Challenges of Interwar Latin America
Overview
United States Good Neighbor Policy
Latin America experienced a significant turn in the middle to early 20th century. The majority of this turn was because of economic policies such as the Bracero Program and Import Substitution Industrialization. In many parts of the Latin American culture saw also a cultural and political programs.
Learning Objectives
- Evaluate the role of World War II on Latin America.
- Analyze the responses of Latin American leaders to the United States in the interwar period.
- Evaluate the Good Neighbor Policy on Latin America.
Key Terms / Key Concepts
Bracero Program: a series of laws and diplomatic agreements initiated on August 4, 1942, that guaranteed basic human rights and a minimum wage of 30 cents an hour to temporary contract laborers traveling from Mexico to the United States
The Good Neighbor Policy
Manifest Destiny from the 19th century put forward a unique relationship that the United States was centrally interested in Latin America as a site of expansion and growth. Throughout the late 19th to early 20th centuries, Latin America was seen by the United States as part of a broader cultural and economic sphere. Latin American countries were to adhere to US policies and ideas. This is best illustrated with Cuba: the relationship established with the United States in the Cuban Constitution allows the United States to go to Cuba at any time they feel is necessary.
The interwar period changed this relationship between Latin America and the United States. Following World War I, the United States followed a policy of isolationism. President Franklin Delano Roosevelt’s administration changed this, when they started pushing for a policy known as the Good Neighbor Policy. The premise behind the policy was that a good neighbor does not go into someone’s house and try to fix problems; instead, a good neighbor will stand at a point and tell you that there are problems in your home. This resulted in a unique relationship between the United States and Latin American states.
The Good Neighbor Policy meant that Latin American states began to find a rhythm and rhyme that worked better for their own people and governments, as there was far less external pressure to deal with. The freedom to explore what made policy sense in Argentina or Cuba, without United States or other foreign interference, meant the development of unique policy goals in each of these states. At this juncture, many Latin American states experienced the opportunity to grow their own ideas and agendas.
The Good Neighbor Policy came about because of the economic downturn of the Great Depression, a depression that also affected Latin American nations. Many of the Latin American states suffered economically. Mexico, for example, struggled to find ways to find money and resources throughout this period. Chile and Peruvian goods did not find markets in this 1930s. While there was a bit of openness in culture and economics that happened in the 1930s, this was limited in scope and scale due to the economic collapse of the Great Depression. Though, out of that catastrophe came a unique economic model that many Latin American countries began to move towards.
In the colonial and 19th century period, Latin America was the site of production of raw materials to sell directly to Europe. This meant that Brazil grew massive amounts of coffee and sugar to sell to European markets. Bananas from Central America were sold directly to consumers in North America and Europe. While Europeans often were selling higher end finished products in return. The industrialized worker of Germany, for example, would sell machine guns to Chile. The problem is that these raw products were relatively cheap in comparison to the finished product’s price. This imbalance of trade caused a problem, because as more finished goods became a part of the market, Latin American states were struggling to keep up with purchasing them. The problem is how expensive cars would be while bananas are very inexpensive, this would mean that there was many bananas that it would take to purchase a car.
The limits of interference of US government meant that Latin America could start to explore how to make and manufacture their own materials. Many Latin America economists started to critically think about how to change this system of trade imbalance during the interwar period. Economist Raúl Prebisch began exploring the idea of Latin American governments pushing consumers to change their trade behaviors. The policy that Prebisch began to call for is known as Import Substitution Industrialization, or more commonly ISI. Prebisch argued that instead of buying finished goods, Latin American governments should start buying the machines to make their own finished goods. This would mean that, instead of buying cars from Italy or Germany, Argentines would buy the machines to make their own cars. This shift was an important one because this became the model of Latin American governments throughout the 1920s and 30s.
