Govt 40.15

agricultural and animal

During 1880-1914, Argentina becomes a key global producer of _______________________ products

immigrants

Early working class organizations in Argentina, Brazil, Uruguay linked to ______________

Latin American economies very _____ in early 19th

weak

Large-scale

____________ henequen production with boom. 300-400 large estates E and S of Mérida. RR connections to haciendas and to port of Progreso. Export to cordage factories in the U.S.

Smoot-Hawley Tariff

________________ 1930 raises duty on Cuban sugar to 2cents/lb

small-scale

________________ henequen use before 1872. -Hand scrapers — 500 lbs of leaves to produce 1lb of raw fiber -> Steam-powered raspers in 1850s - 350 lbs of fiber/day.

latifundio (encomienda)

____________________ in agriculture

International Harvester Corporation

___________________________________ founded in 1903. Dominates agricultural machinery business and manufactures 63% of all binder twine in U.S. By 1910, takes 100% of Yucatán henequen exports. Able to fix prices because of its monopoly

medical (second ir)

modern research techniques, advanced laboratories, medicines, vaccines

agriculture (second ir)

tractor, cultivator, harvesters, threshing machines, mechanized irrigation, synthetic fertilizers,

Heavea brasiliensis

indigenous to Amazon. can grow 100 ft. tall - live for a century, 6 years to produce rubber after planting.

fuels (second ir)

internal combustion engine: oil, diesel, natural gas

porfiriato

late 19th century Mexican land tenure change - attack on communal holdings during the _____________

patroes

lease land to tappers - receive rubber from them periodically in exchange for food, equipment and some cash

proletariat

1870s onward, slow growth of an industrialized "_________________"

Defaults

1890: Argentine National Bank has no gold to defend currency. ___________ on $48 m pounds it owes to Barings

traders

in Belem or Manaus. provide capital to patroes - receive rubber in exchange for trade goods and cash

demand

In Chile, nitrate boom ends with collapse in ____________

colonial

Nitrates in _________ period already identified as a fertilizer and to make gunpowder

industry

Nitrates promote __________ - more transformative

European

1876 law (Argentina) to encourage ____________________ immigration - 1880-1914: 6M immigrants from Europe: 48% Italy. 32% from Spain. - population of Argentina from 1.7M in 1869 to 7.9M 1914

Baring Brothers

1889: _________________ bank in London, holder of most of Argentine debt, attempts to float a loan for a water system in Buenos Aires. Loan fails to get subscribers. This triggers fear of Argentine debt in London

Royal fifth

"_______________" established 1504 - becomes the basis for the wealth of the Spanish Habsburg empire

tappers

(seringueiros) tap the latex from trees - 200-400 per tapper in two "trails" form latex balls with heat

Peru's guano boom

- 1849-1872 - Guano propels Peru into an era of prosperity - Allows debt from 1820s to be paid off: allows for new credit - 2.7-3 million pounds sterling in revenue to Peru during boom - comprises 2/3 of all government revenue - revenue doubles 1847-52 and doubles again by 1872 - allows Peru to float credit for war with Spain, 1864-65 - construction of flagships "Independencia" and "Huáscar" - accumulation of large debt but successfully serviced, 1849-1875

Argentina meat chronology

- 1860s: ammonia compression refrigeration invented - 1876: first refrigerated shipment of meat to Europe (muy mas o menos) - 1877: second shipment (deliciosa!) - 1882: first frigorífico in Buenos Aires - 1890s: Argentina largest supplier of meat to UK - 1900: frozen beef takes off - 1910: meat overtakes grains as top export - 1907: Swift to Argentina. Then Armour and Morris - WWI: decline then rapid growth in exports - 1918: end of war large drop — exports to 1/2 1922 - 1920s: boom again : chilled beef surpassed frozen - 1929: Great Depression - challenge to export model

