of Simon Kuznets and H. B. Chenery and concluded, with several qualifications and caveats, that “a process of industrialization was occurring” at an annual rate of nearly 9 percent during World War I, at perhaps 3 percent in the ’20s, and then, after a brief decline during the Great Depression, at a steady and strong rate of about 5 percent a year between the mid-1930s and the mid-’50s.⁶ At first glance, this seems impressive, and indeed Muñoz believes, with due allowance made for shaky statistics, that the rate of industrial growth was “superior to the world average.” This somewhat deceptive remark can be explained in part by the fact that any country beginning to industrialize will show initially higher growth rates than mature economies because goods previously produced in home industries begin to show up in industrial data as they come to be produced in slightly larger urban shops, and also because industry yields more to investment in underdeveloped, capital-scarce, labor-rich economies. In addition, Chile prospered rather than being destroyed by two world wars; and so on. But with all this taken into account, and though the rate of industrialization in Chile is somewhat less than one might have expected given the strong overall growth of the Chilean economy after 1880, the fact still remains—as Muñoz points out—that the rate of industrialization from around 1900 to the mid-’50s was “slightly higher than the world average.” Palma’s more recent work supports this, pointing out that Chile’s per capita income in 1914 was around $1,000 (1980 U.S. dollars) and that the 16 percent of the active population engaged in manufacturing (in establishments of five employees or more) produced $168 per capita, “1.7 times superior to a ‘Chenery norm’.”⁷ Although the numbers vary with definition, especially the troublesome business of determining whether an industry is artisanal or factory, Table I gives some indication of industrial development.

As compared to the earlier picture of an essentially agricultural and mining economy up to 1930 and state-led industrial development thereafter, as “development toward the outside” gave way to “import substitution,” the new research thus provides a different perspective. The idea of a sharp break at the time of the Great Depression is no longer valid, and the long period from around 1880 into the 1970s can be seen as a continuum. The question, then, is not so much “why no industry?” (at least before 1930), but why industry did not lead to a more satisfying, balanced, and sustained economic growth? This inquiry leads into the larger world in which Chileans endeavored to develop a national industry and the nature of the social matrix at home.

Industry—Or Its Absence—Before Industrialization

Recent work in European economic history emphasizes the importance in the overall path to industry and economic development of “industry before industrialization” or the emergence, in the sixteenth to eighteenth centuries, of household production organized and financed by merchants for sale in local or foreign markets.⁸ Was protoindustry present in Chile’s development, or did its absence hinder industrial development? This question has not yet been raised in studies of Chilean economic history, and it is sketched out here to illustrate a good example of the multiplicity of historical times and the consequences of uneven development.

Let us begin with the long view. For millenia before Columbus, the people of the central Andes (today Peru, Bolivia, and Ecuador) had many advantages over other native Americans through the possession of woolbearing cameloids, mainly the llama and alpaca, but also occasionally the undomesticated vicuña and guanaco. These wools, added to native cotton, permitted a long tradition of homespuns, including the drop-spindle technique and primitive weaving. Sixteenth-century Spaniards added sheep and European varieties of cotton, and encouraged the development of rudimentary obrajes. Local tradition and techniques wedded to colonial compulsion made the central Andes well known for textiles, and, as the colonial economy developed, the distant kingdom of Chile began to exchange wheat, hides, and tallow for Andean woolens. This meant that, as Chile moved to independence from Spain in the late eighteenth and early nineteenth centuries, the country imported most of its cloth—not, however, only from Peru and Ecuador but also legally and illegally from France and Britain. At the same time, thousands of local spinners and weavers produced a rustic and coarse cloth for household use that was sold at local markets. ⁹

Much of this production is statistically invisible, but several observers testify to the presence of crude looms as a normal part of rural households throughout central Chile in the early nineteenth century. One Urízar Garfías was struck by the extent of household industry in the province of Maule, where, although there were no formally established textile industries, there was considerable activity in making bayeta [a coarse woolen], wool socks, capes, and ponchos.” The keen-eyed Lieutenant Gilliss found, as late as 1852, that a “large proportion of the ponchos, blankets, church carpets and rugs, and coarse cloths are…of domestic manufacture showing that the poorer classes of women are not idle beside their spinning wheels and hand looms.” At about the same time, a Talca newspaper estimated annual output of that central province at some 36,000 yards of cloth and 12,000 ponchos.¹⁰ All of this is corroborated by the census data on professions which show more than 80,000 female spinners and weavers (hilanderas and tejedoras) in 1855, including some 35,000 in the heartland central provinces from Aconcagua through Talca.

But, just at this time, when because of population increase and a steadily growing economy one might expect a development of local industry, when merchants might have begun to finance and organize the output of thousands of local spinners and weavers, the relentless march of Lancashire cottons and woolens came to replace not only the finer cloth trade—previously dominated by imported Peruvian and Quiteño cloth— but the homespuns as well. By 1875, there were only 13,300 spinners and weavers in the central zone, and, by 1895, their numbers had shrunk to 4,431.¹¹ Deeper in the provinces, where high transport costs offered protection, thousands of women, judging without calculation their opportunity costs at zero, continued in the “hours before meals” to spin and weave for their own household’s consumption. However, where the new railroads and better cart roads opened the country to British imports, spinners and weavers practically disappeared (see Table II). The better-off Chileans had always preferred imported to local manufactures, and would continue to do so, but in the 1860s, even the humble women in the countryside preferred to sell their wool and “cover themselves with the cotton cloth the foreigners—above all the English—bring in at low prices.” ¹²