Mexico
Key Terms / Key Concepts
Democratic Current: a movement within the PRI founded in 1986 that criticized the federal government for reducing spending on social programs to increase payments on foreign debt (PRI members who participated in the Democratic Current were expelled from the party and formed the National Democratic Front (FDN).)
habeas corpus: a writ requiring a person under arrest to be brought before a judge or into court, especially to secure the person's release unless lawful grounds are shown for their detention
import substitution industrialization: a trade and economic policy that advocates replacing foreign imports with domestic production
National Revolutionary Party: the Mexican political party founded in 1929 that held executive power within the country for an uninterrupted 71 years (It underwent two name changes during its time in power: once in 1938, to Partido de la Revolucion Mexican (PRM), and again in 1946, to Partido Revolucionario Institucional (PRI).
Corruption and Opposing Political Parties
As in previous regimes, the PRM retained its hold over the electorate due to massive electoral fraud. Toward the end of every president’s term, consultations with party leaders would take place and the PRM’s next candidate would be selected. In other words, the incumbent president would pick his successor. To support the party’s dominance in the executive branch of government, the PRM sought dominance at other levels as well. It held an overwhelming majority in the Chamber of Deputies, as well as every seat in the Senate and every state governorship.
As a result, the PRM became a symbol over time of corruption, including voter suppression and violence. In 1986, Cuauhtemoc Cardenas—the former Governor of Michoacan and son of the former president Lazaro Cardenas—formed the Democratic Current, which criticized the federal government for reducing spending on social programs to increase payments on foreign debt. Members of the Democratic Current were expelled from the party, and in 1987, they formed the National Democratic Front, or Frente Democratico Nacional (FDN). In 1989, the left wing of the PRM, now called Partido Revolucionario Institucional, or PRI, went on to form its own party called the Party of the Democratic Revolution. The conservative National Action Party, likewise, grew after 1976 when it obtained support from the business sector in light of recurring economic crises. The growth of both these opposition parties resulted in the PRI losing the presidency in 2000.
The Mexican Economic Miracle
The Mexican Economic Miracle refers to the country’s inward-focused development strategy, which produced sustained economic growth of 3-4 percent with modest 3 percent inflation annually from the 1940s until the 1970s.
Creating the Conditions for Growth
The reduction of political turmoil that accompanied national elections during and immediately after the Mexican Revolution was an important factor in laying the groundwork for economic growth. This was achieved by the establishment of a single, dominant political party that subsumed clashes between various interest groups within the framework of a unified party machine.
During the presidency of Lazaro Cardenas, significant policies were enacted in the social and political spheres that had major impacts on the economic policies of the country. For instance, Cardenas nationalized oil concerns in 1938. He also nationalized Mexico’s railways and initiated far-reaching land reform. Some of these policies were carried on, albeit more moderately, by Manuel Avila Camacho, who succeeded him to the presidency. Camacho initiated a program of industrialization in early 1941 with the Law of Manufacturing Industries, famous for beginning the process of import-substitution within Mexico. Then in 1946, President Miguel Aleman Valdes passed the Law for Development of New and Necessary Industries, continuing the trend of inward-focused development strategies.
Growth was sustained by Mexico’s increasing commitment to primary education for its general population. The primary school enrollment rate increased threefold from the late 1920s through to the 1940s, making economic output more productive by the 1940s. Mexico also made investments in higher education during this period, which encouraged a generation of scientists and engineers to enable new levels of industrial innovation. For instance, in 1936 the Instituto Politecnico Nacional was founded in the northern part of Mexico City. Also in northern Mexico, the Monterrey Institute of Technology and High Education was founded in 1942.
World War II
Mexico benefited substantially from World War II by supplying labor and materials to the Allies. For instance, in the U.S. the Bracero Program was a series of laws and diplomatic agreements initiated on August 4, 1942, that guaranteed basic human rights and a minimum wage of 30 cents an hour to temporary contract laborers who came to the United States from Mexico. Braceros—meaning manual laborer, literally “one who works using his arms”—were intended to fill the U.S. labor shortage in agriculture that was occurring because farmers were drafted into service. The program outlasted the war and offered employment contracts to 5 million braceros in 24 U.S. states, making it the largest foreign worker program in U.S. history. Mexico also received cash payments for its contributions of materials useful to the war effort, which infused its treasury with reserves. There was a large economic resources that helped to build up after the war, Mexico was able to embark on large infrastructure projects.
