Chile remained neutral during World War I (1914-1918). The nation’s economy boomed because of the wartime demand for nitrates, which were used to make explosives. After the war, Germany began to export synthetic nitrates, and Chile’s export market collapsed. Unemployment surged. Strikes and riots disrupted the presidential election campaign of 1920. Many middle-class people joined forces with factory workers and miners to elect Arturo Alessandri Palma president. Alessandri pushed for political and social reforms, but Congress rejected most of his proposals. He resigned in 1924. Alessandri returned to office in 1925 and appointed an assembly to write a new constitution.
The Constitution of 1925 reduced the power of Congress and restored many presidential powers. It called for the president to be elected directly by the voters. Previously, the political party that had won the most seats in Congress elected the president. The new Constitution strengthened individual rights, including freedom of religion. Church and state became separate.
General Carlos Ibanez del Campo was elected president of Chile in 1927. He enacted many social reforms and borrowed large sums of money to finance economic growth. But he ruled as a dictator and aroused widespread opposition. The worldwide depression that began in 1929 caused severe economic problems in Chile. Ibanez was forced to resign in 1931.
Alessandri was again elected president of Chile in 1932. The country made a slow economic recovery during his administration.
Chileans elected Pedro Aguirre Cerda president in 1938. The next year, the government created an economic development corporation called the Corporacion de Fomento de la Produccion (CORFO). With loans from the United States, CORFO built a steel mill near Concepcion, developed hydroelectric facilities, and established a sugar beet industry.
Chile was neutral at the start of World War II (1939-1945), but it broke relations with Germany and Japan in 1943. Chile sold copper, nitrates, and other war supplies to the Allies. Economic development projects continued during the 1940’s under Presidents Juan Antonio Rios and Gabriel Gonzalez Videla.
In 1952, former President Ibanez was again elected president of Chile. Major issues in the election were food shortages, rising inflation, and falling worker income. Ibanez continued to encourage industrialization, but economic problems persisted.
Salvador Allende Gossens was elected president in 1970. The Allende government quickly took over ownership of the copper mines, many private banks, and numerous other industries. It also planned a broad program of land reform, but many impatient rural Chileans began seizing land illegally before the government program could be set up.
The Allende government approved sharp increases in the minimum wage at the same time that it tried to prevent price increases in consumer goods. Food shortages became widespread. Inflation soared. Strikes became common, and both supporters and opponents of Allende staged violent demonstrations. Opposition from Congress and the middle and upper classes further weakened Allende’s government. Finally, in 1973, military leaders overthrew the government. They said that Allende committed suicide after refusing to resign.
The military leaders formed a junta, led by General Augusto Pinochet Ugarte, to rule Chile. Thousands of Chileans died in fighting that erupted between supporters and opponents of the junta. Thousands more fled the country. The junta imprisoned many of its opponents, dissolved Congress, restricted freedom of the press, and banned political parties. It returned many of the state-owned industries to private control and took strong measures to check inflation. However, widespread unemployment and reduced government spending for welfare programs caused hardships for Chile’s lower classes.
In 1980, Chileans approved a new constitution that provided for a gradual return to democracy in the 1990’s. During the 1980’s, however, Chile’s military government continued to violate the people’s civil rights. Many Chileans–especially university students, members of labor unions, and Roman Catholic priests and nuns–pressured Pinochet to allow a democratically elected government.
In 1987, Pinochet allowed opposition political parties to function on a limited basis. In 1988, he honored the 1980 Constitution and called for a plebiscite (vote by the people) on whether he should be approved for a new eight-year term as president. The voters rejected Pinochet, and new elections were held in 1989 for a civilian president and a two-house legislature.