Although he is often despised, very little is known of Gustavo Ross Santa María and his policies. Reviled as the “Minister of Hunger,” he served as ministro de hacienda during Arturo Alessandri’s second presidency. Thanks to Ross, Chile’s economy, devastated by the Great Depression, revived, and by 1938 the country’s exports had risen to pre-1930 levels, while the rate of inflation and the external debt had declined.
But for unexpected circumstances, Ross would have succeeded Alessandri to the Moneda in 1938. Alessandri’s brutal repression of a pro-Nazi coup, the infamous massacre of a group of young men in Santiago’s Social Security Building, so infuriated the followers of the Movimiento Nacional Socialista and Carlos Ibáñez del Campo that they voted for Pedro Aguirre Cerda. Ironically, the candidate of the leftist Popular Front triumphed thanks to the efforts of the right wing.
Many historians have argued that Ross had planned to buy the 1938 election. As Fermandois demonstrates, the opposite was true. It was the supporters of Popular Front who tainted the election by illegally preventing Ross’s followers from voting. Ross had considered appealing the election. Instead, acting on the advice of the head of the army and the Carabineros, he remained quiet, returning instead to private life.
Joaquín Fermandois is perhaps the first historian to study Alessandri’s second regime by focusing on Ross’s economic programs. The dour Ross was an aristocrat who had made a private fortune in the world of finance. Despite his lack of training in economics, or perhaps because of it, he managed to balance the budget, increase taxes, reduce inflation, spur construction, stimulate exports, and encourage the use of domestically produced raw materials.
The key to understanding Ross was his pragmatism. Unfettered by any strong ideological conviction, except his belief in the salutary effects of “order,” he had the freedom to experiment. Although it sounds unlikely for someone with his background, he eschewed traditional capitalism while embracing a sort of economic nationalism. Although an economic nationalist, Ross opposed the notion that the state should own the means of production, including the nation’s mines. Instead he advocated that the government stimulate domestic industry through partnerships with the nation’s businessmen and by providing seed money. Thus Ross’s programs clearly adumbrated some of Aguirre Cerda’s economic policies, including the establishment of the Corporación de Fomento.
Ross was also important because he succeeded in taming the nation’s foreign creditors, particularly those in the United States. Thanks to his efforts, Chile won control of the Compañía de Electricidad. He also forced various American bondholders to accept a great deal less than the face value of the bonds they had purchased. Similarly, no matter how much the United States might complain, he manipulated currency controls to stimulate local industry while restricting the right of foreign companies to repatriate their profits. He also negotiated a series of barter arrangements with foreign nations such as Germany, again to Washington’s displeasure.
Using a variety of primary sources, such as the papers of Gustavo Ross; Chilean, German, and American archives; newspapers; and a vast array of primary and secondary sources, including various doctoral dissertations, Fermandois is the first to demonstrate that reforms long associated with the Popular Front are rooted in the work of men like Ross. Useful for specialists and graduate students, this exceptional volume may also appeal to those who specialize in U.S. foreign policy or international economics.