Camacho used part of the accumulated savings from the war to pay off foreign debts, which improved Mexico’s credit substantially and increased investors’ confidence in the government. The government was also in a better position to more widely distribute material benefits from the Revolution, given the robust revenues from the war effort. Camacho used funds to subsidize food imports that affected urban workers. Mexican workers also received high salaries during the war, but due to the lack of consumer goods, spending did not increase substantially. The national development bank, Nacional Financiera, was founded under Camacho’s administration and funded the expansion of the industrial sector.
Import-Substitution and Infrastructure Projects
The economic stability of the country, high credit rating, increasingly educated work force, and savings from the war provided excellent conditions under which to begin a program of import substitution industrialization. In the years following World War II, President Miguel Aleman Valdes (1946 – 52) instituted a full-scale import-substitution program that stimulated output by boosting internal demand. The government raised import controls on consumer goods but relaxed them on capital goods such as machinery. Capital goods were then purchased using international reserves accumulated during the war and used to produce consumer goods domestically. One industry that was particularly successful was textile production. Mexico became a desirable location for foreign transnational companies like Coca-Cola, Pepsi-Cola, and Sears to establish manufacturing branches during this period. The share of imports subject to licensing requirements rose from 28 percent in 1956 to more than 60 percent on average during the 1960s and approximately 70 percent during the 1970s. Industry accounted for 22 percent of total output in 1950, 24 percent in 1960, and 29 percent in 1970.Meanwhile, the share of total output arising from agriculture and other primary activities declined during the same period.
The Mexican government promoted industrial expansion through public investment in agricultural, energy, and transportation infrastructure. Cities grew rapidly after 1940, reflecting the shift of employment towards industrial and service centers rather than agriculture. To sustain these population changes, the government invested in major dam projects to produce hydroelectric power, supply drinking water to cities and irrigation water to agriculture, and control flooding. By 1950, Mexico’s road network had also expanded to 21,000 kilometers, some 13,600 of which were paved.
Mexico’s strong economic performance continued into the 1960s when GDP growth averaged around seven percent overall and approximately three percent per capita. Consumer price inflation also only averaged about three percent annually. Manufacturing remained the country’s dominant growth sector, expanding seven percent annually and attracting considerable foreign investment. By 1970, Mexico diversified its export base and became largely self-sufficient in food crops, steel, and most consumer goods. Although imports remained high, most were capital goods used to expand domestic production.
Brazil
Key Terms / Key Concepts
Brazilian Miracle: a period of exceptional economic growth in Brazil during the rule of the Brazilian military government, which reached its peak during the tenure of President Emilio Garrastazu Medici from 1969 to 1973 (During this time, average annual GDP growth was close to 10%.)
coronelismo: the Brazilian political machine during the Old Republic that was responsible for the centralization of political power in the hands of locally dominant oligarchs, known as coronels, who would dispense favors in return for loyalty
latifúndios: an extensive parcel of privately owned land, particularly landed estates that specialized in agriculture for export
The Old Republic
Governance in Brazil’s Old Republic wavered between state autonomy and centralization. The First Brazilian Republic, or Old Republic, covers a period of Brazilian history from 1889 to 1930 during which it was governed a constitutional democracy. Democracy, however, was nominal in the republic. In reality, elections were rigged and voters in rural areas were pressured to vote for their bosses’ chosen candidates. If that method did not work, the election results could still be changed by one-sided decisions of Congress’s verification of powers commission (election authorities in the República Velha were not independent from the executive and the Legislature, but dominated by the ruling oligarchs). As a result, the presidency of Brazil during this period alternated between the oligarchies of the dominant states of Sao Paulo and Minas Gerais. The regime is often referred to as “café com leite,” or “coffee with milk,” after the respective agricultural products of the two states.
Brazil’s Old Republic was not an ideological offspring of the republics of the French or American Revolutions, although the regime would attempt to associate itself with both. The republic did not have enough popular support to risk open elections and was born of a coup d’etat that maintained itself by force. The republicans made Field Marshal Deodoro da Fonseca president (1889 – 91) and after a financial crisis, appointed Field Marshal Floriano Vieira Peixoto the Minister of War to ensure the allegiance of the military.
