Main FI Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
From Fourth International, March 1947, Vol.8 No.3, pp.75-79.
Transcribed, edited & formatted by Ted Crawford & David Walters in 2008 for ETOL.
Hard on the heels of General George C. Marshall’s appointment as Secretary of State come declarations from Washington that it will “tighten its bonds” with other American republics. Wall Street publicists, after gleefully recording the fact that Marshall supported standardization of arms, armies and air forces along US lines, predict that he will press for an early inter-American Conference on “mutual defense,” come to terms with dictator Juan Peron of Argentina, and – of course! – inaugurate a vigorous program “to combat communism” in Latin America.
Marshall will undoubtedly step-up the pace of executing Washington’s plans regarding the Western Hemisphere, plans which have gone well beyond the blue-print stage for some time. A more aggressive policy in Latin America is seen as a necessity by American finance capitalists. American productivity; increased by 50 per cent during World War II, is piling more billions of dollars in profits on top of the fabulous amounts already accumulated in American banks. With US industry rapidly saturating the “normal” markets, production threatens to grind to a halt, unless other markets can be found. To prevent a drying up of profits, American imperialism must exploit every available market and, wherever possible, open new ones. Hence the increasing stress on Latin America, always so high on the list of Washington’s strategic considerations.
The Caribbean Islands, Mexico, Central and South America, were the happy hunting grounds of American imperialists in the period between the First World War and the 1929 depression. Wall Street speculation was rampant during the Twenties. And although profits were somewhat disappointing during the Thirties, Wall Street still considers the area as its private preserve. Henry A. Wallace, until recently Truman’s Secretary of Commerce, believes Latin America is the most important section of the world for American capital and has time and again urged American capitalists to increase investments there.
Wall Street needed little urging in the past; 42 per cent (investments in enterprises completely or partially controlled by American capitalists) of US imperialism’s total direct investments abroad were in Latin America in 1939. Income on this investment averaged almost 6 per cent in 1938, according to Willy Feuerlein and Elizabeth Hannan in their book Dollars in Latin America. In their opinion, “past performance of US direct investments” there “has thus been good.”
Latin America was severely hit by the world depression of the Thirties. The awakening middle and working classes of Latin America found their countries saddled with huge debts. Payments and interest on fantastic sums of money borrowed by corrupt government officials for extravagant and often utterly useless projects, were draining their national treasuries. The popular demand for economic independence was augmented throughout Latin America by the fiscal crisis precipitated by the world depression. With national treasuries bankrupt or nearly depleted, and with the masses demanding a halt to Wall Street’s bleeding of their countries, Latin American government officials were forced to seek a way out.
While outright repudiation of foreign debt has not been resorted to by the Latin American countries, measures which amount to nearly the same thing have been fairly common and have caused some losses to Wall Street investors. Through the device of exchange control, for example, a measure adopted by most Latin American countries in the Thirties, governments were able to juggle exchange rates and control available foreign exchange. In dispensing the accumulated exchange the necessities of the nation come first, servicing and retirement of foreign debts are low on the list. In many cases servicing of bonds lagged so seriously that their market prices dropped to a mere fraction of their face value. And in some cases, astute Latin American governments, responding to the pressure of the masses, bought back their bonds at these depreciated prices. Wall Street bankers were furious, but they had only two alternatives: send the US Marines to force payment; or refuse further loans. Since policing the whole of Latin America was impossible, they chose a modified form of the latter solution.
There are methods other than exchange control through which a government so minded can make it extremely difficult for foreign investors. And many Latin American governments, under the powerful prod of desperately poor and awakening masses, have often been so minded.
Nationalist movements in the past have caused considerable loss to foreign investors – complain the authors of Dollars in Latin America – and have diminished the incentive to new investment. Unwillingness to pay has at times been as important as inability to transfer funds abroad. If these movements should develop into an outright denial to foreign capital of any role in the development of the Latin American countries, then economic defense of the Hemisphere on a cooperative basis would be impossible.
Preventing or keeping to an absolute minimum the encroachment of other imperialist nations in Latin America is one of Washington’s primary objectives. Wall Street dislikes competition, but even more important at present are the political ties that flow from economic relations. The US is seeking a solution to the economic problem it confronts in Latin America. Washington’s experts have devised several devious schemes calculated to drive a wedge between Latin America and Europe.
