Latin America-- Neocolonialism

Latin American History

The Triumph of Neo-Colonialism


Beginning around 1870 the expansion of the Industrial Revolution stimulated a more rapid pace of change in Latin American economy and politics.

As Industry in Europe gathered steam and began to produce more and more goods there was a mounting demand for raw materials and foodstuffs and Latin America responded by producing the goods that were in demand.

Starting in the 1870’s European capital flowed into Latin America creating railroads, docks, processing plants and other facilities that were need to expand and modernize production and trade.

It was at this point in the late 19th century that Latin America became integrated into the world economy in which it exchanged raw materials and foodstuffs for the manufactured goods of Europe and North America.

As more Latin American countries adopted free-trade policies they also abandoned efforts to create their own industries, since they could buy manufactured goods from the core countries.

The new emerging world system and Latin America’s place in it as a producer of only raw materials, put Latin America into a position of dependency on Britain and then later the US.

This was the period of neo-colonialism in Latin America, and this worked well until 1914 and the advent of WWI when the war disrupted the market for Latin American goods.

The period of 1870 to 1914 saw an overall growth in the economy of Latin America, but this growth was very uneven.

An important feature of the neocolonial order was its one-sidedness or dependence by one country on the single export of a raw material. This made the economies of these countries extremely vulnerable to fluctuations in prices on the world market.

In each country the modern export sector became an enclave that became isolated from the rest of the economy, and eventually this enclave accentuated the backwardness of the other sectors of the country by draining off their labor and capital.

Railroads were laid out to extract and not to integrate economic regions within countries.

The neocolonial order evolved within the framework of the old hacienda system and it led to a great expansion of the hacienda system.

Because of the expansion of the hacienda Indian lands were again under attack and in Mexico this problem would reach its climax under the regime of Porfirio Diaz.

As land became more and more concentrated in fewer and fewer hands the plots of individual families became smaller and smaller.

Also when the great landowners would seize Indian land this would give the haciendas a new labor force, that of the dispossessed Indians.

Dispossessed Indians rarely became true wage earners, and were caught in a system of debt peonage.

Slavery continued to survive in some places well-beyond mid-century for example in Peru until 1855, Cuba until 1886 and in Brazil until 1888. Similar to slavery was the system of bondage or using Chinese coolie labor. Some 90,000 Chinese coolies were brought to Peru to work on the Guano Islands and to build railroads in the Andes.

In Mexico, Yaquis Indians in the north were hunted down and turned into slaves to labor on the henequen, coffee and tobacco plantations of Yucatan.

More modern systems of labor developed in Argentina were an acute labor shortage led to the state providing incentives to the millions of European immigrants that poured into Argentina between 1870 and 1910.

Labor conditions were little better in the mining industry and in the factories that arose in some countries after 1890.

The rise of the neocolonial order was accompanied by a steady growth of foreign corporate control over the natural and man-made resources of the continent.

The process of foreign control went through stages: In 1870 foreign ownership was largely concentrated in trade, shipping, railroads, public utilities, and government loans. The British were by far the most important investing nation in Latin America during this period.

By 1914 foreign corporate ownership had expanded to include most of the mining industry, real estate, ranching, agriculture and manufacturing. New countries were also owning assets in Latin America and one of the greatest rival of the British was the US.

US investments in Latin America had risen from almost nothing in 1870 to over 1.5 Billion$ by the end of 1914, but Britain had nearly 5 billion $ invested in Latin America.

Foreign economic penetration went hand in hand with a growth of political influence and even armed intervention in Latin America especially by the US.

In the years after 1898, "dollar diplomacy" and outright armed intervention transformed the Caribbean into an American lake and reduced Cuba, the DR, Panama, El Salvador and Nicaragua to the status of dependencies and protectorates of the US.

The new economy demanded new politics. The slogan of the day was "order and progress" and social Darwinist ideas became increasingly popular. Latin American elites increasingly saw the Indian races as the main impediment to their economic development and political and social modernization.

The growing domination of national economies by the export sector and the development of a consensus between the old landed aristocracy and the more capitalist-minded groups reduced political conflict.

A new type of progressive Caudillo emerged such as Porfirio Diaz in Mexico, Rafael Nunez in Colombia and Agusto Leguia in Peru all of whom sought to attract foreign investment and stimulate the economy.

But as the century drew to a close dissatisfied urban middle-class, immigrant and entrepreneurial groups in some countries combined to form parties, called Radical or Democratic that challenged the traditional domination of politics by the landed aristocracy.