Scholars have long recognized the key role that textiles played in industrial development, but contemporaries were also aware of this. Both Salas and Cos Iriberri, in the late eighteenth century, tried to promote the cultivation of flax and hemp and the elaboration of cloth and rope from these fibers. In 1804, there were independent efforts to establish textile factories. A Swiss, Santiago Heitz, seems to have been the first to try, but his efforts soon collapsed. By 1870, only one important mill, founded in 1850, was still in business in the capital city, and it “up to now [1870] has not produced satisfactory results.”¹³ The Buena Vista woolen mill in Tomé, near Concepción, founded in the midnineteenth century by a North American, Délano, had a discontinuous history but was in operation in the early twentieth century, as was the British-owned Chiguayante cotton works also near Concepción; and several import houses had their own small knitting mills. But the textile industry came late to Chile, and not until the 1930s and the arrival of “Los Turcos” or Christianized Palestinians was there a modern, integrated textile industry in Chile.¹⁴

Thus, we do not see here the progression that underlay industrial development in northwestern Europe of household production to the merchant capital phase of “protoindustry,” and, finally, to a self-sustaining integrated modern textile industry. Apart from the question of taste and socially determined consumption to which we shall return, the explanation for this lies essentially in the pattern of uneven development in the Atlantic economy. When cottagers in the Low Countries or England began to move from household production to protoindustry in the late sixteenth century, they faced no more efficient producers than themselves, no ships laden with cheap cloth waiting just offshore. But by the time protoindustry might have emerged in Chile, and possibly have led into an efficient national industry—creating along the way a more prosperous rural economy, ready to buy the output of a nascent industry—the mature output of the world’s most efficient textile industries was pouring through the ports of Valparaíso and Concepción to obliterate the rustic local product. To hold back this flood would have required an enforced tariff and a political will that are difficult to imagine given the class interests of the most powerful political groups in the country in the early nineteenth century: the great landowners, merchants, and miners who were interested in the freest trade possible. The political climate would begin to change with the emergence of new social forces later in the century, and especially after 1930; but nearly a century was lost, and the opportunity gone for local, organic development of the key textile industry. Going into the late nineteenth century, Chile remained as it had been in the late eighteenth. Rustic spinners and weavers deep in the provinces made rude cloth for the needs of their own households, hut the bulk of the market for textiles was supplied by imports, now from Great Britain. The national textile industry remained undeveloped, in either protoindustrial or full factory form. Even the coarse sacks for grain were imported by the millions from India.

A second example of uneven development may be found in flour milling. In the Mediterranean, flour milling developed slowly over some five millennia. From the saddlestones of the Egyptian Third Dynasty there evolved lever and hourglass mills, querns, and revolving millstones. These were adapted to animal power, which, in turn, opened the way for water-powered mills, and, in the last century before Christ, this new technology spread from the eastern Mediterranean through Greece into the Roman world and then outward through the rivers of Europe. Acceptance of these mills was discontinuous and hesitant, as Marc Bloch’s marvelous article on the subject shows, but water- and wind-powered mills were steadily perfected, and, by the sixteenth century, grain mills became Europe’s “heavy industry.” Their widespread use marked the beginning of the breakdown of the traditional world; “it was the distant announcement of the Industrial Revolution.”¹⁵ Since postconquest Chileans, unlike the high-culture maize societies of Mesoamerica and the central Andes, were primarily wheat eaters, a provincial variant of the milling technology described above came with the early Spaniards. By the midnineteenth century, flour milling was a flourishing business, especially in the south-central zone between the fluvial port of Talca and Tomé on the coast near Concepción. Foreign capital and technicians helped make Chilean mills technologically equal to any in the world at that time, and elevated the Talca millers and merchants into a powerful provincial interest group. There were several attempts to improve the ocean port of Constitución that served the industry, and local millers supported by a few Valparaíso merchants formed a company to operate steam tugs.¹⁶ But the tremendous changes in milling introduced in Minneapolis and Budapest overwhelmed smaller producers, and, even on the distant Pacific coast, Chilean mills could not compete. By the 1890s, flour imports were common and the domestic market had to be protected by tariff.

At this moment then, when an independent Chile might have taken stronger steps toward the development of protoindustry in textiles and flour milling, both of which played key roles in European industrialization, these activities were overwhelmed by foreign competition, which delayed the emergence of rural industry and provided no base for later development. The brief political challenge presented by the energetic artisan and milling interests of the southern provinces was put down in two armed conflicts in 1851 and 1859 by the central government dominated by the great landowners of Santiago. The broader “insurrectionary alliance” of those years included artisans, laborers, yeoman farmers, small holders, mineowners in the north, and, most prominently, such southern mill owners as Juan Antonio Pando and Roberto Souper, who pressed for state assistance to the milling industry, break-up of the large estates, and the “rescue of our rural classes from abject servitude.” For Maurice Zeitlin, the civil wars of the 1850s were a “crucial turning point” in Chile, since their defeat amounted to the “virtual suppression of an alternative and independent path of capitalist development.”¹⁷

Whether this is true must remain, of course, a matter of intelligent and provocative speculation, but we do know that out of the 1850s emerged the powerful political forces that determined state policy for at least the next two decades. These forces were the great landowners of the central valley, together with the main urban merchants. Their class interests naturally led them to promote free trade. The landowners wanted markets in Peru and England (exports to that country reached a peak in 1874) for their grain, and the idea of agreeing to import duties on their consumption “would be worthy of a madhouse.” As for the great merchants of Santiago and Valparaíso, “who could imagine them defending the notion of import duties to promote national industry?”¹⁸ Not only this, but whatever success the “insurrectionary alliance” might have had in forming policy, any attempt at industrial development would certainly have encountered formidable obstacles in the archaic countryside where, in 1850, some 80 percent of all Chileans lived.

