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FROM the American point of view one of the most disturbing developments in the international field is the rapid expansion of German, Italian and Japanese influence in Latin America. This influence, while still primarily economic, has already given clear indications of having serious political implications. Any such trend is obviously of the utmost interest and concern to the American public. Unfortunately there is not space in the scope of a single article to describe all aspects of this invasion in detail. It is nevertheless possible, by enumerating examples in the four largest South American states -- the "ABCP" Powers -- to convey a fairly accurate picture of the manner in which this invasion is being carried out and with what consequences to the economic and political interests of the democratic Powers, particularly, of course, the United States.
Brazil, Uruguay and Argentina are approximately six hundred miles closer to Lisbon than to New York. Communication facilities have emphasized this fact, bringing the three countries much nearer to Europe in point of time than they are to the United States. For several years, two-day trans-Atlantic airmail service has been maintained by France and Germany. German commercial flights to South America average almost a plane a day. The Air France is planning to establish a fifty-hour air service for passengers and freight between Paris and Buenos Aires. The Italians and Germans are also inaugurating overseas passenger flights. German and Italian steamship services to Brazil and Argentina already far surpass those of England, France or the United States in comfort, swiftness and cheapness.
Recent shifts in Brazil's internal economy have brought her closer to Europe in other ways than in space and time. Though Brazil is still dependent for her prosperity upon the foreign coffee market -- principally that in the United States -- cotton is today looming ever larger among her exports: she is now producing over two million bales a year. To dispose of this cotton, she must turn to Germany, Italy and Japan, now that England is obtaining most of her supply within the Empire. Brazil's citrus fruit -- she is the world's largest exporter of citrus fruit -- and bananas go mostly to Europe.
It is the so-called Fascist nations which are most aggressive in trying to expand their foreign trade and gain control of new supplies of raw materials; and it is they which, far more than England, France or the United States, seek to impose their own philosophies of government upon the smaller nations with which they deal. In exchange for Brazil's nickel and tin Germany sends not merely aski marks but also Nazi political theories, hoping to acquire enough influence there to prevent Brazilian products from being sent to England and France in time of war. Germany's system of nationalized foreign trade, state subsidies, organized dumping, currency control and direct barter are all used, in Brazil as elsewhere, to further Nazi political designs.
The penetration of German capital into Brazil thereby assumes added significance. Brazil is said to have a fourth of the world's known iron reserves; and Thyssen and Krupp are said to have secured concessions in Itabira, which reliable geologists have claimed to contain the richest deposit in the world. The Deutsche Luxemburgische Bergwerks und Hütten Aktiengesellschaft controls the mines of Corrego de Meio; other German concerns own copper mines in Parahyba, nickel mines in Goyaz and a million and a quarter acres of presumably oil-bearing lands in Matto Grosso. And this is only the beginning of the list of German mineral holdings in Brazil.
The great German air corporation, Lufthansa, has rapidly built up a continental network of aviation lines in South America. In Brazil its subsidiary -- Syndicato Condor -- has woven a 5,000-mile network of routes over the more developed portions of the country. From Natal, where connections are made with trans-Atlantic planes, lines run south through Rio de Janeiro to Porto Alegre, Montevideo and Buenos Aires. Others run westward across the hinterland of Brazil and over the Andes to Bolivia, Chile and Peru. Eventually these routes will be extended through Ecuador to connect with the web of the Scadta, also a Lufthansa subsidiary, in Colombia.[i] That these lines may have some political purpose is indicated by the statement of an Argentine editor that swastika-bearing planes are more numerous than could be used "in a hundred years of strictly commercial expansion."
Estimates of the number of German residents in Brazil, including descendants of early settlers, vary from 400,000 to a million. Their presence there makes it possible for German business men to sell their goods on the Brazilian market with a minimum of sales' costs. German cotton and coffee plantations use German agricultural machinery and electric motors. German textile factories use German looms. The state-owned railroads have been turning heavily to Germany for equipment. According to the American Chamber of Commerce in Rio, German goods have been underselling American products by 10 to 40 percent. During 1936 and 1937 Germany led all other countries as a provider of Brazilian imports. The United States dropped to second place. England, on the downgrade everywhere, dropped even behind Argentina. Germany gained a favored position for her aski marks, whereas the United States and other countries saw their credits frozen and exchange operations frequently hampered.
