USM Open Source History Text: The World at War: World History 1914-1945

Economic Development in Latin America in the Neo-Colonial Age

The era in Latin American history from 1880 until 1929 is commonly known as the age of neocolonialism. Why “neo” -- or new colonialism? This is to distinguish what was happening from the “old” colonial period during which Central and South America were ruled by Spain. What was neocolonialism? In short, it was a combination of economic exploitation of Latin American states by industrializing countries (Britain, France, Germany, and the United States) and selective military intervention to protect and expand their economic interests. Let’s take a closer look at this era of neocolonialism.

To understand the neocolonial era in Latin American history requires one to understand the overall world economic picture to some degree. We have learned about the rapid industrialization beginning in the late 19th century. We have also learned about the transportation revolution that brought the world ever closer together. We saw an example of this in the lecture on Gandhi. Gandhi, an Indian, was able to study law in London, work as a lawyer in South Africa and return to lead an independence movement on the subcontinent. With industrialization came two major developments, both critical for Latin America. The first was the movement of European countries -- especially England and Germany -- away from agricultural production and toward industrialization. After centuries of growing their own food, European countries became highly dependent on the importation of agricultural goods. Foodstuffs, in other words, now came largely from abroad. Together with this trend – the movement of European economies from agriculture to industry – was the physical migration of people from the countryside to the cities. The result was massive urbanization. Together these twin phenomena created both an enormous new class – the industrial working class (together with the white-collar middle class clerks). This, in turn, created enormous new demand for basic goods, both agricultural products and other raw materials. Latin America, sparsely populated and with vast amounts of fertile land, became one center of a worldwide agricultural boom.

From the late 1880s until the 1929 Crash, Latin America underwent what is called an “export boom” of massive proportions. Mexico’s trade, for example, increased 900% between 1877 and when its revolution broke out in 1910. Brazil during these years came to dominate the world’s coffee market. An estimated two-thirds of the world’s coffee came from this Portuguese-speaking South American nation by 1929. With the Brazilian economy shifting to coffee, Cuba extended its dominance of the world’s sugar market. By 1929, the island nation was producing around five million tons of sugar per year. The rise in sugar production and consumption is thought to have provided the industrial working class with enough caloric energy to endure long days toiling in the factories and mines. Without the influx of sugar, some historians argue that industrialization would have run up against not only more popular discontent but also the lack of available labor. The narrow, mountainous and coastal nation of Chile saw its mines swing into full production. Millions of dollars worth of iron, copper and nitrates flowed to Europe and the U.S. to feed the boom in railroad building, automobile production and general industrialization. And yet all of these countries paled in comparison to the agricultural bastion of Argentina. By 1900, Argentina was exporting 21 thousand tons of wheat per year. Wheat export continued to grow until the 1929 – especially in the grain-starved years of world war between 1914 and 1919. Smaller nations also witnessed agricultural booms. Guatemala saw a spike in coffee production. Honduras turned to its own form of yellow gold – the banana. Ecuador cultivated massive amounts of cacao.

On first glance, then, it would seem that times were good in Latin America during the period of the great export boom from 1880 to 1929. It is not that simple. Let’s look at the few case studies of this agricultural boom in action.

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