The main foreign relations in Latin America were with European countries but there were some relations with the USA as well. There are many examples that are worth analyzing that illustrate how the booms in Latin America only left the natives with a struggling economy and little chance to prosper. A few of these include the Anglo-Argentine Alliance, the guano boom, 'the coffee boom, the rubber boom, and the Bracero Program
The Anglo-Argentine Alliance
In this contract, Argentina formed an alliance with Britain, where Argentina, with their land and resources exported primary goods to Britain. Britain used these goods to manufacture secondary goods which they then sold in the international market for high prices. Argentina, already a poor country, could not afford the technology needed to create secondary goods, so their only option was to sell raw materials to Britain. The demand came for the secondary goods and not the raw material so Argentina's only buyer was Britain, but Britain had buyers from all over the world, including Argentina. By diversifying their market England was not vulnerable to fluctuations in global demand. Britain made large profits through this alliance, but Argentina never gained much since the raw materials were sold for little, and bought back in the form of the secondary goods.
Britain gave investment to Argentina, developing their transportation system and building infrastructure in the country. Although this appeared to benefit Argentina, in reality they became heavily dependent on British investment which in the long run was detrimental to the economy of Argentina.
Furthermore, the workers who worked in the lands of Argentina were exploited and struggled to gain from the trades. The profits never filtered to Argentina for its own benefit. The land, resources and labor in Argentina was used to benefit Britain, while the real benefits of the free market trade and exports stayed with the powerful European country. Argentina never moved forward and remained completely dependent on their trade with Britain.
This illustrates one way in which European countries and USA used the resources and cheap labor of Latin America for their own benefit, while stifling the growth and independence of Latin America through their foreign policies. Britain never allowed Argentina to gain from their trades, and even the investments given did more harm than good.
The Guano Boom
Another example of Neocolonialism in Latin America was the boom of guano; bird dung rich in nutrients used for fertilizer. Found on islands off the coast of Peru, this product was Peru's most important export from 1841 to 1879. Guano helped set off Europe's agricultural revolution and was key to feeding their increased population (Meade 106).
In 1860, the demand for guano decreased rapidly due to synthetic and cheaper forms of fertilization. But the decrease in the demand was not the main reason the boom was detrimental to Peru. The guano industry was government owned. Peru owned the right to all of the revenue earned from the guano, however they did not spread it evenly. Instead, only very few individuals or companies ever saw the wealth. Also, Peru had relied on loans to build the guano industry. After the boom went bust, the government was again in heavy debt (Meade 107).
In Peru's guano boom and subsequent decline due to the introduction of another product also lead to the "bust" in another "boom, bust" cycle. The money wasn't evenly spread out, so only a handful of people had access to the profit. Even though they kept the wealth in the country for the most part, they did not use the revenue wisely. These people didn't use the money to invest in the bettering of the country, but rather used it to bring in outside goods. These foreign goods pushed the local goods out of the market because they weren't able to compete with the cheaper made products. Then in 1860 when guano was replaced by nitrates, the country suffered because it didn't put the money from the industry for education or healthcare, or anything else that would actually help the community. This mistake caused the country to again go into a state of poverty and social downfall.
The Coffee Boom
Colombia had the coffee boom. "In Colombia the boom in coffee exports began in the early years of the century and grew from one million bags (60 kilos each) in 1913 to three million bags yearly by the end of the 1920's, making coffee the leading export". Coffee exports boomed from the 1800's onwards. By the 1920's coffee accounted for 70% of the total exports. (MEADE 179-80).
The revenue brought in from the coffee sales benefitted Colombia for a little while, in that it contributed to the development of roads that stretched across the country. Colombia built railroads, but although they were more advanced, weren't as useful in Colombia as they had been in Argentina. Colombia was growing in its own way, separate from what other nations had before it. But it fell into the same trap as its neighbors; using a single commodity to carry the nation's economy. Even though coffee proved itself to be a "fixed demand commodity" (Meade, 133) there's no way for a country to expand economically when it relies on a single crop. Much of the value of coffe is added when the beans are roasted. Efforts have been made to roast beans in Latin America however their short shelf live has made this impossible.
At the end of the Colombian coffee boom, and in unison with the banana workers strike, Colombia went into a repression. The development of these crops in Colombia was organized by the United Fruit Company, a United States business. Because of their distance from the actual production, the managers were able to enjoy their riches while the laborers in Colombia worked in horrible conditions getting little pay. On October 7, 1928, the banana workers went on strike to protest their working conditions and pay, and the company retaliated in the banana massacre. This lead to an increased movements by laborers all over Latin America, who fought for better working conditions and better pay.