Internal Market

Chilean population grew at an annual rate of 1.33 percent between 1865 and 1930, below the U.S. rate of 2.08, but well above the European rate of. 83. Moreover, there was substantial rural-urban migration, so that, by 1930, nearly half of Chile’s population lived in cities. These rates of growth and urbanization are well above those considered appropriate for economic “takeoff” by W. W. Rostow, but in absolute numbers the urban population was small by the standards of other industrializing countries: only 398,000 in 1865 and just about 2,000,000 in 1930¹⁹ In the early stages of industrial development, the rural market thus had to be important, and it is here that we encounter one of Chile’s most intractable obstacles to growth. At the end of the colonial period, Salas could not fail to notice, even by contemporary standards, the deep inequalities of income distribution: “Nothing is more common than to see in the very fields that have just produced abundant crops, the arms of the workers who have brought in the harvest extended to beg for alms and bread.”²⁰

From these beginnings, from this colonial inheritance, economic and social relations in the Chilean countryside changed at a snail’s pace. The search for appropriate descriptive terminology for this history runs from the older “feudal” to the dependency school’s “capitalist” to the hedging “semifeudal” or “seignorial,” but all of these can be accommodated in Pablo Macera’s scheme for the structure of the hacienda or great estate, the dominant institution in Chilean rural society.²¹ In this view, the hacienda is Janus-faced. Toward the external front, toward local or international markets, the Chilean landowner, often resident in Santiago, negotiated the sale of his produce for cash, obtained credit from hanks, and strove to make a profit. In short, he acted like the capitalist he was. But toward his workers, toward the internal front of his enterprise, he was a semifeudal seigneur. He paid his workers in kind or tokens, and endeavored to gain a precapitalist obedience through a paternalism at best benign and at times tyrannical. Everyone observed the peculiar institution of the Chilean countryside, but no one did anything about it. Service tenants (inquilinos) and day laborers remained unorganized and impoverished. By the late 1930s and into the ’40s, organized labor threatened to extend its influence into the countryside, and rural workers began haltingly to develop an “exacting temperament” and push for better salaries and working conditions. As this occurred, the landowners rattled the saber of higher agriculture prices, and it became obvious to urban politicians that if higher food prices were permitted they would cut into the earnings of the industrial sector then being promoted, and create political problems with the urban mass. Under these circumstances, the industrialists, the proletariat, and the landowners struck a mutually beneficial bargain at the expense of rural workers: the landowners agreed to accept controls on agricultural prices in return for a hands-off policy by the Marxist parties in the countryside. Rural workers were not permitted to organize and protests were squelched. Archaic social and economic relations in the countryside thus persisted into the midtwentieth century. This is indicated by the 1954 law that required landowners to pay at least 20 percent of their workers’ salary in cash; a measure, by the way, stoutly resisted by the workers themselves.²² Obviously, a rural economy in which workers are paid 80 percent of their wage in rations of food, rights to pasturage, or tokens for the company stores does not offer an enormous attraction to market-seeking entrepreneurs.

Thus, the Chilean path to industrialization does not rise out of an artisan past, cross over the long bridge of protoindustry, and broaden onto the highway of self-sustained growth. Rather, like mining, it begins quite abruptly and almost accidentally, and it retained a certain enclave character, threatened, if we may change the metaphor in midstream, by the high title of foreign competition on one side and restricted by the shallow bog of rural poverty on the other. Within this fairly narrow space, however, industry did develop, rapidly promoted to a surprising degree by foreign immigration. In the early nineteenth century, the British, Germans, and French had moved into the commercial vacuum created by the break with Spain, and, by 1850, about 60 percent of the principal merchants in Valparaíso and Santiago were of those nationalities. Later, although Chile did not attract working-class migration from Europe, some 80,000 foreigners, mainly Europeans and North Americans, settled in the country, an extraordinarily high percentage of them with money and entrepreneurial ambition. By the end of the century, their talents and capital were turned to industry. As of 1914, some 56 percent of all industrial establishments in the country were owned by foreigners, without taking into account the many others owned by children and grandchildren of foreign immigrants who had, by 1914, become economically Chilean.²³

As others have noticed, industrialists in Chile emphasized consumer rather than capital goods, and they bent their efforts to obtain exclusive rights or monopolies. By the 1890s, they had support not only through tariffs but also from the protection afforded (especially before the opening of the Panama Canal) by high freight rates. In the work of Muñoz, Kirsch, Hurtado, and Palma already mentioned, the years from the War of the Pacific to the 1950s emerge as a period of unbroken industrial growth.²⁴ Unfortunately, however, the inherent obstacles still existed in the 1950s and ’60s, and beyond the objective, quantitative fact that industrial expansion had by then reached certain limits and growth had leveled off, the economic expectations of all social classes were nevertheless much higher than a century earlier. As Hurtado puts it, “We were backward with respect to Europe in 1810 and we continued to be backward in 1950.” Although it is hard to tell whether the gap widened or closed over that period, few people were concerned with the question in 1810, but everyone was 150 years later. And, of course, this often resentful awareness brought wholly new political forces into play after 1964.²⁵

In Search of the Chilean Bourgeoisie

On the phone recently with a nonacademic friend, I explained that I had to hang up in order to attend a talk called, “In Search of the German Bourgeoisie.” “Why don’t they look in Marbella?” he asked. Academics, in fact, have looked everywhere for the Chilean bourgeoisie. Quite a few were apparently found in Paris in September 1891 celebrating President Balmaceda’s suicide, although some investigators have concluded that a bourgeoisie never existed at all. In the last analysis, it becomes a matter of definition. Industrialists, merchants, and financiers clearly did exist in Chile. The significant question is whether these groups together or any one of them formed a self-conscious class with its own coherent project of national development. To elucidate the matter, my purpose here is to examine the complex and reciprocal relationships among industry, social class, and the state, while keeping in mind the various foreign models, implicit and explicit, that not only deeply affected the nature and values of the Chilean upper classes at the time but have recently guided academic discussion as well. It is important here, then, to set out the main features of the constantly changing, generally expanding, rarely harmonious groups of (mainly) men who dominated Chile over the past century and a half.