Peru's guano bust

- 1872-1879 - Political instability persists during guano period: 14 changes in government during the period. - struggle over government revenue - spending on bureaucracy, military - Peru restructures revenue flow: lowers import duties, abolishes head tax on Indians. - enormous debt taken on — railroad building and military: 10m pounds to 33m in a three-year period - measurements of reserves clash after 1870 creditors raise interest rates - 1875 nationalization of nitrates: by then government runs out of money - 1876 default on foreign debt: no new credit until 1890 - 1878: increase in money supply to meet obligations: chaos and inflation. - 1879: war with Chile

Conquest of the Desert

- 1878-79 opens huge areas of pampa -> rise of large estates and speculation (35% of farmers own their own land in 1900)

Baring Brothers Crisis

- 1889: GOA breaks promise and uses paper $ to pay off debts set in gold. Value of Argentine gold peso is 94% higher than paper - 1889: Baring Brothers bank in London, holder of most of Argentine debt, attempts to float a loan for a water system in Buenos Aires. Loan fails to get subscribers. This triggers fear of Argentine debt in London. - Concern about debt drives up gold premium in Argentina. GOA and provinces print more paper $. Immigration tails off. Land prices begin to fall. - 1890: Argentine National Bank has no gold to defend currency. Defaults on $48 m pounds it owes to Barings. - Nov. 1890: At point of failure, Baring Brothers bailed out by Bank of London with help from France, Russia. - Crisis ensues. Bank failures in Argentina. Argentine GDP falls 11% 1891. - Crisis reverberates throughout Latin America and "emerging markets" - Crisis triggers years of slow growth — not until 1898 does lending resume.

domestic use agriculture (export boom)

-skewed land distribution - latifundio - absentee landlords - debt peonage - low mechanization - low productivity (seeds, technology, ag extension) - low quality herds - high illiteracy - low wages - poor farm-market infrastructure

Chile Nitrates: Last Spurt of Prosperity and Bust

- 1919-1933 - Post-War years shows large fluctuations and price and demand for nitrates. Huge drops in 1919, 1921-23, recovery, and then a collapse of industry with Great Depression. - U.S. market for nitrates partly replaced Germany in the 1920s. Effort by the Guggenheims to modernize the industry. Shanks method replaced by higher tech/capital intensive Guggenheim method to extract 90% nitrates from low grade (7%) ore. Huge Guggenheim investment. - 1930. GOC drops export tax on nitrates and forms, with Guggenheims (50/50 stake) The Nitrate Company of Chile (COSACh) to control industry. - Guggenheims to raise $110m in bonds but with Depression and collapse of demand, the industry busts and in 1933 COSACh is dissolved. - During mid-1920s, copper replaces nitrates as key export of Chile. Nitrate cycle ends with Depression and never returns.

middle

- 1950s: Cuba a _________ income country: GDP per cap 60% Europe. Beats some U.S. states. - Yet seen as a sordid dictatorship ripe for revolution. - Proximity to U.S. a curse and a blessing. Sugar sweet for some, bitter for others.

transformative growth in Argentina

- Argentina to developed status 1910 - Per capita income of $3,800 surpasses France and Germany Only UK. U.S. , Australia and Canada have higher - annual economic growth 1880-1913 averages 5% - during peak of boom, 1903-1913, averages 11.2% - per capita growth during boom 1880-1914 is 2.5% - huge increase national budget: 140m pesos 1895 -> 450m 1914 - 300 plus % increase - real wages grow on a par with UK - double Italy - domestic industry grows 8% per year 1875-1913 - growth stabilizes politics - universal male suffrage - urbanization, Buenos Aires "la gran capital" - 6m immigrants from Europe - cultural, intellectual, education leader

labor during export boom

- As economies were globalized, so did labor become influenced by world events and ideologies - 1870s onward, slow growth of an industrialized "proletariat" - Working class organization is first consolidated where export booms propel national development: Argentina, Brazil, Chile, Uruguay - Based on changes in transportation, manufacturing, construction, services, technology - Early working class organizations in Argentina, Brazil, Uruguay linked to immigrants - Elites/capitalists moved European ideologies regarding development, work, and labor unions: Liberalism, free trade, positivism. - Radicalization of labor after 1900 and especially after 1917. - Labor disputes in Latin America often lead to violence - Labor movement in Mexico migrates into being controlled by ruling Party - Labor in Colombia, Venezuela, Peru, Bolivia, Cuba affected by export sector but develops later than ABC/U.