All this is accompanied by a vigorous propaganda drive under the supervision of the foreign propaganda bureau in Berlin. Many agencies (which also function in other Hispano-American countries) are utilized; not excluding the Gestapo, Germany's world-wide and very efficient secret service. Germans all over the continent have been herded into Bunds, Turnvereins, Jugend clubs and swastika-saluting congregations, trained by German war veterans. Lectures, organizers, literature, schools, films and radio have all served, with the result that, except for German Jews, outward conversion has been well-nigh complete.
Germans who resisted this pressure have had their business boycotted, their properties damaged, have lost their citizenship or have been physically assaulted. Four Nazi agents have been put on trial in Buenos Aires for attempted arson against the property of anti-Hitler newspapers and other "enemies." The German Jew has seen his business ties with the Reich destroyed; everywhere he has been boycotted by German merchants and by the many Brazilian firms dependent on them. The continent has been doused with anti-Semitic propaganda. Anti-Semitism is one of the active doctrines of the Brazilian green-shirted Integralistas and of the imitative Fascist and Nazi bodies in all countries.
After securing the undivided obedience of the local Germans, the next goal of the Nazis has been to convert the native population to National Socialist doctrines. Brazilian educational institutions are honeycombed with German professors, whose salaries are paid by the Reich. Brazilian students and military and naval cadets are taken in droves to Germany, free of cost, and return home indoctrinated with National Socialism. Brazilian radio stations are provided by Germany with phonograph records for transcription; and radio sets, which in the short-wave field can receive only German programs, are given away or sold cheaply.
Heavy German advertising, and apparently in some instances direct subsidies, effectively help to block criticism of the Reich. According to the latest available figures, there are fifteen Nazi newspapers in Brazil. Their influence has doubtless been circumscribed by a recent decree of Vargas prohibiting the circulation of foreign-language newspapers in rural areas. The German News Agency, known in Latin America as Trans-Ocean, gives its news away practically free through sixteen-hour-a-day radio broadcasts. Easy facilities are provided to news-dispensing agencies for acquiring automatic radiotype recording apparatus. In this Nazi propaganda the Reich is held up as a happy land of unemployment, America as a land of gangsterism, strikes, greed and Bolshevism.
The German Embassy in Rio maintains a Cultural Attaché, who until recently was Herr Hans Honning Von Cassel, a former sewing machine salesman in São Paulo. According to Claridad of Buenos Aires, he personally directed many Integralista activities. German firms required their employees to join the Integralista movement, helped finance it and provided it with arms. The Vargas régime for years encouraged these Green Shirts, using them as an aid to the police in crushing all opposition. Last November, Vargas used them to overthrow his own government and abolish the last vestiges of democratic processes. In the first victory parades, the Green Shirts marched past Guanábara Palace, along with the army and navy. Vargas' new constitution contained most of the Integralistas' program and he admitted some of their leaders into government posts. Little wonder, then, that the Italians and Germans exulted over this new addition to the Berlin-Rome-Tokyo combination.
But their enthusiasm was premature. Vargas, thinking entirely in terms of his personal power, did not long permit the Integralistas to continue as a semi-governing body.[ii] He soon ordered them to disarm and finally outlawed the movement entirely. A preliminary plot to revolt was uncovered, arms were confiscated and the leaders arrested. In the abortive "pajama revolt" of last May -- in which were implicated the Palace Guard, the Integralistas, part of the navy, and apparently Italian and German secret agents -- Vargas escaped destruction by the skin of his teeth. He thereupon curbed German activities. Cultural Attaché Von Cassel hurriedly left the country under a considerable cloud. German schools, of which in one province alone there are over 2,000, were ordered to teach Portuguese, display the Brazilian flag, show no swastika or other foreign emblem and to cease accepting funds from foreign organizations or governments. Nor could anyone not a Brazilian citizen henceforward teach in them.