The American imperialists are bent on complete domination of Latin America. The problem is – how to do it? Some among them, the minority at the moment, would like a return to the “big stick” policies employed by President Theodore Roosevelt. These imperialists and their political spokesmen recall with considerable satisfaction the invasion of Haiti and Santo Domingo, and the subsequent control of these countries’ revenues until American bankers were paid. They recollect with nostalgia the actions of the US Marines who, operating under orders from the “idealist” President Woodrow Wilson, established “order” in Nicaragua for the Wall Street bankers.
Although such measures, executed with vigor and unrestrained brutality during the first quarter of the present century, collected a few “bad” debts for the Chase National and the National City Banks, they were inadequate as a long-range policy. As a policy benefiting the whole of the American capitalist class they were an utter failure. Military intervention, the “big stick,” and other forms of undisguised imperialism cannot be successfully employed over the whole of Latin America. American imperialism arrived too late to carve out its empire with methods employed in previous centuries.
Subtler methods became a necessity, particularly after World War I. Moreover, two ideologists of American imperialism, Feuerlein and Hannan, state that retaliatory measures against Latin American “defaulters” on bonds and “confiscators” of foreign holdings would not work now, either.
Like renewed military intervention, it would not deal with the basic causes of nationalism, nor could it touch any of a great variety of measures which can legally be taken by a sovereign state to restrict. the rights and privileges of alien investors. These may be as damaging – they warn – as repudiation of bonds or confiscation of oil wells.
Washington accepted the new gospel with reluctance, but it did so several years before President Franklin D. Roosevelt proclaimed and popularized the so-called “Good Neighbor Policy.” By 1928 the State Department, under the guidance of an avowedly reactionary Republican, abandoned the “big stick” policy, called for “collective intervention” to solve inter-American “disputes,” and began camouflaging US imperialist aims beneath the gentle manner and benign demeanor of philanthropists. All that remained for the greatest demagogue of them all, Franklin D. Roosevelt, was to put a few finishing touches on the policy, give it a colorfully colloquial title and publicize it in his “fireside chats.”
Washington spokesmen now elaborately attempt to give the impression that the Yankee industrial and financial colossus has at last abandoned its predatory role in the Western Hemisphere and has become a great benefactor, humanitarian and altruist.
In all propaganda beamed south, Yankee aid in the industrialization of southern countries is spoken about and promised. Industrialization is the keynote. Nor is it hard to understand why.
A large percentage of the Latin American people live under primitive conditions, raise most of their food and have little or no money with which to buy manufactured goods. The countries are poor. Transportation is lacking to carry merchandise from the seaports to the interior. Although Latin America embraces an area several times as large as the United States, it is populated by about an equal number of people. Large sections still remain virtually uninhabited.
Tremendous sums of money are needed to combat disease, to improve communications and to establish both light and heavy industries. Although all of this development is necessary to improve the living standard of the masses, a very small portion of the investments holds forth the possibility for a profitable return. For, contrary to popular opinion, the southern republics are not blessed with abundant and diverse natural resources. While high-grade iron ore is not lacking, coal suitable for coking is rare. Heavy industry faces a serious handicap, not only from lack of steel and economical possibilities for making it, but also from lack of a large labor force. And, most important of all, the infant industries have only a small, poverty-stricken native market to supply: in competition with the well-established industrial giants of North America and Europe they would be smashed.
In order for the industry that now exists in Latin America to survive it must be protected by high tariffs. While such measures have made the development of a few native industries possible, they have raised the prices of commodities, thus limiting the market still further and have been a factor in keeping the living standard of the masses at an abysmally low level.
Although designed to aid native capitalists, the tariffs have often served the interests of a section of the American imperialists. Many North American capitalists were quick to take on the protective coloration of native industry by establishing branch factories. In some cases such enterprises are owned entirely by the parent company; in other cases ownership is shared with native capitalists; but almost without exception management is retained by the American investors. Branch factories have been among the most profitable investments in Latin America; but here, too, experts are warning Wall Street investors that the saturation point has nearly been reached.
Washington’s propagandists are exploiting the widespread and rapidly growing desire for economic independence that exists in Latin America. Latin Americans believe industrialization is the way out of imperialist bondage. But under the sway of imperialism, the poverty-stricken, debt-burdened countries south of the Rio Grande can industrialize only at the cost of further indebtedness to Wall Street or its Washington agents. With the possible exception of Argentina, none of the countries can finance even partial industrialization and the hoped-for economic independence.