The Formation of a Preindustrial Elite

Any explanation of class formation leads inevitably back to the countryside, because in Chile, beginning in the midsixteenth century, the conquering Spaniards found a rare niche in the American landscape that reminded them of their own Mediterranean world, and, in the subsequent three centuries, they formed an agrarian society that has been a distinctive feature and persistent burden in national life. By the last third of the nineteenth century, with the consolidation of the republic, the Chilean leaders who had inherited the colonial world made up a sophisticated preindustrial urban elite that faced in two directions at once—simultaneously attracted by two distinct sets of values, torn by dual political impulses, and tempted by irresistible models of foreign consumption. To put this in a certain perspective, let us consider for a moment other colonial regimes, say eighteenth-century India or nineteenth-century Kenya or Indochina, where a thin layer of British and French remained culturally distinct from the conquered masses, and were unsuccessful in leading or even surviving national independence movements after World War II. A quite different example may be found in colonial North America, where the original European settlers obliterated or pushed aside the native population and segregated the blacks, and where the “creole” leaders eventually formed a more or less homogeneous culture out of the rest—whom, of course, they led to independence.

Compared with this, in Chile as in much of Latin America, the conquerors and their descendants occupied a decidedly ambivalent position. From the beginning, from their urban outposts in America, they had looked to Spain, and then, in the nineteenth century, toward France and England for ideas, culture, and manufactures, all the while maintaining a mixture of gruff affection, bemused paternalism, and outright contempt for their humble compatriots on whom their own livelihood depended. Race was always an important element in the social hierarchies of Mexico and Peru, and although in Chile the native population and the handful of blacks present in the eighteenth century have been much more assimilated than in those countries over the past two hundred years, in the midnineteenth century Chileans, too, commonly thought in racial and racist terms.²⁶

But if the dominant groups in Chile were separated from the masses by race and culture, they were also bound by race and culture; for if the former were whiter than the latter, they were of the same religion and spoke the same language. Precisely because they could be confused with the common people, the upper groups strained to set themselves off from them by embracing with fervor everything European, and especially French and English. In the independence movement itself and in the founding of the new states, one can see the curious ways that foreign models affect segmented colonial societies. In the formative years of the early nineteenth century, the Chilean elite did not turn to its own people with the introspective nationalism of, say, the United States in 1790 or the newly independent countries of our own day, but, rather, was “uncompromisingly outward looking, avid to learn and imitate anything coming from France or Britain.” Indeed, the normal process of emancipation was reversed, as “independence came first and nationalism followed” —another instance of the curious inversions so characteristic of societies peripheral to, but strongly attracted by, the rhetoric of foreign models. It is hard to exaggerate the attraction that Paris and London came to have for the Chilean upper classes. Benjamín Vicuña Mackenna thought that those two cities dominated the world, “Paris because of her intelligence and social influence, London because of her wealth and material power. I think that if by magic these two empires could be united, Rome would be resurrected.” Sergio Villalobos’s recent essay shows in elegant and telling detail the attraction of Paris fashion for the Chilean elite who carried, frequently to ludicrous extremes, their adoration of French food, dress, and architecture.²⁷

The fullest picture of the nineteenth-century Chilean elite and its collapse into frivolity and self-caricature may be found in Gonzalo Vial’s sprawling, brilliant, intuitive, and recent Historia de Chile. In this work, the industrious and modest landowners who formed the core of the older elite succumbed to the temptations of urbi et orbi; the first represented by a modernized Santiago made more attractive by gas and electricity, and the second by London and Paris made more accessible by steam and rail. Newly rich bankers and miners “decorated themselves” with the purchase of rural estates (fundos) to join the elite. And many traditional landowners, previously tied to the land in a rustic and not wholly unaffectionate compact with their workers, now became absentee owners, “consumed their fundos” through mortgage loans, built garish mansions in Santiago, made certain that nothing in the house was of local manufacture, and took elaborate vacations to Europe. In Vial’s work, the extranjerización—the “foreignizing” —of the Chilean elite is not explained, but it is persuasively described. Of course, not all those in the older, austere aristocracy fell victim to easy wealth and gave themselves over to sloth, ostentation, and frivolous imitation of things foreign, but, by the end of the nineteenth century, the decadent elements of the elite “set the tone” for the country as a whole. Not unnaturally, the arrivistes created by nitrate and commercial wealth clamored for admission to the charmed circle, and, to the extent that they were successful, widened the space available for the entry of foreign industrial entrepreneurs. In Vial’s view, the “middle class” in the early decades of the twentieth century was hardly a class at all, but rather an amorphous collection of public employees, petty entrepreneurs, and small farmers, excluded from power and subject to the withering contempt of their insecure social betters.²⁸

While the thin oligarchic veneer of landowners, entrepreneurs, writers, and painters knew the streets of Paris as well as their own, ordinary Chileans were unaware even of the existence of their own country. “The inquilino,” wrote an eyewitness in the 1860s, “has no idea where England or Spain or France might be… [H]e believes himself to be indigenous to his hacienda, and if he were transported to Paris or London and interrogated there as to the country of his birth… he would answer not Chile but Peldéhue, Chacabuco, Huechún, or Chocalán.”²⁹ Domingo Sarmiento, the great Argentine writer and later president, put the distinction between Europe and America as “Civilization or Barbarism,” and if the Chilean landowner had less repugnance for his peons than did his Argentine counterpart for the violent gaucho, he hardly saw them as fellow citizens.