They demanded political, social and economic and educational reforms that would give more weight to the newly emerging middle sector of Latin America.

Also small socialist and anarchist-syndicalist groups emerged in some countries by the 1890’s that would challenge both capitalism and neo-colonialism.

In Mexico, General Porfirio Diaz seized power in 1876 from President Lerdo de Tejada with the support of regional caudillos, military personnel and liberal, as well as Indian and mestizo small landholders who believed that Diaz would put an end to the dispossession of the Indian.

Diaz installs himself in the Presidency, but in 1880 allows his best friend to become President until 1884 when Diaz resumes being president of Mexico and stays in the office until he flees the Mexican Revolution of 1911. Diaz became one of the longest personal dictators in Latin American history.

In terms of economic policy Diaz favored the great landwoners, the financiers and the foreign capitalists whose assistance would insure his political survival.

Diaz sent the army out to crush peasant revolts when haciendas would seize their lands.

Diaz granted all sorts of lavish concessions to British and American investors in order for them to build railroads in Mexico.

As far as Diaz was concerned everything hinged on economic development, no matter what the costs or who owned the investments.

But in order to attract foreign investment, Diaz needed to created political and social stability in Mexico. To do this Diaz adopted a policy of political cooptation or conciliation, for as Diaz put it "a dog with a bone in its mouth neither steals or kills." Therefore any political opponent of Diaz that had some degree of power would be bought out and brought into the Diaz camp.

Diaz also created an efficient police force called the rurales or mounted police who would suppress peasant resistance and break strikes.

The other side of Diaz’s policy was pan o palo bread or the club. Opponent who refused Diaz bribes would be beaten, arrested sent to prison or made to disappear.

Through such political means Diaz was able to eliminate most political opposition to him by 1888. Diaz had no respect for congress who he referred to as his stable of horses. The state governors of Mexico were usually generals who were friends of Diaz.

One problem though that Diaz faced was the incredible growth of Mexican bureaucracy due to his administration and empleomania. Also the army which was indispensable to the dictatorship of Diaz enjoyed many special favors and good pay in order to ensure their loyalty. But there were too many officers, in fact there was one officer for every 10 soldiers and one general for every 300 troops.

The church became another pillar of the dictatorship, as long as Diaz allowed the church to ignore earlier reforms. Land and wealth again accumulated in Church coffers. Often priests had wives, mistresses, dozens of illegitimate children and owned businesses on the side.

Diaz also had the support of some of the Mexican intellectual community in the form of the cientificos, who also believed in Social Darwinism and that the Indian had to be eliminated and replaced by another race in order for Mexico to prosper.

Mexican education did make some advances under the guidance of men like Justo Sierra who secured the adoption of obligatory primary education.

Landownership was extremely concentrated in Mexico. At the beginning of the 20th century, Mexico was an agrarian country with 77% of its population living in the countryside.

Between 1883 and 1894 various laws opened the way for vast territorial acquisitions by private individuals, land companies and foreigners. One individual owned 12 million acres in Baja California.

But the land companies were still not satisfied with the acquisition of vacant lands, and wanted to dispossess the Indians of their lands as well.

By 1910 more than 90% of the Indian villages of the central plateau, which was the most densely populated region of the country had lost their communal lands. And landless peons and their families made up 9.5 million of a rural population of 12 million. Much of this land was sold to North American speculators.

The problem with hacienda agriculture was that it was labor intensive and had a very low technological level of production. In the early 1900’s the production of foodstuffs stagnated, barely keeping pace with the growth of population and per capita production also declined.

This decline culminated in three years of bad harvests between 1907 and 1910 due to drought and a lack of modern irrigation in Mexican agriculture.

As a result Mexico began to buy food from the US.

The only food products that experienced an increase in production was alcoholic beverages. Life was so miserable for the average Mexican at the beginning of the 20th century, that the death rate from alcoholism was six times that of France.

At the same time, inflation increased the price of what food was available to the Mexican peoples, and there was no corresponding increase in wages for the Mexican worker to offset the price inflation.

While food production for the domestic markets declined the production of food and industrial raw materials for the foreign market expereinced vigorous growth.

By 1910 Mexico had become the largest producer of henequen and Mexican export production became increasingly geared towards the needs of the US market which was the pricipal market for sugar, bananas, rubber and tobacco produced on plantations which were owned not by Mexicans, but foreigners who had inversted in Mexico.

American companies dominated the Mexican mining industry and the output of copper, lead, silver, gold and tin increased sharply after 1890.

