Download Neocolonialism 1880-1930

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The reform movement in Latin America had created a stronger middle class and had
introduced the idea of capitalism to the region. However, the social hierarchy based on
ethnicity was still in place and many natives found themselves outside of the economic boom
to come. For the elite and even the middle class things were not so bad. They were reaping in
the benefits of the great export boom.
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Throughout Latin America trade was growing immensely. Brazil in the early 1900s was
producing most of the world’s coffee. Guatemala, Honduras, Ecuador, Bolivia exported tons
of tobacco, rubber and bananas and the elite from these countries, were enjoying the benefits
while the lower class suffered.
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The numerous revolutions and costs of social reform had severely weakened the economies of
many Latin American nations. In response to this crisis Latin American leaders looked to
Europe and the United States for aid.
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The practice of Neocolonialism became an answer to the failing South American
economies. Foreign investment and loans from Europe and the United States began to lift the
financial burdens of many Latin nations. This “bail out” came at a high price however.
Neocolonialism is a process that creates a society that is dependent on its financial
relationships with more powerful countries. Latin American countries became dependent on
foreign loans and military support and often fell into tremendous debt. Europe and the
United States would take advantage of these situations and create a new era of Imperialism.
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The Great Export Boom: starting in the 1880’s, Latin America went through a rapid
industrialization process which also fueled an immense increase in exported goods. The
creation of large factories in the cities created new job opportunities for rural farmers and a
new urban working class was created. The building of railroads and trains increased trade
between nations and decreased transportation times and costs. Modern farming techniques
and equipment, increased the production of cash crops and created a strong middle class
and immense trade wealth.
The economic boom did not benefit the majority of Latin American citizens however. Large
landowners and urban merchants became wealthy and powerful by exploiting the new
industries, the new working class and native farmers and the nonexistent economic laws.
Land values near railroad lines soared but the poor indigenous people who lived near them
were displaced and never saw a profit from them.
Displaced peasants became employees of landowners. (very similar to encomiendas) Most
lived as peons on rural haciendas. These Landless peasants had no place to grow
subsistence crops so they became indentured servants or sharecroppers. Once working for
landowners, peasants had little time to grow their own crops. Wages were often too small to
support a family. Women and children joined the labor force. Vagrancy laws (punished
non-workers) harassed those who avoided wage labor. Many peasants moved to the cities to
escape the harsh farming life.
Cities remained small but attracted migration from countryside and immigration from
overseas. Buenos Aires, Argentina was the largest city at 750,000 while Rio de Janerio, Brazil
followed with nearly 500,000.
Rural Landowners spent their massive export profits in the cities. They eventually became
urban, leaving their business in the hands of a hired administrator or family member in the
countryside.
Education became important to landowning families most studied law, medicine or politics.
Urbanization meant education for the upper and middle classes. Argentina and Uruguay
were the most literate while Brazil (the most rural) had a literacy rate of only 2 of every 10
citizens.
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Bananas: The tropical weather of Central and South America was perfect for growing large
quantities of the these cash crops. Europe and the United States began to heavily invest in
Latin American plantations. In countries like Panama, El Salvador, Guatemala and Costa
Rica, Bananas become a source of wealth. The banana companies are usually owned by
foreign countries like the U.S. or Germany and the profits are taken away from the local
economy. These countries become known as “Banana Republics” due to their dependence
on one cash crop and foreign investment. The United Fruit Company, owned by the United
States, was worth more money than all of the economies of these Banana Republics combined
by the 1920’s.
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Coffee: In 1888 Brazil becomes the last western nation to abolish slavery. Without a cheap
source of labor Brazil welcomes foreign immigration as a new labor force. (Italians, Germans,
Chinese) The Coffee plantations of Brazil and Columbia eventually grow the majority of the
world’s coffee by the 1930’s. The wealth generated by this industry creates a rural middle class
but also created a wider gap between the rich and the poor. The governments of both
countries borrow heavily from foreign banks to create modern factories and transportation
for the coffee industry. This eventually leads to foreign control of the coffee industry.
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Rubber: When Charles Goodyear invented the process of Vulcanization (chemical
process that made rubber stronger and more elastic)in 1844 he had no idea what effect his
discovery would have in South America. The Brazilian Amazon was a huge source of rubber
trees. The demand for rubber skyrocketed with the industrial revolution. The machinery
needed rubber belts and wheels to run efficiently and with the invention of the automobile
the demand for rubber soared even higher. Native workers called “tappers” work long hours
for little pay gathering sap in the harsh rainforests. Many became sick or alcoholics from the
endless work. Meanwhile “Rubber Barons” became insanely wealthy.
