ADOLF HITLER, a Latin American diplomat has suggested, deserves a statue in the patio of the Pan American Union in recognition of his services in promoting hemisphere solidarity. When his submarines attacked and sank our merchant ships and the merchant ships of many Latin American republics within gunshot of American shores, they drove home the need for common action against a common foe. And the action of his Japanese allies further emphasized that need. By seizing the Philippine Islands, British Malaya and the Dutch East Indies, Japan forced us to look to the resources of this hemisphere for most of our supplies of strategic materials. Finally, by cutting off the Latin American countries from their overseas markets and sources of industrial products, Germany and Japan compelled them to turn to us for salvation from economic disaster. All the American states are now facing a common problem -- how to make the most effective use of their combined resources for mutual aid.

Fortunately, our relations with our neighbors in this hemisphere were better in December 1941 than they had been for many years; in this respect we were not caught unprepared. Beginning at Buenos Aires in 1936, a series of inter-American conferences had strengthened the ideological basis for mutual assistance and had prepared mechanisms for joint defensive action. At Havana in 1940 representatives of all the republics joined in declaring that an act of aggression against one American state by a non-American Power would be considered an act of aggression against all. Acting on this declaration, all nine of the Central American and Caribbean republics declared war on the Axis Powers within a week after Pearl Harbor. Mexico joined the belligerent group in June 1942, and Brazil in August. The remaining republics, except Argentina, have broken diplomatic relations with the enemies of the United States.

Full economic coöperation was pledged to the United States by the Latin American republics at the Rio Conference in January 1942, particularly in the direction of supplying us with the maximum possible amounts of the raw materials needed by our war industries and cutting off trade and financial relations with Germany and Italy. We, in our turn, pledged our aid in cushioning the shock of war to their economies. How economic coöperation has worked will be described in the following pages. They will show how, using a remark made by Mr. Churchill in another connection, we and our neighbors have become somewhat mixed up together for mutual and general advantage, and will inquire what may be the results of the mixing process after the war is over.

I. MOBILIZATION OF HEMISPHERE RESOURCES

We are buying for our war industries all the strategic materials that the mines, forests and plantations of Latin America can produce, and more than ships can carry to our shores. In order that they can produce more, we are helping the Latin American states to install new facilities, rebuild their railroads and improve their ports. We are also making liberal purchases of non-strategic materials which we do not need and which, for lack of shipping, we must store in their ports. On the other hand, we have steadily cut down the volume of our shipments to them. Our rigid control over ocean shipping, our export controls, and our War Production Board priorities, have reduced their imports of our manufactured goods to a bare minimum of essentials. As a result, shortages of both capital equipment and of consumers' goods have already appeared in many of the republics, bringing in their wake rationing and price fixing. They also have had a depressing effect on public works projects and new construction of all kinds; while railroads and public utilities have been unable to provide adequately for repairs and depreciation.

We have tried to mitigate these effects by enlisting the coöperation of the Latin American states in determining what imports they need most. Their coöperation has been particularly useful in the delicate business of dealing with blacklisted Latin American firms. The foundation of inter-American action against these firms was laid at the Rio Conference. At a later conference in Washington (June 30-July 10, 1942) representatives of the various governments agreed to eliminate the activities of residents known to be, or to have been, "engaging in activities inimical to the security of the Western Hemisphere." As a result, many German, Italian and Japanese firms have been forced to replace their managers, to submit to government management, or to sell out, either to nationals of the country where they had been doing business, or to the state itself.