While the thin oligarchic veneer of landowners, entrepreneurs, writers and, painters knew the streets of Paris as well as their own, ordinary family. To a certain extent, this was because the Chilean countryside is a delightful place to live, with its pastel-shaded hills and delicious climate. In the last half of the nineteenth century, grounds, gardens, and fountains were added to make several haciendas veritable showplaces for retreats, honeymoons, and social bases for politics. So here is yet another contradiction: if, by the late nineteenth century, Chilean agriculture was becoming increasingly commercialized, and its owners edging less gingerly into the rapid currents of Chilean capitalism, the attraction of a place in the country and the ownership of a proper estate where archaic working relations and obedient workers remained anchored in the seventeenth century still exerted a powerful pull on both traditional owners and the newly rich. This can be seen by the new names in lists of landowners.

In 1882, on the eve of the enormous expansion of the Chilean export economy, the Mercurio of Valparaíso published a list of the wealthiest people in Chile, 59 “millionaires,” as proof of the possibilities available through order and effort in a free country.”³⁰ Some writers have used this list to show the relative insignificance of agriculture as a generator of individual wealth, since less than half were landowners. But the more interesting point is not that only 20 made their fortune in agriculture, but that the remaining 39—designated as miners, bankers, and capitalists—subsequently invested their earnings in rural estates. This would be comparable to Andrew Carnegie sinking his steel income into Scarlet O’Hara’s plantation. The analogy may seem far-fetched in the United States, because by the time Pittsburgh steel was one of the engines of industrialization, the southern plantation economy had been shattered by the Civil War. But in Chile, at the comparable moment in its history, the “South” had won. This is perhaps more true in a cultural than a political sense, for if it is true that the 1891 Civil War in Chile kept the great landowners in the political saddle, they were dependent on coalition and alliance with other factions; but there is no doubting the powerful social model exerted by the landowning class along its urban-rural nexus.

The flow of capital from mining, banking, and even industry to the countryside is a long-acknowledged impression, indeed a commonplace in historical literature and even, as Isabel Allende shows in her recent The House of the Spirits, an enduring notion in fiction as well. There is no close economic analysis that might show the relative rates of profit in agriculture and industry, or the degree to which this pattern of investment inhibited the formation of capital. But two elements of this process should be emphasized. First, the development of the nitrate export sector was sudden and accidental, induced from external demand, not a slow and organic outgrowth of Chilean society; thus it occurred at a time when the values of a conventional landed society were still dominant. Second, the rise of mining, and later even of industry, did not elevate to political power a class deriving from those activities. Mining was largely under the control of British investors, and, later for copper, of North Americans. To be sure, some individual Chileans operated mines, but, more commonly, Chileans participated as workers and through the mediation of the state which taxed exports and channeled revenue into private and public activities. Chilean bankers, lawyers, and accountants in support, but on the fringe, of nitrate and copper mining made money, as did government officials in the new bureaucracies surrounding mining, yet the road to social prominence for them still led through ownership of land.

Industry, as we have seen, grew steadily in these years, but as we have also seen, and just as in mining, Chileans themselves did not form the core of this emerging sector. Thus, the strong growth in mining and industry had the paradoxical effect of consolidating the agrarian oligarchy, an indication of which can be seen in the economic interests of Congress. About one-half of all deputies and senators in 1875 included among their assets a large estate, and after a quarter century of strong mining and industrial growth, nearly 60 percent did so.³¹

In 1890-91, the new social forces generated by late nineteenth-century development came into conflict in a fierce civil war that left some 10,000 dead and the efforts of a progressive and somewhat quixotic president in ruins. Balmaceda’s attempt to promote a “bourgeois revolution” from above found support among some entrepreneurs in industry and mining as the Chilean dominant classes split, as they had in 1851, along economic lines. Balmaceda’s defeat left British interests intact in the nitrate north, and denied Chilean copper miners the state support that might have enabled them to develop the huge deposits of lower-grade ore that came under the control of Kennicott and Anaconda a decade or so later. Whether industry would have taken a different development path had the Balmacedistas won the civil war is another question.³² For beneath the political struggles over economic policy were deeper, more intractable cultural features that bring into question the ability of Chileans to form a genuine bourgeoisie and carry through a program of modern economic development. For these more subtle, imprecise, yet undoubtedly fundamental issues, let us turn briefly to a number of Chileans who, over the past century, have reflected on them.

Chilean Explanations

In 1878, a brilliant professor, economist, and member of Congress, Miguel Cruchaga, assembled the data then available on population, tax revenue, and natural resources, and, together with a close study of law and legislation on economic matters, produced the best nineteenth-century analysis of the Chilean economy. Cruchaga’s understanding of industrial growth sounds for all the world like the schemes set out a hundred years later by development economists: “From primitive societies,” he wrote, “the slow but free action of men leads to agriculture, then to domestic industries auxiliary to agriculture, and the slow growth of urban population and industry.” An improved agriculture, then, permits greater output with less labor, and workers are freed for more industry until finally the process “procures for concentrated urban populations the joys of a florescent civilization.” Cruchaga was also painfully aware of how the “path of our own industrial organization is notably different from that of other countries. “The explanation for Cruchaga and other liberals of his age began with the nature of Spanish colonialism. “We tore from our cities the shield of Castile but we did not get rid of…the economic system that was imposed upon us.” By this, he meant the system of large estates and their subservient labor force, the emphasis on mining, the lack of industry, too many doctors and lawyers and no businessmen, and wasteful, conspicuous consumption; “the spirit of saving did not arrive at our shores.” Unlike his contemporaries in Mexico or Colombia, Cruchaga does not list the church among his obstacles to development, perhaps because in peripheral Chile the church was less economically important than in the core areas of Spanish America. ³³

