CHILEAN POLITICS AND ECONOMY 259
the telegraphic and railway systems and on the
construction of bridges, roads, and docks. Bal-
maceda also generously endowed public educa-
tion, needed to provide skilled workers for Chilean
industry. During his presidency the total enroll-
ment in Chilean schools rose in four years from
some 79,000 in 1886 to over 150,000 in 1890.
He also favored raising the wages of workers but
was inconsistent in his labor policy; yielding to
strong pressure from foreign and domestic em-
ployers, he sent troops to crush a number of strikes.
Central to Balmaceda’s program was his de-
termination to “Chileanize” the nitrate industry. In
his inaugural address to Congress, he declared that
his government would consider what measures it
should take “to nationalize industries which are, at
present, chiefl y of benefi t to foreigners,” a clear refer-
ence to the nitrate industry. Later, Balmaceda’s strat-
egy shifted; he encouraged the entrance of Chilean
private capital into nitrate production and exporta-
tion to prevent the formation of a foreign-dominated
nitrate cartel whose interest in restricting output
clashed with the government’s interest in maintain-
ing a high level of production to collect more export
taxes. In November 1888, he scolded the Chilean
elite for their lack of entrepreneurial spirit:
Why does the credit and the capital which
are brought into play in all kinds of specula-
tions in our great cities hold back and leave
the foreigner to establish banks at Iquique
and abandon to strangers the exploiting of the
nitrate works of Tarapacá?... The foreigner
exploits these riches and takes the profi t
of native wealth to give to other lands and
unknown people the treasures of our soil, our
own property and the riches we require.
Balmaceda waged a determined struggle to end
the monopoly of the British-owned Nitrate Rail-
ways Company, whose prohibitive freight charges
reduced production and export of nitrates. His na-
tionalistic policies inevitably provoked the hostility
of English nitrate “kings” like North, who had close
links with the Chilean elite and employed promi-
nent liberal politicians as their legal advisers.
But Balmaceda had many domestic as well
as foreign foes. The clericals opposed his plans to
further curb the powers of the church. The landed
aristocracy resented his public works program be-
cause it drew labor from agriculture and pushed up
rural wages. The banks, which had profi ted from
an uncontrolled emission of notes that fed infl ation
and benefi ted mortgaged landlords and exporters,
were angered by his proposal to establish a national
bank with a monopoly of note issue. The entire oli-
garchy, liberals as well as conservatives, opposed
his use of the central government as an instrument
of progressive economic and social change.
Meanwhile, the government’s economic prob-
lems multiplied, adding to Balmaceda’s political dif-
fi culties by narrowing his popular base. By 1890
foreign demand for copper and nitrates had weak-
ened. Prices in an overstocked world market fell,
and English nitrate interests responded to the crisis
by forming a cartel to reduce production. Reduced
production and export of nitrates and copper sharply
diminished the fl ow of export duties into the treasury
and caused growing unemployment and wage cuts
even as infl ation cut into the value of wages. The
result was a series of great strikes in Valparaíso and
the nitrate zone in 1890. Despite his sympathy with
the workers’ demands and unwillingness to use force
against them, Balmaceda, under pressure from do-
mestic and foreign employers, sent troops to crush
the strikes. These repressive measures ensured much
working-class apathy or even hostility toward the
president in the eventual confrontation with his foes.
Indeed, Balmaceda had few fi rm allies at his
side when that crisis came. The industrial capital-
ist group whose growth he had ardently promoted
was still weak. The mining interests, increasingly
integrated with or dominated by English capital,
joined the bankers, the clericals, and the landed
aristocracy in opposition to his nationalist pro-
gram of economic development and independence.
The opposition mobilized its forces in parliament,
where Balmaceda lacked a reliable congressional
majority, forcing him to abolish the system of par-
liamentary government and return to the tradi-
tional system of presidential rule established by the
constitution of 1833. His rash act, made without
any serious effort to mobilize popular forces, played
into the hands of his enemies, who were already
preparing for civil war.