Joint action was especially effective against Axis interests which in 1939 controlled 10,500 miles of air transport routes in South America (16 percent of the entire network of the continent) and a transatlantic service to Europe. The fatal weakness of the German and Italian lines was the fact that they depended for fuel and spare parts on sources of supply within this hemisphere; this made them vulnerable to our weapons of economic warfare -- export licensing and the blacklist. The United States Defense Supplies Corporation, working in close association with South American governments, used these and other weapons with such good effect that within two years all German and Italian lines had been eliminated and their services had been replaced by extensions of the lines operated by United States companies or bona fide Latin American companies.[i]

To cushion the shock of war, the United States Commodity Credit Corporation has been making a number of purchases in Latin America. Thus it has agreed that by September of this year it will buy 10,600,000 bags of Brazilian coffee, much of which, for lack of shipping, will be stored in Brazil. It also has made contracts to buy Haitian coffee and Nicaraguan, Haitian and Peruvian cotton, not for our own needs, but to furnish a substitute for European buying of those commodities. The United States Treasury agreements to provide funds to Mexico, Ecuador and Colombia to assist in stabilizing their currencies also should be included among the "shock-absorbing" measures. Pursuing similar objectives, the Export-Import Bank has extended credits for road building in Honduras, Nicaragua and elsewhere in Central America where lack of shipping has thrown banana and coffee workers out of their jobs; also for public works in Venezuela, as well as to finance the cocoa and coffee crops there. It also has considered making loans to develop coal mining and to erect steel and iron works in Peru, and to construct a hydroelectric plant in Uruguay; but the lack of shipping space and shortages of machinery and equipment in the United States make it unlikely that even if these projects are agreed upon they will be carried through until after the war.

The United States has sent technical missions to the southern republics in large numbers and for a wide variety of purposes. Some have gone to explore the possibilities of industrial development; others to stimulate interest in increased food production or to demonstrate new agricultural methods; others to discover areas suitable for products which the United States formerly imported from the Far East -- rubber, abacá, insecticides, vegetable oils, quinine and other medicinal plants. Finally, as part of our drive to increase the output of strategic materials, we have launched, and partially financed, extensive coöperative campaigns against various tropical diseases, especially malaria and yellow fever.

Obviously, then, the war effort of the United States has not failed to take Latin America into proper account. The Coördinator of Inter-American Affairs alone has a staff of 800 in Washington; and other government departments and agencies have assigned hundreds of employees to handling Latin American affairs. The number of our officials on temporary and permanent assignment in the other republics is variously estimated at from 500 to 800; probably the lower figure is the more accurate. The largest groups are those of the United States Rubber Reserve Company and the Board of Economic Warfare. The latter employs 140 persons in Latin America, of whom 33 are stationed in Brazil.

Our expenditures of government money in the 20 republics during 1943 will be somewhere between a billion and a billion and a half dollars. This sum will go for purchases of strategic materials, expenditures for defense projects, agricultural, sanitation and cultural programs, disbursements of the Export-Import Bank and miscellaneous items. Judged by our present scale of government spending, a billion and a half dollars is not a large sum. It is only one percent of our 1942 national income and only 6 percent of our 1942 total war expenditures. But by Latin American standards, it is a very considerable sum indeed. For example, it equals three-fourths of the value of the total exports of the 20 countries concerned in prewar years. If distributed evenly over the entire population, it would amount to about $12 per capita. Of course, it will not be equally distributed; and in some of the smaller republics our outlays may be large enough in relation to the national income to bring a very substantial increase in national prosperity.

II. OUR AIMS AND ACCOMPLISHMENTS

What does all this activity add up to? What results can we claim for the effort made and the money spent to date?

Perhaps the fairest way to frame a reply is to recall first what we want to accomplish. We want to win the war. We want the Latin American countries to help us -- for our own sake primarily, of course, but also because we believe it is their war as well as ours. We have endeavored to enlist their political sympathies on our side, and we have sought their economic assistance, particularly in supplying us with strategic materials. In return, we have offered to help them avoid the economic disaster threatened by the loss of their European markets. All these purposes are actually so inter-connected that any specific project, such as, for example, a rubber purchase agreement, may help in all three directions. Underlying some of the projects which we have sponsored, particularly those in the field of sanitation and nutrition, is the broad humanitarian purpose of helping masses of people less fortunately situated than ourselves to achieve a higher standard of living. But it should be remembered that, to the extent that such activities raise the efficiency of labor employed in getting out rubber and other strategic materials, they also contribute directly toward the primary purpose of winning the war.

