Sir, is there to be no limit to our benevolence for these People? There is a point, beyond which, even parental bounty and natural affection cease to impose an obligation. That point has been attained with the States of Spanish America.1

Of course there was sympathy for the Spanish American rebels in the United States. How could it have been otherwise? The rebels were fighting Spain, long an object of hatred and contempt. This alone justified goodwill, as did the hope for increased trade and the prospect of a significant loss of European influence in the hemisphere.2 But how deep did this sympathy run?

In the Congressional debates of the period there was much more enthusiasm for the cause of the Greeks than that of the Spanish Americans.3 Similarly, the press referred frequently to private collections of funds (‘liberal donations’) for the Greek fighters – not for the Spanish Americans. This is not surprising. The US public could feel a bond with the Greeks – ‘it will become even quite fashionable to assist the descendants of those who were the bulwark of light and knowledge in old times, in rescuing themselves from the dominion of a barbarian race'.4 Unlike the Greeks, however, the Spanish Americans were of dubious whiteness. Unlike the Greeks, they hailed not from a race of giants, but – when they were white – from degraded Spanish stock.5 Some US citizens felt for them the kinship of a common struggle against European colonial rule; others agreed with John Quincy Adams: ‘So far as they were contending for independence, I wished well to their cause; but I had seen and yet see no prospect that they would establish free or liberal institutions of government.

This article looks at the beginnings and early development of the modern copper smelting industry in Chile. It analyses the factors which led to its occurrence, contrasting it with other countries where no smelting industry developed. It argues that the development of the Chilean smelting industry stimulated copper mining and reinforced the expansion of coal mining. Furthermore, it permitted the retention in the country of a larger part of the rent generated by copper mining than would have been the case had all the copper ore been exported, and was therefore an important factor in the development of the Chilean economy as a whole.

Until 1879 tne Chilean copper industry was the most dynamic sector of the economy of the Republic. During the period 1844—79 it generated exports of 341 million pesos (around £64 million), or 42.3 % of the total value of the exports of the country, and contributed 29 million pesos, or almost 10% of the ordinary fiscal income, through the export duty levied.1 Most of this copper left Chile in the shape of ingots of over 99% fine (that is pure) copper, bar copper of c. 96 % fine or regulus, a semi-processed form of copper of around 50% fine; only 12.1 % left in the shape of copper ores of different types.2 The smelting and, to an even greater extent, the refining of the copper ore in Chile permitted the miners to develop a wider variety of potential markets. It also facilitated the Luis Valenzuela is a Lecturer at the Centre for Development Studies, University College of Swansea.

The dynamics of Brazil's transportation sector early in this century reveal much about how and why US industries conquered the Brazilian market and established a sound basis for investment. Especially during the 1920s, US companies responded to the transportation needs of Brazil's rapidly growing economy and won the major share of its automobile and truck markets. This was crucial because of the automobile's central role as a leading sector of the world's economy during this period. Sales and then direct investment by US firms in automobile assembly plants placed US business on a more secure foundation than British investment, prominent in a sector losing the vitality exhibited in the nineteenth century: railroads. Rail systems slowed their extension into the immense Brazilian interior while the automobile flourished, promoted by a powerful Brazilian lobby for automobilismo reinforced by efforts of US business and government. This process illustrates how the Brazilians' interpretation of their economic needs coincided with pressures exerted by US industry to create a permanent US presence within Brazil's economy. How Henry Ford replaced Herbert Spencer as the foremost symbol of industrialism in early twentieth century Brazil sheds light on the personal and political dynamics of international business competition.1

Rapid economic growth in the early twentieth century thrust a host of new local and regional demands upon Brazil's woefully inadequate transportation sector. Capital formation rose without interruption from 1901 onwards and reached very high levels immediately prior to World War I; more than 11,000 industrial firms producing over 67% of the economy's 1920 industrial output came into being between 1900 and 1920.