Writing on the eve of the War of the Pacific (1879-84), which gained for Chile the rich mining district of the north, Cruchaga could hardly have imagined the impact that nitrate and copper exports would have on the strueture of development. Within two decades, nitrate exports were the powerful motor of the Chilean economy, and, although British investors came to dominate this industry (Chileans controlled between 20 and 40 percent as of 1900), a steadily increasing tax on exports yielded to the Chilean state a torrent of revenue that was directed into education, railroads, and urban modernization. By 1914, consular reports from several countries, books by enthusiastic travelers, investors’ handbooks, and a number of stunning, slick-paper promotional volumes all gave the impression, superficial as it turned out, that Chile, among all nations in Latin America, was especially blessed and clearly on the road to prosperity and the “enjoyment of a flourishing civilization.”³⁴

In the midst of this “dance of the millions,” the high point of what would later be called “development toward the outside,” another brilliant critic, the acute, maddening, trenchant, stubborn Francisco Encina, whose cantankerous twenty-volume Historia de Chile is one of the monuments of Chilean historiography, wrote a little book called Nuestra infe rioridad económica: Sus causas, sus consecuencias (1911), which aimed to delve beneath the gloss of apparent well-being to what he called the “veritable pathological state” of Chilean development.³⁵ Encina had little patience for his colleagues who debated the relative merits of paper money or the gold standard and the inadequacy of the banking system. At the time, Encina wrote, many Chileans—”distinguished economists and politicians”—were divided over the issue of tariffs. For many, the “excessively protectionist” rates restricted economic growth. The current orthodoxy, of course, derived from the powerful ideas of comparative advantage: high tariffs inhibited the acquisition of equipment necessary for mining and agricultural production, raised prices of imports and artificially created a number of local industries that produced items of had quality at high prices. Against the free trade arguments, a vocal and growing minority, prominent among them Malaquías Concha and Tancredo Pinochet, cited Frederick List and pointed out that no country had managed to industrialize without protection from competition, and pushed for a political economy that would create local industry.

Encina, although a qualified protectionist, rejected all the conventional arguments as merely superficial and transitory. Economies had flourished or decayed under both metallic and paper money regimes, he pointed out, and, moreover, economic history revealed no example of a country ruined by excessive tariff protection. At the same time, the experienced and keen-eyed Encina observed that in Chile the most protected industries did not fare so well as those exposed to foreign competition. In fact, the Chilean tariff of partial protection was neither chicha ni limonada—neither fish nor fowl—and did whatever it was intended to do imperfectly. In any case, “our economic inferiority derives from very different causes.” For Encina, the causes were less complicated than they seemed to others, hut at the same time deeper and less susceptible of solution. They lay in the social psychology of the people themselves, in part a result of the “detestable and inadequate education they receive.” If Chileans were vigorous soldiers, and more or less capable of agriculture, they totally lacked the requirements for industrial life. Although it is difficult to quantify or even to research the question of values, more than one sharp-eyed Chilean, including both Cruchaga and Encina, are persuasive in their strongly held opinion that their countrymen in the late nineteenth century “lacked absolutely” the values and aptitudes required by industrial society. Encina bitterly remarked on the ironic contradiction of Chile at the turn of the century: that a country inadequate for agriculture and suitable for industry should be inhabited by people avid for the first and incompetent for the latter.³⁶

Primitive Producers, Civilized Consumers

Capital formation is an important element in industrial growth, and much has been written about the pernicious effect of unequal exchange and adverse terms of trade on societies peripheral to the capitalist centers. The effect of patterns of consumption as distinct from patterns of production—the impact of “import economies” as well as export economies— has been less noted. But, once again, we must recall that the enormous increase in national income created by the export economy, distributed unequally toward the upper reaches of Chilean society, took place while the country’s own productive base was primitive. The models for consumption, and the goods themselves, were found outside the country, especially in Europe, and, thus, the Janus-faced Chilean elite, whose social and political ambivalence has already been discussed, found it entirely natural to adopt the tastes and fashions of Paris and London, while turning a disdainful eye toward the inadequate products of its own people.

Educated Chileans read and traveled, but, paradoxically, their adoration of Europe diminished capital formation at home. As their incomes grew, they wanted “to dress their peasants with ponchos of English wool, ride in saddles worked by the best leather makers of London, drink real champagne, and light their mansions with Florentine lamps. At night, they slept in the best English furniture, between sheets of Irish linen and covered with English blankets. Their silk shirts came from Italy, the jewels that adorned their women from London.”³⁷ Horace Rumbold, British consul in Santiago, was impressed “by the clatter of a smart brougham or well-appointed barouche that might figure with credit in the Bois de Boulogne…and well-dressed, refined looking women gliding along” where “the models of elegance are all French.” But Rumbold also noticed that the luxury of Santiago was “out of due proportion with the power and resources of the country of which it is the capital.” Along with an immodest taste for foreign goods was contempt for local products. “When price and quality are the same, we invariably prefer the article of foreign provenance, “wrote Encina, and, in fact, “for a local manufacturer to attempt to sell his product he must attach labels that simulate foreign origin.”³⁸