When we recall that our own unity of national purpose was brought about only by the direct Japanese attack on our territory, we could hardly expect that all our neighbors to the south would rise as one man to take their stand at our side. Differences in educational advantage and in access to newspapers and the radio aside, there remains the stubborn fact that for 170 years we have been a single country while they are 20 different countries, separated by physical difficulties of transportation and communication, by differences in language and in culture, and by the memories of bitter and bloody wars. In some of the republics, the official act of breaking diplomatic relations with the Axis received stronger support from the working classes than from the small groups that direct governmental affairs. In others, Mexico for example, the official attitude is genuinely friendly, but popular feeling, in some classes or regions at any rate, lags behind. Thus many Mexican peasants, who have always looked upon the gringos as traditional enemies and Europeans as friends, are bewildered when they are told that Mexico and the United States are fighting side by side against Germany and Italy. An important specific test of political coöperation is the measure of support given by Latin American governments in blacklisting and blocking the funds of German and Italian business firms. This test reveals wide variations; some smaller countries score much higher than their larger neighbors.

Thus far the threatened economic disaster has not arrived. It is true that agricultural workers in Central America are suffering. The republics of this area have always depended principally on our markets, and now that we have diverted our shipping elsewhere, their bananas are not worth picking. Our loans and purchases have helped; but unfortunately, before we realized how much we would be cramped by our shortages of goods and shipping we made large promises which must in some cases wait until after the war for fulfillment. Mexico, Brazil, Chile and Peru, on the other hand, are prosperous. Mexico, favored by the fact that she adjoins us by land, is furnishing us with important quantities of minerals of all kinds. Brazilian rubber, manganese and iron ore, and Chilean and Peruvian copper get high shipping priorities. These countries, therefore, are exhibiting the familiar signs of a boom: rising prices, credit expansion and business optimism. Argentina, partly as the result of large British purchases of beef and mutton (including some for our account),[ii] is enjoying a reasonable degree of prosperity.

We cannot yet measure the results of our health and sanitation campaigns in Latin America, or of our efforts to encourage new crops and better agricultural techniques. For the present, our scattered efforts in these directions can hardly amount to more than demonstration projects. As such, they may many times repay their cost; but what they accomplish in the long run will depend on how genuinely the responsible Latin American leaders believe in them and how far they are willing and able to support them. They will be hampered by meager public revenues and lack of native technicians. President Vargas of Brazil appears to understand thoroughly the value to his country of the sanitation measures to which the United States has contributed. But leaders in some countries take a different attitude; they seem to fear popular dissatisfaction after the war if they are not able to support the new social services established with our aid.[iii]

In some of the republics, economic and social progress can best be promoted through industrialization. The war has cut off Brazil, Argentina, Chile, Peru and Colombia from their normal European sources of imports; our export controls have shut off their supplies of American specialties. The resulting shortages and high prices give a strong impetus to the expansion of manufactures, which we have encouraged by our loans and in some instances by the novel plan of supplying second-hand industrial equipment made idle here by our scarcity of raw materials. Four of our textile plants have already been shipped to Brazil, one to Venezuela and one to Mexico. A storage-battery plant went to Chile, and a blast furnace to Brazil.[iv] We are also training young Latin Americans in our technical schools as mechanical and electrical engineers.

In the past, various handicaps on the industrialization of certain of the republics have commonly been emphasized. Critics have dwelt on their lack of coal and iron in favorable locations, the inexperience of their native populations, the difficulties of transportation, and the scarcity of capital. But now new factors have come in. The development of a new technology based on light metals and the progress made in air transportation, for example, give the problem a different aspect. New conditions will also affect the terms of capital investment; in future, none of the countries concerned will probably want to accept foreign capital if it carries with it foreign control of their enterprises. The new slogan of "economic independence" is finding practical application in the growth of state ownership, or participation, in key industries and in the insistence that citizens of the country shall hold a controlling interest in industries which remain in private hands. We have recognized the validity of this principle in agreements defining the terms on which the Export-Import Bank will aid in the establishment of new enterprises in Latin America. These agreements stipulate that native capital shall participate in the new ventures. Thus our wartime policies are setting a pattern which may be usefully followed by private capital in postwar investments.

