When dictator
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Marcos Perez Jimenez was overthrown in 1958. Venezuela was one huge oilwell, surrounded by jails and torture chambers and importing everything from the United State: cars, refrigerators, condensed milk, eggs, lettuce, laws, and decrees. In 1957, the biggest of Rockfeller's enterprises, Creole, had declared profits equaling almost half its total investment. The ruling revolutionary junta raised the tax on its profits from 26 percent to 45 percent; in reprisal the cartel promptly lowered the price of Venezuelan petroleum and began to fire workers en masse. The price fell so low that despite the tax raise and increased oil exports, the state collected $60 million less in 1958 than in the previous year.
The governments that followed did not nationalize the oil industry, but neither did they grant new oil-extracting concessions to foreign companies until 1970. Meanwhile, the cartel speeded production from its Near Eastern and Canadian deposits; in Venezuela, prospecting for new wells here and there, confirming that it has no other function than that stated by President Romulo Betancourt: "Not to achieve the dimension of a major enterprise, but to serve as intermediary for negotiations on the new concession formula." The new formula was proclaimed several times but never put into practice. In 1970, under the Christian Democratic regime of Rafael Caldera, progress was said to be well advanced toward singing "service contracts" under which the companies would explore and exploit 250,000 hectares in partnership with the state. Another form of fig-leaved imperialism, the mixed-enterprise system, had previously been used to deliver most of the petrochemical industry--
synthetic rubber, polyethylene, ammonia, urea-- to Union Carbide and a Standard Oil subsidiary.
The industrializing thrust that has taken shape and strength during the past two decades shows visible symptoms of exhaustion, of an impotence that is all too familiar in Latin America: the internal market, limited by the poverty of the masses, cannot sustain the development of manufacturers beyond certain limits.
At the same time, agrarian reform initiated by the Accion Democratica administration, has traveled less than half of the road its creators promised to traverse.
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Salvador Garmendia, the novelist who reinvented the prefabricated hell of this whole conquest culture, the culture of petroleum, wrote to me in the middle of 1969:
Have you seen the apparatus that extracts crude petroleum? It looks like a big black bird whose sharp-pointed head rises and falls heavily day and night without stopping for a second: it is the only vulture that doesn't eat shit. What do we do when the characteristic sound of the sipper tells us there isn't any more oil? The grotesque overture is already beginning to be heard over Lake Maracaibo, where fabulous communities grew up overnight, with supermarkets, dance halls, a profusion of whorehouses and gambling dens--
money had no value. I recently made a trip through there and felt claws in my stomach. The smell of death and decay overpowers the smell of oil. The towns are semi-deserted, wormeaten, ulcerated, the streets deep in mud, the stores dilapidated One of the companies' old divers goes down every day with a saw to cut lengths of abandoned pipeline which he sells as old iron. People are beginning to talk about the "companies" as if conjuring up a golden fable.
They live like acrobats on a tightrope of myths about the old days, when fortunes were squandered on a turn of the dice or a week-long drinking orgy.
Meanwhile, the pumps continue bobbing up and down and the rain of dollars falls on Miraflores, the government palace, to be turned into superhighways and other cement monsters. Seventy percent of the country lives a totally marginal existence. In the cities an unconcerned, well-paid middle class stuffs itself with useless objects and makes a strident cult of imbecility and bad taste.
The government recently announced with great fanfare that it had exterminated illiteracy. Sequel: in the recent electoral fiesta registration lists showed a million illiterates between eighteen and fifty years of age.