The greatest zeal for foreign goods was found among the newly rich bankers and miners, thrust to unprecedented economic heights by the nitrate boom, but they were quickly imitated by nearly “the entire high society.”³⁹ The two main categories of luxury consumption—both in effect “imports”—were foreign goods and foreign travel. There is no systematic quantitative or comparative study of either, but outraged critics and joyful consumers alike agreed at the time that spending of all kinds had reached unimagined levels. Vial details the multitude of “palaces” and huge new houses of French design and imported furnishings, the imports of silk and velvet, and the pianos and jewels. Chileans, in other words, had acquired French tastes; both Chileans and French purchased the same products. Unfortunately for Chile, however, the products were made in France and led to French, not Chilean, growth. A final example reveals both the extranjerización of the Chilean elite and the juxtaposition of social times. In 1887, Don Francisco Undurraga left with his wife and several children (one of them a few months old) for Europe. They were accompanied on the ocean liner by the children’s tutor, a cook, the wet nurse, a recently delivered female burro (in case the wet nurse failed), together with 50 bales of hay for the burro’s feed during the long journey. Vial concludes, with Encina, that the elite’s self-abandonment to luxury consumption at the turn of the century created a veritable financial “hemorrhage” that undercut Chilean economic expansion. ⁴⁰

Given the class structure, it follows that the tastes and patterns of consumption developed by the Chilean elite as a result of its veneration for European culture were slow to diffuse into the society as a whole. In Great Britain, fashion and consumption spread rapidly from London to “penetrate even the villages and farmhouses.” But this pattern, deriving not only from higher and more evenly distributed incomes but also from low barriers to mobility and looser definitions of status, was unusual even in European economies. In this, as in so many other social features, Chile resembles the patterns of Eastern Europe, especially in terms of social reference groups (like Chileans, the nineteenth-century elites of Hungary and Rumania looked to French and English hautes bourgeoisies for their models) and in the deep cultural divisions between urban and rural societies.⁴¹ As we move into the twentieth century, of course, these divisions begin to break down and more homogeneous patterns of consumption emerge.

The enormously skewed pattern of income distribution apparently did not encourage saving and capital formation among the Chilean upper classes, although this factor—like many others—is difficult to quantify. Cruchaga believed that the absence of a “spirit of saving” in Chile was a deep-seated problem that derived from Iberian precedent. Whatever the case, he believed that Chile, in the 1870s, was “one of the less prepared” in the world to undertake the “labor of saving,” because the more educated part of the population had “deeply rooted habits” that were contrary to those needed for the formation of capital. Moreover, the effect of luxury consumption was aggravated by “the marked preference for foreign over local products, one of the principal reasons for the persistent trade defieit.”⁴² “These general habits,” Cruchaga noted wryly, “have not been improved by legislation.” By the end of the century, as trade, industry, and mining were passing into foreign hands and the “social problem” emerging in urban slums, the Chilean elite acquired its enduring fame as a clase derrochadora or “squandering class,” an image that is caught best perhaps in Luis Orrego Luco’s brilliant Casa grande (1907) but appears in more than one contemporary novel, and is given high relief in the works we have seen.⁴³ Toward the end of the century, the future rector of the National University summed up the voluntary dilemma of his countrymen: they are, he said, “civilized consumers but primitive producers.”

Failed Bourgeois Revolution?

Does this complex of attitude and practice indicate the absence of a “self-conscious, national, industrial bourgeoisie” dedicated to capital formation, entrepreneurship, and growth? This fundamental conclusion grew out of the agonizing reappraisal brought about by the failure of post-1930 policies of industrialization, in which the state endeavored to promote somewhat more energetically than before, through tax concessions, public investment, and tariff protection, the industries that would produce at home the items previously imported. By the mid-1960s, the “import substitution” economy had leveled off to stagnation, and a number of people looked for explanations beyond the analyses associated with the Economic Commission for Latin America (CEPAL in its Spanish acronym) or the emerging dependency school. Like Encina in 1911, they sought explanation less in economic than in the deeper, and unfortunately more intractable, phenomena of culture.

For Claudio Véliz, industrialization in Chile was “neither the product of the activities of a rising industrial bourgeoisie nor has it produced one.” Rather, in Chile, the state, or a kind of bourgeoisie d’affaires deriving from a preindustrial urban culture, supported (especially after 1930) the process of industrialization: it “granted licenses, encouraged doubtful ventures, and channeled foreign exchange and public credit in the direction of … friends, relatives, and political supporters.⁴⁴ Yet, Véliz continues, “there was no cultural or religious infrastructure behind [this elite’s] association with industrial ventures, there had been no commitment to austerity or general reforms and improvements in the educational system leading to substantial technological innovation, but most important of all there was no cultural ethos associated with the task of industrialization.” There was consequently no “creativity in mechanical craftsmanship, industrial design, technical innovation…” “It would not be possible to write a book on the art of Chilean industrialization,” he wrote, “because there is none that is not unashamedly derivative on a straightforward imitation of foreign industrial design.” During these same years (post-1930), Véliz points out, Latin America produced “towering figures in the arts, literature, music, and architecture, but none who could without hesitation be identified with a ‘culture of a rising industrial bourgeoisie.” Nowhere in the voluminous work of Pablo Neruda, for example, does the word “industry” appear. Unable or unwilling to create their own industrial culture or a set of values, Chilean industrialists were obliged “to embrace the culture of the traditional upper classes.”⁴⁵ The political force of a nascent industry was therefore blunted, and the “bourgeois revolution” not carried through.

