ON THE WORLD TODAY
THROUGHOUT large regions of Latin America, industrial development is considerably greater than is commonly’supposed. Argentina’s 1943 industrial production was 4 per cent greater in money value, for example, than its agricultural output. In Brazil, war conditions have greatly accelerated the trend toward industrialization, and industrial production rose from 35 per cent in 1937 to 60 per cent in 1945.
In Chile, a third of those gainfully employed are industrial workers. In Mexico, 22 per cent of the national income in 1942 came from manufactures. Here and there an “underprivileged” republic like Haiti struggles along with a bare million dollars invested in a few rum distilleries and oilseed crushing mills. But even the smaller tropical countries register more industrial activity than they did a dozen years ago.
Large or small, most Latin American industries confer economic benefits on the domestic hinterland by using mainly domestic products as raw materials. Brazil’s textile industry — Latin America’s largest — processes chiefly Brazilian cotton. Similarly, the textile factories of Argentina, Uruguay, and Chile process native wools. The tropical countries refine their own sugar and operate their own distilleries.
Only domestic ores are used in Brazil’s considerable pig-iron output. They will be used almost exclusively in the coming 300,000-ton per year operations of the “big-steel” plant now building at Volta Redonda near Rio de Janeiro.
Most of the cattle-raising countries have reached, or are approaching, self-sufficiency in the manufacture of shoes. Moans still can be heard, in certain shoe-manufacturing centers in the United States, because all of the large and many of the smaller republics have established self-sufficiency in shoe production. In the course of the years, the United States has, in fact, lost its market for shoes in Latin America. But from the standpoint of Hemisphere economy, there is another side to these laments.
Today cheap shoes of domestic manufacture are being worn by millions of Latin Americans who, when they were dependent for footgear on expensive imports, wore no shoes at all. Also, by escaping hookworm and ground-carried diseases, they live longer, produce more efficiently, and have more money to spend in inter-American markets for many things besides shoes.
Cement and building materials are produced almost everywhere. Furniture is manufactured from domestic lumber. Small and large glass-making and bottle-making works have grown up around the canning and the brewing industries in fully half the republics. Since the 1930’s, domestic pulps in half a dozen countries have been used increasingly in paper manufacture.
Higher wages in Brazil
For both the national and the over-all Latin American economies the industries are increasing purchasing power in proportion as industrial labor is paid higher wages than are paid to agricultural labor. They are increasing national production, basically important in countries with a low standard of living and an inadequate supply of goods. In practically every Latin American republic, they are taking workers out of the glutted pools of agricultural labor.
Brazilian textiles are a case in point. A relatively large.industry, Brazilian mills have about two thirds of the spindles in use in Latin America. And yet, by United States standards, it is a low-wage and lowefficiency operation. Brazilian operators tend only about one third of the machines tended in the United States, and Brazilian loom-tenders, until recent wage adjustments were made to inflationary war prices, earned on an average only 75 cents a day.
Even with wages as low as 75 cents a day, families with several members employed in factories are better off than the average Brazilian farm family, which has an income of less than $200 a year. They are in the market not only for a considerable range of Brazilian farm and factory products, but for a few imported articles for their convenience and comfort. Such families are no longer on the land, where they would further depress the price of farm and plantation labor.
Furthermore, expanding industry needs more customers. Each new processing or manufacturing plant is interested in the establishment of other industries, whose employees will be better able to consume its products than rural workers living off the land, with a few dollars a year thrown in for “store groceries.”
In building her Volta Redonda steel mill, Brazil, for instance, is seeking outlets for steel rails, steel plate, and construction materials in the neighboring South American republics as well as in the domestic markets. The Sao Paulo plants began manufacturing light machinery on a considerable scale during the war, and even experimented modestly with machinetool production with an eye to future exports to Uruguay, Argentina, and the West Coast countries.
Power plants and public health
Wherever industry has developed on a large scale in Latin America, its requirements have a direct bearing on the major social and economic deficiencies of the republics. Illiterate labor is inefficient labor, and for most technical operations something considerably better than grade school literacy is required of the worker. Hence, generally speaking, public education ranks highest in Latin America’s industrially advanced countries, like Argentina and Chile, and in such communities as Mexico City, Brazil’s Sao Paulo, Colombia’s Medellin.
Sick labor, too, is inefficient labor, and factory hands work so close together that contagious diseases must not be allowed to spread. So Latin American industrial plants often set regulations for health and sanitation which are adopted by governments as basic public health policies.