American capitalists are only too anxious to supply the capital, either alone or with native capitalists as junior partners, provided they are insured against loss. Wail Street investors are worried about the effect of a “great variety of measures which can legally be taken by a sovereign state to restrict the rights and privileges of alien investors.” And they are disturbed by the mounting threat of debt repudiation and confiscatory measures. Therefore, they want their investments guaranteed by the American government. They plan on achieving this “modest” desire through two institutions which Washington was instrumental in establishing. First, there is the World Monetary Fund which has as its aim the elimination of exchange controls and other forms of currency manipulation which worked to the detriment of Wall Street in the past. Second, the World Bank which will guarantee the principal and a satisfactory return on foreign investments. In this scheme, the funds of the 38 nations, who are members of the World Bank, will guarantee the investments of, mainly, American bankers.
Moreover, money borrowed from the World Bank will be spent, principally, for American-made machinery, farm implements and tools, for rail and auto transportation, for hydroelectric plants, drilling and mining equipment and a host of other light and heavy manufactured goods of which, owing to the effects of the war on Europe, the United States is now the chief supplier. Thus American capitalists stand to make money two ways – by the sale of commodities and through interest on the financing.
At first glance it appears that the light industrialists in the United States would suffer as competing industries in Latin America are developed. It must be remembered, however, that talk about complete industrialization is pure propaganda intended for Latin America only. Secondly, as pointed out above, industrialization has rigid limitations. But it is true that some light industries will be affected adversely by even the limited industrialization that Washington is willing to back. For the most part these are the producers of textiles, shoes and similar consumer goods. (It should be borne in mind that the more influential capitalists who manufacture shoe and textile machinery will profit by the above.) Although some of the light industrialists oppose every move toward industrialization of Latin America, the stronger and more aggressive of this very group are already well-entrenched through branch factories in Latin American industry.
With the exception of Brazil, no industries are contemplated which will compete seriously with American heavy industry. The industries regarded as practical and profitable are supplementary and subordinate to industry in the metropolis. In the few cases where they are competitive, they are considered essential to US military power. Moreover, a certain measure of industrialization is a virtual necessity if American imperialism is to retain its hegemony in Latin America.
The United States “cannot absorb all the surpluses of even tropical products, such as coffee and sugar,” say Feuerlein and Hannan. “How could we manage to take their competitive products, hundreds of millions of bushels of wheat and corn and flaxseed and hundreds of thousands of tons of meat, wool and hides?” This is the dilemma US imperialism is confronted with: most of the countries in its backyard colonial domain must look to Europe for their major market; and hence are under compulsion to form economic and political ties with European nations.
The economies of all Latin American countries are extremely dependent on foreign trade. The southern republics must sell a few raw or partially processed products on the world market to obtain exchange for the purchase of manufactured commodities. Like all colonial or semi-colonial countries, they sell cheap products and buy costly ones. They are normally faced with a lack of foreign credits and in times of depression, or when one of their major purchasers is suffering a crisis, their economies become paralyzed.
The extent of this dependence on foreign trade is described by the authors of Pan American Economics (Paul R. Olson and C. Addison Hickman) as follows:
In nineteen of the twenty Latin American republics, a trio of products provided 50 per cent or more of total export values. Even in Mexico, the sole exception, three products furnished 37 per cent. In eleven nations, three products furnished 75 per cent or more of total export values, whereas in six cases a trio furnished 90 per cent or more of export values. Although such concentration is the epitome of territorial specialization and division of labor, it has plunged Latin America into more than one economic holocaust.
To overcome or alleviate this situation, which also causes extreme political instability and “threatens the security” of Wall Street’s domination, Washington is encouraging a diversification of Latin American industry. It is trying to free Latin America from its economic dependence on European markets.
“Recognizing that their dependence on Europe may involve a threat to our own security,” say the imperialist ideologists Feuerlein and Hannan, “we shall need to strengthen their domestic economies, as well as to provide sea and air defenses against foreign penetration.”
Washington experts, realizing that the projected “industrialization” of Latin America is at best a long-range perspective – some know full well that it is impossible under imperialism – are pressing for immediate measures that would free Latin American exchange for US purchases. Here again the policy that circumstances dictate for Wall Street’s southern empire dovetails with US imperialism’s broader aims. Washington is pressing for an International Trade Organization to control trade barriers, monopolistic practices, commodity agreements and other policies affecting world trade. Free trade, so Wall Street says, is the touchstone of world prosperity. But the proposition is not without an ulterior motive. If the restrictions on trade could be eliminated along with monetary manipulation, Latin American exchange would then be freed for purchases from the Yankee factory.
The free trade policy is, of course, counter to the Latin American trend toward raising barriers rather than lowering them. Latin American governments, impelled by the mass desire for economic advancement, are determined to protect their infant industries. With its virtual monopoly of credits which Latin America must have to even begin this herculean task, Washington hopes to force them into line.