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Part II
~
Development Is a Voyage
With More Shipwrecks
Than Novigators
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4. Tales of Premature Death
A DECL.ARATION OF INDEPENDENCE
HAILED BY BRITISH WARSHIPS
When George Canning, the brains of the British Empire, was celebrating its worldwide triumphs in 1823, the French charge d'affaires had to swallow the humiliation of this remark: "Be yours the glory of victory followed by disaster and ruin, be ours the inglorious traffic of industry and an ever growing prosperity.... The age of chivalry is gone; and an age of economists and calculators has succeeded." London was entering a long period of festivity; Napoleon had finally been beaten some years earlier, and the curtain was rising on the era of Pax Britannica. In Latin America, the power of landlords and rich port merchants had been secured in perpetuity by independence, at the cost of the newborn countries' imminent ruin. The former Spanish colonies and Brazil were markets hungry for English textiles and pounds sterling at so much percent. Canning did not err when he wrote in 1824: "The deed is done, the nail is driven, Spanish America is free; and if we do not mismanage our affairs sadly, she is English. "1
The steam engine, the mechanical loom, and the perfection of textile machinery had precipitously matured Britain's Industrial Revolution. Factories and banks multiplied; the internal combustion engine modernized navigation and big ships sailed to the uttermost parts, expanding 173
British industry. The British economy paid with cotton textiles for the hides of Rio de la Plata, the guano and nitrates of Peru, the copper of Chile, the sugar of Cuba, the coffee of Brazil. Throughout the nineteenth century industrial exports, freightage, insurance, interest on loans, and profits on investments fed British prosperity. Actually, much of the legal commerce between Spain and its colonies, before the wars of independence, was British-controlled--apart from the steady flow of contraband to Latin American coasts, effectively screened by the slave trade. The overwhelming majority of goods passing through Latin American customs houses was not Spanish. Spain's monopoly had never in fact existed: "The colony was already lost to the metropolis well before 1810, and the revolution was no more than political recognition of this state of affairs."2
British troops had taken Trinidad with but one casualty, but the commander of the expedition, Sir Ralph Abercromby, was convinced that other military conquests in Spanish America would not be so easy. Soon afterward, British invasions of Rio de la Plata failed. The defeat confirmed Abercromby's view on the ineffectiveness of armed expeditions and the ripeness of the hour for diplomats, merchants, and bankers: a new liberal order in the Spanish colonies would offer Britain the opportunity to secure nine-tenths of Spanish American commerce.3 Latin American lands burned with independence fever; after 1810, London applied a devious and two-faced policy which fluctuated with the need to favor British trade, keep Latin America from falling into United States or French hands, and avert Jacobin infection in the newly independent countries.
When the revolutionary junta was formed in Buenos Aires on May 25, 1810, British warships saluted it with a salvo of guns from the river. The captain of the Mutine made a glowing speech on His Majesty's behalf, and the jubilation warmed British hearts. Buenos Aires waited barely three days to repeal certain bans on trade with foreigners; twelve days later it cut the taxes on external sales of hides and fats or tallow from 50 to 7.5 percent. Six weeks later, the ban on exporting gold and silver coins was removed, so that they could flow tranquilly to London. A triumvirate replaced the junta in September 1811, and the export and import taxes were again reduced and in some cases abolished. After 1813, when the Assembly declared itself the sovereign authority, foreign traders
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were exempted from the obligation to sell their merchandise through native businessmen. In 1812, British traders were reporting to the Foreign Office that they had succeeded in replacing German and French textiles; they had also replaced
Argentine textile production, which was strangled by the free-trade port. The same occurred with variations elsewhere in Latin America.
From Yorkshire, Lancashire, the Cheviot Hills, and Wales poured an endless stream of cotton and woolens, iron and leather, wood and porcelain goods. Manchester's looms, Sheffield's foundries, Worcester and Staffordshire potteries flooded Latin American markets. Free trade enriched the ports which lived from exports, lifted sky-high the extravagance of oligarchies determined to enjoy every known luxury, but ruined budding local manufacture and frustrated expansion of the internal market. Some weak and technically backward colonial industries had grown up despite metropolitan prohibitions, and were on the rise on the eve of independence as Spain's oppressive bonds loosened and war in Europe created a shortage of supplies. In the nineteenth century's first years, factories were recovering from the blow of the royal decree of 1778 authorizing free trade between Spanish and American ports, The resulting deluge of foreign goods had crushed colonial production of textiles, pottery, and metal objects, and the artisans had little time to get back on their feet; then independence flung open the door to free competition from Europe's already developed industries. Under the vacillating customs policies of independence governments, Latin American manufactures continued fitfully, with one foot in the grave and with no possibility of sustained long-term development.
