While I was teaching at the University of the North in Antofagasta in the North of Chile, I had the opportunity to learn about the American companies that have exploited the copper mines in Chile, practically since the beginning of the century.

In 1922, Anaconda Copper Mining Company bought mining operations in Chile. The mine Chuquicamata, or “Chuqui”, became the largest open pit copper mine in the world. Located in the north of Chile, just outside Calama at above sea level, it is northeast of Antofagasta and north of the capital, Santiago. Chuqui provided two-thirds of the company’s profits.

The exploitation of new copper mines in other parts of the world, during World War II, affected the competitiveness of copper in Chile. The African copper had lower production costs and high grade. Also the colonial status guaranteed low taxes and wages. In the early 1950s, Rhodesia (Zambia and Zimbabwe) and the Belgian Congo (Zaire) were competing with Chile. The Bancroft Mine in Northern Rhodesia produced an average of 96 million tons per year, in 1954, three times more than the production of Chuqui.

But Anaconda switched over from underground to open-pit mining in the 50’s, and in 1956, Anaconda netted the largest annual income in its history: $111.5 million.

In 1960, the two major mining companies in Chile, Anaconda and Kennecott, accounted for 11% of Chile’s gross national product, 50% of its exports, and 20% of government revenue. So, much of Chile’s economy relied on copper exports and the mines, controlled by foreign corporations. The Chilean economy was vulnerable to the demand fluctuations of the copper international commodity chain. A commodity chain is a series of links, connecting many places of production and distribution, and resulting in a commodity that is then exchanged on the world market.

By the late 1950s, the three principal copper mines in Chile were Chuquicamata, El Salvador, and El Teniente. Chuquicamata and El Salvador were owned by the Anaconda Copper Company and El Teniente was owned by the Kennecott Copper Corporation. The La Exotica mine, an adjunct of Chuquicamata, was added to these big mines in 1966.

These large mines were mainly self-contained and self-sustaining settlements with their own cities to house their workers, their own water and electrical plants, their own schools, stores, railways, and even, in certain cases, their own police forces.

In Chuquicamata, the American employees of Anaconda lived in their own city with American owned stores. The Chilean workers lived in camps and the stores or “pulperias” were owned either by Anaconda or subsidiaries of the company. In these stores, you could find anything from clothes to medicines to food. Effectively, this system brought back the money earned by the workers to the hands of their the employers.

The housing developments of the Americans were known as the “dollars” and the camps for the Chilean workers were known as the “pesos”.

The need of having camps for the Chilean workers had started with nitrate exploitations in the 1880’s. At that time, British entrepreneurs dominated the nitrate industry. A well known and important British businessmen, John Thomas North, was known as the “King of the Saltpeter”.

Traveling and providing supplies across the Chilean dessert was extremely difficult. So the companies founded small villages and made available lodging, water, and food for the workers. These self-sufficient installations included areas for the extraction and processing of Niter, on-site mining center management, worker’s housing, “pulperias”, churches, schools, recreation centers, and entertainment.

The pulperías were a combination of a general stores and the wild west barrooms of the United States. They did not use normal currency. The workers got their wages in tokens which were exchanged for food rations valid only in the company store. The system of tokens included fixed prices established by the company to guarantee social and labor benefits to their workers and to maintain a certain level of labor stability. However, in the long run, the fixed-price system was ineffective in controlling the rising inflation. Moreover, every pulperia had different tokens. The nitrate was used in fertilizers, but the industry died in Chile in 1930 when synthetic nitrate was invented.

According to a friend, who’s family worked in the nitrate industry in the North of Chile, the name “pulperia” was a reference to the way the company extended its hands on everything that could bring their money back to their own pockets.

Between 1932 and 1958, Anaconda’s subsidiaries also maintained a system of fixed prices that guaranteed workers’ access to “inexpensive food”. Inflation had started with the depression in 1929, and it was rampant in Chile for much more time. The company maintained that the fixed prices were part of a larger system of social and labor benefits. Of course, even though the idea was based on welfare capitalism, Anaconda used this benefit as a way to induce the labor force and maintain the workers practically tied to the company. The local labor unions caused enormous pressures to improve and expand the benefits. However, the company stores’ (Pulperías’) problems led to many labor and social conflicts in the copper camps. By 1958, the system had become too expensive and unpractical. Finally, the company and the unions agreed to replace the payment system by paying in cash to the workers.

Years after, the socialist candidate Salvador Allende won the election, and he promised to deal with the issue of the American-owned mines head-on. This was the third stage of the Chileanization of copper efforts that had started many years before. At the beginning of 1971, Allende sent to Congress a project for a constitutional amendment that would allow Chile to nationalize all mines, and to transfer all present and future copper fields to the state. Congress passed this amendment on July 11, 1971, by a unanimous vote. On July 16, 1971, based on this amendment, law #17.450 was promulgated, and became effective immediately.

The event was celebrated as the Día de la Dignidad Nacional (Day of National Dignity).

The expropiation of the mines was done without compensation, but the Allende government was overthrown in 1973, and the new military government agreed to pay Anaconda more than $250 million for its expropriated mines.