A New Basis for Pan-American Trade

by LUIS QUINTANILLA

I

THE Latin-American Republics won their territorial independence not long after the United States. Later, as in Mexico under Juarez, they gained political separation from the Church. But, unlike the United States, they have yet to end successfully their vital struggle for economic emancipation. This does not mean that Latin America must fight United States capital. The intelligent cooperation of that capital is needed to build up the national economies of some twenty Hemisphere Republics. For their participation in this continental task. United States investors will, of course, be not only morally but financially rewarded. In other words, Latin America still needs capital, but it must be of an entirely different type from the capital of the past.

With its main sources of income virtually all under foreign ownership, and under the control of a very few people, Latin America is seriously handicapped in creating a national wealth. For, contrary to the contention of the interested parties, foreign monopoly investments do not help the development of a country. Rather, they hinder it by the very nature of their purpose, which is the artificial control of prices in order to insure high and steady returns to distant speculators for whom countries are not nations inhabited by human beings, but mere commodities.

Experience has taught us to fear absentee capitalism. We do not want great sums of money invested from distant foreign markets by one powerful monopoly, but numerous small investments placed by people directly and personally interested in the country that will provide them with the means of living. We need people who, for instance, would come to Mexico with five, ten, or fifteen thousand dollars each, determined to make of their investment a human and not a market experience, a wholesome venture involving not only their pocketbooks but also their brains and their hearts. We want people willing to settle, learn the language, adjust themselves to the customs, and mingle in brotherly fashion with the native population. In short, we need and welcome an immigration with the moral qualities, the dynamic initiative, and the loyalty of the North American pioneers. Of course we need capital - but an understanding, coöperative capital; not for the exploitation of Latin America, but for its economic development. The era of exploitation is gone forever in this Hemisphere of Neighbors.

I do not believe in “reformed” capitalists; but I know there are plenty of intelligent ones. It is to them I make this appeal. In our countries they will find untold opportunities to show their enterprising genius. Money will be safe, because in the long run it is only safe when it is used fairly. In fact all rights, and not property rights alone, are safe only when they do not infringe on the rights of others.

The businessman of tomorrow will understand that the era of exploitation has given way to that of coöperation. Often men lose all because they insist on retaining too much. The people of the United States have shown exceptional flexibility. Not being overburdened with prejudices born of outmoded traditions, they have been able to adjust themselves to changing circumstances. PanAmericanism, if it means anything, is another turning point in American history. The price for it is the establishment of domestic and inter-American democracy; not only the formal, theoretical, political democracy of our several constitutions, but the material, tangible, economic democracy in our peoples’ way of living.

Intellectuals may spend leisurely hours interpreting the tenets of democracy; but when democracy is in danger, it is the people who do the fighting. And those who are willing to die for democracy should be allowed to live under it. United States investors must become fellow workers in the cause of Latin-Amcrican democracy; they must not, they can not, as in the past, block consciously or unconsciously the liberal policies proclaimed by domestic administrations determined to release the full potentialities of the heretofore inarticulate Latin-American masses.

In a very keen analysis of “Inter-American Trade and Financial Problems” Eduardo Villaseñor, Director General of the Bank of Mexico, writes: “I think the future of the United States is irrevocably linked to that of Latin America. It is up to them whether they want to be linked to a poor Latin America or a rich Latin America.” A shrewd businessman will agree with Villaseñor that there is only one possible choice. A rich client is always a better client. This is precisely what Gordon S. Watkins, Professor of Economics in the University of California, made plain when he stated in a lecture delivered April 15, 1941: “Permanent expansion of inter-American trade is not likely to be assured unless the United States, together with the governments of Central and South America, takes an active interest in the elevation of the standards of life for the great mass of Latin Americans.”

Some people will say that a Pan-Americanism resting on hemisphere economic democracy is a dream which will never be realized. These skeptics are blind to the youth, the intelligence, and the idealism that are characteristic of the man of America — the man for whom Secretary Padilla of Mexico has been the brilliant herald.

To chronic un-American pessimists I would say: A dream, yes, perhaps; but an American dream! And American dreams have made history. Because of that, we feel safe in predicting that this other American dream — of an integral hemisphere democracy, based on the enjoyment of rights, economic as well as spiritual — will some day become a reality; and that this new American reality, when it does take form, will shape the world of tomorrow.

2

But if Pan-Americanism is to be more than wishful thinking, it must rest on a feasible inter-American economy. I do not mean, by this, that business and trade considerations alone suffice to create international goodwill, but merely that, in the field of international relations as well as in the domestic one, economic situations are a necessary foundation for any policy. It is therefore pertinent to analyze some of the essential aspects presented by our Pan-American — or rather Pan-Americanist — economy.