Rule of the Landed Oligarchies
The history of the Old Republic is dominated by a quest to find a viable form of government to replace the preceding monarchy. This quest swung Brazil back and forth between state autonomy and centralization. The constitution of 1891 established the United States of Brazil and granted extensive autonomy to the provinces, now called states. The federal system was adopted, and all powers not explicitly granted to the federal government in the constitution were delegated to the states. Over time, extending as far as the 1920s, the federal government in Rio de Janeiro was dominated and managed by a combination of the more powerful Brazilian states: Sao Paulo, Minas Gerais, Rio Grande do Sul, and to a lesser extent Pernambuco and Bahia.
The sudden elimination of the monarchy left the military as Brazil’s only viable, dominant institution. As a result, the military developed as a national regulatory and interventionist institution within the republic. Although the Roman Catholic Church maintained a presence, it remained primarily international in its personnel, doctrine, liturgy, and purposes. The Army began to eclipse other military institutions, such as the Navy and the National Guard. However, the armed forces, were divided over their status, relationship to the political regime, and institutional goals. Therefore, the lack of military unity and disagreement among civilian elites regarding the military’s role in society prevented the establishment of a long-term military dictatorship within the country.
The Constituent Assembly that drew up the constitution of 1891 was a battleground between those seeking to limit executive power, which was dictatorial in scope under President Deodoro da Fonseca, and the Jacobins—radical authoritarians who opposed the coffee oligarchy and wanted to preserve and intensify presidential authority. The constitution established a federation governed supposedly by a president, a bicameral National Congress, and a judiciary. However, real power rested in the hands of regional patrias and local potentates, called “colonels”. There was a constitutional system as well as the real system of unwritten agreements (coronelismo) among the colonels. Under coronelism, local oligarchies chose state governors, who selected the president.
This informal but real distribution of power emerged as a result of armed struggles and bargaining. The system consolidated the state oligarchies around families that were members of the old monarchical elite, and to provide a check to the Army, the state oligarchies strengthened the navy and state police. In larger states, state police evolved into small armies.
In the final decades of the 19th century, the United States, much of Europe, and neighboring Argentina expanded the right to vote. Brazil, however, moved to restrict access to the polls under the monarchy and did not correct the situation under the republic. By 1910, only 627,000 eligible voters could be counted among a total population of 22 million. Throughout the 1920s, only between 2.3% and 3.4% of the total population could vote.
The middle class was far from active in political life. High illiteracy rates went hand in hand with the absence of universal suffrage or a free press. In regions far from major urban centers, news could take four to six weeks to arrive. In this context, a free press created by European immigrant anarchists started to develop during the 1890s and 1900s and spread widely, particularly in large cities.
Latifundio Economies
Around the start of the 20th century, the vast majority of Brazil’s population lived on plantation communities. Because of the legacy of Ibero-American slavery, abolished as late as 1888 in Brazil, there was an extreme concentration of landownership reminiscent of feudal aristocracies: 464 great landowners held more than 270,000 km² of land (latifúndios), while 464,000 small and medium-sized farms occupied only 157,000 km². Large estate owners used their land to grow export products like coffee, sugar, and cotton, and the communities who resided on his land would participate in the production of these cash crops. For instance, most typical estates included the owner’s chaplain and overseers, indigent peasants, sharecroppers, and indentured servants. As a result, Brazilian producers tended to neglect the needs of domestic consumption, and four-fifths of the country’s grain needs were imported.
Brazil’s dependence on factory-made goods and loans from technologically, economically, and politically advanced North Atlantic countries retarded its domestic industrial base. Farm equipment was primitive and largely non-mechanized. Peasants tilled the land with hoes and cleared the soil through the inefficient slash-and-burn method. Meanwhile, living standards were generally squalid. Malnutrition, parasitic diseases, and lack of medical facilities limited the average life span in 1920 to 28 years. Without an open market, Brazilian industry could not compete against the technologically advanced Anglo-American economies. In this context, the Encilhamento (a “boom and bust” process that first intensified, and then crashed, in the years between 1889 and 1891) occurred, the consequences of which were felt in all areas of the Brazilian economy for many decades following.