end of henequen boom

- Boom peaks during WWI and then fades fast: —"sisal" from German E. Africa competes - 1912 —by the 1920s, sisal overtakes henequen in use for binder twine. - By 1930s, harvester-combine machine use is widespread - market share of henequen 1/4 of peak and falling. - With market almost evaporated, President Cárdenas of Mexico nationalizes the haciendas — small holdings created. - Synthetics in 1950s ends henequen and cuts deeply into natural fiber markets.

fall of Brazlian rubber commodity chain

- Brazil still 50% world production 1910 - 40% of Brazil export earnings (coffee 41%) - Speculation drives price to $3 a lb. then collapses. Price falls 80% 1910-1920. - production in Brazil collapses - by 1920 1/8th of 1910. Brazil world share of market evaporates. - by 1920s when world production booms, Brazil no longer a factor.

rural

- Cuban sugar -> Combination of high-level development in some areas and ________ poverty and backwardness and inequality

Henequen and RubberConclusions

- Examples of export-led growth that did not succeed. - Both responded to technology-driven demand in industrializing countries and natural supply advantage. - Both booms in areas far from center of national life - Both linked to international commodity chain at point of export - Labor force recruitment difficult in both - Regional boom does not translate to national impact - Booms end when foreign competition eliminates advantage - Neither boom generates growth in other sectors of economy. - Local economies lapse back into a state of isolation.

Argentina's boom of 1880s

- Fueled by agricultural exports: first wool, then wheat and other cereals: oats, corn, barley, linseed - Encouraged by GOA not defaulting on debt after Panic of 1873 - first massive influx of British capital: 23m pounds by 1873 - 157m pounds, 1890. By 1890 one/third of all British investment in Latin America is in Argentina. - Ocean freight rates plummet: rates in 1886 half of 1877 rates - Trade: $104m gold pesos 1880 rises to $250m/g/p 1889 - Shipping in Argentine ports: 2.1MT 1880, rises to 7.7MT 1890 - RR track: 1,570 miles 1880/ rises to 5,850 in 1890 - Population of Buenos Aires: 286,000 1880/ 536,000 1890 - Net immigration: 850,000 during 1880s. - Government grows, spends. Lavish imports of luxury goods

Argentina boom to crisis in the 1880s

- Gold standard, reintroduced in 1881, suspended in 1885 - Provincial banks issue paper currency — supposedly backed in gold but take out loans in gold to comply. Monetary base grows 18% per year, 1880-1890. - GOA takes on large debt: service cost rises from $23m gold pesos in 1885 to $60mg/p in 1890. Assume more debt to service old debt. Foreign debt taken out in gold. - By 1890, 40% of GOA annual revenue to service debt. - Huge GOA spending on infrastructure in 1880s financed by debt and deficit spending. Current account deficits run at 20% average annual 1880-1890. - Inflation runs at 17% per year, 1884-189 - 60% of imports are for consumer goods in 1890.

Yucatán

- Henequen dominates economy of the _____________, important for Mexico. - 70% of agricultural land in Yucatán in henequen - 95% of all henequen exports from Yucatán at peak - 20% of Mexico's total exports during boom peak

labor during export boom era

- Labor availability a negative factor in commodity era - Manual labor is often scarce. - Employers bemoan supply - Outside workers often used. - Poor migrate - Immigration limited to Atlantic economies. - Argentina population 30% foreign-born 1913 - 6.6M - Coerced workers often used. - Low salaries in most countries. Employers refuse to pay more. - Human resources highly restricted in managerial, technical era. - Strong opposition to worker organizations - Frequency of violence in dealing with labor mobilization, strikes, and protests.