The efforts of the United States to combat Nazism in Brazil have been quiet but persistent. After the November coup, the anti-Semitism of President Vargas was checked, apparently in part as a result of American diplomatic pressure. The American treasury provided Brazil with $60,000,000 in gold credit and proposes to advance more. Secretary Hull made his famous (and probably unwise) offer to lend Brazil outmoded American war vessels. A leading Brazilian paper, apparently American-subsidized, now prints elaborate pro-American supplements with words of good cheer from American officials and business men. Persistent efforts won the unfreezing of American credits and a counter-restriction on German aski marks. Whereupon Germany, unable to buy Brazil's cotton and cacao with blocked marks, carried out her threat to buy elsewhere and placed large orders in Colombia, Panama and Central America. Provisional figures for the period from May to July 1938 show that Brazilian imports from the United States once more exceed those from Germany.
The Italians have long hoped for the establishment of a subservient corporate régime in Brazil. Luigi Federzoni, President of the Italian Academy, declared in Mussolini's Popolo d'Italia that "the Italian Fascist organization, the Italian press and the Italian support of Brazil" had contributed to Vargas' successful November coup. During the last seventy-five years over one million Italians have emigrated to Brazil. Italians own large coffee and cotton plantations, numerous mills and factories, and engage in lumbering. A powerful Italian economic influence is exercised through the wealthy Banca Commerciale Italiana and the Banco Italo Brasileiro. With the exception of half a dozen smart new German vessels, Italian companies operate the finest and swiftest passenger ships and give the lowest rates in the South American trade. The Italians are opening a new trans-Atlantic air service; they already maintain an airline between Rio and Buenos Aires. They have staged many military air flights to Brazil and elsewhere in South America for political and propaganda purposes. In 1934 Balbo took a squadron of twenty-one war planes across the Atlantic, and sold them all. More recently Bruno Mussolini led three planes across, and donated his ship to the Brazilian Government in an elaborate ceremony. Italy has made strenuous efforts everywhere in Latin America to sell munitions and war vessels. Last February, for instance, three Italian-built submarines were delivered to Brazil.
Mussolini wants all Italians in South America to be loyal Fascists. In Brazil, Italian firms not only boycott non-Fascists, but at one time even obliged their employees to join the Integralista movement. Besides the various Italian-language newspapers, many Portuguese-language publications are induced through advertising and subsidies to play up Fascist activities. The Rome propaganda office maintains a free press service, utilized by many Brazilian publications, which of course makes a point of running down the United States and democracy. Short-wave broadcasts are sent out daily from Rome over three powerful stations. By two-way broadcasts, local Brazilian and Argentine stations are induced to handle Fascist programs. The Italians are also heavy purchasers of radio time on local stations. The Istituto Universitario Italiano promotes cultural relations. Many Italian professors, whose salaries are paid by the Fascist Government, are sent over. The whole faculty of Economic Sciences at São Paulo is an Italian gift. Numerous scholarships are granted to Brazilian students and cadets. Known Fascist sympathizers (including in the past many of the Green Shirts) have been invited to Rome at Italian expense, to be personally fêted by Mussolini. Similar activities are carried on in the other Latin American countries.
Japan also exercises a large influence in Brazil, where 200,000 of her emigrants live. The Japanese Embassy, like the German, has a Cultural Attaché for the promotion of favorable publicity. Numerous Japanese professors have been sent to Brazilian educational institutions; in one a Japanese professor even teaches American history! Our State Department recently rejoiced over the cancellation of a large Japanese agricultural concession. But in May 1938 the ban on Japanese immigration was lifted. This year São Paulo has a farm-labor shortage of 300,000 hands, and plantation owners find Japanese to be the most efficient workers.