Native “tappers” 1880’s
Rubber worker today
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Sugar: The trade of sugar cane was the oldest cash crop business in Latin America. The days
of the triangular trade and slavery were centered around the massive profits of sugar
plantations. The 1800’s and 1900’s saw little change in this industry other than the abolition
of slavery in 1886 by the Spanish empire. In the Caribbean, Cuba and Puerto Rico (still
owned by Spain), were completely dependent on the sugar and rum trade. The field workers
had no rights or benefits and large landowners made the huge profits from the sales. The
social inequalities in Cuba would eventually lead to the Cuban War for Independence
against Spain in 1895. Cuban rebel Jose Marti led the rebellion and Cuba Libre movement
which called for the U.S. intervention that was promised under the Monroe Doctrine. After
years of U.S. investments in the Cuban and Puerto Rican sugar industries, the conflict forced
the United States to act on the side of the Cubans against Spain .
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The Spanish-American War (1898): U.S. newspapers began to cover the Cuban rebels’
struggles against Spain and focused on the harsh and violent tactics of the Spanish army
against civilians. In 1898 the United States sent the USS Maine to Havana harbor to protect
U.S. Citizens in Cuba. During the night an explosion destroyed the ship and killed most of
the crew aboard. The newspapers of William Randolph Hearst and Joseph Pulitzer used
“yellow journalism” (exaggerated propaganda and headlines) to incite calls for war against
Spain. After negotiations broke down between Spain and the U.S. war was declared and
American naval forces were sent to the Philippines (another Spanish colony)and Cuba.
Under Admiral Dewey the U.S. navy crushed the Spanish fleet at the Battle of Manila bay in
the Philippines. The land war in Cuba was more difficult due to the terrain and tropical
diseases of yellow fever and malaria. Theodore Roosevelt led a famous charge of his unit
the “The Rough Riders” up San Juan Hill and defeated the Spanish forces. Eventually
Spain was defeated on land and at sea. The United States became an imperialist power by
annexing Puerto Rico and the Philippines while controlling Cuba Financially.
Cuban Rebels 1898
Jose Marti
Yellow Journalism
The Rough Riders
By the late 1800’s the United States had become the greatest influence in foreign investments
for Latin American nations. Great Britain had been the leader in foreign investments and
banking but U.S. companies and banks bought British interests and became dominant.France
also tried to influence Latin American finance by attempting to build a canal in the Colombian
controlled isthmus of Panama.
 The Panama canal (1888-1914) In 1888 France began digging a canal in the Colombian
province of Panama to connect the Atlantic and Pacific oceans. The profits from tolls and the
decrease in travel time would create immense revenue once completed. French builders ran
into extreme difficulties with yellow fever however. Year after year, hundreds of workers died
from the mosquito born disease. As the toll mounted, (20,000 in all) French investors were
angry at the lack of progress, thousands of French investors lost their money. The word
Panama quickly became synonymous with scandal and fraud. About $287 million had been
spent and only 11 miles of canal had been dug. The project looked like a lost cause.
 Theodore Roosevelt became President of the U.S. in 1901 and tried to take over the project.
In 1902, the United States reached an agreement to buy rights to the French canal property and
equipment for $40 million. The U.S. then began negotiating a Panama treaty with Colombia.
Colombia sensed a scam and withdrew its negotiations so Roosevelt and Panamanian business
interests collaborated on a revolution. The battle for Panama lasted only a few hours.
Colombian soldiers were bribed $50 each to lay down their arms; the U.S. Navy anchored off
the Panamanian coast in a show of support. This became known as Gunboat Diplomacy.
 On November 3, 1903, the nation of Panama was born. The U.S. drained swamps and sprayed
tons of pesticide in the area to kill the mosquitos. After years of hard labor ,the Panama Canal
opened on August 15, 1914. It immediately became a large source of profit for the United States
while Panama saw little of it. The Canal was returned to Panama in 1979, it currently makes 1.4
billion dollars a year in profits.
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Gunboat Diplomacy
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The Industrial revolution enhanced the motivations and abilities of the western imperialist
powers. (Britain, France, Germany, United States) This resulted in a rapid conquest of
territories either militarily or financially. In less than half a century an independent Latin
America was turned into an economic colony of the industrial powers, mainly the United
States of America.
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The Democratic gains of the liberal reform movement were replaced by dictatorships and
oligarchies that supported foreign economic intervention. Governments became corrupt with
wealth from exports and elections were rigged. (set up for future revolutions)
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The lower classes and the native populations once again suffered and became the “slaves” of
the new economic elites. The upper and middle classes became more prosperous and well
educated but their fortunes are tied to foreign investors and banks.
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Despite modernization and industrialization, many Latin American nations did not own the
factories or railroads in their own countries. In exchange for short term wealth the elites had
failed to see the long term effects on their economies. (Western powers lose interest and leave
in the 1930’s, causes economic collapse)
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Latin American Intellectuals protest European and American imperialism. Dictators suppress
their freedom of speech and press. The movement never gains enough strength to change
policies.
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Massive immigration from Europe to Argentina, Brazil and Uruguay create “European” style
cities but pushes indigenous natives to slums and rural areas.