1941: Chile

Political Affairs.

The Popular Front President, Pedro Aguirre Cerda, died on Nov. 25, and the executive powers passed to Vice-President Gerónimo Méndez, leader of the Radical party. The election campaign for a new president was bitter.

President Aguirre Cerda was a member of the moderate Radical party. His program of social progress, likened to the Roosevelt 'New Deal,' was necessarily postponed, first, by a disastrous earthquake and, next, by the repercussions in Chile of the war in Europe. Thus reconstruction and national defense superseded social reform as primary aims of his administration. The deceased president served as a balance wheel between the conflicting political factions of Chile, although his followers had been gradually deserting him and the continued unity of the Leftist forces seemed doubtful. The outbreak of hostilities between Germany and Soviet Russia led in September to a reconciliation between the Chilean Communist and Socialist parties, whose antagonism earlier in the year threatened the collapse of the Popular Front. A bill passed by the Congress to outlaw the Communist party was vetoed by the President a few weeks before the Congressional elections of March 2. These elections, conducted fairly, increased the Communist seats in the Chamber from 7 to 17 and added three new Communist Senators. This left the Socialists holding the balance of power in both houses but displaced them as fourth political party of the nation. Motions to unseat the newly elected Communist Congressmen were defeated in July.

Schism within the Radical party added to the political confusion. A dispute between the President and the party in June led to the resignation of five of the six Radical Cabinet ministers on party orders. The sixth, Minister of Interior Arturo Olavarría, remained but forfeited party membership. A revamping of the Cabinet in October brought four Radicals back into ministerial posts. The key post in the Cabinet is now held by a strong anti-Nazi, Leonardo Guzmán. The Vanguardia Popular Socialista, formerly the Nacista party, has been moving farther and farther away from the Popular Front. On May 20, forty-two members of the party were arrested on charges of plotting against the Government. The party leader, González von Marées, as a Deputy, is immune from arrest, but the editor of the Vanguardia organ, El Trabajo, was among those apprehended. Juan Antonio Rios was elected president Feb. 1, 1942.

War Status.

Immediately following the Japanese attack on Hawaii, Chile requested a meeting of the Foreign Ministers of the American republics in order that united action might be taken (See BRAZIL for the Rio Conference). Chile granted the United States non-belligerent status but declared its neutrality in World War II. Current Chilean-Argentine proposals for fortifying the strategic Straits of Magellan, unfortified to date by mutual agreement of 1881 for their perpetual demilitarization, call for the use of equipment from the United States. The Straits are important in continental defense as the only means of maritime traffic between the Atlantic and Pacific if the Panama Canal should be closed. The strategic importance of Chile's distant Pacific possession, Easter Island, is also receiving consideration. The Republic set a precedent for other South American nations suffering an acute shipping shortage by requisitioning five Danish ships in Chilean ports on the ground of 'political necessity,' to be returned with compensation after the War.

In spite of the large German-speaking population in south Chile, the Chilean Government has been vigorously pro-democratic, as is indicated by a number of anti-Nazi demonstrations, the arrest of German members of a Landesgruppe following the seizure of documents pointing to the organization within the country of a military Nazi society, and the appointment of a pronounced anti-Fascist as Minister of the Interior. Chile led the Latin American countries in protesting the Nazi execution of French civilian hostages. The Chilean administrative attitude in this respect has been in marked contrast to the caution displayed by the Argentine Government (See ARGENTINA). Following charges of subversive activities involving the Embassy the newspaper Crítica initiated a move to have the German Ambassador ousted.

Finance and Trade.

The 1942 budget proposal submitted to Congress calls for the largest annual expenditure in the history of the Republic, and, for the first time in a decade, authorizes an actual cash deficit. Revenues, estimated at 2,419,723,500 pesos, were roughly 10 per cent more than the 1941 estimate, but expenditures have been increased 18 per cent. The year 1941 closed with an accumulated deficit representing at least one-tenth of the total budget. Increased taxation, stiff cuts in general expenditures, and reduction in imports not indispensable have been recommended. A constitutional amendment to restrict Congressional authority to initiate extra-budgetary credits was defeated. Superimposed on the ordinary budget is a national defense program of 4,000,000,000 pesos (with the peso equivalent to four cents U. S. currency), which was passed by the lower house in November after a two-cent per pound copper export tax was divorced from it. The Government is authorized to contract foreign loans to finance this program.

The expansion of the United States defense effort, following the passage of the lease-lend bill in March, created an increased demand for copper, which worked to Chile's benefit since it is the largest copper-producing country of Latin America. The 'over-all' agreement concluded by the United States with Chile, Peru and Argentina in September for the acquisition of strategic and critical metals brought Latin American copper into the United States' market, and deprived Japan of an important source of this, and other strategic materials, such as manganese and mercury, which Japan, through outbidding the United States, acquired in rapidly rising amounts in 1940 and the first half of 1941. Japan's imports of bar copper from Chile, for example, increased from 559 metric tons in 1938 to 14,460 tons in 1940.

Nitrate is, however, Chile's basic industry and a more accurate barometer of the Republic's general economic situation, and it indicated 1941 as a satisfactory year. The United States increased its purchases from 600,000 to 900,000 tons, the latter figure representing from 80 to 85 per cent of total output. United States-Chilean trade, in general, has made tremendous gains in the last two years. In the same interval Japan jumped from eighth to third rank in Chile's trade. The Republic's first international trade emergency measure was approved by Congress in July, empowering the President, for three years, to set up a complete control of exports. See also PAN-AMERICAN AFFAIRS.