Argentina's history has been profoundly influenced by the development of its agriculture. It was through the exportation of beef and grain that the country experienced spectacular economic growth between 1880 and 1930. Historically, agricultural and agro-industrial production have made up between 70 and 80% of export earnings.1 As a consequence, the sector's dominant interest group during that period, the Argentine Rural Society (Sociedad Rural Argentina – SRA) acquired enormous economic power, which led to political clout as many of its members went on to become presidents of the republic and to staff the most important ministries. Because of the political influence so attained the SRA was soon referred to as one of the key factores de poder, or power holders, along with the military, the Church and, later on, labour. This hegemony came to an end in the mid-1940s when industrialisation replaced agriculture as the main contributor to the nation's Gross Domestic Product (GDP), and when Peronism removed the landowning elite from control of the levers of power. The agricultural sector continued to take a backseat among the priorities of most of the administrations following Perón's downfall in 1955, because the future of Argentina was perceived to rest upon the promotion of import substitution industrialisation. Agricultural interest groups were never again able to gain the same kind of access to economic policy-making as they had once enjoyed. To make matters worse, the whole rural sector was forced to finance the state-led industrialisation process through a variety of direct and indirect government taxes.

A nation that demands from its government nothing but the maintenance of order is already a slave in the bottom of its heart; it is the slave of its wellbeing, and the man who is to chain it can arrive on the scene.

The politics of inflation in Latin America

In recent years inflation has accelerated in Latin America to become a seemingly intractable problem. In many countries, even when high inflation or hyperinflation has been brought down, the inflationary ‘floor’ has remained high, with all the appearance of a series of upward and irreversible steps. The underlying average annual rate of inflation has tended to rise steadily, as can be seen in the table overleaf.

The reasons for persisting high inflation and for the seeming inability of government policy to bring inflation down in a lasting manner are complex and controversial. Moreover, as a number of authors have noted,1 the reasons for the failure of anti-inflationary policy are often, in some measure, political as well as purely economic. For one thing, inflation, and efforts to control inflation, involve a redistributive struggle the political costs of which the government may be unable or unwilling to bear. In addition, the government simply may not have the administrative capacity to implement certain measures effectively. For example, one way of restoring fiscal balance may be to increase taxes on wealth-holders, but this may not be a politically feasible option for many governments. Central governments may have limited control over the spending of regional and local governments, or over state-owned corporations, and may therefore have difficulty in controlling expenditure. Moreover, effective anti-inflationary policy may require political conditions that may simply not be present in many Latin American political systems. For example, in September 1989, towards the end of the Sarney government in Brazil, inflation was running at 38% per month.

Transitions into democracy: convergence and distinct paths

In mid-1982 Mexico's Minister of Finance, Jesús Silva Herzog, arrived in the United States and announced that his country was not going to continue paying its foreign debt. Silva Herzog's declaration was soon followed by debt defaults in many other Latin American countries, marking the beginning of the region's most serious economic crisis in this century. This crisis involved the partial breakdown of Latin America's financial and trade linkages to the world economy; the cessation of new credit money paralleled an interruption in the flow of capital investments, amounting to a total reversal of the financial patterns of previous decades. (The level of foreign investment, especially in manufacturing and mining, had been relatively high since the mid-1950s, albeit with significant differences from country to country).

The debt crisis coincided, not incidentally, with a convergence of the political trajectories of five of the region's more industrialised countries: Mexico, Brazil, and the three Southern Cone nations of Argentina, Chile, and Uruguay. All five governments – the South American military dictatorships and Mexico's stable authoritarian PRI regime – experienced periods of political turbulence closely related both to the severe economic disruptions and to other domestic and international influences.

One of the remarkable aspects of this 1982 political convergence was that it came after the ‘long decade’ of the 1970s, during which the governmental routes of the five countries had been extremely divergent. In Argentina, for example, instability, militarism and political violence had intensified, starting in 1969; these phenomena then spread to its traditionally more democratic neighbours, Chile and Uruguay.