Brazilian rubber exports provided an enormous amount of wealth beginning in the 1870's but then collapsed after 1910. The time period was first called the "rubber boom" but then was renamed to a "boom gone bust". During the boom period of rubber, it attracted laborers, speculators and merchants from all over the world. Rubber exports consisted of a milky white fluid extracted from the Hevea Brasiliensis tree which is called latex. The rubber boom created instant millionaires or "rubber barons". The boom became a bust because people became aware that the trees could grow outside the Amazon region (Meade 114-115). Rubber brought in a lot of money to only a few people. By harvesting the sap from rubber trees, Brazil was able to provide the rubber that was demanded by Europe and other industrial countries. People started migrating to Brazil to work tapping these trees with the aspirations of getting rich. However in this situation, the only people getting rich were the people in control. Once scientists discovered that rubber trees could be grown outside of Brazil, the competition started. Because the trees grown outside of Brazil were in plantations, they could get more rubber, and Brazil couldn't compete with it. The spoils of the short-lived rubber boom were very poorly applied and distributed. The vast wealth was funneled into a very small group of elites of Brazilian society and industry. Instead of social and industrial investment, the rubber revenues were spent on lavish projects such as opera houses, which serve next to no social or economic benefit relative to the amount of money these projects cost. This period in history serves as a classic economic and political lesson, showing that a boom can unexpectedly turn into a bust, and that one should plan accordingly. After the rubber boom, Brazil had little to show for its successes. Instead of applying the rubber money to the support of economic and social prosperity, the Brazilian elite class squandered the money on foolish cultural projects, instead of the much needed programs to benefit the entire nation and its future.
The Bracero Program
The Bracero program was an effort by the U.S. to get workers from Latin America. The program began with an agreement between President Roosevelt and Manuel Avila Camacho. The agreement was to recruit over 300,000 Mexicans to be agricultural workers because of a labor shortage in the United States. This labor shortage was due to worker vacancy because of military conscription and the influx of highly skilled workers needed for factories caused by the U.S. involvement in World War II. They brought in the workers to do the jobs at a lower cost, as not to displace the rightful owners of the job. Labor representative from both Mexico and the U.S. oversaw what jobs were in the program, the wages and the working conditions (Meade 215).
By the time the program ended, approximately 4.6 million Mexicans had participated. However, many of the contracts were not started until after the war ended (Meade 216). The idea was that after the war was over and the men returned home they could take back their jobs from the Mexican workers. This, however, never happened. The workers stayed and were able to keep their jobs because employers liked the cheap labor. The Bracero program is the first example of exploiting immigrant workers in the U.S. Because they come from poorer nations, they are paid less. The U.S. took advantage of the Mexican workers during a time of labor shortage and then took advantage of their economic situation. The U.S. treated them as slaves and basically kicked them out of the country when they were no longer needed.
The Bracero program can also be blamed for the current immigration issues in the USA. It was this program that started the problem of "illegal" immigrants, when the workers from Latin America suddenly became "illegal" when the program ended. Employers began hiring illegal workers because of their tendency to work for a lower wage than the average worker. This tactic was appealing to employers because illegal workers worked for cheap, without support, or any type of health benefits, which lowered the employers over head cost significantly.
Not only did the Bracero program exploit Mexican workers but also most US residents are unaware that without the Bracero program the US would not have been able to produce enough food to send to the military abroad and to meet the demand at home during World War II and the Korean War. The Mexican government also took advantage of this program to keep the salaries of these poor Mexican workers to themselves and it was not until 2008 that this was revealed. This was a tough time for these Mexican workers they were put to work for cheap wages and once the soldiers came back they were out of a job and getting kicked out and on top of that they were being robbed of their salaries by their own government. This whole program was history lesson that we are now figuring out. This laid down the foundation of US relaying on "cheap labor from Mexico to depress prevailing wage levels, especially in agriculture, at home" (Meade 217). The Bracero Program did have some benefits for both Mexico and the United States. First of all, it filled the labor positions that were lost during war time since many of the U.S soldiers were sent overseas and were unable to work. The U.S. was able to endure the lack of workers during World War II and the Korean War and preserved our food supply. In addition to that, it was a positive change for Mexican workers at this time. The Bracero program mandated a certain level of wages, housing, food and medical care for the workers, which many of them did not have in Mexico. This allowed worker to also send money back home in hope for a better life for their family when they were away at work.
New Age of Imperialism Fueled by Capital Investment
Towards the end of the 19th century, much of the first world had just come out of several major wars and civil strife. Accompanying this new stability came accelerated growth of manufacturing across Europe and the United States. In order to increase production and revenue, major international players looked to Latin America to expand. When these nations turned to Latin America, they found both supply and demand. They invested heavily in capital to increase production of raw goods to extract, which supplied monstrous international demands. These giants also saw that they could flood local markets in Latin America with these extremely cheap goods, such as textiles. When the local people opted to purchase cheap European goods, the market for local goods shriveled up, collapsing numerous local industries. The inability to have a self-sustaining economy made countries all across Latin America dependent on their European masters.
Cuba and the Platt Amendment:
After Cuba gained its independence Cuba’s constitutional delegates were informed that they had to include the Platt Amendment in Cuba’s new constitution or the United States would not end the military occupation. The Platt Amendment states, “That to enable the United States to maintain the independence of Cuba and to protect the people thereof, as well as for its own defense, the government of Cuba will sell or lease to the United States lands necessary for coaling or naval stations at certain specified points to be agreed upon with the president of the United States” (Zolov, 82). The Platt Amendment thinly guises the Platt Amendment as a means for the United States to protect Cuba. However the Amendment clearly seeks to expand the United States’ influence over Cuba by increasing the permanent military presence in Cuba. The Platt Amendment enabled the United States to create the Guantanamo Bay detention camp in Cuba. The Amendment also places stipulations on what kind of debt Cuba can enter into and who Cuba may sign treaties with. These stipulations show how much influence the U.S. exerted on Cuba when it was creating its constitution. The Platt Amendment was renounced by the Cuban government in 1933 only 30 years after it had been passed (Zolov, 81). The Platt Amendment demonstrates how Latin America was not only influenced through economic means during the neocolonial period but through coercive policy as well.