Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Dedication
- Preface
- List of acronyms
- Table of official exchange rate parities to US dollar
- Map: Central America
- 1 A century of independence: foundations of export-led growth
- 2 Central America in the 1920s: reform and consolidation
- 3 The 1929 depression
- 4 Economic recovery and political reaction in the 1930s
- 5 Central America and the Second World War
- 6 Post-war economic recovery
- 7 The struggle for democracy, the Cold War and the Labour movement in the first post-war decade
- 8 The foundations of modern export-led growth, 1954–60
- 9 The illusion of a golden age, 1960–70
- 10 External shocks and the challenge to the social order, 1970–9
- 11 The descent into regional crisis
- 12 Conclusions
- Methodological Appendix
- Statistical Appendix
- Notes
- Bibliography
- Index
- CAMBRIDGE LATIN AMERICAN STUDIES
3 - The 1929 depression
Published online by Cambridge University Press: 03 February 2010
- Frontmatter
- Contents
- List of figures
- List of tables
- Dedication
- Preface
- List of acronyms
- Table of official exchange rate parities to US dollar
- Map: Central America
- 1 A century of independence: foundations of export-led growth
- 2 Central America in the 1920s: reform and consolidation
- 3 The 1929 depression
- 4 Economic recovery and political reaction in the 1930s
- 5 Central America and the Second World War
- 6 Post-war economic recovery
- 7 The struggle for democracy, the Cold War and the Labour movement in the first post-war decade
- 8 The foundations of modern export-led growth, 1954–60
- 9 The illusion of a golden age, 1960–70
- 10 External shocks and the challenge to the social order, 1970–9
- 11 The descent into regional crisis
- 12 Conclusions
- Methodological Appendix
- Statistical Appendix
- Notes
- Bibliography
- Index
- CAMBRIDGE LATIN AMERICAN STUDIES
Summary
Although the world economic crisis which developed at the end of the 1920s is known as the 1929 depression, the decline in economic activity occurred in different years in the Central America republics; the first country to experience a downturn in the value of exports was Nicaragua in 1926, while in Honduras the fall in exports was delayed until 1930/1; the phrase ‘1929 depression’ is therefore a convenient, if slightly inaccurate, description for the events which unfolded in Central America in the period after 1926.
The impact of the world depression was transmitted to Central America in the first instance through a fall in commodity prices. The peculiar nature of banana prices received by Central America, however, meant that earnings from this commodity (see Chapter 2, pp. 35–6) did not follow the pattern set by other primary exports, and the performance of those republics mainly dependent on banana exports (the banana republics) differed accordingly from those mainly dependent on coffee earnings (the coffee republics).
The decline in commodity prices, particularly for coffee, could not be offset by increases in volume, and export earnings fell. This reduction put a severe strain on the newly established currency stability, but the exchange rate at first held its ground and imports were savagely reduced through a combination of demand-reducing falls in real income and non-price rationing. By 1932, however, Costa Rica and El Salvador were obliged to break the link with gold, and their exchange rates began to depreciate against the US dollar.
- Type
- Chapter
- Information
- The Political Economy of Central America since 1920 , pp. 48 - 67Publisher: Cambridge University PressPrint publication year: 1987