The strongest pressures for power development and for the improvement of backward transportation systems come from industries in search of greater productive capacity and better access to markets. Industry develops the taxable resources to pay for power, railroads, highways, and also educational and public health facilities.
If, during its recent flood of war profits, Brazil had had a revenue-producing system approaching the rigors of United States taxation, it could have financed a highway linking its northern commercial ports with Rio de Janeiro; and the TVA’s it needs might already be out of the blueprint stage.
Pressures toward economic development do not come exclusively from “big industry" in the recognized industrial centers. The settled regions of Latin America are dotted with hundreds of small towns and cities, having from 2000 to 40,000 population, which serve their immediate regions as trading hubs far more exclusively than do towns of similar size in the United States.
Suppose one of these towns acquires a small power plant, and in its wake two or three small industries — a canning works, perhaps a crude woodworking and furniture shop, and a tannery. Immediately, the community leaders become interested in passable roads into the surrounding area, so that supplies and customers may come in and deliveries can move out without interruptions. Or they start building a passable road to the nearest trading centers. Then, sooner or later, they want an all-weather feeder road connecting with a national highway or railway, so that local products can be sold regionally, or even nationally.
But the outstanding service which industrial development can render to the modernization of the Latin American economy is financial. In proportion as it increases property values, profits, purchasing power, volume of business, living standards, and wealth of goods, industrial expansion will increase the taxable wealth of the republics as a whole. It will provide them with resources of cash and credit to pay for social and economic improvements, from schoolhouses to powder dams — improvements which they desperately need in order to compete with industrial nations on equal terms.
Colombia and Bolivia move to the right
No new major political tensions have arisen, but there has been little progress toward relieving existing ones. In Colombia, Mariano Ospina Perez, Conservative Party candidate in a three-cornered contest with a divided Liberal Party ticket, was elected President. No old-fashioned “Yanqui"-baiting Conservative, Ospina Perez at once proclaimed his friendship for the United States and announced his intention of visiting Washington before his inauguration in August. The Liberal split and the election of Perez were considered in our State Department as symptoms of a Latin American rightist trend.
In Bolivia, the government installed by an ArgentineSpanish-Nazi “putsch” two years ago last winter has begun openly playing politics on the side of the Peron regime in Argentina. In a controlled byelection early in May it brought about the election to Congress of Major Elias Belmonte, notorious Nazi agent in the 1943 coup and in other South American intrigues. Now it is proposed to return “Deputy” Belmonte from Spain to Bolivia under “legislative immunity.” Meanwhile, the government has crushed an attempted “liberal” coup.
Can we do business with Peron?
The United States has been under increasing pressure to compose its quarrels with Peron. A few weeks before his inauguration, Peron called John M. Cabot, American charge d’affaires at Buenos Aires, for a conference, insisted that he was no fascist, but a good practicing democrat, and frankly proposed that the United States and Argentine governments bury the hatchet in order to unite the Western Hemisphere for the coming Anglo-American war against Soviet Russia.
Even stronger pressures were being exerted on the home front. In their increasing policy consultations with the State Department, top generals and admirals have been taking a firm hand in discussions of Argentine relations during the spring. Their advice, too, has been that ideological differences and even the failure of the Peron regime to cooperate in the war should be forgotten for the sake of patching up the Hemisphere’s defensive unity.
Against these combined currents the Truman administration appeared to bend a little. The State Department and its military advisers have gone openly to work drafting American proposals for a mutual military assistance treaty with the Latin American nations, Argentina included, to be considered by the next Inter-American Conference of Foreign Ministers.
In May the President sent a special message to Congress urging passage of a bill to make up-to-date American military equipment available to the Latin republics. A “trial balloon” proposal was released by the Inter-American Defense Board in Washington, suggesting reciprocal use of military bases in emergencies.
Whatever the objectives of these conciliatory gestures, Washington soon knew the results so far as Argentina was concerned. President Juan Peron’s personal newspaper in Buenos Aires, La Epoca, denounced the Truman arms program as a wicked “imperialistic” scheme of the “Yanquis” to dominate the Hemisphere by military power, and declared Argentina should have nothing to do with it.
The United States, after all the omens and pressures and attempted concessions, was back where it started. It had been told once again that it could have Hemisphere unity on Peron’s own terms.