Year 501 Copyright © 1993 by Noam Chomsky. Published by South End Press.
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Chapter Seven

World Orders Old and New: Latin America

1. "The Colossus of the South"

"When the resources of that vast country are taken into account," the editors of the Washington Post wrote in 1929, "it becomes evident that within a few years Brazil will become one of the leading powers of the world." "The United States rejoices in the rise of this great republic in South America," which "has found the road to permanent prosperity and peace." The euphoric predictions seemed not unreasonable. "Brazil is notable for its tremendously favorable combination of large size, low population density, and rich endowment of natural resources," Peter Evans observes, and it had nothing to fear from external enemies. In the second half of the 19th century, real per capita income rose more rapidly in Brazil than in the United States. Its leading export, coffee, was under control of local capital (Brazil provided over 80 percent of world output by the turn of the century). Some weaknesses were showing: the economy relied so heavily on exporting primary products that this rich agricultural country had to import even food staples. Nevertheless, the "colossus of the South," as the New York Herald Tribune termed it in 1926, appeared to be a true counterpart to the Colossus of the North, well-placed to rise to prosperity and power. It seemed, indeed, "a mighty realm of limitless potentialities," "a nation which staggers the imagination," as other US journals described it.

The Wall Street Journal, in 1924, offered a more caustic glimpse of the future: "No territory in the world is better worth exploitation than Brazil's." Five years later, "American businessmen boasted a larger share of the export market than their British rivals" and "New York had replaced London as the major source of new capital investment" (Joseph Smith). US investment grew tenfold from 1913 to 1930; trade more than doubled, while that of Britain declined by nearly 20 percent. The picture was much the same throughout the region. Direct US investment in Latin American enterprises almost doubled to $3.5 billion in the 1920s, while portfolio investment (bonds and securities) more than quadrupled to over $1.7 billion. Venezuelan oil under the Gómez dictatorship, mines in Bolivia, Chile and elsewhere, and the riches of Cuba were among the favored targets. From 1925-1929, US capital inflow to Latin America was about $200 million a year, while the annual outflow to US investors was about $300 million.1

Serious US interest in Brazil dates from 1889, when the monarchy was overthrown and a republic established, and a Pan-American conference was held in Washington "as part of a wider strategy designed to oust European competition and thereby secure American commercial ascendancy in Latin American markets," Smith writes. The US was hesitant to recognize the republican government, in part because "the conservative instincts of American politicians were alarmed at the overthrow of a symbol of authority and stability by military violence." But as incoming Secretary of State James Blaine recognized, "Brazil holds in the South much the same relationship to the other countries that the United States does in the North," and commercial opportunities were vast. Hesitations were soon overcome.

Recognized to offer "incalculable" commercial opportunities, Brazil was chosen as the site of the third (1906) Pan-American conference, where Secretary of State Elihu Root declared that the US and Brazil, "acting together, would form a single and eternal guarantee for the integrity of America." From 1900 to 1910, US trade and investment with Latin America more than doubled, growing at the fastest rate in the world. As global power shifted toward the United States with World War I, Washington was able to implement the Monroe Doctrine beyond its Caribbean sphere. The already substantial US economic and political influence throughout the hemisphere increased, giving rise to the euphoria of the 1920s.2

US dominance of the Brazilian market peaked after World War II, when the US supplied half of Brazil's imports and bought over 40 percent of its exports. By then, the vision of Washington planners was so expansive that Latin America had come to play only a minor part, though it was not forgotten. "Latin America's role in the new world order," Stephen Rabe observes, was "to sell its raw materials" and "to absorb surplus U.S. capital." In short, it was to "fulfill its major function" and be "exploited" for the benefit of the core industrial countries, along with the rest of the South.3

Rabe's description of the New World Order of 1945 is no less apt today; the same is true of Bolívar's concerns about the "very powerful country, very rich, very warlike, and capable of anything" that stands "at the head of this great continent." The major theme of the Colombian era -- the service role assigned to the South -- persists as we advance to a "new imperial age."


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1 Evans, Dependent Development, 51ff. WP, May 6, 1929; New York Herald Tribune, Dec. 23, 1926; CSM, Dec. 22, 1928; NY Post, Dec. 21, 1928; WSJ, Sept. 10, 1924; cited by Smith, Unequal Giants, 186f., 135f., 82. Krenn, US Policy, 122. Green, Containment, 8f.

2 Smith, Unequal Giants, 3ff., 35f., 134.

3 Evans, Dependent Development, 70; Rabe, Road to OPEC, 110.