The Japanese take 29 percent of Brazil's exports of agricultural produce. They own large rubber plantations: one of them near Para contains over a million acres -- a rubber farm rivalling Ford's. They also possess cattle, rice, sugar, banana and coffee estates. A third of the new cotton-growing industry is in Japanese hands. They have also introduced the cultivation of silk, tea and rice, products which can be sold on foreign markets. The Yokohama Specie Bank and the Bank of Taïwan maintain several branches and correspondents in Brazil. The large Japanese colony, extensively engaged in the retail business, provides a normal outlet for many types of goods from the home country. The Associção Central-Nippon Brasileira actively promotes cultural and business relations. The Japanese Central and South American Export Association, headed by Ruyuzo Asama, owner of one of the largest export companies, is aided by his government with subsidies and diplomatic support. In pursuance of a ten-year trade program, Japanese commercial missions constantly tour not only Brazil but all South American countries. In return the Association invites leading South American business men and cabinet officials to visit Japan at its expense.
In Argentina, American sales are outdistancing those of the United Kingdom. But in general, British and Italian influence predominates in both Argentina and Uruguay. The Anglo-Italian diplomatic rapprochement of last spring -- still hanging between life and death -- was very pleasing to the Argentinians.
Within the last century two million Italians are estimated to have emigrated to Argentina, where they now form roughly one-third of the total population. Many prominent Argentine families bear Italian names, and Italians have long played leading rôles in business and politics. Fascism has given the bulk of Italian immigrants a new militant unity. The Italians have various large dailies in Buenos Aires and control one of the larger afternoon Spanish-language papers. Italian propaganda has been facilitated by a common Latin culture. The persecution of the Church in Germany has raised Argentine doubts about the Nazi movement. Fascism, however, is regarded as a protector of religion -- a belief confirmed by Italy's armed support of the "Christian" Franco and by Mussolini's liberal concessions to the Church in Italy and to Catholic missionaries in Ethiopia.
A strong Fascist group, the Legión Cívica with about 150,000 members, was organized in Argentina with the aid of wealthy Italians and the government in 1931. Seven smaller Fascist organizations have now been welded into the Guardia Argentina. Uriburu's successor, President Justo, removed one elected governor after another, replacing them for the most part with pro-Fascist interventors. Ortiz, elected President last winter, ran on the Concordancia ticket made up of Conservatives, renegade Fascists and former members (of which he was one) of the Unión Cívica Radical Party. Fascists are rarely molested in Argentina, though democratic groups enjoy few rights. Dr. Manuel Fresno, Governor of Buenos Aires Province (containing a fourth of the country's inhabitants), has referred to Mussolini and Hitler as "the saviors of Europe."
The approximately 100,000 Germans who live in Argentina have gone largely into ranching, commerce, banking, engineering, medicine, dentistry and teaching. A number of years ago Hugo Stinnes bought large oil tracts in Neuquén Territory. The Germans are wrenching the railroad-supply business away from the British: for example, forty new locomotives for the Argentine State Railways have recently arrived from Germany. German-Argentine capital, using German planes and German technicians, runs the Aeroposta line south across the Pampas and Patagonia to Tierra del Fuego. The Chief of the Argentine Air Force, General Armando Verdaguer, and two aides recently made an extensive "informative" trip to Germany at German invitation and expense. Hitler personally decorated him with the order of the German Eagle. He bought five Junker planes on trial.
The Japanese have invested in Argentine meat, fur, quebracho and cotton. High Argentine officials have warmly urged them to increase their investments.
So far little open opposition has been noted on the part of Argentines to Italian penetration, though La Critica -- the large opposition daily which was suppressed during the recent elections -- has been carrying on an active anti-Fascist campaign. The existence of the anti-Nazi daily Argentinisches Tageblatt (even if it is largely supported by Jewish elements) indicates that Nazi regimentation and violence have not converted all the local Germans. Various native groups conduct boycotts of German goods, and German schools have been closed in certain areas.