THE DIMENSIONS OF INDUSTRIAL INFANTICIDE
At the beginning of the nineteenth century Alexander von Humboldt estimated the value of Mexican manufactures--mostly textiles--at some 7 or 8 million pesos. Woolen and cotton cloth were turned out in specialized workshops: Quer6taro had more than 200 looms and 1,500 workers; 1,200 cotton weavers worked in Puebla.4 In Peru, the colony's crude products were never as perfect as the native textiles of Pizarro's time but economic performance was very great. The industry was based
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on forced labor by Indians who were locked into the shops from before dawn till late at night. This development-annihilated by independence-had been precarious but of some magnitude in Ayacucho, Cacamorsa, Tarma; the community of Pacaicasa, which formed one great weaving establishment with more than 1,000 workers, is now extinct, and Paucarcolla, which supplied a large area with wool blankets, is disappearing. In Chile, one of Spain's most far-flung possessions, isolation favored the development of industrial activity from the beginnings of colonial life. It had spinning mills, textile mills, and tanneries; all the ships of the South Seas were equipped with Chilean rigging and cordage; it manufactured metal objects, from retorts and guns to ornaments, fine tableware, and clocks, and built boats and vehicles. In Brazil, too, textile and metal works, which took their modest first steps in the eighteenth century, were wiped out by foreign imports. Both manufactures had managed to prosper despite obstacles imposed by Lisbon, but after 1807 the Portuguese monarchy, installed in Rio de Janeiro, was a toy in British hands and London had strength of a different order. "Until the ports were opened up," writes Caio Prado, "the shortcomings of Portuguese commerce had provided a protective barrier for a small local industry--a poor artisan industry, true, but enough to satisfy part of the local demand. This small industry could not survive free competition from abroad, even in the most insignificant products."5
Bolivia was the Rio de la Plata viceroyalty's most important textile center.
At the end of the century, according to Intendente Francisco de Viedma, 80,000 people in Cochabamba were engaged in making wool and cotton cloth and tablecloths. Oruro and La Paz also had factories which, together with those in Cochabamba, supplied blankets, ponchos, and warm flannel to the population, troops of the line, and frontier garrisons. From Mojos, Chiquitos, and Guarayos came the finest linen and cotton cloth, hats of straw, vicuna and lamb's fur, and cigars. "All these industries have disappeared in the face of competition with similar foreign-made articles," testified a book published on the first centenary of Bolivia's independence.6
In Argentina, the coast was the most backward and least populated region until independence moved the economic and political center of gravity from inland to Buenos Aires. Only one-tenth of the population 176
lived in Buenos Aires, Santa Fe, and Entre Rios at the beginning of the nineteenth century. A rudimentary native industry had slowly developed in the center and north while, as Procurador Larramendi observed in 1795, "not one craft or manufacture" existed on the coast. Textile workshops wove three types of ponchos, and factories produced sturdy carts, cigars and cigarettes, leather and shoe soles in Tucuman and Santiago del Estero--both pockets of underdevelopment today. All kinds of cloth, fine woolens, and clergymen's black flannel came from Catamarca; Cordoba turned out more than 70,000
ponchos, 20,000 blankets, and 40,000 Spanish yards of flannel a year, along with shoes and leather goods, sailing cinches and yards, carpeting and cordovan. The important tanneries and saddleries were in Corrientes. Salta was famous for its fine saddles; Mendoza produced between 2 and 3 million liters of wine a year, rivaling that of Andalusia; and San Juan distilled 350,000 liters of aguardiente a year. Mendoza and San Juan, situated between the Atlantic and the Pacific, were the "throat" of South American commerce.
