The first weeks of the Popular Unity government had the euphoria of the new, shocking announcements and emotional phrases.
Everything seemed to start well, in his first press conference as Head of State, Allende stated: "I am not in this position to perform miracles, I am in this position to teach people to work on the basis of planning their economy and contributing their sacrifice and heroism in daily effort ".
In a massive act held at the National Stadium, Allende stated: "I make the phrase of Fidel Castro my own, in this government you can put your feet, but never your hands. I will be inflexible in the custody of the morality of the regime."
Interior Minister José Toha announced that the Mobile Group of Carabineros had been dissolved, as part of the 40 measures promised. Posters during the campaign featured pictures of police beating women and students.
The decree stipulated that the troops of the disappeared Mobile Group would become members of the Prefecture of Special Services. Toha told reporters: "We are sure that the policies of the popular government will make unnecessary the existence of police groups that have to confront the population.
Months later it would be the same staff of the former Mobile Group (now the Prefecture of Special Services) which, following orders, would arrive equipped with gas masks and shields to dissolve demonstrations using luma batons and tear gas.
On the other hand, children from a distant northern mountain school who had never seen the sea before, would spend two weeks in the Presidential Palace in the city of Viña del Mar.
Allende expressed his displeasure that some union leaders came to La Moneda and treated him as "Excellence." Then I declare: I am not just another president, but rather I am the first president of a popular, national and revolutionary government that opens the way to socialism. Furthermore, I am not His Excellency the President of the Republic, but rather I am the Comrade President.
In all official correspondence the expression "sir" was deleted and replaced by "comrade". Imperceptibly there was discrimination between those who could be called "comrade" and those who were "sir." Thus, little by little the Popular Unity was dividing the Chileans into two groups that would become irreconcilable: those who belonged to the Popular Unity and those who were not. The "comrades" and the "sirs".
Three months after starting his mandate, Allende declared in Valparaíso: "I am not the president of the socialist party, I am the president of the Popular Unity. Nor am I the president of all Chileans. I am not the hypocrite who says it, no. I am not. I am not the president of all Chileans.
But it was not these words that made the most bitter impression. In an interview made by the French Marxist ideologue Regis Debray and which was reproduced by the Mirista (MIR - Revolutionary Left Movement) and pro-Castro magazine Punto Final. He asked him how he had accepted the Statute of Constitutional Guarantees. Allende's response was: I accepted it as a tactical necessity to assume power. The important thing at that time was to take over the government.
His words reflected a certain political cynicism. He had accepted the statute as an indispensable requirement to obtain the presidency. He had never intended to comply.
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| Chilean families saw the ghost of hunger arise. Grocery stores were empty and modest people lined up in vain to try to get what they needed to eat. |
Other events began to reveal a new phase in Allende's personality. The politician who reached the presidency was forced to do what Popular Unity determined. This was made up of 6 collectives, but there were only two strong parties: the Socialist and the Communist, which looked aggressive, although from the outside they affirmed their granite revolutionary unity.
A Senator from the Popular Unity (Alberto Jerez, from the Christian Left) confided that on one occasion he could not help but express his bitterness for the stubborn and harsh way in which socialists and communists wanted to impose their points of view on Allende. He interrupted the Popular Unity meeting in La Moneda shouting: Do you want to tell me who the hell is the President of the republic and is in charge here?
This resulted in several spectacular announcements made by Allende that were subsequently not carried out.
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| The total shortage of products was a reflection of reality, the economic chaos was suffocating Chile, while inflation grew at an impressive rate. |
On December 30th, 1970, Allende spoke on the national radio and television network announcing: "Within eight days I will send a bill to Congress to nationalize all the banks."
The initiative never reached parliament.
The legal loopholes were beginning. Every law had an escape door.
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| With a legal subterfuge, CORFO bought the titles of the private shareholders and the commercial banks were passed to the State. The Popular Unity parties installed Managers and Directors in their administration. |
Hence, with the current "bourgeois laws" Popular Unity could gradually establish socialism in Chile, stepping on tiptoe to prevent the jealous constitutionalists from giving the cry of alert.
In the case of the banks, why go to Congress where the Popular Unity did not have a majority? It is true that the Christian Democracy had expressed its approval, but it also spoke of banks as worker companies.
The best thing was to nationalize them all without consulting Congress. How? The law that created the Corporation for the Promotion of Production (CORFO) empowered this company to acquire shares in some companies. That provision could be used to buy shares in all banks. The day that it could have acquired half plus one of those shares without Congress passing a law; the banks would pass into the hands of the state.
CORFO, lacking its true role, dedicated itself to buying shares in all banks. These shares were not even listed on the stock market. They were offered a part in cash and the rest in bonds payable over several years.
The same system of purchase of shares of the banks, began to apply CORFO in the industries. The state was swallowing companies without the need for law.
To the 45 companies that would be nationalized, others were added, not knowing if that amount would be the final one.
But as this was very onerous, an alternative was established: to produce labor disputes that forced businessmen to sell at any price. The CUP (Popular Unity Committee) of the industry workers helped that aim.
All in all, 1971, the first year of the Popular Unity government was prosperous. Everyone earned more, everyone spent more, and lived better.
Chileans were unaware that this feast had a bitter price: they were wasting the reserves accumulated by the country for years.
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| The procedure used by the Popular Unity to achieve the "redistribution of income" -according to its representatives- was the uncontrolled issuance of paper money. This generated a rise in inflation and the appearance of the black market. |
To cover the fiscal deficit and the commitments derived from the generous increases in wages and salaries, banknotes began to be printed.
The 1971 emission reached 20,000 million escudos (a million dollars at that time), which represented an increase in the emission of 132.7 percent. But the money printing machine was just working. In the last year of the Popular Unity, it would exceed that figure ten times (216,000 million escudos in eight months).
The political dividend of this artificial bonanza was that Allende, who had obtained 36.3% of the vote, saw his strength increased to 49.5% in the municipal elections. Now he was on an equal ground with the opposition.
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| Government of Jorge Alessandri (Right): 1958-63 Government of Eduardo Frei (Christian Democrat): 1964-69 Government of Salvador Allende (Left): 1970-73 |
That the economy collapsed, that industries died, that inflation devoured wages and salaries, was part of a strategy destined to reduce to zero that "capitalist society" and in its ruins begin to build the new socialist economy.
Another adverse factor was added: the brain drain began. In the fiscal bodies, in the companies that were nationalized, the professionals and technicians who were not from the Popular Unity were fired or had their lives made impossible, labeling them reactionaries and saboteurs.
Engineers, doctors, biochemists, biologists, civil builders, architects, had to leave Chile.
Eduardo Simián, the engineer who made the first oil spout in Chile, was given forty-eight hours to leave his post. He was immediately hired by Ecuador.
You might be interested in the first part of this article: The Socialist Experience in Chile - Part I
* Information based mainly on the work by Hernan Millas and Emilio Filippi "Anatomy of a Failure".
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