First, a rapid survey of Latin America’s foreign trade reveals that our twenty-one Republics cannot be considered as a unit; rather, they are two distinct groups: on the one hand, those which sell at least one-half of their exports to the United States of America; on the other, those which do not. Considering the figures for 1937 (a normal pre-war year), we find that only nine countries belong to the first group, eleven to the second.

Panama sells to the United States 90 per cent of its exports; Honduras, 89 per cent; Cuba, 81 per cent; Colombia, 64 per cent; Guatemala, 64 per cent; Salvador, 61 per cent; Mexico, 56 per cent; Nicaragua, 55 per cent; Costa Rica, nearly 50 per cent.

In the other group we find, in decreasing order of percentage, the following: Brazil, which sells 36 percentof its exports in United States markets; the Dominican Republic, 35 per cent; Ecuador, 33 per cent; Haiti, 28 per cent; Peru, 22 per cent; Chile, 22 per cent; Venezuela, 14 per cent; Uruguay, 14 per cent; Argentina, 13 per cent; Paraguay, 8 per cent; Bolivia, 7 per cent.

It is evident, in the light of these figures, that Pan-Americanism cannot mean the same thing for a country which, like Panama, exports 90 per cent of its products to the United States as it does for a country like Bolivia, which exports only 7 per cent to the United States. Anyone would admit that, in strict business sense, a client who buys 90 per cent of one’s goods is more valuable than a client who buys only 7 per cent. You must try to keep the first, whereas you can afford to lose the second.

Export figures become particularly significant in dealing with the Latin-American Republics, because a substantial percentage of their total annual production is sold not in domestic but in foreign markets. The United States exports less than 10 per cent of its total production, while LatinAmerican countries export from one-third to one-half of their commodity output; and in some the ratio rises as high as 70 or 80 per cent. Writes Professor Watkins: “In C hile, Colombia, and Venezuela about nine-tenths or more of all mineral production is exported, and in Peru about three-fourths. Most agricultural exporting countries, such as Brazil and Colombia, export about one-half of their farm output. The Argentine exports two-thirds of its crops and three-fourths of its livestock, and Cuba, with its intensive sugar production, exports more than threefourths of its farm produce.” Eliminate, as the war has done, European trade and markets, and you will find that something like five hundred million dollars’ worth of raw materials, nearly 30 percent of Latin America’s total yearly output, find no markets. I shall quote from another source a few figures which will show perhaps more vividly the plight of Latin-American trade in the world at war.

Take some of the chief agricultural exports of the Republics to the south: 93 per cent of Latin America’s meat almost totally from Argentina — went to Europe before the war. To Europe went also: 86 per cent of Latin America’s corn — exported also mainly from Argentina; 85 per cent of the cereals — more than half exported by Argentina; 74 per cent of the cotton — mostly from Brazil; 73 per cent of the wool — half of it from Argentina; 66 per cent of the hides and skins — exactly half of which came from Argentina; and 64 per cent of the linseed almost totally from Argentina. The few LatinAmerican agricultural exports bought by the United States are: bananas, 79 per cent of which are sold in United States markets, from Colombia and Central America; sugar, 72 per cent of which is bought by the United States, mostly from Cuba; cocoa, 67 per cent exported to the United States, mostly from Brazil; and coffee, 57 per cent, of which finds a ready market in the United States, also mostly from Brazil.

That is not the worst. Not only does the trade of Latin America depend upon foreign and not national markets (unlike the United States and, even more, Soviet Russia), but in too many cases exports consist of only one or two products.

For Instance, 91.9 per cent of Guatemala’s exports are coffee and bananas; 90.5 per cent of Venezuela’s, oil and by-products; 86.9 per cent of Salvador’s, coffee; 78.9 per cent of Bolivia’s, tin and silver; 78 per cent of Cuba’s, sugar; 76.4 per cent of Costa Rica’s, coffee and bananas; 74.3 per cent of Colombia’s, coffee and oil; 73.6 per cent of Panama’s, bananas. The other Latin-American Republics are in a better position since, having a more diversified production, their trade income does not depend exclusively upon the world price of one commodity. But a country whose trade is predominantly foreign and almost exclusively in one commodity, while it may be independent in name, is economically at the mercy of the market which buys that specific commodity. And since in most cases that market is controlled by one monopoly, the firm behind that monopoly holds in its hands the economic fate of that particular country.

3

These figures show that the economies of Latin America remain colonial to a large extent. Confirming this, one could make use of many other statistics. For instance, a comparative analysis of government revenues would bring out the fact that trade barriers rather than income taxes or levies on commercial transactions provide most of the national income of Latin-American governments. Colombia, the Dominican Republic, and Salvador obtain more than 40 per cent of the national revenue from import and export duties; Chile, Costa Rica, Guatemala, Haiti, and Paraguay, from 50 to 85 per cent; whereas only 6 per cent of the United States Government revenue comes from duties upon foreign trade and nearly 60 per cent from income tax. As long as the LatinAmerican Republics remain in their primitive, agricultural stage of economic development, tariff barriers, as was true of the United States for many years after their independence, will continue to constitute their main source of income. And trade barriers are a hindrance to an inter-American economy.