III. POSTWAR POSSIBILITIES

This is the second honeymoon of Pan Americanism. For a second time a world war has brought the United States and the Latin American republics into unusually close relations, economic and political. In 1914-18 we took the place of Europe in their export and import trade; in 1918 the total value of our purchases of Latin American goods was more than twice what we had bought four years previously. Our sales to them increased almost three times. Yet, after a brief postwar boom in 1919 and 1920, the abnormal trade structure collapsed, and twenty years later our share in Latin American trade was practically the same as it had been in 1914.

Somewhat the same thing happened on the political side. The United States received a considerable amount of support from other nations in this hemisphere during World War I. Brazil and seven Central American and Caribbean republics declared war on Germany, and four in South America -- Peru, Bolivia, Ecuador and Uruguay -- severed diplomatic relations with the Central Powers. But, when the war was over, inter-American relations instead of improving steadily deteriorated until, at the end of the twenties, the Havana Conference marked an all-time low.

History does not always repeat itself, and the new and more closely-knit fabric of inter-American relations now being woven need not inevitably be destroyed. This war has brought 19 out of the 20 republics to our side; also, our relations with them have been organized and formalized to a much greater extent than ever before. We must expect, however, that when the dangers from across the Atlantic and the Pacific have been removed, the pressure for coöperation with the United States will slacken. The old causes of hostility and disagreement on both sides will again come to light, above all their fear of Yankee imperialism and our demand for the repayment of prewar loans (perhaps also wartime advances). If instead of ignoring these issues during the war we make a serious effort to remove them, there is no reason why the honeymoon should not result in permanently better relations.

To attempt to formalize these relations after the war by forming a Pan American bloc would probably be a mistake. The idea of a regional organization in which the United States would be predominant appeals to those who feel that the creation of a series of great regional groups would be a substitute for a world organization. Many Americans who before Pearl Harbor were isolationists now belatedly realize that modern technology has ended the chance of living a life of complete national self-sufficiency. They consequently have expanded their horizons to take in the whole hemisphere. They find some support among exporters who would like to secure preferential tariff treatment in Latin American markets. Military men, appalled by our lack of adequate reserves of strategic materials at the beginning of this war, might look upon special arrangements for securing such materials from sources in this hemisphere as an essential feature of postwar defense programs.

But there is no evidence that persons in responsible positions in our government are thinking in these regional terms. On the contrary, while their recent public addresses recognize our legitimate responsibilities in this hemisphere, they stress the international or world-wide character of the associations which the United States hopes to maintain after the war. In New York, on January 27, 1943, Nelson Rockefeller, Coördinator of Inter-American Affairs, referred to wartime hemisphere unity as pointing the way toward world coöperation. On the same day, Under Secretary Welles, speaking at the Pan American Union, emphasized the opportunity which would be offered to the American republics after the war to participate in the tasks of postwar reconstruction on an international scale. Secretary Hull thus far has given no indication that he would abandon, in favor of a regional tariff system, the principles of non-discriminatory and multilateral foreign trade for which he has long fought.

The idea of joining with the United States in an exclusive regional bloc after the war seems equally far from the thoughts of leading Latin American statesmen. For example, Dr. Ezequiel Padilla, Mexico's able Minister of Foreign Affairs, writing recently in these pages, referred with approval to President Wilson's interpretation of Pan Americanism as a union of the American republics in their capacity of spiritual allies, "that march in accord because they think alike and are animated by common sympathies and ideals." [v]

"The politicians of the days of independence sought by achieving continental unity to counteract European action; while the politicians of today realize clearly that Pan Americanism must not and cannot be thought of solely as a bulwark for isolation but as a road leading to more efficient universal coöperation." This, he says significantly, marks the outstanding difference between the earlier Pan American hope and the present-day reality. In a recent book, Luis Quintanilla, Mexican Minister in Russia, has stressed the necessity of maintaining ties with Europe: "There will be a Europe again; as a matter of fact there will always be a Europe. Inter-American coöperation must not exclude the participation of our hemisphere in any world enterprise, whether cultural or economic." And he adds: "Inter-Americanism leads to world organization. The history of America must not be circumscribed by geography."[vi] Such opinions are in line with the predominant trend of thinking and writing in this country on postwar problems.