reaper-binder

- Mechanization of wheat: from horse-drawn reaping machine of 1820s to the invention of the ____________ in 1872. (2 men can reap 12-14 acres/day)

Chile's nitrate boom

- Nitrates reshapes Chile economy. From depression of the 1870s and War to large-scale growth over decades. - Huge increase in production, value of exports, and revenue to the GOC. During period before WWI, nitrates constitute 2/3 of Chile's exports, generate 50% of GOC revenue, and account for 15% of GDP. - UK-owned operations control 2/3 of production until about 1895. - Key markets are Germany, UK, other European and some U.S. before 1914. - Nitrate producer "combinations" (cartels) to counter price fluctuations. - Nitrates transformative for Chile's economy. - Forward/backward linkages stimulate other sectors. - Very capital intensive. Challenges of a key industry far from population centers. - Labor force a challenge. Up to 30k workers needed. Recruited from Central Valley and Peru and Bolivia. No immigration from Europe or Asia.

grains

- ________ drive Argentinian economic growth 1870s-1910: - wheat: (Arg 5th in world - 1889) largest export - corn: 5MT exported 1912 - Linseed oil — third largest crops - 1MT 1913 - 1914 - alfalfa overtakes wheat as largest crop — feed

Shanks method

- developed in 1870s - using indirect steam from boilers - allows extraction from 15% nitrate content beds

commodity lottery

- exportable resources of a country are determined in large part by geography and chance. Natural advantage and supply/demand timing. - commodities differentiated in terms of long-term supply/demand variable, price stability, terms of trade (units of exports required to purchase units of imports expressed in a ratio) - outcomes of commodity-led growth influenced by political, economic and institutional factors. (dimension and nature of forward/backward linkages in commodity chain, size and stability of capital/investment, labor availability and productivity of human resource, political stability' and quality of institutions)

Latin America supply side advantages (1870-1914)

- near monopolies of certain products in time: natural fertilizers, rubber, henequen. - great variety of climates - often in same country - greater political stability (consolidation national unified elites (ABC,U), Con/Liberal rivalry abates (except Colombia), Porfiriato, limited but increasing democracy, "oligarchic republics - Peru, Bolivia) - triumph of free trade policy (Libs, Radicals, Positivists) - positive cycle of credit - commodities = collateral - fall in transportation costs ((steel-hulled ships, boilers, oil powered), Panama canal 1914, RR construction in Latin America, refrigeration)

Second Industrial Revolution

- oil, steel, electricity - 1870-1914 -Domination of 4 industrial powers: UK, US, Fra, Ger - Latin America linked to global economy through supply/demand advantages in commodities - Large variety of commodity experiences in the region - some transformative, some boom/bust - Continued low labor supply and yet low wages - Rise in government revenues and increased state presence. -Early industrialization takes place in most advanced countries: Argentina, Brazil, Chile, Uruguay, Mexico -Early middle class formation. - Rise of organized labor in advanced economies

Platt Amendment

- passed by U.S. Congress 1901 - grafted onto Cuban constitution of 1902 - incorporated into bilateral Cuba/U.S. treaty signed 1903 key terms: - Cuba will not enter into a treaty with a foreign power that will impair its independence or allow foreign military presence - Cuba will not assume or contract public debt that it cannot pay with ordinary fiscal revenue - U.S. may as it wishes intervene to preserve Cuban independence and to protect life, property, and individual liberty - Cuba will agree to plans for "sanitation" of cities of the island to protect Cuba and the U.S. - Isle of Pines omitted from proposed constitutional boundary of Cuba - Government of Cuba will sell or lease to the U.S. the lands necessary for coaling and naval stations at points to be agreed upon (Guantánamo) - These provisions shall be incorporated into a bilateral treaty with U.S.

