Expropriation Without Compensation: Copper in Chile, 1970–1973

ABSTRACT In this essay, I analyse the nationalisation of large copper mines during Salvador Allende's socialist government in Chile in the 1970s. This is one of the earliest cases ‘nationalization without compensation’. Chile's legal argument was based on the novel idea that ‘adequate’ payment should be calculated as book value minus ‘excessive profits’. In turn, excessive profits were defined, for every year, as profits above 12% of book value. I analyse the economic arguments that led to nationalisation, and I deconstruct and critically evaluate the methodology used to calculate ‘excessive profits’ and ‘adequate compensation’. I analyse the US and multinationals' response to Chile's nationalisation policies. JEL Classification: B22, E52, E58, F31, F33.