mmigrants was Carlos Anwandter, an exile from Luckenwalde who arrived to Valdivia in 1850 and in 1858 founded Chile's first German school. Other Germans left the city and became settlers, drawn by the promise of free land. They were often given forested land, which they cleared to turn into farms. Native Mapuche and Huilliche either sold their land or were pushed into reservations. The Osorno department of Valdivia Province was moved to Llanquihue Province (created in 1853) as consequence of German immigration to the Llaquihue area.
Valdivia prospered with industries, including shipyards, the Hoffmann gristmill, the Rudloff shoe factory, the Anwandter beer company and many more. The steel mills of Corral were the largest recorded private investment in Chile at the time, and were the first steel mills in South America. In 1891 Valdivia became a commune according to a law that created such subdivisions. After the Malleco Viaduct was built in 1890 the railroads advanced further south, reaching Valdivia in 1895. The first passenger train arrived in 1899. In 1909 a fire destroyed 18 city blocks in downtown Valdivia,[] which were rebuilt with modern concrete buildings. By 1911 lumber production, from clearing native forests, became the most important industry. Cattle-raising was a growing industry, and wheat was grown on the cleared lands. Lumber, cattle, leather, flour and beer were exported. In 1895 the city's population was of 8,062 inhabitants and was estimated in 9,704 as of 1902.
The economic prosperity of Valdivia continued throughout the first half of the 20th Century. In 1917 the first "Valdivian Week" (Spanish: Semana Valdiviana) was celebrated. Chile's oldest beauty content, "Queen of The Rivers" (Spanish:Reina de Los R�os) began the same year. The city evolved as an early tourist center in Chile, while popular songs that named Valdivia and the Calle-Calle River made it