rubber in brazil conclusions

- rubber boom in Amazon arises from world demand and natural supply of Brazil - booms while Brazil able to maintain natural market advantage — quickly ends when advantage ceases - little innovation or change in structure - inefficient and high cost - foreign links begin at ports - Brazilian elites disinterested in rubber despite revenue to government. Concentrated in other states (Rio, Minas, São Paulo. - Important resources to the state but not essential. End of rubber boom does not stunt Brazil's growth. - Amazon lapses back into a state of isolation. - - Boom/bust cycle of rubber a lost opportunity

weaknesses in Argentinian export model

- rural sector wealth too concentrated - large costs - fiscal revenue high but from export taxes and import duties - not on land or income - large % of capital is foreign - high dependence on UK - negative fiscal and monetary policies - non-convertible peso leads to devaluation until gold standard 1899 - Baring Crisis 1890: fiscal/monetary crisis and default - large external debt - payable in gold - deficit spending at national and provincial levels - large inflation during most of period - manufacturing grows but no manufacturing exports

end of chilean nitrate boom

-1914-1918 - Efforts to produce synthetic nitrates come to fruition. German scientists produce ammonia in 1904 and synthetic nitrogen for fertilizer and explosives. - World War I outbreak disrupts key German and French markets. Collapse of nitrates, 1914-15. Recovery with shipments to UK and U.S. 1917-18. - Huge downturn in Chilean economy, 1914-16. Work virtually halted in the nitrate fields. - Post-War, Chilean nitrates begin to recover, but German record synthetic nitrate production during War carries over into the 1920s to rival Chile. BASF and I.G. Farben. - By the mid-1920s, German synthetics outproduce Chilean nitrates.

commodity demand (1870-1914)

-Agriculture: guano, nitrates, henequén - Food/food processing: wheat, corn, beef, lamb, agricultural oils, coffee, cacao, sugar, bananas, tin - Stimulants and pharmaceuticals: tobacco, coca, cocaine, coffee, sugar, cacao - Textiles and footwear: cotton, wool, leather, indigo, rubber. - Explosives: mining/military: nitrates - Construction/electrical: copper, zinc, bauxite, tin - Transportation: rubber, copper, zinc, tin, wool, cotton

mills

-U.S. Presence increases 1898-1930: - 1913: 37% of total Cuban crop produced by U.S. _____ - 1924: 63%

beef

1910: _______ replaces cereals as Argentina's top export

beet and cane

19th century competition and co-existence between _______________ sugar (2 types)

exporters

Belem/Manaus: purchase rubber from traders — all cash. sell to importers in U.S. or UK with links to manufacturers. exporters often replace the traders and even the patroes

coffee in Colombia conclusions

Coffee is also transformative in Colombia beginning in the late 19th century. - Coffee development promotes small landholding and regional industrialization in central cordillera. - Key revenue factor for GOC and spurs national infrastructure - Coffee remains important for Brazil and Colombia during a long period — both maintain important market share. - As economies of Brazil and Colombia grow, coffee increasingly a smaller share of total exports and government revenue.

gold

Concern about debt drives up ______ premium in Argentina. GOA and provinces print more paper $. Immigration tails off. Land prices begin to fall.

proto-democracy

Cuba a weak ____________________ with weak institutions yet successful in many important areas: - richest country in the Caribbean and one of the most literate and healthy in Latin America - with development standards on par with S. Cone - in 1950, literacy in Cuba is fourth highest in LatAm, behind only Argentina, Uruguay and Chile - pre 1960 Cuba led all countries in LatAm in lowest infant mortality rate and highest life expectancy - sugar economy promoted a manufacturing/industrial sector in Cuba before 1930 that was superior to anything in the Caribbean. In 1920s, the share of manufacturing in GDP was ahead of Colombia and close to Mexico at 11-13%. - both small and large-scale industrial production: cement, beer, shoes, bricks, metallurgy, petroleum refining, cigars, distilleries, rum, candy, coffee - highly urbanized society - large railroad system

Cold War

Cuban Sugar production collapses with end of ______________: - about 1.8 tons now - 1% of world market share

Spain

Export of silver builds and then undermines _______ as an imperial power

developed

Export sector transforms Argentina to status of a ______________ country by 1910.

weight

GOC sets an export tax on __________ of exports - not price - 2.20 pesos per 100 kg.

enclaves

Guano and nitrates do not form export "____________" outside of national economy

little

Guano contributes _______ to national development

labor

Henequen: Need for _________. Mayans, coerced Yaqui people, Chinese and Korean laborers. Convicts.

