Part 13

_Religion._--The Roman Catholic religion is declared by the constitution to be the religion of the state, and the inaugural oath of the president pledges him to protect it. A considerable part of its income is derived from a subsidy included in the annual budget, which makes it a charge upon the national treasury like any other public service. The secular supervision of this service is entrusted to a member of the president's cabinet, known as the minister of worship and colonization. The executive and legislative powers intervene in the appointments to the higher offices of the Church. The greater part of the population remains loyal to the established faith. The law of 1865 gives the privilege of religious worship to other faiths, and the laws of 1883 made civil marriage and the civil registry of births, deaths and marriages obligatory, and secularized the cemeteries. Under the reform of 1865 full religious freedom is practically accorded, and it is provided that the services of religious organizations other than the Roman Catholic may be held in private residences or in edifices owned by private individuals or corporations. Of the 72,812 foreigners residing in Chile in 1895, about 16,000 were described as Protestants. Notwithstanding the opposition of some political elements to the Church, the Chileans themselves may all be classed as Roman Catholics. The ecclesiastical organization includes one archbishop, who resides at Santiago, three bishops residing at La Serena, Concepción and Ancud, and two vicars residing in Antofagasta and Tarapacá. These benefices are filled by appointments from lists of three prepared by the council of state and sent to Rome by the president, and in the case of an archbishop or bishop the appointment must also receive the approval of the Senate. The Chilean clergy are drawn very largely from the higher classes, and their social standing is much better than in many South American states. The Church also possesses much property of its own, and is therefore able to maintain itself on a comparatively small subsidy from the public treasury, which was 985,910 pesos (£73,943) in 1902. The Church maintains seminaries in all cathedral towns, and these also receive a subsidy from the government.

_Finance._--For a long time Chile was considered one of the poorest states of Spanish America, but the acquisition of the rich mineral-producing provinces of the north, together with the development of new silver and copper mines in Atacama and Coquimbo, largely increased her revenues and enabled her to develop other important resources. During the decade 1831-1840 the annual revenues averaged about 2,100,000 pesos (of 48d.), which in the decade 1861-1870 had increased to an average of only 8,200,000 pesos--and this during a period of considerable agricultural activity on account of wheat exports to California and Australia. After 1870 the revenues increased more rapidly owing to the development of new mining industries, the receipts in 1879 amounting to 15,300,000 pesos, and in 1882 to 28,900,000 pesos. The revenues from the captured Peruvian nitrate fields then became an important part of the national income, which ten years later (1902) reached an aggregate of 138,507,178 pesos (of i8d.), of which 105,072,832 pesos were in gold. In 1906 the receipts from all sources were estimated at 149,100,000 pesos, of which 62,200,000 pesos gold were credited to the tax on nitrate, 39,800,000 pesos gold to import duties, and 23,500,000 pesos currency to railway receipts. During these years of fiscal prosperity the country suffered much from financial crises caused by industrial stagnation, an excessive and depreciated paper currency and political disorder. To ensure an income that would meet its foreign engagements, the government collected the nitrate and iodine taxes and import duties in gold. As a considerable part of the expenditures were in gold, the practice was adopted of keeping the gold and currency accounts separate. In 1895 a conversion law was passed in which the sterling value of the peso was reduced to 18d., at which rate the outstanding paper should be redeemed. A conversion fund was also created, and, although the government afterwards authorized two more large issues, the beneficial effects of this law were so pronounced that the customs regulations were modified in 1907 to permit the payment of import duties in paper. The national revenue is derived chiefly from the nitrate taxes, customs duties, alcohol tax, and from railway, postal and telegraph receipts. There is no land tax, and licence or business taxes are levied by the municipalities for local purposes. The national expenditures are chiefly for the interest and amortization charges on the public debt, official salaries, military expenses in connexion with the army and navy, public works (including railway construction, port improvements, water and sewage works), the administration of the state railways, telegraph lines and post office, church subsidies, public instruction and foreign representation.