By 1911 Mexico was the third largest producer of oil in the world, but the fields were all owned by US and British corporations that paid no taxes to the Mexican government.

French and Spanish capitalists monopolized the Mexican textile industry after 1890.

Because of the foreign control of the key sectors of the Mexican economy a popular saying at the time was"Mexico, mother of foreigners and step-mother of the mexicans." Another was pobre mexico, tan lejos de dios y tan cerca Los Estados Unidos."

The cientificos justified the foreign ownership of most of Mexico’s economy as it stimulated rapid economic growth and development.

Clearly there were some benefits to the influx of foreign capital for it created a modern banking system and a fairly good railway system, but this came at a heavy cost to the Mexican people. The costs were a brutal dictatorship, the severe poverty of the vast majority of Mexicans and the survival of feudal forms of labor such as debt peonage.

Mexicans suffered terribly in terms of labor relations between workers and managers. In 1910 forced labor and outright slavery, as well as older forms of debt peonage still existed in southern Mexico.

In central Mexico, by 1910 a massive expropriation of Indian villages had created a large landless Indian work force.

In the mining sector in the northern state of Sonora a labor strike broke out at the American owned copper mine at Cananea over exploitative labor conditions in 1906 which was ruthlessley repressed by both Mexican and American troops called in by the American owners to suppress the strike in Mexico. Many historians of the Mexican Revolution regard this repression as the beginnning of the Mexican Revolution.

For despite such repression the Mexican trade movement continued to grow.

The grwoing wave of strikes and agrarain unrest in the last phase of the Diaz dictatorship indicated an increasingly rebellious mood among ever broaders sections of the Mexican people.

Alienation spread among white collar employees towards the Diaz regime for their life opportunities had been sharply limited by Diaz selling off Mexico to the gringos.

Need to define just what a revolution is in the 20th century.

I’d like to discuss various theories of the Mexican Revolution. Ruiz Thesis of the The Great Rebellion, Alan Knight, that it was a Great Political Revolution.

Even members of the ruling class began to join the criticisms of Diaz. There were many upper class Mexican entrepreneurs who resented the advantages that foreign and especially North American investors were granted by the Diaz regime.

They also feared that unless Diaz carried out reforms, that anarchist and socialist elements could overthrow the capitalist system itself. Fearing a communist revolution the upper class elements urged Diaz to end his personal rule, to broaden the base of Mexican government to incorporate the lower class and for the political system to be responsive to the plight of the middle class.

Diaz refused to listen and many of the middle class reformers reluctantly began planning a revolution.

Typical of these men was the wealthy businessman and hacendado Fransico Madero who would become the apostle of the Mexican Revolution.

The economic situation in Mexico worsened between 1906-1907, and a depression that started in the US spread throughot Mexico by 1907.

The depression caused a wave of bankruptcies, layoffs and wage cuts. By 1910 things had become explosive in Mexico as there were workers strikes, agrarian unrest and general hatred of the Diaz regime. discuss the revolution of unment rising expectations, resource mobilization and theories of relative deprivation.

The social base of the Diaz dictatorship was disintegrating.

In Bolivia many of the same themes that occurred in Mexican History were occurring at about the same time as the Indians of the altiplano were being dispossed of their lands by the expansion of the hacienda by the 1880’s.

This expansion at the expense of the Indian communities of Bolivia provoked many serious Indian rebellions throughout the 1880’s, which were crushed by the Bolivian army.

Liberalism had come to Bolivia and it was thought at the time that for Bolivia to truly become an advanced nation Indian lands which were communally owned, but were not private property would have to be privatized.

The laws that allowed for this were often abused by mestizos who sought to take Indian lands for their haciendas. Previously the Bolivian government left the Indians to their lands for they comprised an important tax base for the Bolivian government.

But by the 1880’s there was a new boom in mining in Bolivia first in silver and then in zinc and tin. Consequently, the Bolivian state no longer needed the tax revenues from the Indian communities since they could tax the mining industry.

Also, as the mining industry took off there was a greater demand for foodstuffs in the urban areas of Bolivia, especially in the mining areas. It was thought that the haciendas produced food more efficiently than Indian communities and for this reason haicendas expand at the expense of Indian communities from 1880 to about the 1920’s.

