Economic Imperialism in Latin America

In the second half of the 19th century, Latin America was subjected to imperialist aggression from both Europe and the United States. The “new imperialism” was concerned with a world capitalist economy as the industrialized nations of Europe and the United States sought raw materials, low-wage labor, and new markets for their goods. The emerging middle classes of Latin America were hungry for the latest European news and fashions.

Britain replaced Spain as Latin America’s major trading partner. Companies based in Britain became the largest investors in Latin America, followed by ones from France and Germany. Europeans invested over $10 billion in Latin America between 1870 and 1919, primarily in Argentina, Mexico, and Brazil.

Role of the United States The United States was not yet as established a world power as Britain or France. However, the Second Industrial Revolution brought newfound prosperity to the young republic. U.S. corporate investments came later and were concentrated at first in Mexico and Cuba. These investments supported infrastructure and industry, especially railways, shipping, and the emerging banking and financial sectors. They also financed mining, guano, and meat processing and packing plants. In 1823, the Monroe Doctrine, the U.S. policy of opposing European colonialism in the Americas, told the world that Latin America was in the U.S. sphere of influence.

Investments in Argentina In the late 19th century, Britain had invested more in Argentina than in its own colony of India. As much as 10 percent of British foreign investment was in Argentina. British investors, entrepreneurs, and business leaders helped turn Argentina into the richest country in Latin America and one of the dozen richest in the world by the outbreak of World War I. They improved breeding stock and developed large-scale farming throughout the grassy plains, known as the Pampas. They also financed infrastructure and building projects, such as the railroad and telegraph systems. Because of its location on the shallow Rio de la Plata, Buenos Aires needed to build a new port to facilitate passenger service and the massive import and export of goods and services. The British financed and designed the new port, Puerto Madera.

Mining in Chile Spain colonized the region of present-day Chile between 1540 and 1818. Chile’s economic development was initially dependent on the export of agricultural produce. The wealth of these raw materials brought dependency on Spain and tension among neighboring states. Copper would come to dominate Chile’s exports. The mining sector in Chile would come to be one of the pillars of the Chilean economy, making up for more than one- third of government income.

Rubber Industry in Brazil Brazil once had a booming rubber industry. However, it declined after people began growing rubber in Malaysia at a lower cost. The shift of rubber production demonstrated how trade was organized to the advantage of companies based in Europe and the United States. Economic competition brought prosperity to some regions, but it was always fragile.

Central America and the Caribbean Foreign investors often used their governments to act as “strong men” to help them achieve the ends they wanted. The United Fruit Company was an American corporation that traded in tropical fruit, primarily bananas, grown on Latin American plantations and sold in the United States and in Europe. The United Fruit Company allied itself with large landowners to pressure governments to maintain conditions that would be favorable for the U.S. company. In a short story, the writer O. Henry coined the term “banana republics” to describe small Central American countries under the economic power of foreign-based corporations. The banana republics were politically unstable states with an economy dependent upon the exportation of a limited-resource product, such as bananas or minerals.

Patterns of imperial control over territories and transportation networks in Central America, the Caribbean coast of Colombia, Ecuador, and the West Indies continued as companies sought political dominance to gain monopolies over natural resources.