The ordinary and extraordinary receipts and expenditures for the five years 1899-1903, in gold and currency, in pesos of 18d., were as follows:--

+------+--------------------------+-----------------------------+ | | Receipts, pesos. | Expenditures, pesos. | | +-------------+------------+--------------+--------------+ | | Gold. | Paper. | Gold. | Paper. | +------+-------------+------------+--------------+--------------+ | 1899 | 83,051,604 | 45,239.970 | 31,732,797 | 76,749,793 | | 1900 | 89,869,178 | 46,515,102 | 30,564,821 | 82,143,742 | | 1901 | 74,665,061 | 35,394,434 | 39,808,517 | 91,087,171 | | 1902 | 105,072,832 | 33,434,346 | 45,093,278[5]| 89,170,087[5]| | 1903 | 108,503,565 | 32,490,145 | 12,508,075 | 84,721,437 | +------+-------------+------------+--------------+--------------+

For 1906 the expenditures were fixed at 149,000,000 pesos, and the revenues were estimated to produce 149,100,000 pesos, which included 62,200,000 pesos gold from nitrate taxes, 39,800,000 pesos gold and 200,000 pesos paper from import duties, 23,500,000 pesos paper from the state railways, 2,500,000 pesos paper from postal and telegraph receipts, and 15,000,000 pesos gold from loans. How the revenues are expended is shown in the estimates for 1907, in which the total expenditures were estimated at 134,830,532 pesos paper and 58,796,780 pesos gold, the principal appropriations being 16,192,780 pesos paper and 99,733 gold for the war department, 10,460.781 paper and 6,315,731 gold for the marine department, 40,934,273 paper and 16,984,671 gold for railways, and 6,324,817 paper for public works. In addition to these the budget of 1906 provided for gold expenditures in 1907 of 7,000,000 pesos on sanitary works and 8,000,000 pesos on the Arica-La Paz railway. The custom of dividing receipts and expenditures into ordinary and extraordinary, of treating the receipts from loans as revenue, of adding six months to the fiscal year for closing up accounts, and of dividing receipts and expenditures into separate gold and currency accounts, leads to much confusion and complication in the returns, and is the cause of unavoidable discrepancies and contradictions.

In May 1906 the external debt of the republic aggregated £21,700,000, including the loans of 1905 and 1906, amounting to £5,700.000, for sanitary works and railway construction. At the same time the internal debt was 107,000,000 pesos (£8,025,000), which increases the funded indebtedness to £29,725,000. Like Brazil, Chile has been careful to preserve her foreign credit, and though an average indebtedness of about £10 per capita may seem large for a nation with so much absolute poverty among its people, the government is finding no difficulty in negotiating new loans, the mineral resources of the country and the conservative instincts of the people being considered satisfactory guarantees. According to official returns, the real-estate valuations in 1903-1904 aggregated 1,777,217,704 pesos, of which 1,020,609,215 pesos were in urban and 754,608,489 pesos in rural property. Of the total returned, 1,775,217,704 is described as taxable, and 262,626,576 pesos as non-taxable. The large and steadily increasing receipts from import duties, amounting to 91,321,860 pesos in 1905, and 103,507,556 pesos in 1906, appears to indicate an encouraging state of prosperity in the country, although an average of 34½ pesos a year (nearly £2 : 12s.), in addition to the increased prices paid for home manufactures, seems to be a very heavy indirect tax upon so poor a people.

