v Chapter 27- Latin America (LATAM) Overview:

Ø LATAM gains independence by mid-1800s (Map)

§ Breaks colonial trade monopolies

§ Positive economic factors for Latin America:

· Very rich in natural resources

¨ Still 100+ years to gain $ prosperity & stability

§ Who organized & led LATAM wars of independence?

· What were this group’s motives?

¨ Resist influence of Liberal ideas growing in Europe

¨ Preserve social & political status quo (of whom?)

¨ Break colonial trade monopoly

· Who held political power after the wars?

Ø Impact of Wars of Independence on infrastructure:

§ Effect on mines, livestock, organized work force?

§ Economic dependence shifted from Spain to whom?

Ø Key factors & questions of historians wrt LATAM history:

§ Why less prosperous & stable than Europe & US?

· LATAM role in integrated global economic system

¨ Timing of this integration following independence

· Impact on LATAM’s economic independence?

§ LATAM’s incentive for development of export economy?

· Raw materials for European finished products (result?)

§ Result of focus on development of export economy?

· Vulnerable to Europe & N. American supply & demand

· Susceptible to foreign business & banking interests

· Also exposed to potential political interference

Ø Downside of concentrating on 1 or 2 export products:

§ Too narrow economic base for domestic/regional trade

§ Too vulnerable to global commodity price fluctuations

§ Europe/US able to exploit at LATAM’s economic expense

v Independence without Revolution

Ø Immediate Consequences of Latin American Independence

§ Economic exhaustion & political instability (exception?)

§ Major political factors following LATAM civil wars:

· Broad segment of population wished government ill

· Major economic contraction of 1830s

· Difficult & isolated terrain with vast distances

¨ Inter-regional trade virtually non-existent

¨ Few institutions fostering regional trade

· Absence of capital investment to repair infrastructure

¨ Peninsulares returned to Spain or left for Cuba

§ Result: Commercial trade shifted from Spain to whom?

· LATAM’s incentive: protection, markets, capital invest.

§ Other major sources of discontent & disagreement:

· Character of future government (King or republic)

· Creole elite disagree among themselves on objectives

· Conflict among regions on transportation tariffs

· Conflicting interests of competing areas & groups:

¨ Inner rural hinterland vs. Port cities

¨ Civil elite vs. military elite

Ø Absence of Social Change

§ One area of mutual agreement?

· Strong opposition by Creole elite to social reform

§ With independence=> came abolition of slavery by 1855

· One notable exception?

§ Voting rights depended on what qualification?

· Status of peasants?

§ Racial codes abolished=> but not racial prejudice

· Who tended to comprise social & political elite?

§ Status of land reforms following independence?

· Whose interests most likely to be protected?

§ Absence of any substantial social or $$$ revolution

· One key exception (1910)?

§ Result: Regime change only involved elite power shift

· Majority poor population & its status unaffected=>

¨ Lack of trust or loyalty toward regime as result

Ø Control of the Land – key questions:

§ What system dominated LATAM’s agricultural economy?

§ How was its elite society organized?

§ How was its labor force organized & controlled?

Ø Control of the Land:

§ Hacienda system & Latifundia dominated agro. economy

· Virtually law unto its own

· Grew even larger during 19^th century=> who?

· Labor intensive with little heavy machinery

· Main products?

§ Landowners constituted own society

· Families often intermarried

· Nurtured friendships with urban elite colleagues

· Wielded political power & influence

· Ruled countryside with protection of army

§ Rural labors depended exclusively on landowners

· In Brazil slavery would persists until 1888

· Other rural areas=> debt peonage (?) widespread

¨ Large landholdings vs. yeoman farmers of North

¨ No education for peasants

§ Growth of LATAM urban life during latter 19^th century

· European immigration – supported by Creole elite

· Social & political impact of urban growth

Ø Submissive Political Philosophies

§ Creole elite embrace European Liberalism=> result?

· Republican govmnts w/limited suffrage- qualification?

· Ignore social & economic plight of the poor

· Manifested racial prejudices toward whom?

§ Economic liberalism & desired British investment:

· Result: Creole elite favor free trade

§ How did LATAM maintain its trade balance with Britain?

· “Capital flight” equivalent => gold & mineral stocks

· Exchanged for finished products from Europe/Britain

§ Exploiting the land=> the liberal creed

· Agriculture & minerals traded for cheap imports

· “Bill payer”=> confiscated Church & Indian lands

¨ Liberals believe land exploitation = progress

§ Influence of Auguste Comte=> positivism

· Cult of science & technological progress

· Justification & rationale for technocrats & dictators

§ “Scientific” racism=> preserves social status of whom?

§ LATAM conservative intellectual heritage=> influence?

· Rise of military elite=> guarantor of order & stability

· Virulent anti-communists (esp. post 1917 & 1957 Revs)

v Economy of Dependence

Ø Impact of Wars of Independence

§ Destroyed Spain’s & Portugal’s trade monopolies

§ Opened ports to new trading patterns

§ Remained $$$ dependent on non-LATAM economies

§ Political independence & free tree=> but w/caveate?

