In the period leading up to and after World War 1, American companies invested heavily in Chilean copper, which became the main export of the country. U.S. investments reached $1 billion by 1930, mostly in copper, and the U.S. displaced Britain as the main foreign power in the country. There were a series of political experiments in this period as well. A military coup in 1924/25 brought a few reforms but with it came a dictator named Carlos Ibanez del Campo, interrupting for a time Chile's comparatively long history of democratic rule, by Latin American standards (or indeed by any standards). The world-wide depression led to more coups in 1931 and 1932 (a pattern also seen in Argentina, Brazil, and Central America). After that, there was a long period of four decades of uninterrupted civilian democratic rule. Between 1938 and 1952 there was a government consisting of mostly centrist parties (in particular the Radical Party) with left-wing support in a coalition called the Popular Front. These governments presided over a certain amount of industrialization led by the populist state.1 Their social base lay in the growth of the Chilean middle class, which supported the Radical or National parties, and the working class, which provided support for what were by then Latin America's most numerous and well-organized Socialist and Communist parties.

Beginning in 1958, Chileans elected three successive one-term governments, each with a very different development strategy. In 1958, the conservative candidate Jorge Alessandri came to power by narrowly defeating the socialist leader Salvador Allende.

Alessandri followed a classic free market style of capitalist development, reducing the government's role in the economy and inviting foreign companies to invest in Chile. Inflation was contained by keeping wages low. This strategy ran into problems however -- there were few productive investments made by the private sector and eventually inflation broke out again when the government devalued the currency. A new party, the Christian Democrats (Partido Democrata Cristiana, or PDC), made gains in local elections in 1963. The Christian Democrats' support came from the middle classes -- white-collar workers, skilled workers, professionals, managers. It also got votes from women and slum dwellers and had some support in the countryside because it promised a land reform.

In order to prevent a victory by Allende and the left in the 1964 presidential elections, Chilean businessmen supported the Christian Democrats. The United States also poured $20 million into the campaign in favor of the Christian Democrats, and their candidate, Eduardo Frei, won the election with fifty-six percent of the vote to Allende's thirty-nine percent.

Frei's development strategy had a vague content but a progressive tinge. It was based on a vision called "communitarianism" in which the state promoted social welfare without getting involved in class struggles. He said: "We do not propose for the country either a socialist road or a capitalist road, but one that emerges from our national reality and our national being, in which the state predominates as the administrator of the common good."2 The Christian Democrats called for land reform (but never implemented it) and for the state to own fifty-one percent of the copper sector -- a policy known as the "Chileanization" of copper -- which did not effectively dispossess the American companies, who continued to make large profits in Chile. For two years the economy did fairly well, but inflation returned in 1967 along with slower growth and high unemployment. 

Landowners and the business elite became alarmed at the prospect of land reform. Unions were angered by the decline in living standards and repression of strikes. The Christian Democrats themselves divided into left and right wings. In May 1969 the party split, with the left wing forming the Unitary Popular Action Movement(MAPU),
and seeking an alliance with parties on the left.

The 1970 elections for president were a three-way contest between the conservative National Party, which ran former president Jorge Alessandri; the left, which formed a coalition called Popular Unity (Unidad Popular, or UP) of communists, socialists, the Radical Party, MAPU, and two smaller parties, with Salvador Allende of the Socialist Party as their candidate; and the Christian Democrats, who ran Radomiro Tomic from the remaining left wing of the party. U.S. interests -- the CIA and the multinationals -- put less money into the campaign than they had in 1964, assuming Alessandri would win, but the results were:

The central objective of the united popular forces is to replace the current economic structure, ending the power of the national and foreign monopoly capitalists and large landowners, in order to initiate the construction of socialism.

Such a transition to socialism would require major structural changes, notably the nationalization of the industrial sector (to be called the Area of Social Production), and the implementation of an effective agrarian reform. Other goals included providing better health, housing, and social security, and ending discrimination against women.

The core of the policy was to raise wages at the expense of profits, thereby squeezing the private sector, much of which was to be taken over by the state and run at a lower rate of profit. By the end of 1971, 150 industrial plants were under state control, including twelve of the twenty largest firms. Unemployment declined as the economy expanded, inflation was kept under control, and workers' incomes rose by fifty percent, a huge increase. As a result, the UP increased its share of the vote in the April 1971 municipal elections. 

In July 1971 the U.S.-owned copper mines were nationalized, and after a calculation of the companies' "excess profits" from 1955 to 1970, it was determined that Chile owed the two big American companies Anaconda and Kennecott Copper nothing for the mines. (The way this was done was by comparing copper profits in Chile with the companies' profits elsewhere in the world.