During this period, Brazil did not have a significantly integrated national economy. The absence of a big internal market with overland transportation, except for mule trains, impeded internal economic integration, political cohesion, and military efficiency. Instead, Brazil had a grouping of regional economies that exported their own specialty products to European and North American markets. The Northeast exported its surplus cheap labor but saw its political influence decline in the face of competition from Caribbean sugar producers. The wild rubber boom in Amazônia declined due to the rise of efficient Southeast Asian colonial plantations following 1912. The national-oriented market economies of the South were not dramatic, but their growth was steady, and by the 1920s, that growth allowed Rio Grande do Sul to exercise considerable political leverage. Real power resided in the coffee-growing states of the Southeast—São Paulo, Minas Gerais, and Rio de Janeiro—that produced the most export revenue. Those three and Rio Grande do Sul harvested 60% of Brazil’s crops, turned out 75% of its industrial and meat products, and held 80% of its banking resources.
Struggles for Reform
Support for industrial protectionism increased during the 1920s. Under considerable pressure from the growing middle class, a more activist, centralized state adapted to represent the new bourgeoisie’s interests. A policy of state intervention, consisting of tax breaks, lowered duties, and import quotas, expanded the domestic capital base. During this time, São Paulo was at the forefront of Brazil’s economic, political, and cultural life. Known colloquially as a “locomotive pulling the 20 empty boxcars” (a reference to the 20 other Brazilian states) and Brazil’s industrial and commercial center to this day, São Paulo led the trend toward industrialization with foreign revenues from the coffee industry.
With manufacturing on the rise and the coffee oligarchs imperiled by the growth of trade associated with World War I, the old order of café com leite and coronelismo eventually gave way to the political aspirations of the new urban groups: professionals, government and white-collar workers, merchants, bankers, and industrialists. Prosperity also contributed to a rapid rise in the population of working class Southern and Eastern European immigrants—a population that contributed to the growth of trade unionism, anarchism, and socialism. In the post-World War I period, Brazil was hit by its first wave of general strikes and the establishment of the Communist Party in 1922. However, the overwhelming majority of the Brazilian population was composed of peasants with few if any ties to the growing labor movement. As a result, social reform movements would crop up in the 1920s, ultimately culminating in the Revolution of 1930.
Years Under the Military Regime
Brazilian society experienced extreme oppression under the military regime despite general economic growth during the Brazilian Miracle.
The Brazilian military government was an authoritarian military dictatorship that ruled Brazil from April 1, 1964 to March 15, 1985. It began with the 1964 coup d’etat led by armed forces against the administration of the President Joao Goulart, who had previously served as Vice President and assumed the office of the presidency following the resignation of democratically-elected Janio Quadros. The military revolt was fomented by the governors of Minas Gerais, Sao Paulo, and Guanabara. The coup was supported by the Embassy and State Department of the United States. The fall of President Goulart worried many citizens. Many students, Catholics, Marxists, and workers formed groups that opposed military rule. A minority even engaged in direct armed struggle, although the vast majority of the resistance supported political solutions to the mass suspension of human rights. In the first few months after the coup, thousands of people were detained, and thousands of others were removed from their civil service or university positions.
The military dictatorship lasted for almost 21 years despite initial pledges to the contrary. In 1967, it enacted a new, restrictive constitution that stifled freedom of speech and political opposition. The regime adopted nationalism, economic development, and anti-communism as its guidelines.