_Currency._--The monetary circulation in Chile consists almost wholly of paper currency, nominally based on a gold standard of 18d. per peso. The conversion law of 1895 made the currency convertible at this rate, although the gold peso was rated at 48d. previous to that date; but the financial crisis of 1898 caused the suspension of specie payments, and a forced issue of additional paper led to a further postponement of conversion and the prompt withdrawal of specie from circulation. The paper circulation consists of national and bank issues. The former owes its existence very largely to the war with Peru, the civil war of 1891, and the financial troubles of 1898. On the 1st of January 1890 the national issues stood at 22,487,916 pesos, and the bank issues at 16,679,790 pesos, making a total of 39,167,706 pesos currency in circulation. This total was largely increased by President Balmaceda in 1891. On the 31st of July 1898 the conversion of paper notes, under the law of 1st June 1895, was suspended, and the government issued 27,989,929 pesos to the banks of issue, which was described as a loan at 2%, and raised their outstanding circulation to 40,723,089 pesos, and at the same time issued on its own account 17,693,890 pesos and assumed responsibility for 1,193,641 pesos which had been illegally put into circulation before 1896. This gave an aggregate registered circulation of 86,045,166 pesos in 1898. In 1904 another issue of 30,000,000 pesos was authorized and the date of conversion was still further postponed, and in 1907 a more general act provided that the maximum paper circulation should not exceed 150,000,000 pesos of the value of 18d. per peso, and that new issues should be made only through the issue department and against deposits of gold, which deposits would be returned to depositors on the presentation of the currency issued. The redemption of this issue was guaranteed by a conversion fund of 100,000,000 pesos, and by an authorization to issue a loan of 50,000,000 pesos to redeem the balance, if necessary. The conversion fund under the act of 1895 stood at 77,282,257 pesos (£5,796,170) on the 31st of May 1907. There are 23 joint-stock banks of issue, with an aggregate registered capital of 40,689,665 pesos (£3,051,724). Their circulating notes are secured by deposits in the national treasury of gold, government notes and other approved securities. There is no state bank, though the Bank of Chile, with its numerous agencies and its paid-up capital of 20,000,000 pesos, may be said to fill the place of such an institution. Besides these, there are four non-issue banks, two foreign banks and their agencies, and three mortgage banks, with agencies at the important provincial centres, which loan money on real-estate security and issue interest bearing hypothecary notes to bearer. There are 8 savings banks in the republic, whose aggregate deposits on the 31st of December 1906 were 14,799,728 pesos.

The monetary unit, the gold peso, does not form a part of the actual coinage. The gold coins authorized by this law are the _condor_ of 20 pesos, the _medio condor_, or _doblon_, of 10 pesos, and the _escudo_ of 5 pesos. The silver coins are the _peso_ of 100 centavos and its fractional parts of 20, 10 and 5 centavos. The bronze coins are of 2½, 2, 1, and ½ centavos.

The metric system of weights and measures is the legal standard in Chile, but the old Spanish standards are still widely used, especially in handling mining and farm produce. Nitrate of soda is estimated in Chilean quintals (101.41 lb) in the field, and metric quintals (220.46 lb) at the port of shipment. In silver and copper mining the _marc_ (8 oz.) is commonly used in describing the richness of the ores. Farm produce is generally sold by the _arroba_ or _fanega_; the _vara_ is used in lineal measurement, and the _cuadra_ is used by country people in land measurement. (A. J. L.)

HISTORY.

Inca conquest.

Chile was the recognized name of the country from the beginning of its known history. The land was originally inhabited by tribes of Indians, who, though not mere savages, were far below the level of civilization distinguishing the races of Mexico and Peru. When the country first became known to the Spaniards in the 16th century the northern tribes were found to be more civilized and much more submissive than those of the south. The difference was no doubt due to the invasion and conquest of northern Chile in the 15th century by Yupanqui, Inca of Peru, grandfather of Atahualpa, ruler of Peru at the time of its conquest by Pizarro. The dominion of the Incas in Chile was probably bounded by the Rapel river (lat. 34° 10' S.), and, though their control of the country was slight, the Peruvian influence led to the introduction of a higher civilization, and, by weakening the power of the tribes, paved the way for the invasion of the Spaniards. Beyond the limits of the Inca conquest the Indians of Chile were distinguished by fierce independence of character and by their warlike qualities. Rude and ignorant as they were, they possessed a rough military organization; each community was led by its _ulmen_ (chief), and in war the tribes fought together under an elected leader (_toqui_). The name of the Araucanians, the most powerful of the tribes, came to be applied to the whole confederation of Indians living south of the Bio-bio river.