Latin-American Republics are still lands of primitive exploitation for the benefit of some foreign monopolists. They are, to the latter, lands of raw material and cheap labor. It is, of course, to the selfish interest of these prosperous monopolies to maintain these primitive conditions of exploitation; but it is obviously not to the benefit of the millions of people who eke out a miserable existence in their own potentially rich territories. The result of so untenable a situation is quick and fantastic returns for foreign investors, but unbelievably low standards of living for the native populations.

We are just beginning to gather reliable data on the standards of living of the great body of Latin America’s population. The figures at hand are amazingly few, but nevertheless so impressive that I cannot refrain from presenting some of them.

The country of the Hemisphere which shows the highest average salary for its workers is, of course, the United States of America. According to domestic statistics, intelligently gathered by the Confederation of Latin-American Workers, the C.T.A.L. — a pioneer in this worthy task — the average hourly salary of a United States worker, in at least ten of the most common occupations (construction workers, carpenters, mine workers, unskilled laborers, printers, drivers, painters, and similar occupations) is $1.33. In contrast, the average hourly salary in other republics of the Hemisphere for more or less the same group of workers is: Canada, $0.56 per hour; Argentina, $0.30; Uruguay, $0.25; Cuba, $0.20; Colombia, $0.14; Mexico, $0.13; Costa Rica, $0.11; Bolivia, $0.09; Chile, $0.06; Ecuador, $0.05; and the Dominican Republic also $0.05. From $1.33 to five cents, a nickel, a package of chewing gum. So goes the scale of hourly salaries unevenly distributed among the same workers of our Hemisphere.

Some people try to becloud the issue by contending that such statistics mean nothing because the cost of living in Latin America is so cheap that you can almost buy there, in cents, what you must buy in the United States with dollars. That is wholly inaccurate. The same C.T.A.L. has compiled specific data which allow us to refute this silly argument. Those data show, not what the workers of the Hemisphere comparatively earn, but what they can buy with what they earn.

Let us consider only some of the essential food items of consumption, such as bread, beef, milk, eggs, and sugar. In the United States the average worker earns, per hour, enough to buy 7.8 kilos of bread; while, with the product of a same hour’s work in substantially the same occupation, a Canadian worker can only buy 4.3 kilos of bread; one from Argentina, 3.2; Uruguay, 2.9; Cuba, 1.7; Chile, 1.4; Mexico, 1.1; Colombia, 1.0; Costa Rica, 0.9; Dominican Republic, 0.5; Ecuador, 0.4; and Bolivia, 0.3. Thus, to take the two extremes only, a United States worker is paid, in bread, over twenty times more than his fellow worker from Bolivia. In terms of beef, the situation is as follows: United States, 2.0 kilos; Canada, 1.1; Argentina, 1.6; Uruguay, 2.0; Mexico, 0.6; Colombia, 0.3; Chile, 0.2; Ecuador, 0.2; Bolivia, 0.2; Dominican Republic, 0.1. That is to say, United States workers are paid in meat more than ten times as much as workers in Latin America. In milk, United States workers receive more than twelve times the amount that can be purchased — also with an hour’s pay — by their Latin-American brothers. In sugar, the situation is still more favorable to United States workers. They can buy, with their pay for an hour’s work, as much as thirty times more sugar than, for instance, the workers in the Dominican Republic. It is sad to say that, even in countries that export sugar in large amounts, like Cuba, workers can only purchase one-fifth of the amount which United States workers can acquire, on the basis of the average hourly salary. Finally, I cannot refrain from quoting the data in terms of eggs. The hourly salary for the worker in the United States allows him to buy 53.4 eggs; in Canada, 21.5; Argentina, 24.4; Uruguay, 16.6; Colombia, 8.0; Mexico, 7.5; Costa Rica, 6.4; Chile, 4.5; Ecuador, 3.3; Bolivia, 2.9; and the Dominican Republic, 2.4.

Are those conditions compatible with our idea of a Pan-American democracy? As long as they prevail, can we even think of our Hemisphere as a territory in which there is equality? Lastly, can democracy have the same meaning for the Bolivian, Chilean, Haitian, Dominican, or any other underpaid Latin-American worker, as it has for the workers in the United States? Still more simply: can democracy have any meaning whatsoever for the ill-housed, ill-clothed, illfed Latin-American millions who have never known a concrete, tangible benefit of democracy? The issue raised here is the most important one in any factual discussion of Pan-Americanism. It is the very meat of PanAmericanism. Any other consideration might be important in itself, but relatively it is secondary.

If Latin Americans are to become more and more involved in the fate of democracy, they must become more and more acquainted with its tangible benefits.