Langer, Erick D. "Liberalism and the Abolition of Indian Communities in Nineteenth-Century Bolivia," Historia y Cultura, forthcoming (April, 1989)

The abolition of Indian communities and their sale to non-Indians and the resulting expansion of haciendas during the late nineteenth and early twentieth centuries represents one of the most important transformation in Bolivian rural history. Liberalism provided the justification for the destruction of communal units of production as it did elsewhere in Latin America. During this process there were many concerns such as fiscal constraints, Indian resistance and the state’s varying power to repress any political mobilization that the Indians attempted. Governmental authorities also interpreted and implemented regulations in line with regional interests and their own ideological priorities.

The leaders of the triumphant Bolivarian army were virtually all imbued with classic liberal ideas. It was Simon Bolivar who set the tone for the reform of Indian communities in a classic liberal fashion. Bolivar was appalled that the Indians should be treated as legal minors and was eager to integrate them into the emergent political culture as full-citizens. As early as 1824 Bolivar decreed that the Indians should be declared private owners of the land that they tilled and Bolivar in doing so tacitly implied the legal denial of corporately owned Indian property and community lands. In fact all community land not claimed by an individual owner was to become the property of the state and sold at auction.

The law promulgated in Cuzco legally abolished the Indian communities by partitioning their lands into equal portions among the community members, giving one topo of fertile or two topos of poor agricultural land to each Indian. There has been a wide divergence of interpretations of this decree among historian. Some hail this legislation as progressive while others have attacked the decree and law as anti-Indian because they, in hind sight appeared to have justified the expansion of haciendas at the expense of corporate Indian land holdings. As Langer suggests the reality probably lies somewhere in between, but it seems clear that the Liberator really didn’t understand the Andean peasant economy in the early 19th century. It also appears that Bolivar was more concerned with integrating the Indians in the political system by obliterating old colonial ethnic distinctions and create out of the old corporate structures a new class of small holders which according to Liberal thought of the period would form the

Langer p.2

backbone of a national political culture. However, these reform measures were never carried out. The Bolivian government heavily relied on community tribute for revenue and by 1827 Sucre was forced to restrict these measures.

The most important piece of legislation regarding the communities passed during Santa Cruz’s administration was the law of 1831 which declared that community Indians become owners of all the land they possessed. The 1831 law also provided Indians assurances that they would remain in possession of their lands and the president never abolished the Indian head tax. This law among others also facilitated the collection of Indian tribute which was important to finance the expansionist foreign policy of Santa Cruz. Santa Cruz defined what the Indians saw as an explicit pact between the Indian communities and the government. The communities would pay their tax than the government would defend Indian lands. The fiscal interests of the state prohibited a dramatic change from policies fo the colonial past during the first half of the 19th century. I

In the 1840’s President Jose Ballivan in 1842 contradicted earlier legislation which gave lands to the Indian in the form of corporate or private property. Ballivan decreed that the state held legal title to Indian lands and that the Indian only had the usufruct rights. Yet it should be noted that this decree didn’t change the basic relationship between the community and the state. Ballivan’s apparent intention was to facilitate the efficient collection of tribute and the state still remained the guarantor of the integrity of Indian lands. Langer and others argue that emphyteusis plan was the easiest legal means to strengthen the hands of the provincial governor against the usurpation by outsiders and may have actually strengthened the bond between the state and the communities.

Liberalism returned to the ideological discussion in the 1860’s and with its remergence there was again concern over the problem of Indian lands. In the 1860’s a new breed of silver miners were gaining ascendancy in demanding neo-classic liberalism in regards to the silver trade. Some people of the time such as Mallo advocated the abolition of tithes and the substitution of these taxes and tribute payments with a property tax on the land the comuneros actually farmed. The rest of the community land was to be rented by the state and to make up for the revenue shortfall due to the loss of tithes a catastro or property tax would be imposed on forms of real property whether improved or unimproved in the country.

Langer p.3

By the 1860’s the Indian was seen as being unable to participate fully in the political culture of the nation or even in its economic life due to the corporate barriers that community property created for the Indian’s integration. After 1860 there was never any question of whether the Indian communities should be abolished, but debate changed over the processes that should be used to abolish Indian community property.

Essentially Langer argues that it was the rise of silver mining revenues which replaced the importance of community tribute payments in funding the government of Bolivia that allowed the government and elite elements of Bolivia to attack the corporate property structure of the Indian communities. Langer is concerned with the time period of 1820 to 1870 and presents a highly detailed argument with a good bibliography of primary and secondary source materials to prove his thesis. The article will be essential in providing a base for a chapter on Indian legislation the reaction of Indian to this legislation from 1824 to 1870.