But our emphasis on the necessity for a global settlement after the war must not lead us to shirk the responsibilities and obligations which we have undertaken in wartime vis-à-vis our southern neighbors. These responsibilities are formally stated in the Final Act of the Rio Conference. In signing it, our representatives pledged the United States to assist the other republics in making economic readjustments in the postwar period of transition, "in a manner guaranteeing the continuance of adequate production and permitting the existence of trade under conditions equitable to producers." In plainer English, we promised to undertake to help prevent a postwar collapse of their markets.

We have already taken steps in this direction by agreeing that our governmental contracts for the purchase of rubber and other strategic materials shall extend into the postwar years. We may need to go further. We may find it necessary in the period of transition from war to peace to make new purchase contracts on a descending scale, or to make loans to promote industrialization through the Export-Import Bank or through an International Development Corporation. Something might be done to stabilize markets for raw materials and staple foodstuffs by inter-governmental commodity agreements between producing and consuming nations, both in and without the hemisphere. New trade agreements on the Hull pattern should be made, and the terms of those already in effect should be liberalized. We should stand ready to provide the Latin American countries with the technical assistance they so badly need and to make it possible for well-qualified Latin American students to attend our technical schools.

Such direct assistance will be essential, particularly in the immediate postwar years. But in the longer view, our indirect aid will be more effective. We must not forget that none of these countries wants to be dependent, economically or politically, on the United States, or on any other country. On the contrary, they seek to escape from anything resembling a colonial status. The best thing we can do is to facilitate their resumption of normal trading relations with us and with the rest of the world as soon as possible and on the most advantageous terms possible. We can of course do this only if we succeed in warding off a postwar depression at home, for their economies are now so closely linked with ours that if we crash after the war they will crash with us. On the other hand, if we can keep our factories fully employed, our demand for raw materials will help mightily to sustain prosperity in Latin America. But maintaining our own prosperity will not be enough; for example, even if our national income remains at a high level our markets will not absorb more than a fraction of the great quantities of wheat and corn which Argentina will need to export if it is to avoid economic disaster. We shall not be able to take very much of the cotton of Peru and Brazil; and even our great purchases of Brazilian and Colombian coffee will not clear the markets in those two countries. The same is true of many other products of Central and South America. Latin America will also need European markets, and prosperous ones. Here lies our second major responsibility. At times those who are busy with plans for the postwar world seem to be so preoccupied with European aspects of the problem that they seem to be neglecting responsibilities nearer home. But the fact is that if by such planning we are able to help establish a durable world peace and promote the expansion of international trade, we shall have fulfilled in large part our Pan American obligations.

[i] This subject is being treated in detail in a forthcoming book, "The Struggle for Airways in Latin America," by William A. M. Burden, to be published shortly by the Council on Foreign Relations, New York.

[ii] Argentine beef exports for the year September 1941 to August 1942 were 40 percent higher in value than the average of the five years 1935-39. Mutton exports have risen nearly 50 percent and canned meat 250 percent. (Foreign Crops and Markets, December 1942, p. 301.) The Combined Food Board has announced that the British Ministry of Food has been designated the sole purchaser of Argentine, Brazilian, Uruguayan and Paraguayan meat and meat products for both the United States and the United Kingdom. (New York Times, February 22, 1943.)

[iii] New York Times, November 19, 1942.

[iv] Ibid., November 21, 1942.

[v] FOREIGN AFFAIRS, October 1942, p. 9.

[vi] Luis Quintanilla, "A Latin American Speaks." New York: Macmillan, 1942, p. 182 and 241.

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  • PERCY W. BIDWELL, Director of Studies, Council on Foreign Relations; author of "The Tariff Policy of the United States" and other works
  • More By Percy W. Bidwell