page_title: Economic history of Chile
section_title: Spanish conquest (1541–1600)
hierarchical_section_title: Economic history of Chile / Colonial economy / Spanish conquest (1541–1600)
caption_attribution_description: Deutsch: Karte von Chile. Pedro de Valdivia. Koloniale Siedlungen in Chile, 1540 - 1553 English: Map of Chile. Pedro de Valdivia. Locations of colonization in Chile, 1540 - 1553 Español: Mapa de Chile. Pedro de Valdivia. Fundaciones en Chile, 1540 - 1553
context_page_description: The economy of Chile has shifted substantially over time from the heterogeneous economies of the diverse indigenous peoples to an early husbandry-oriented economy and finally to one of raw material export and a large service sector. Chile's recent economic history has been the focus of an extensive debate from which "neoliberalism" acquired its modern meaning.
  Chile emerged into independence as a rural economy on what was the periphery of the Spanish Empire. A period of relative free trade that began with independence in the 1810s brought a modernizing development of certain sectors of the Chilean economy. This was accompanied by formation of a local business class, a novelty in Chile. Chile experienced its first modern economic crisis with the Long depression in the 1870s. The exploitation of lucrative nitrate deposits of the north conquered in War of the Pacific marked a whole epoch in the history of Chile and the economic legacy of nitrate has been widely debated.
  In the first half of the 20th century Chile suffered severe economic recessions including the Great Depression.
context_section_description: The conquest of Chile was not carried out directly by the Spanish Crown but by Spaniards that formed enterprises for those purposes and gathered financial resources and soldiers for the enterprise by their own. In 1541 an expedition (enterprise) led by Pedro de Valdivia founded Santiago initiating the conquest of Chile. The first years were harsh for the Spaniards mainly due to their poverty, indigenous rebellions and frequent conspirations. The second founding of La Serena in 1549 (initially founded in 1544 but destroyed by natives) was followed by the founding of numerous new cities in southern Chile halting only after Valdivia's death in 1553.
  The Spanish colonization of the Americas was characterized by the establishments of cities in the middle of conquered territories. With the founding of each city a number of conquistadores became vecinos of that city being granted a solar and possibly also a chacra in the outskirts of the city, or a hacienda or estancia in more far away parts of the countryside. Apart from land natives were also distributed among Spaniards since they were considered vital for carrying out any economic activity.
  Beyond subsistence the 16th century economy of Chile was oriented towards large-scale production. Spanish colonizers used large amounts of indigenous labour following the slave labour system used in the sugar cane plantations of the Mediterranean islands and Macaronesia. This system of labour successively killed the production base leading to the imposition of the encomienda system by the Spanish Crown in order to prevent excesses. In Chile Spanish settlers managed to continue to exploit indigenous labour under slave like conditions despite the implementation of the encomienda. Rich Spanish settlers had over time to face opposition to their mode of production by Jesuits, Spanish officials and indigenous Mapuches.
  The initial Spanish settlers of Chiloé Archipelago (conquered in 1567) attempted to base their economy on gold extraction and a "hispanic-mediterranean" agricultural model. This activity ended in a general failure given the unsuitable conditions of the archipelago. Spaniards however reoriented their activities into logging Fitzroya.
caption: All mainland Spanish settlements (red dots) south of Biobío River were destroyed by 1604.
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