page_title: German colonization of Valdivia, Osorno and Llanquihue
section_title: Economic impact
hierarchical_section_title: German colonization of Valdivia, Osorno and Llanquihue / Economic impact
context_page_description: From 1850 to 1875, some 6,000 German immigrants settled in the region around Valdivia, Osorno and Llanquihue in Southern Chile as part of a state-led colonization scheme. Some of these immigrants had left Europe in the aftermath of the German revolutions of 1848–49. They brought skills and assets as artisans, farmers and merchants to Chile, contributing to the nascent country's economic and industrial development.
  The German colonization of Valdivia, Osorno and Llanquihue is considered the first of three waves of German settlement in Chile, the second lasting from 1882 to 1914 and the third from 1918 onward. Settlement by ethnic Germans has had a long-lasting influence on the society, economy and geography of Chile in general and Southern Chile in particular.
context_section_description: Following independence in 1820, Valdivia entered a period of economic decline. Since colonial times the city had been isolated from Central Chile by hostile Mapuche-controlled territory, and it depended heavily upon seaborne trade with the port of Callao in Peru. With independence, this intra-colonial trade ended, but it was not replaced by new trade routes.
  About 6,000 Germans settlers arrived in southern Chile between 1850 and 1875. Of these, 2,800 settled around Valdivia. The plurality of those Germans settled in Valdivia came from Hesse (19%), and 45% of them had worked as artisans in Germany. The next largest occupation group were farmers (28%), followed by merchants (13%). Most German settlers who reached Valdivia brought current assets, including machinery or other valuable goods. Wealthy immigrants in Valdivia provided credit to poorer ones, stimulating the local economy. The nature of the German immigrants to Valdivia contributed to the city's urban and cosmopolitan outlook, especially when compared to Osorno.
  At first, German settlements outside Valdivia were largely based on subsistence economies. As transportation developed, the settlers' economy shifted into one linked to national and international markets and based on the exploitation of natural resources, chiefly wood from the Valdivian temperate rainforests. This became particularly egregious in the period after 1870, when improved roads made connection from the hinterland of Llanquihue Lake to the coast easy. Germans and German-Chileans developed trade across the Andes, controlling mountain passes and establishing the settlement from which Bariloche in Argentina grew.
  In Osorno, German industrial activity declined in the 1920s at the same time that the city's economy turned towards cattle ranching. With land ownership heavily concentrated among a few families, many indigenous Huilliche of Osorno became peasants of large estates (latifundia) owned by Germans.
  Among the achievements of the German immigrants was a deepening of the division of labour, the introduction of wage labour in agriculture, and the establishment of Chile's first beer brewery in Valdivia in 1851 by Carl Anwandter. Some foreign observers made exaggerated accounts regarding the impact Germans had in local affairs; for example, Isaac F. Marcosson wrote in 1925 that Valdivia "was a collection of mud houses" before the arrival of Germans.
  Trade between Germans and German-Chileans with indigenous peoples was not uncommon. Indeed, some German merchants catered specifically to them. For example, in San José de la Mariquina, Mapuches were the main customers of German shopkeepers. A lucrative leather industry that Germans created was supplied by indigenous traders from across the Andes until the 1880s when the Argentine Army displaced indigenous communities. The city of Bariloche in present-day Argentina grew out by a shop established by German-Chilean merchant Carlos Wiederhold. Beginning with him, businessmen of German heritage brought in labourers from the Chiloé Archipelago to the Bariloche area. German and German-Chilean enterprises in southwestern Argentina acted as brokers for both Chile and Argentina, assisting both nations in controlling traffic across the southern Andes.
caption: Drawing of the landscape around Puerto Montt in 1850 by Vicente Pérez Rosales
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