Chile – The Political and Economic Crisis of 1891

By | December 1, 2021

The Santa María was replaced by another liberal, Manuel Balmaceda, who tried to restore the unity of the liberal party. When he thought he had succeeded and had a solid majority, he began a policy of heavy expenses: railway construction in the southern provinces for 6 million pounds; construction of schools and colleges for 10 million dollars; the increased fleet of 3 cruisers and 2 deep-sea torpedo boats; creation of the naval base of Talcahuano; new armaments for infantry and artillery and purchase of heavy artillery to fortify Valparaiso, Talcahuano and Iquique. The country was in full prosperity; the momentary crisis, caused by the very sharp drop in the prices of saltpetre, was over; the Antofagasta and Tarapacá fields, after the war interlude,

But Balmaceda had composed a ministry of his own will; he intervened in the elections of 1888 to secure a majority. And here is the clash: the opposition is demanding the establishment of a real parliamentary regime: Balmaceda maintains that the constitution allows him to appoint ministers as he likes, regardless of the majority of the Congress. The fight broke out very violently; the opposition refused to vote on the budget; Balmaceda replied, with a decree, that the budget of 1891 would be identical to that of the previous year (January 1, 1891); then the vice-president of the Senate, Waldo Silva and the president of the Chamber of Deputies, Ramón Barros, took refuge on a warship and started the revolution. The fleet lined up against the Balmaceda: junta), and in vain the Balmaceda mobilized his troops: beaten at Placilla, he had to give up power. On 19 September 1891 he killed himself. For Chile political system, please check

His death left the land free to the junta whose leader, Admiral Montt, was later elected president of the republic. The latter strove with energy and tact to pacify the country, still in the grip of dissensions: in 1892 an amnesty was granted to the Balmacedist officers, who were able to repatriate undisturbed; the local administrations obtained autonomy: the army was reorganized with German officers; finally the fiat currency was abolished and the gold currency was introduced again.

In 1896 Federico Errázuriz was elected president of the republic. At the beginning of 1897 the Chilean attention was absorbed by international issues: border disputes with Argentina: the Tacna-Arica question with Peru; Bolivia’s outlet to the Pacific.

A treaty of 1881 established, in principle, that the border between Chile and Argentina should follow the crest of the Andes and the hip line: but in practice it was found that the ridge and the hip line did not always coincide, that the former would favored Argentina and the second Chile. From this the controversies arose. In July 1898 the situation became critical; then an agreement broke out. The Atacama question was referred to an arbitration court: the award (April 1899) was in favor of Argentina. The question of Patagonia was submitted to the arbitration of Great Britain and the sentence (November 20, 1902), gave satisfaction to both parties, who concluded a treaty, undertaking to refer to the arbitration of the

In 1893, according to the treaty of Ancón, a plebiscite should have been held for the attribution of the territory of Tacna-Arica. Chile did not hesitate to do so, hoping that the weather would improve its state of affairs; Peru argued instead that, since the plebiscite clause remained unfulfilled, the region should certainly return to it. The dispute dragged on for a long time and was only recently settled (see below).

Chile undertook, with a protocol of 1895, to cede the port of Arica to Bolivia, but then offered it the smaller port of Vitor, located south of the first; Bolivia at first preferred to wait, hoping to have Arica, if it remained permanently in Chile. With the treaty of October 17, 1904, she renounced the port and the coastal region, while Chile undertook to pay her an indemnity and to build the La Paz-Arica railway at her own expense, granting Bolivia free transit on its territory.

Of more notable importance, in this period, the internal events. The constitutional order had been changed after the revolution of ’91. The president was declared irresponsible and deprived of the right to dissolve Congress; the latter (made up of the Senate and the Chamber of Deputies) became the arbiter of Chilean political life, the ministry, whose existence depended on the approval of the two chambers, having to answer to him for his acts. In order to avoid any intervention by the executive power in the legislative power, a commission of seven deputies and seven senators was also established which had to sit permanently, even during the interval between one parliamentary session and the other, and which had the right to convene the Chamber.

It was the utter helplessness of the executive power. But what made the action of the parliamentary regime difficult was the internal discord between the parties, which had multiplied in number. It was no longer a question, as in Montt’s day, of progressives and conservatives; now, the Liberal Party alone had split into doctrinal liberals, moderate liberals and democratic liberals. Hence the need for combinations between parties, the difficulties of parliamentary life, the instability of the ministries, which succeeded each other in the short term, under the presidency of the liberal Germán Riesco (1901-1906), of the conservative Pedro Montt (1906-1910), by Ramón Barros Luco (1910-1915), one of Balmaceda’s opponents, and by Juan Luis Sanfuentes (1915-1920).

To increase the precariousness of the political situation, was added the aggravation of social questions. In this regard, Chile is the state in all of Latin America, where they have presented themselves with the greatest violence. The intense industrial activity, especially after the end of the war with Bolivia and Peru, and the annexation of the provinces of Tarapacá and Antofagasta; the large amount of public works carried out (at the beginning of the nineteenth century, large port works, the railway connections through the Andes with Argentina, in 1910, and with Bolivia, in 1913) causing the formation of a conspicuous class of workers, placed social questions in the foreground, the doctrinal formulation of which came from Europe. The contemporary and progressive increase in the cost of living aggravated the problem, which naturally passed into the political field. Thus deficiencies of the parliamentary system and social issues were accumulating a discomfort, which erupted under the presidency of Arturo Alessandri (1920-1925), who succeeded Sanfuentes. The Alexandri program (administrative decentralization, women’s suffrage, separation of the Church from the state, income tax, labor code, government control over the nitrate industry, etc.) could not even be partially implemented due to the opposition of the Union, which had a majority in the Senate. The legislative elections of 1924 did indeed give the majority to the Democrats in both chambers, but despite this, the Congress got lost in sterile discussions and was unable to take the necessary measures to restore a balanced budget and to face the financial crisis. This provoked lively discontent, which on 4 September was the interpreter of a coup d’état of the army. Alexandri resigned (8 September) and the government was taken over by a junta headed by General Altamirano. The congress approved the measures, claimed by the junta, but rejected the resignation of the president, who instead granted a six-month leave: Alessandri left on 10 September for Buenos Aires. The junta dissolved Congress and established a government with dictatorial powers, who issued an electoral law and various other laws to reorganize and restore the administration of the state and local authorities. On 23 January 1925 the provisional government was, in turn, overthrown by a new junta, headed by Bello Codesido, General Dartnell and Admiral Ward, who, recognizing Alessandri as constitutional president, invited him to take power. Alessandri arrived on March 30 in Santiago, where he was welcomed with enthusiasm. A commission, chaired by him, drew up the new constitution which was approved with the plebiscite of 30 August. The presidential election, called for October 24, was preceded by a lively agitation: finally the major parties agreed on the candidacy of Emiliano Figueroa, who was elected by a large majority and entered office on December 23: legislative elections followed, after which the country returned to the normal constitutional regime. But the political environment did not calm down. Colonel Carlo Ibáñez, Minister of War since December 1925, was appointed Prime Minister (February 1927), Vice President of the Republic in April and President (May 22), after the resignation of Figueroa. With the special powers conferred on him, he began a vigorous action against the Communist agitation, and rearranged the finances and administration.

Chile - The Political and Economic Crisis of 1891