It was calculated that twelve percent was the world-wide profit rate for these companies, and that they had made $774 million above this in Chile from 1955 to 1970: "This deduction exceeded the book value of the companies' properties"). Nationalization however caused an escalation of ongoing U.S. plans to destabilize the Chilean economy, which were coordinated for the Nixon administration by Henry Kissinger, who in a famous quote said: "I don't see why we need to stand by and watch a country go communist due to the irresponsibility of its own people." In other words, the U.S. would decide what was best for Chile, and if that meant replacing a democratically-elected Marxist with a military government, that was perfectly acceptable to Kissinger and Nixon (not to mention the copper companies and ITT -- International Telephone and Telegraphs -- which had also been expropriated in Chile). So, the U.S. cut off loans to Chile and blocked World Bank and other sources of money (the U.S. ambassador to Chile remarked: "Not a nut or a bolt will reach Chile.... We will do all in our power to condemn Chileans to utmost poverty").

As a result of the drop in aid and economic sanctions, Chilean industry ran into problems getting spare parts, technology, and new machinery. Meanwhile inflation returned because workers and peasants now had more money to spend, driving up prices, while shortages of goods were occurring. Agriculture declined as the land reform disrupted production, and landowners took land out of production. Politically, it should be pointed out that Allende did not control the entire state machinery -- he did not have a majority in Congress, he did not control the judiciary, he did not have the loyalty of the entire civil service nor of much of the army high command, which had been trained in the United States. The upper classes owned most of the mass media, and used it against him (the CIA also gave money to conservative newspapers and radios to do a vicious smear campaign playing on fears of communism)

Military Coup: September 11, 1973

The coup and its unexpectedly bloody aftermath, put an abrupt end to a relatively long period of constitutional rule in Chile and set the stage for a de facto authoritarian regime that would be sustained through force until 1990.

From 1973 until 1990, and particularly in the earliest years of the military regime, human rights violations were widespread and systematic. These included arbitrary arrests, raids on private households, imprisonment, extra-judicial executions, torture, relegation and exile.

For the next twenty minutes, Hawker planes launched 20 projectiles into the heart of the government building, reducing it to a burning pile of rubble.

President Salvador Allende and a handful of his closest advisors and personal bodyguards had hurried to La Moneda earlier that morning to assess reports of an ominous movement of troops in Valparaiso.(read testimonies)

It was not the first time rumors had flown of a plot to overthrow the democratically elected socialist government but this seemed the most serious rebellion yet. Originally believed to be an uprising of minority factions within the Army and Navy, it became clear as the morning progressed that Allende no longer had a single ally among the leaders of all branches of the Armed Forces.

The coup was inevitable.

In the moments before the commanding generals of the coup gave the order to initiate an air strike against La Moneda, they repeatedly demanded Allende’s resignation, offering him and his family safe passage out of the country. Allende refused to surrender, and instead busied himself organizing the armed resistance from within La Moneda, evacuating as many people as possible from the building and sending his top aides to negotiate with the military leaders.
Shortly before he died, Allende went on the only radio airwave still open, RadioMagallanes, to give a defiant last address (link) to the nation, in which he pledged his own life in defense of his right to govern. Throughout September 11 and the following day, the military established absolute control over all Chilean territory.

The conventional view among Latin Americanists is that the Chilean Armed Forces had been institutionally loyal and supportive of civilian supremacy at least since the 1891 civil war, which pitted different factions of the Armed Forces against one another and resulted in the overthrow of President Jose Manuel Balmaceda. The military rarely intervened in the political arena after that and when it did so, its interference was minimal.

This was the military that most Chileans knew, or thought they did. And it was the same military that so many Chileans, some of whom supported the coup initially, quickly  lost trust in as the new regime’s horrors unfolded before them. The leadership of the Christian Democratic party, for example, publicly supported the military coup at first, only to do an about-face several months later when the regime's dismal human rights record could not be ignored

Those who explicitly opposed the coup from the beginning were principally the left political parties, both those that comprised the Unidad Popular and others, as well as a small group of dissident Christian Democrats. Rather than blaming the coup on the breakdown of traditional political consensus and seeing it as the answer to economic and social "chaos," some of these opponents saw September 11 as the "last card" played by conservative forces to defeat Latin America's only successful socialist revolution in democracy. They argue that Chilean conservatives allied with US interests were unsuccessful in defeating Allende through elections, economic sabotage or CIA covert aid, so they resorted to the only remaining option - military intervention