Commercial agents from Manchester, Glasgow, and Liverpool toured Argentina and copied Santiagan and Cordoban ponchos and Corrientes leather goods, as well as the local wooden stirrups. Argentine ponchos cost seven pesos, Yorkshire ones three. The world's most advanced textile industry won at a gallop over the products of native looms, and it was the same with boots, spurs, iron grill work, bridles, and even nails. Interior Argentine provinces were ruined and promptly rose against the dictatorship of the port of Buenos Aires. The top merchants (Escalada, Belgrano, Pueyrredon, Vieytes, Las Heras, Cervino) had assumed the power wrested from Spain, and trade enabled them to buy English silks and knives, fine Louviers cloth, Flanders lace, Swiss sabres, Dutch gin, Westphalian ham, and Hamburg cigars. In exchange, Argentina exported hides, tallow, bones, and salted meat, and the cattlemen of Buenos Aires province extended their markets thanks to free trade. The typical tough gaucho of the pampas was described thus in 1837 by the British consul in La Plata, Woodbine Parish: "Take his whole equipment--examine everything about him--and what is there not of raw hide that is not British? If his wife has a gown, ten to one it is made in Manchester; the camp-kettle in which he cooks his food, the earthenware he eats from, the knife, his poncho, spurs, bit, are all imported
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from England."7 Argentina even received the stones for its sidewalks from Britain.
In about the same period James Watson Webb, U.S. ambassador in Rio de Janeiro, reported:
In all of Brazil's haciendas the master and his slaves dress in the products of free labor, and nine-tenths of them are British. Britain supplies all the capital needed for internal improvements in Brazil and manufactures all the utensils in common use, from the spade on up, and nearly all the luxury and practical items from the pin to the costliest clothing. British pottery, British articles of glass, iron, or wood are as common as woolens and cotton cloth. Great Britain supplies Brazil with its steam and sailing ships, and paves and repairs its streets, lights its cities with gas, builds its railways, exploits its mines, is its banker, puts up its telegraph wires, carries its mail, builds its furniture, motors, wagons .... 8
Free trade euphoria drove the port merchants wild: in those years Brazil also imported coffins (already lined) for the dead, riding saddles, crystal chandeliers, saucepans, and-most improbable of all for tropical coasts-ice skates; also wallets (although Brazil had no paper money) and an inexplicable quantity of mathematical instruments. The trade and navigation treaties signed in 1810 put a lower tax on English than on Portuguese imports, and their text was so barbarously translated from English that the word "policy," for example, was transmogrified into the Portuguese word for "police." The British in Brazil enjoyed a special code of justice which removed them from the jurisdiction of the national courts: Brazil was an unofficial member of the British economic empi
re.
A midcentury Swedish traveler arriving at Valparaiso witnessed the extravagance and ostentation free trade had produced in Chile: "The only way to rise in the world," he wrote, "is to submit to the dictates of Paris fashion magazines, to the black frock coat and all accessories thereof... The senora buys a new hat that makes her feel eminently Parisian, while the husband dons a high, stiff cravat and imagines himself at the pinnacle of European culture,"9
Three or four British concerns had taken over the Chilean copper market and juggled prices in the best interests of foundries in Swansea, Liverpool, and Cardiff. The British consul general reported to his government in 1838 on the "prodigious growth" in sales of copper, which was exported "chiefly, if not entirely, in British ships or on behalf of Britons."10 British businessmen monopolized
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commerce in Santiago and Valparaiso, and Chile was the second most important Latin American market for British products.
Latin America's big ports, through which the wealth of its soil and subsoil passed en route to distant centers of power, were being built up as instruments of the conquest and domination of the countries to which they belonged, and as conduits through which to drain the nations' income. While ports and capitals strove to be like Paris or London, behind them stretched the desert.
PROTECTIONISM AND FREE TRADE: THE BRIEF FLIGHT
OF LUCAS ALAMA N
The expansion of Latin American markets speeded accumulation of capital in the nursery gardens of British industry. The Atlantic had for some time been the main highway of world trade and the British had shrewdly capitalized on the location of their island--surrounded by ports, halfway between the Baltic and the Mediterranean, and facing out to the coasts of America. Britain was organizing a worldwide system and becoming the great factory supplying the planet: the entire world supplied it with raw materials and received its manufactured goods. The Empire had the greatest port and most potent financial apparatus of its time, the highest level of commercial specialization, a world monopoly on insurance and freight, and control of the international gold market. Friedrich List, father of the German customs union, once observed that free trade was Britain's chief export. (This German economist, born in 1789, preached in the United States and his own country the doctrine of protectionism and industrial development.