Spanish invasions.

The first Spanish invasion of Chile took place in 1535, when Diego de Almagro, the companion and rival of Pizarro in the conquest of Peru, marched into Chile in search of gold. Disappointed in his quest, and meeting with obstinate resistance from the southern tribes, he returned to Peru with his whole force in 1538. In 1540 Pizarro sent Pedro de Valdivia to make a regular conquest and settlement of Chile. Valdivia founded Santiago, the present capital of Chile, in February 1541, and proceeded to build the towns of La Serena, Conceptión, Villarica, Imperial, Valdivia and Angol, in order to secure his hold on the country. But the Indians fought desperately for their independence, and in 1553 a general rising of the tribes ended in the defeat and death of Valdivia and in the destruction of most of his settlements. This was the beginning of nearly a century of continuous warfare. As there was no gold in the country the number of settlers was small, the loose tribal organization of the natives made it impossible to inflict a vital defeat on them, and the mountainous and thickly wooded country lent itself admirably to a warfare of surprises and ambuscades. General after general and army after army were despatched from Spain and Peru; Chile was given a government independent of the viceroy of Lima; attack after attack was made on the Indians, their lands were laid waste, and the struggle was conducted with merciless ferocity: all in vain. Settlements and forts were never free from assault and were taken and retaken; if one Indian army was destroyed another took its place, if one _toqui_ was killed another was chosen; when defeated, the Indians retired to their forests, marshes and hills, recruited their forces, and fell on the pursuing Spaniards. In 1612 an attempt was made by a Jesuit missionary to negotiate a peace, but not till 1640 was the desperate struggle ended by the treaty of Quillin, which left the Indians all the land south of the Bio-bio river. Up to 1800 the peace was broken by three wars, in 1655, in 1723 and in 1766, the last ended by a treaty which actually gave the Araucanians the right to have a minister at Santiago.

Colonial system.

It was this constant warfare with the Indians and the necessity for hard continuous work, owing to the lack of precious metals in Chile, that no doubt helped to produce in the settlers the strength and hardihood of character that distinguishes the Chileans among South American races. But not unnaturally the material condition of the country was the reverse of prosperous. The expenditure far exceeded the revenue. The Indian warfare occupied nearly the whole attention of the governors and much of the time of the settlers. By the Spanish colonial system the development of manufactures was prohibited and the trade of the colony was limited not only to Spain but to the one port of Cadiz. Till the 18th century ships were not allowed to sail round Cape Horn, so that the Chileans had to trade indirectly through Peru and the Argentine. Agriculture was the one resource of the colony, and wheat was grown for export to Peru, but the land was concentrated in the hands of a few big landowners, and the cultivation of the vine and olive was forbidden. At the end of the 17th century Santiago was a town of poor one-storeyed houses and had only 8000 inhabitants; the other towns, Valparaiso, Concepción, La Serena, were only large villages. Books were not allowed to be imported, and education was limited to such as was given here and there by priests and monks. The Indians within the limits of the Spanish colony were treated like slaves, and horribly mutilated to prevent their escape; but at the same time a gradual fusion of races was taking place, and the Chilean peasant (_peon_) of to-day is as much of Indian as of Spanish descent. The Araucanians, however, continued to preserve their independence; they jealously resented the introduction of Spanish influence, and the missionary efforts of the Jesuits met with little success.