· (Europe/US now shape economic life for LATAM)

· Why? (impact of large internal domestic markets)

Ø LATAM forced to trade primarily outside its region

§ Export of raw material remained as it was before

§ Imports from Europe still primary mode of exchange

§ Jungles & mountains prevent East-West trade (Map)

§ No road/RR system for regional/domestic trade

§ Little domestic investment other than for export economy

Ø New Exploitation of Resources

§ Significant war damages to LATAM’s infrastructure

· (Mines, machinery, labor force, agriculture crops)

· To fix above=> what was LATAM forced to do?

· Seek capital, investment, trade, & transport from where?

§ Role of Britain:

· Predominate $$$ influence=> replace Spain monopoly

· Saturate LATAM markets with manufactured goods

· Discourage competition & internal manufacturing $$$

· Restored mining industry => problem? (raw materials)

§ How did LATAM pay for its imports & foreign services?

· (Europe’s key demand from LATAM in exchange?)

· Political & economic impact on LATAM as result?

¨ (Agricultural & export sectors gain political pwr)

· Food stuffs produced?

¨ (wheat, beef, hides, hemp, coffee, cocoa, etc.)

§ Impact on & of Government Policy?

· Expand & extend cultivated lands to support economy

¨ Land exploited until depleted then abandoned

¨ How did government acquire more land?

· Influence on land speculation?

· Incentive for domestic manufacturing? Cheap imports?

§ Therefore post-1880s=> $$$ prosperity based on what?

· Specialized agro commodities or mineral exports

¨ The long term problem with that economic situation?

¨ Locked LATAM economy into dependent $$$ cycle

¨ Exports (raw materials) pay for imports (finished)

§ NTL=> 1870-1930 viewed as LATAM’s “golden age”

· Primary cause of this era’s economic prosperity?

¨ Global economic market link w/Europe/US demand

§ Three broad categories of late 19^th cent. LATAM exports:

· 1. Common available foodstuffs (wheat & beef)

· 2. Tropical unique products (bananas, sugar, coffee)

· 3. Natural resources (copper, nitrates, petroleum)

§ Impact of above trade patterns & internal improvements:

· Reinforced economic link to Europe & later US

· Euro/North America provided $$, tech, engineer skills

¨ (build bridges, roads, RR, shipping, new mines)

· Transport system built to support what (exports)

§ Impact of any European/US economic downturn?

· LATAM’s economy severely affected (no other outlet)

· LATAM had no control over economic destiny

· Tied directly to global supply & demand – why?

¨ (too narrow product base & no internal trade)

Ø Increased Foreign Ownership & Influence (late 19^th cent.)

§ False sense of long term economic security

· Growing European demand for LATAM exports

§ Export market profits discourage development of what?

· (local industry – with one exception=> export support)

· Land speculation dominated local investment

· No incentive for foreign investment in local industry

¨ (why help develop potential competition?)

§ LATAM soon loses control/ownership of key industries

· Nitrate industry prime example (80% foreign owned)

§ Euro/US used political/military pwr to protect $ interests

· Britain dominated region until early 20^th century

¨ Diplomatic & military direct/indirect=>

Ø Shape local domestic politics to suit interests

· US dominated following 1898 (why that year?)

¨ US acts as regional policeman (pix p. 765)

¨ 1903 => TR supported Panamanian independence

Ø US motive?

¨ US “Dollar Diplomacy” replaced Britain by 1920s

§ Impact of any shift in global demand on LATAM’s $$$?

· Rise of oil exports

Ø Economic Crises and New Directions

§ Impact of Great Depression on Latin America

· Commodity prices & European/US demand?

· Latin America defaults on foreign loans

¨ Suspends interests payments

¨ Impact on foreign creditor financial institutions?

§ Eventually $$$ downturn would lead to new $$$ era

· Post WWII sees rise of economic nationalism

· Determination to create local independent $$$ sectors

¨ Aim: economic independence for Latin America

¨ Strategy: cut ties & lessen vulnerability to global $$

§ Prime motivation for LATAM to develop own industries?

· Role of export economy’s collapse on LATAM’s $$$

· Perceived need for “import substitution”

· Result of “neo-colonial economy” on LATAM’s $$$

¨ Vulnerable dependent economy beyond its control

§ By 1945=> 3 major LATAM manufacturing areas emerge:

· 1. Prep of raw materials for export (sugar, copper, oil)

· 2. Supply for local demand (utilities, textiles, machines)

· 3. Reassembly of imports (assembly by cheap labor)

· All of above categories considered light industries

v Search for Political Stability

Ø Background: limited political experience of colonists

§ Strong centralized government form Madrid

§ Royal bureaucrats composed of Peninsulares took charge

§