Establishing the Regime
Within the Army, agreement could not be reached as to a civilian politician who could lead the government after the ouster of President Joao Goulart. On April 9, 1964, the coup leaders published the First Institutional Act, which greatly limited the freedoms of the 1946 constitution. Under the act, the President was granted authority to remove elected officials from office, dismiss civil servants, and revoke political rights of those found guilty of subversion or misuse of public funds for up to 10 years. Three days after the publication of the act, Congress elected Army Chief of Staff, Marshal Humberto de Alencar Castelo Branco to serve as president for the remainder of Goulart’s term. Castelo Branco had intentions of overseeing radical reforms to the political-economic system, but he refused to remain in power beyond the remainder of Goulart’s term or to institutionalize the military as a governing body. Although he intended to return power to elected officials at the end of Goulart’s term, competing demands radicalized the situation.
Military hardliners wanted to completely purge the left-wing and populist influences for the duration of Castelo Branco’s reforms. Civilians with leftist leanings criticized Castelo Branco for the extreme actions he took to implement reforms, whereas the military hardliners felt Castelo Branco was acting too lenient. On October 27, 1965, after two opposition candidates won in two provincial elections, Castelo Branco signed the Second Institutional Act, which set the stage for a purge of Congress, removing objecting state governors and expanding the President’s arbitrary powers at the expense of the legislative and judiciary branches. This not only provided Castelo Branco with the ability to repress the left, but also provided a legal framework for the hard-line authoritarian rules of Artur da Costa e Silva (1967 – 69) and Emilio Garrastazu Medici (1969 – 74).
Rule of the Hardliners
Castelo Branco was succeeded to the presidency by General Artur da Costa e Silva, a hardliner within the regime. Experimental artists and musicians formed the Tropicalia movement during this time, and some major popular musicians such as Gilberto Gil and Caetano Velsos were either arrested, imprisoned, or exiled. The military government had already been using various forms of torture as early as 1964 in order to gain information as well as intimidate and silence potential opponents. This radically increased after 1968.
Widespread student protests also abounded during this period. In response, on December 13, 1968, Costa e Silva signed the Fifth Institutional Act, which gave the president dictatorial powers, dissolved Congress and the state legislatures, suspended the constitution, ended democratic government, suspended habeas corpus, and imposed censorship.
On August 31, 1969, Costa e Silva suffered a stroke. Instead of his vice president assuming the office of the presidency, all state power was assumed by the military, which then chose General Emilio Garrastazu Medici, another hardliner, as president.
During his presidency, Medici sponsored the greatest human rights abuses of the time period. Persecution and torture of dissidents, harassment against journalists, and press censorship became ubiquitous. A succession of kidnappings of foreign ambassadors in Brazil embarrassed the military government. Reactions, such as anti-government manifestations and guerrilla movements, generated increasing repressive measures in turn.
By the end of 1970, the official minimum wage went down to US $40 a month, and as a result, the more than one-third of the Brazilian workforce that made minimum wage lost approximately half their purchasing power in relation to 1960 levels.
Nevertheless, Medici was popular because his term was met with the largest economic growth of any Brazilian President, a period of time popularly known as the Brazilian Miracle. The military entrusted economic policy to a group of technocrats led by Minister of Finance Delfim Netto. During these years, Brazil became an urban society with 67% of people living in cities. The government became directly involved in the economy, investing heavily in new highways, bridges, and railroads. Steel mills, petrochemical factories, hydroelectric power plants, and nuclear reactors were also built by large state-owned companies like Eletrobras and Petrobras. To reduce reliance on imported oil, the ethanol industry was heavily promoted.
By 1980, 57% of Brazil’s exports were industrial goods compared to 20% in 1968. Additionally, average annual GDP growth was close to 10%. Comparatively, during President Goulart’s rule, the economy had been nearing a crisis, with annual inflation reaching 100%. Additionally, Medici presented the First National Development Plan in 1971, which aimed at increasing the rate of economic growth, particularly in the Northeast and Amazonia. Brazil also won the 1970 Football World Cup, promoting national pride and Brazil’s international profile.
Attributions
Attributions
Title Image
Wikimedia Commons. Getuilo Vargas: https://en.wikipedia.org/wiki/Get%C3%BAlio_Vargas#/media/File:Getuliovargas1930.jpg
Adapted from:
https://www.coursehero.com/study-guides/boundless-worldhistory/mexico/
https://www.coursehero.com/study-guides/boundless-worldhistory/brazil/