The Latin American Crisis - 1940

Rogelio Casas Cadilla

[Reprinted from Land and Freedom, July-August 1940]

Up to the first World War, the South American countries administered themselves under simple formulas. Immigration laws were scarcely known, and the customs-house were tolerant. The states could be developed more or less freely. Argentina and Brazil, to which most of the emigrant repaired, received the greatest benefit from the enormous human resources which arrived on their shores. The cities were populated rapidly, and the vitality of these countries was invigorated. Wealth circulated in abundance. In general South America was making rapid progress.

The post-war crisis produced a great economic reversal. Prices of goods fell. The budgets of the governments were not reduced. The great landed proprietors accepted only small increases in taxes (in proportion to the benefits they received), and all the countries fell into the fatal error of imposing higher customs duties on imported goods. This course eventually led to poverty and catastrophe. Each day saw higher duties heaped upon necessities. A new privilege was born, called "home industry." And with it was also born another form of privilege, the combinations of working men.

Today all South America is burdened with restrictive laws. Its nations oppose the import of goods. They also forbid the entry of persons, which results in a further diminution of wealth. Ships no longer go to their ports, because people and goods may not enter through them. With the reduction of commerce, freight rates have increased, and the little trade that remains is not worth mentioning. On the whole, the South American economy presents a desolate aspect. At the wharves there are almost no shipments to be seen. The governments have tampered with their monetary systems. This apprehension that the government will devaluate the currency and suppress the natural workings of the market has caused a tremendous destruction of wealth. Although all these governmental restrictions may seem to be born of necessity, they run counter to economic laws, and thus bring disaster to the economy of the nations.

There is only one way open to the South American countries to sustain and renew themselves: To return to this natural law, and permit people to enter their territories freely; to permit the free entry of goods; to permit competition to exist, so that prices will be lower and wealth accessible and finally, to collect taxes only from the ownership of land and public services, that is, the profits of privilege. This is the only course to follow to establish liberty and justice.

At the head of the government of the United States there are some men, such as Cordell Hull and Sumner Welles, who understand the problem of trade. With their cooperation South America has a splendid opportunity to solve some of her difficulties in the new and more dangerous crisis created by the second World War. Her economic life and sovereign liberty are being threatened. Will she heed the warning?