Chilean Nitrate Company (COSACH)

Owned by the government of Chile and private interests, the Chilean Nitrate Company (Compañía de Salitre de Chile, or COSACH) was founded to produce nitrate. In the 1920s, the Guggenheim family interests introduced a new technique to refine nitrate. Although more economical, the natural nitrates, or salitre, had difficulty competing with synthetics, particularly those produced by German chemical firms using the Haber-Bayer process. In hopes of lowering production costs and thus the price, the Guggenheims requested that the government of Carlos Ibáñez rescind the export tax on nitrates, but the government needed money and could not grant the concession. As a compromise, the Guggenheims and Ibáñez created COSACH in 1931. Since the new corporation virtually controlled the mining and marketing of natural nitrates, the U.S. and Chilean interests hoped that COSACH could maintain prices. In return for the abolition of the export tax, the Guggenheims gave the Chilean government $80 million over a four-year period. From then on, the Chilean government and the corporation agreed to share equally in COSACH's profits or losses. Consistent with Ibáñez's policy of economic nationalism, Chileans would have to constitute at least 80 percent of COSACH's workforce.

COSACH never fulfilled the expectations of either the government or the Guggenheims. Although the new technology did increase production, it also dramatically cut—by more than 85 percent—the number of people working in the nitrate mines. What was worse, the onset of the Great Depression reduced world demand so that the price of nitrates fell and even the more efficient COSACH could not make a profit. Arturo Alessandri abolished COSACH in 1933, heavily in debt and denounced by nationalists who claimed that Ibáñez had sold out to the Guggenheims. It was replaced in 1934 by COVENSA (Corporation for the Sale of Nitrate and Iodine), a solely government-owned company that produced and marketed nitrates. As of the mid-1990s Chilean nitrates constituted 69 percent of the world's annual production.

See alsoAlessandri Palma, Arturo; Ibáñez del Campo, Carlos; Mining: Modern.

BIBLIOGRAPHY

Frederick M. Nunn, Chilean Politics: The Honorable Mission of the Armed Forces 1920–1931 (1970), pp. 157-158, 169, 171-172.

Thomas O'Brien, "Rich beyond the Dreams of Avarice: The Guggenheims in Chile," in Business History Review 63 (1989):122-159.

Additional Bibliography

Conti, Viviana E. and Marcelo Lagos, eds.. Una tierra y tres naciones: El litoral salitrero entre 1830 y 1930. San Salvador de Jujuy, Argentina: Unidad de Investigación en Historia Regional, Facultad de Humanidades y Ciencias Sociales, Universidad Nacional de Jujuy, 2002.

Robles-Ortiz, Claudio. "Agrarian Capitalism in an Export Economy: Chilean Agriculture in the Nitrate Era, 1880–1930." Ph.D. diss., University of California, Davis, 2002.

                                          William F. Sater