Its drive toward war with the Soviet Union has forced Washington to subordinate other aspects of its Latin American policy to military considerations. While pressing every sector of imperialist penetration – airways and communications, cultural missions, student-professor exchanges, and so on – each in its way intended to extend Yankee influence – Washington policy-makers are placing major emphasis on “Hemispheric Defense.”
Right now, the War Department’s plans for the area have A-1 priority; military considerations are at the top of the list. Eleven of we twelve minerals on Washington’s strategic list in 1943 – manganese, chromium, tungsten, tin, bauxite (aluminium), antimony, platinum, mercury, mica, iodine, and sodium nitrate-can be secured in whole or in part from the Latin American countries. Their proximity to the metropolis plus development and control by US imperialists is of paramount importance in current war plans.
Ranking high among commodities needed in huge quantities during war is petroleum. Venezuela has vast fields containing 11 per cent of the proven oil resources of the world. Other countries are either producing or known to have large undeveloped sources.
Through “military cooperation” Washington hopes to secure these essential resources for its exclusive use and, through the same maneuver, make of Latin America an “impregnable fortress.”
The ‘War Department’s Hemispheric Defense Plan, through which Washington hopes “to standardize military organization, training methods and equipment” throughout the two continents and form a Hemispheric Army under US command, was at first opposed by experts in the State Department who feared it would defeat its aim by aggravating political tensions in Latin America; that it would associate the United States with tendencies toward military dictatorship; and most important of all, that it would increase the anti-imperialist sentiment of the Latin American masses.
In the August 1946 issue of Fortune, Big Business magazine, the historian Arthur M. Schlesinger Jr. presented the State Department’s argument in opposition to this policy. The “State [Department] asserted that no amount of staff coordination or lend-lease arms would stop sabotage or other anti-US activity if large numbers of the working people wanted to commit it.” Therefore, Schlesinger informs, the “State [Department] objected to the whole movement to focus Latin American relations on military issues.”
Washington overrode these objections. With the appointment of a five-star general as Secretary of State, military considerations will have a decisive influence. The nations of Latin America are to be shackled firmly to Wall Street’s giant war machine. “South America, strategically and politically, is the soft underbelly of US power,” declared Schlesinger Jr. Marshall and the War Department are determined to correct this “weakness.” Complete control of the two continents and the integration of their armies into a single, well-knit military unit with bases for planes, ships and ground forces, would give US generals and admirals an incomparably powerful base and field of maneuver.
All this is to be achieved, so Washington hopes, through such demagogic formulas as “muhi-lateral action,” “collective intervention,” and so on. The 21 nations are to meet (at Rio de Janeiro by midsummer, according to reports emanating from Washington this month) in order to work out a “mutual defense treaty.”
Although the War Department’s Inter-American Military Cooperation Bill has not been approved by Congress, various phases of it are, nonetheless, being carried out. The US controls numerous bases in Latin America or has working agreements with native governments which amount to practically the same thing. Many Latin American governments are already supplied, at least in part, with American armaments. Most of them are anxious to get more. More than a few dictatorial governments regard US guns and planes as easily accessible and efficient instruments for keeping their unpopular regimes in power.
The October 1, 1946 World Report announced that the US is seeking control over 4½ million square miles to “protect” the 500 miles of the Panama Canal Zone. It already has “bases in Bermuda, the Azores and Brazil,” but considers the “main defensive circle around Panama” much larger. US military missions, considered of vital importance in preparation of the Hemispheric Army, have been sent to 13 Latin American countries this year. They have been instructing in US methods and in the use of American arms and equipment. The number of missions and men participating in them is “to increase from now on.”
“High-ranking American officers like General of the Army Dwight D. Eisenhower,” who recently completed a junket to two key countries – Brazil and Mexico, “and Fleet Admiral William F. Halsey, are to make 15 good-will tours through other American Republics this year,” continues World Report. “Spanish and Portuguese editions of US field manuals and military journals and reviews are distributed free of charge. More than 100 Latin-American officers are to study at US service schools. In all, the program for this year (1946) is double what it has been in the past,” that is, double what it was even during the war.
Dispensing armaments and knowledge of US war methods, aside from the direct job of preparing the Latin-American countries for war in the near future, will in some respects implement Washington’s over-all plan for the hemisphere. Military and semi-military politicos are impressed with American military might. Intimate knowledge of it impresses them still more, makes them feel more secure against the masses, and gives them pause before taking any action that might draw the wrath of the Yankee colossus down on their heads. Most of the Latin American governments show signs of willingness to “cooperate.”