In Chile the origins of German influence go back to the middle of the last century when a number of German immigrants settled at Valdivia. Encouraged by liberal land grants and other concessions they have continued to emigrate to Chile, especially to the southern part, until today a large number of the leading families in Chile bear German names. For several decades the German element has been prominent in directing the country's economic and political life. In recent years there has been a steady growth of Nazi agitation, as was evidenced by the abortive Nazi rebellion which occurred at Santiago on September 5 of this year and led to the deaths of nearly a hundred persons.
In Chile Germany is running nip and tuck with the United States for trade leadership. Britain is definitely down in third place. The Germans, strongly welded together in clubs and associations, preserve their language and have their own schools. The Gildermeister family of Peru has expanded its sugar industry into Chile. Not long after the World War, the Krupps acquired in Llanquihue province land on which to build a large steel and munitions plant, and Germans were settled nearby. German capital has recently gone into Chilean nitrates. It has also put up a big paper factory, is active in the leather industry and is edging into other fields.
Chile does not place as severe restrictions on monetary exchange with Germany and Italy as it does with most other countries. More German than British automobiles are sold: the cheap Opel car is especially popular. (However, the United States still maintains a commanding lead in the Chilean automobile market.) The Germans have supplanted the British as purveyors to the state railroads, the most efficient system in South America. This year the government-owned airlines were equipped throughout with JU-86 Junkers. Immediately after the Buenos Aires Peace Conference, General Diego Aracena spent 100,000,000 pesos in Germany and Italy for war equipment; and more recently, after inspecting planes in the United States, he bought another 16,000,000 pesos worth of German hydroplanes for the line between Santiago and Magallanes at the country's southern tip. Many Italian planes are also being bought. An Italian officer, General Longo, is the key man in the air force and directs a corps of Italian instructors. When the Chilean poet Vicente Huidobro wrote a biting poem, "Fuera de Aquí" (Get Out of Here), he was brutally beaten up. Not long ago a pro-Loyalist lecture on Spain was prohibited at the request of the Italian Embassy.
In Peru the influence of Italy and Japan is stronger than Germany's. Italians constitute the largest European group. Galvanized into aggressiveness by Fascist organizers, they have assumed a dominant position even in Peruvian military and political life. The long-established Banco Italiano de Lima, as a result of government favors, has become one of the two most powerful financial institutions in the country. Peru's immediate destinies are largely decided by Dictator Oscar Benavides and by the Banco Italiano, which is under the direction of Gino Salocchi, popularly known as "the Viceroy of Peru." Long ago, when he was Peruvian Minister to Italy, Benavides enjoyed intimate relations with Mussolini. Later, when Minister to Spain, he declared that "the peoples can be saved only by men identified with Fascist doctrines." Italians operate the light, power and tramway facilities of Lima, Callao and other cities. The Italo Peruano provides much of the country's electrical apparatus. The Dusa Radiodifusión controls the leading broadcasting station and many radio sales agencies. Italians are engaged in the wine industry, own sugar and cotton estates, are active in lumbering and manufacturing.
The four leading dailies of Lima enjoy intimate relations with the Banco Italiano and receive heavy Italian advertising. The most powerful of them, El Comercio, preferred organ of the wealthy Civilista landholding class and of the Catholic hierarchy, supports Fascism whole-heartedly. One of its co-owners, Carlos Miró Quesada, now in Italy studying the corporate system with a view to implanting it in Peru, directs an Italian propaganda bureau for half a dozen countries. Many private schools, some partly subsidized by the Peruvian Government, are run by Italians. The most active supporter of Fascism in the National Catholic University, where numerous lectures praising Fascism are given, is Professor Alberto Benavides Canseco, brother-in-law of the Dictator-President. The Italian propaganda bureau in Peru, a branch of the central office in Rome, is run by two Italians close to the Benavides Government and is the center for Fascist indoctrination in Ecuador, Colombia and Chile.