But what in all this is Véliz’s model? What cultural and political conditions would have permitted Chileans to carry through a satisfactory development? The model is obviously Great Britain and Western Europe, homelands of the “conquering bourgeoisies.” There, in the course of the nineteenth century, an ever more powerful industrial society is supposed to have displaced the landowning aristocracies in politics, and then imposed its cultural values on the nation as a whole.⁴⁶ Presumably, the absence of this process accounts for the obstacles to industrial development in Chile, where, instead, landowners clung to their political power—or at least exercised a powerful veto in matters important to them—into the midtwentieth century and where, as Véliz’s eloquent argument persuades, no clear industrial ethos emerged. If there was a “failed bourgeoisie,” what would a successful bourgeois revolution in Chile actually have looked like?

For Zeitlin, a successful bourgeois revolution in Chile would have reflected the powerful mining interests already present in the Balmaceda government, and furthered their development by promoting at public expense the infrastructure necessary to reduce the cost of transporting and processing ores, and reducing the costs of coal together with the establishment of a state bank for their use.⁴⁷ The loss by Chileans of their own copper mining to North Americans in the early twentieth century is one of Zeitlin’s key explanations of Chile’s “retarded capitalist development.”

If the “bourgeois revolution from above” failed as a consequence of the 1891 civil war, and Chilean mine owners subsequently gave way to foreign domination, the state did provide substantial support for industry. Six years after the defeat of Balmaceda, the tariff of 1897 increased the import duty on most items to 60 percent, more protection than requested ten years earlier by the Sociedad de Fomento Fabril (SOFOFA), and this was followed by general tariff reforms in 1916, 1921, and 1928, “each with a gradually higher level of protection.”⁴⁸ It is true that duty on specific items fluctuated with the pressure brought to bear on Congress by interest groups—high duty on refined sugar to protect two powerful local refineries, the free entry of cotton thread because powerful import houses had local knitwear factories, for example—but although the state did little to help develop a capital goods sector, it was by no means indifferent to the promotion of other industry. In fact, it made some efforts even in basic industry. Offering incentives to French investors in iron and steel works in 1905 and in 1924, the state began to invest directly in industry and marketing organization.⁴⁹ Nor is it by any means certain that more decisive intervention by the state in the 1890s would have accelerated a bourgeois revolution. Encina, a champion of economic nationalism, noticed in his 1911 essay that “protected industries have not developed with greater vitality than those open to foreign competition.”⁵⁰ In all of the recent works of Kirsch, Muñoz, and Hurtado, it is difficult to imagine that the course of Chilean industrial development would have been much different had the “bourgeois political revolution from above” triumphed in 1891. This brings us back full circle to the peculiar way that Chile’s sharply segmented society responded to the temptations offered by old values and new possibilities of consumption.

Newer Perspectives on Chilean Development

Throughout the discussion of Chile’s industrial “failure “runs the assumption of a normal model, that social classes in modernizing societies inevitably come into conflict resulting in the triumph of the bourgeois revolution in some cases and its failure in others. England and France provide the classic examples of success. But in recent years, this model itself has come under heavy attack, and is being essentially demolished by a new generation of historians and social scientists. Today, as Geoff Eley writes, “few historians outside the pages of the Annales Historiques de la Révolution Française would call the French Revolution flatly a “bourgeois revolution” or the ancien régime a “feudal society” with a completely clear conscience. Similarly, “Christopher Hill stands increasingly alone in maintaining the same definition of the English Revolution.”⁵¹ On closer examination it appears that no industrial class in Western Europe in the nineteenth century was able to rule without alliance with the territorial nobility or agrarian classes; few newly rich failed to emulate or aspire to join aristocratic society; and if “we take the ‘rise of bourgeoisie’ to mean the ascendancy of a unified liberal-democratic world view, expressed through organized class consciousness …and secured through control of the state then … the concept might as well be abandoned. “The “failure of a bourgeois revolution “in nineteenth-century Germany has long been seen in stark contrast to England, France, and the United States, but Eley and Blackburn make a strong argument that neither Germany nor Britain possessed a politically triumphant bourgeoisie, and, if this is the case, “where on earth has the bourgeoisie ever ‘risen’?” If recent interpretations of European history are correct, then it seems that historians—and economists and sociologists—of Chile are working with a model of a “normal pattern” of social development in England and France which is not accepted by historians of those countries.”⁵²

Seen in the more nuanced light of recent European interpretations, Chile’s modern history thus does not seem to be a case of “failure” or aberrant experience. Chilean mine owners sank their earnings into rural estates, but so did the Wedgewoods; the industrial arrivistes strove for acceptance by the landed nobilities or oligarchies in Europe as well as in Chile; and if Andrew Carnegie did not buy a great estate in the United States it was because none was readily available. Certainly there are enough examples of conspicuous consumption among the Mellons and Vanderbilts in this country, and, in a longer and comparative perspective, we can see now that the long passage from agriculture to industry in Europe and America was uneven, discontinuous, and evolutionary, even though there is no doubt that the process was different in the periphery than in the homeland of capitalism.

Of course, there is no reason why Chile should conform to, or be measured against, any specific model, nor should its historical development necessarily occur at the same rate or in the same century as other countries. But in this very unevenness of the global economy, when a segment of the peripheral society reflects the tastes and values not of its own countrymen but of the distant metropolis, important distortions are introduced into the process of industrial development. I have tried to indicate the peculiar features in the formation of the Chilean elite that contribute to that distortion. Since elements of the pattern discussed here can be discerned in other countries, distortion in Chile is a matter of degree; explanation, moreover, is made more difficult by the absence up to now of quantitative and comparative information.

Why did a balanced and sustained industrialization not take place in Chile? As in the case of all important historical questions, the reader is left with tentative and partial explanation.

Author notes