Latin America

on the World Today

THE tensions behind the present disturbances in Latin America are tensions of frustration, insecurity, disappointment, and hopelessness. During the years of the war and an active Good Neighbor Policy the Latin American nations pinned their faith on a consistent improvement in their economic conditions, and the improvement has not been forthcoming. They were encouraged to industrialize, only to find today that the prices of new machinery and of imported materials are often prohibitive. They were urged to pile up relatively huge dollar balances in payment for their war supplies. But with rare exceptions, no effective steps were taken to prevent the dollars from being spent on luxury items at post-war inflation prices.

The republics were led to believe that consistent aid, in the way of economic partnership and mutually profitable financial support, would be provided by the United States as a “good neighbor.” Instead, most of the economic operations of the Good Neighbor Policy were liquidated in Washington within a few months, when the war ended.

Loans for economic improvement were cut down to a dribble, so far as government financial agencies like the Export-Import Bank were concerned. Private finance was asked to carry on the job of promoting Latin American economic development. But except in certain lucky projects, this was an impossible assignment — if only because of the exchange obstacles to dollar payments even on highly profitable investments.

Within the republics, these factors have rolled up an ever increasing storm of internal economic discontent and disturbance. Currencies have depreciated. Inflation has injured merchants and industrialists, infuriated labor whether organized or unorganized, and terrified Latin American families in all walks of life.

Peru’s new deal fails

The Venezuelan and Peruvian military coups were curiously identical both in causes and tactics. The Peruvian and Venezuelan democratic regimes came into being in 1945 — Peru’s through the choice of Dr. José Luis Bustamante as president in the first fair and free election of the country’s history; Venezuela’s through a violent revolution of a nation-wide popular party called Acción Democrática, aided by a faction of ostensibly progressive young army officers.

Both regimes staked their future on hopeful economic programs. The Peruvians proposed a series of agrarian and educational reforms aimed at bringing the Indian mountain peons into full partnership in the economic life of the country. The Venezuelans aimed at balancing their economy so that the dirt-poor peasants and small farmers of the rural hinterland could share in the upper classes’ immense oil wealth. Each was recognized to be a generation-long job. But there was no reason why, under halfway favorable conditions, a single presidential administration should not make headway.

Headway could hardly be made, however, with the Hemisphere’s economy in the doldrums. Peru needed dollar exchange, industrial progress, and loans and investments, merely to launch its program concretely. Not being able to draw on assistance, or even sympathy, the Bustamante administration got nowhere. So in default of a program, the Peruvian Congress, by no means the most competent democratic political body in the world, developed a loggerhead situation between the Apra Party, which favored the reforms, and the Conservatives, who opposed them. As a result, legislation was deadlocked afler Bustamante’s first year in office.

No reform for Venezuela

Venezuela, with its oil wealth and its debtless solvency, needed loans less. But its problems of establishing a domestic revenue system which would supply the funds to build roads into the farming regions, improve farm practices, and assure the peasants of transportation to their markets were hardly less complicated than trying to sell the Good Neighbor Policy in Washington again.

Meanwhile, the government had to be reorganized. Acción Democrática accordingly drafted and adopted a new constitution, providing for universal suffrage and election of the president by popular vote. Under the new constitution Dr. Rómulo Gallegos, outstanding educator and internationally known novelist, was elected president by an 80 per cent majority, and inaugurated in February, 1948.

on Latin America

But much time had been lost, and attempts to balance the economy were seemingly frustrated, just as Peru’s program for agrarian reforms was frustrated by lack of means and political deadlock. And when the Gallegos regime attacked ils revenue problem by proposing a heavy increase in oil taxes, it appeared to be a blow at the new Venezuelan middle classes in cities like Caracas and Maracaibo, who live largely off the country’s oil prosperity.

Both in Peru and in Venezuela, large numbers of middle-class people made it plain, in the kind of conversations which shrewd power-polilicians hear, that they would welcome at the head of their governments “strong men" who would protect them in their newly privileged status. Now that they had something at stake, the middle-class groups tended to revert to the classical pattern of Latin American politics beloved of the old-time landed aristocracies. They welcomed dictators who would hold the shaky economic line for them.

The “strong men" act

As usual, the “strong men “were ready. President Bustamante in Lima and President Gallegos in Caracas were first confronted with demands that they take enough military officers into their cabinets to make them virtually prisoners of the army. When they refused, they were deposed and sent into exile. Both coups were quick “inside jobs “ in the presidential palaces, and so bloodless.

The rest was routine — the same routine in both republics. General Odria set himself up as provisional president in Lima; Lieutenant Colonel Carlos Delgado Chalbaud, outstanding military leader of Acción Democrática’s 1945 revolution, as provisional president in Caracas. Both chose military juntas for their cabinets. Both dissolved the national Congress, suspended the constitution, and began governing by decree laws.

Each outlawed his country’s strongest political party — Apra in Peru, Acción Democrátiea in Venezuela—as a dangerously subversive “minority.”Both dictators noisily proclaimed that they had saved their republics from “Communist" domination, although the Apristas have been sworn foes of Peru’s small Communist Party for more than twenty years, and Venezuela’s Communists, in the 1945 revolution, put up the last bloodletting resistance to Acción Democrática.

These farcical explanations were not offered to explain the overthrow of two promising experiments in Latin American democracy, but to make stage thunder in Latin America’s coup politics. And ex-President Gallegos’s charges that American oil companies and American military intrigues brought about his ouster make no better sense. The democratic experiments died on the vine because of economic and financial undernourishment.

Probably there can be no buffer against disasters of this sort in Hemisphere relations until some statesman of the competence and protocol standing of Sumner Welles is brought into the State Department to reactivate the Good Neighbor Policy.

Opportunity for private investment

Here and there are a few encouraging signs. In the country’s trade and investment centers, for instance, there has been increasing concern, since the war, over inter-American economic relations. One proposal that has come out of discussions of dollar balances and trade stoppages has to do with a larger investment of United States capital on a partnership basis, in consumers’ industries and more efficient merchandising establishments, employing chain-store methods, within the economically more developed republics.

It already has reached an advanced blueprint stage, and the blueprints may be a tip on a new type of Latin American investments. In theory, of course, such a project is a close relative of the Good Neighbor Policy itself. More and cheaper consumers’ goods, so the idea runs, spread employment around, raise living standards, freshen internal trade activity — and may help to overcome lack of purchasing power and dollar shortages.

Again, a new lift in prosperity may be offered to Mexico in the shepe of a deal permitting, under ironclad royalty agreements and strict government control, some private exploitation of Mexico’s still vast oil resources. The Army and Navy, who want “defensible oil" in large quantities available near home for emergency purposes, are hot for it and are pressing the Washington government to throw its full weight into negotiations.

Such programs, however, need a firm and consistent Good Neighbor Policy of a strong government behind them. Without this, plans for consumer-goods industries and distribution, or for settling the touchy question of Mexican oil exploitation, can die as easily as Latin American experiments in democratic government.