Very little is now heard about the growth of fascist organizations in Latin America. Although reactionary right wing groupings and parties do exist, and in some cases are actually in power, Washington finds it more convenient at present to soft pedal that angle of its propaganda. Even General Juan Peron, Argentine dictator and for some time the State Department’s chief target in Latin America, is being wooed by Washington. The truth of the matter is, the military dictators and reactionaries in Latin America are anxious to come to terms with Washington.
The Stalinists are making a lot of noise about US imperialism at present because such propaganda fits in with Stalin’s political schemes. Although their anti-imperialism is a shabby farce, they can appear quite revolutionary in the eyes of the genuinely anti-imperialist masses.
For among the masses and especially the workers, the response to Truman’s plan, although as yet poorly organized because of the class-collaborationist labor leaders, has been one of violent hostility. The workers have reacted, as they will in the future, much as the State Department specialists feared they would. Washington has good reason for being alarmed by the growing anti-imperialism, the mounting mass radicalization that is taking place in Latin America. It can very easily bring to nought their grandiose scheme.
Stalinist parties have long been a factor of some importance in the political life of several of the southern countries. Following the policy characteristic of Stalinism throughout the world, they are obedient to the will of the Kremlin. When Stalin was nursing the good will of the Western “democracies,” Latin American Stalinists avoided any talk about American imperialism and called for no actions whatever against it. In following this traitorous policy, they supported dictators such as Penaranda of Bolivia and Vargas of Brazil, both of whom were in the favor of the Yankee imperialists. They condemned the Argentine military dictatorship and lent support to the State Department’s anti-Peron campaign.
As the Kremlin’s relations with Washington and London changed from amiability to hostility, the Stalinist parties began to flaunt anti-imperialist slogans. Reversing their position of yesterday they are now directing their main fire against American imperialism. Almost overnight they discovered that Dictator Juan Peron is a just, peace-loving, yet valiant fighter against imperialism and a great benefactor of the Argentine Republic.
Unfortunately, a large section of the Latin American masses, many of whom are just now experiencing a political awakening, are still unaware of the treacherous role of the Stalinists. Despite the fact that the Communist parties have turned into the absolute opposite of the party led by Lenin and Trotsky, recently radicalized workers still associate them with the party of the October 1917 Revolution. Moreover, the politically inexperienced Latin American workers are frequently fooled by the “anti-imperialism” featured in current Stalinist propaganda. As a result the Stalinist parties are still able to attract considerable numbers of Latin American workers.
But it is not only the Stalinist parties which the State Department fears will disturb Wall Street’s security in the Western Hemisphere. Washington fears even more, and with just cause from its point of view, the genuine revolutionary development of the workers in Latin America .
Washington is well aware of the increasing causes for mass radicalization in Latin America. The standard of living has declined drastically in the last few years. It is still headed sharply downward. Brazil’s masses are living at one-third the prewar standard. The same is true in Mexico where prices have tripled since 1939. In 1945 alone, prices rose 25 per cent in Brazil. Prices are skyrocketing throughout Latin America. The workers are fighting back with strikes for higher wages.
What World Report for August 29 tells about Brazil is typical of the rest of Latin America. “Significant by-product of inflation is the tendency to blame the US for Brazil’s economic mess,” says this Wall Street organ. “Merchants explain their high prices with the claim that imports from the US are scarce and expensive. Some Brazilians charge the US got millions of dollars worth of war materials from Brazil at bargain prices and is paying for them with US goods sold at inflated prices.”
Brazil is in the throes of one of the worst economic crises in its history. Other Latin American countries have either entered or are on the threshold of similar or worse economic crises. They will undoubtedly be accompanied by profound political disturbances, as witness the great mass demonstrations against black market profiteers last August.
Genuine working class revolutionary parties – sections of the Fourth International – are small, but they have unlimited opportunities for growth in the political and economic maelstrom that will engulf Latin America in the near future. Although a substantial section of the native capitalist class sees its destiny linked with that of Wall Street and Washington, the vast majority of the workers have no illusions about what this will mean for them. A mighty anti-imperialist storm is brewing in Latin America. It is not without cause that Washington strategists are becoming ever more concerned with a solution to their Latin-American dilemma as they rush madly toward the Third World War.
Main FI Index | Main Newspaper Index
Encyclopedia of Trotskyism | Marxists’ Internet Archive
This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Encyclopedia of Trotskyism On-Line as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.
Last updated on 12.2.2009