During the 18th century the condition of the colony was improved in many ways. The Bourbon kings of Spain were more liberal in their colonial policy. Merchant-ships were allowed to sail direct to Chile, trade with France was sometimes permitted, and a large batch of hardy emigrants was sent out from the Biscay provinces of Spain. Freed from the preoccupation of the Indian wars, the governors gave more attention to the general welfare of the country: a university was started in Santiago in 1747, many towns were built about the same time, agriculture and industries were promoted and a coasting trade grew up. In 1778 Charles III. threw open all the ports of Spain to the colonies and allowed freedom of trade with France. But in general the administration of the colony was burdensome, oppressive and inefficient. The people had no voice in the government. Ruling with the help of the Royal Audience, the governor was absolute master of the country, and regulated the smallest details of life. Such time as the officials could spare from the main object of enriching themselves by extortion and corruption was given up to endless official and religious ceremonies and to petty disputes of etiquette and precedence. All the high posts and offices were filled by men sent from Spain, with the result that bitter jealousy reigned between them and the native-born colonists (_criollos_). The _criollos_ as a rule filled the posts in the municipalities (_cabildos_), disposed of by sale, so that when the revolution broke out the _cabildos_ naturally became the centres of the movement. As in all Spanish colonies, so in Chile, the Church played a large part in the public life. Chile was divided into the two bishoprics of Santiago and Concepción, and the Church managed to accumulate most of the wealth of the country. At the same time the monks and Jesuits did useful work in teaching industrial and agricultural arts, and in giving the people a certain degree of education; but the influence of the Church was used to bolster up the traditional narrow colonial system, and the constant quarrels between the clergy and the secular powers often threw the country into confusion.

At the opening of the 19th century Chile was a colony whose resources had hardly been touched, with a population of about 500,000 persons, of Spanish and mixed Spanish and Indian blood: a people endowed with the vigour of character bred by a mountainous country and a bracing climate and by a hard struggle for existence, but ignorant through lack of education, shut out by a narrow-minded commercial system from knowledge of the outside world, and destitute of the character-training that free institutions afford.

Struggle for independence.

The national independence of Chile dates from the second decade of the 19th century. The revolt of England's North American colonies, and the events of the French Revolution naturally suggested the idea of a struggle for independence to the Spanish colonists, and the deposition of Ferdinand VII. by Napoleon, and the ensuing disorganization of Spain, supplied the desired opportunity. In 1809 risings took place in Venezuela, in Ecuador, in Upper Peru and in the Argentine; the revolutionary fever spread to Chile, and on the 18th of September 1810 the _cabildo_ of Santiago secured the resignation of the governor and vested his powers in an elected _Junta_ (board) of seven members. This event was the beginning of the independence of Chile. But it was some time before independence was fully attained. The mass of the people were ignorant, intercourse between them was slight, and there was a strong section attached to the old régime. The party determined on independence was at first small, and compelled to conceal its aims till the ground had been prepared for open decisive action. Further, there were divisions between the patriots of Santiago and those of Concepción, and bitter jealousies between the leaders, the chief of whom were Juan Martinez de Rozas, José Miguel Carrera and Bernardo O'Higgins. Owing to the apathy of the people and the enmities existing among the leaders, the Spanish forces, sent by the viceroy of Peru to crush the revolutionary movement, succeeded after two years' indecisive fighting in completely defeating the patriots at Rancagua in 1814. For three years the Spaniards maintained their hold on Chile, ruling the country with tyrannical harshness, but in the spring of 1817 a patriot force which had been organized at Mendoza in the Argentine by José de San Martin, an Argentine officer, and by O'Higgins, crossed the Andes and overwhelmed the royalists at the battle of Chacabuco. O'Higgins was named director-general of Chile, while San Martin, realizing that the independence of each colony depended on the Spanish being expelled from the whole of South America, set about preparing an invasion of Peru. The viceroy of Lima made one more effort to uphold the power of Spain in Chile, but the army he despatched under Mariano Osorio, the victor of Rancagua, was decisively defeated at the river Maipo on the 3rd of April 1818. By this battle the independence of Chile, formally proclaimed by O'Higgins in the previous February, was finally secured.

The republic.