This article analyses the role of trie German immigrants in the industrial developmen! of Valdivia between 1850 and 19)4. This group managed to organise an important group of modern factories dedicated mainly to the transformation of agricultural and forestry products into manufactured or semi-manufactured goods. They were also sucessful in placing their production in the local, national and international markets, making Valdivia an important port for the export of industrial products. The establishment of the factory system in Valdivia extended the use of two of its principal characteristics: the división of labor and wage payments in cash.