Atacama

Huge deposits of sodium nitrate (salitre) formed from thousands-year natural process in ___________ Desert region of (before 1883) Peru and Bolivia. Pre-cordillera region.

Coffee in Brazil

In Brazil coffee is key to revenue flow for GOB and a central factor in development of São Paulo and nationally - GOB plays important role in global coffee commodity chain

certificate holders

June, 1880, with Chile in control of nitrate fields, GOC Commission awards control of operation to __________________________. No nationalization. Controversial decision

1860s

Nitrate extraction up to _______ low-tech heating method used on beds of 50% nitrate content

La Industrial

Only a brief attempt at value-added industrialization. In 1897 McCormick Co. forms "____________" — in 1903 folds and moves to Chicago

war

Outbreak of _____ between Peru/Bolivia alliance and Chile in 1879. Certificates sold at deeply discounted rates to speculators

puzzle

Performance of Argentina since export boom of the 1880s continues to __________ historians

nationalizes

Peru ______________ nitrates in the midst of the guano bust in 1875-76. Payment in certificates

17

Sugar consumption in U.S. peaks in 1929: falls __% by 1933

Cuban

Sugar dominates ___________ economy and built a strong linkage with the United States

dependency

Sugar in Cuba produces mixed results: strong development in certain sectors but also ________________ and eventually a stimulant for revolution.

slavery

Sugar intimately linked to the history/development of many countries and a key stimulus to ____________ in New World

coffee

____________ a commodity with a long and very profitable record - By the late 19th century a key export throughout Latin America - has particular advantages in terms of supply/demand - - Despite early links to slavery, profitable with wage labor

sugar

___________ one of longest-traded and influential commodities

repeal

With FDR, _____________ of Platt Amendment

patio

_______ process increases silver yield from ore (mercury)

Fordlandia

attempt by Henry Ford to produce rubber in Brazil ("_____________") and Belterra (1928-1940s) ends in total failure

transportation (Second IR)

bicycle, automobile, trollies, subways, dirigible, airplane, steel-hulled ships, refrigeration

communication (Second IR)

commercial telegraph, telephone, radio, wireless, moving pictures, typewriter, mimeograph

additive model

export sector grafted on to existing model with little change to non-export sector!(bananas)!

transformative growth

export sector promotes development of non-export sector (Argentina, Chile, Brazil, Uruguay) for successful promotion of national growth - diversification of markets - expand to new products - leads to growth of the non-export sector

destructive model

export sector sucks in resources from other areas (tin in Bolivia)!

participation/domination

guano and nitrate: important foreign __________________ in both commodity chains - linking to globalized economy. But not foreign ___________________ - regardless of the influence exercised

supply

guano boom ends in Peru because of _________ variable

steel (second ir)

higher quality production. structural steel for construction and shipbuilding

half

in 1914: _____ of total FDI in Cuba is from U.S.

smuggled

rubber ______________ out of Brazil 1876 - Malaysia and Indonesia rise as competitors

vulcanization

rubber use limited until after 1839, when Charles Goodyear perfects process known as "_________________" to stabilize rubber in one state - opening door to multiple uses.

interior

shift in center of gravity of rubber production - away from State of Pará towards the __________ - Manaus and Acre. Pará share 49% total production in 1885 to 26% 1910.

By early 17th century, _________ from New World makes possible a global currency

silver

19th-20th

sugar demand rose strongly __________ century and remains high

mita

the ____ system for mining and public works