Students, military cadets and officials go to Rome to visit or study, with their expenses paid by either the Italian or the Peruvian Government. Colonel Jorge Vargas, Chief of Staff of the Peruvian Army, recently went to Rome to study Italian methods and buy Italian munitions. Italian officers train Peru's large flying corps, the planes of which are of Caproni and Breda manufacture. Various Italian mass flights have been made over Peru. The Italians are building a modern Caproni aircraft factory and are putting up the largest airdrome in Latin America at Las Palmas, near Lima. Italian officers have charge of the President's Palace Guard; they also direct the police and the civil guards, whose numbers are equal to those of the regular army. Italian artillery and machine guns, sent out last December, have been distributed to various parts of the country, in particular along the Ecuadorean frontier.
There is little chance to ascertain the attitude of the Peruvian public toward this aggressive Italian penetration, since there is no free press, and the jails and jungle concentration camps are full of political prisoners.
The Japanese come next after the Italians in importance in Peru. The official statistics report that there are 22,600 of them. However, unlike Americans, Englishmen, and other nationalities, the Japanese are not required to register; consequently no exact count of them has ever been made. Competent observers claim that actually they total around 60,000 (as compared to 1,229 Americans), or 25 percent more than all other aliens together. High Peruvian officials, in violation of the immigration laws, bring in Japanese as plantation hands. Over two-thirds of the saloons and bread stores and one-half of the barber shops in Lima province are in Japanese hands. They control a larger share of retail business than does any other foreign group. Japanese operate factories making auto bodies, auto upholstering, rubber goods, light steel articles and electric light bulbs. They produce much of Peru's cotton and sugar. They own 18,000 of the 30,000 acres under cultivation in Chancay Province and all the waterfront adjacent to Chimbote, the first good salt-water harbor south of Panama. Through this port Japanese goods and immigrants are easily smuggled into Peru.
Japanese merchants in Peru (where 85 percent of the population is Indian or mestizo) have spread the theory that the country's original inhabitants came from Japan many centuries ago and that the two peoples are therefore blood brothers. Leading Peruvian merchants are invited to Japan at the expense of the Japanese export association. Japan buys much of Peru's raw cotton, fifty percent of her guano and a considerable share of her oil, vegetable-ivory and mineral products. During the Leticia trouble she sold Peru 60,000,000 soles worth of munitions.
Germans are strong in retail lines such as machinery, hardware, electrical goods, jewelry, paint and chemicals. Sixty percent of the business of Arequipa, third city of Peru, is in German hands. The Gildermeisters, with 100,000 acres under cultivation, operate the most powerful sugar concern in South America and alone account for 43 percent of Peru's exports of that commodity. They also have a powerful radio station, constantly guarded by armed Germans, and enjoy the privilege of a private port. By means of aski marks German imports into Peru quadrupled between 1932 and 1936, and continued to increase during 1937. German sales now exceed British sales.
At the present moment no European Power is likely to invade Latin America. But the activity there of the totalitarian states, and the growth of their economic and political power, might produce a set of circumstances which they could exploit as they have exploited the civil war in Spain. The United States has pledged its word not to intervene in Latin America; but no European Power has made any such pledge. The struggle for trade and raw materials, in the course of which the so-called Fascist Powers have improved their position in the countries to the south, is undoubtedly being carried on with one eye cocked on the possibilities of a world war. In the case of a major conflict, by means of their emigrant colonies, their propaganda, and the influence of their banking and commercial enterprises, Germany and Italy might be able to interfere with the flow of supplies from Latin America to nations against whom they were fighting. Wars or revolutions fomented in Latin America at opportune moments might serve the same end. These possibilities may force us to a reappraisal of the Monroe Doctrine: territorial conquest is no longer the only European danger with which we have to reckon in Latin America.
[i] See "Atlantic Airways," by Edward P. Warner, FOREIGN AFFAIRS, April 1938, p. 467-483.
[ii] See "The New Régime in Brazil," by Ernest Hambloch, FOREIGN AFFAIRS, April 1938, p. 484-493.