Panama to Patagonia

by Charles M. Pepper

There is really only one acute South American question, which is that between Chile and Peru relative to Tacna-Arica, and since it does not enter into the economic conditions of political progress I omit its discussion here.

In the European attitude with regard to the commercial and industrial bases of the Monroe Doctrine has been much that is both grotesque and humorous. But at the bottom of it all is the full appreciation of the economic value of Latin America. France frequently chides herself for her failure to profit more by the moral influence of Latin ideas and literature on the neo-Latin countries. “We know,” wrote one authority,[23] “the grand scheme of economic absorption of the Latin Republics by the imperialism and the industrialism of the North.”

23 La Vie Latine, Paris, 1904.

The imperialism may be dismissed, but the industrialism of the United States, when it once ventures into South America and becomes rooted, is worthy of the attention which European economists give it.

Though Germany and Great Britain are engaged in a ceaseless struggle for supremacy, the French writer bewailed the Anglo-Teutonic commercial movement as if it were a joint one. He proposed Latin-American leagues; the Spanish moral and economic re-conquest of the colonial empire with the aid of France; a kind of family pact, Hispano-Americanism as opposed to Pan-Americanism or Germanic-Anglicism. On their side the Germans complain of the loss of German prestige in South America, and some of their writers advocate a European trade combination against the Yankee invasion of the Southern Continent, just as a similar combination is proposed in Europe. Each nation in the international trust would expect to get the lion’s share of the benefit. John Bull occasionally has a tearful period of brotherly affection, and asks Uncle Sam to poke his long fingers into the hot coals where the English walnut has been dropped.

With regard to these suggestions it may be said that in international commerce racial affinity counts for as little as do sentimental ties. The presence of English, German, or French capitalists and immigrants in any foreign country naturally draws some home trade, but this has little influence on the general volume. European colonization of South America need not mean Europeanizing it commercially any more than politically. In spite of the large German colonies in southern Brazil, Germany lost commerce with that nation, while she gained it with other South American countries. It is often remarked that much of Germany’s profitable traffic is with British colonies.

In an analysis of European interests in South America it is necessary to distinguish between the securities or various forms of national debts and the actual investments in trade and industry, including railways and mines. While the statisticians vary widely in their estimates, it is reasonable to conclude, from an examination of the leading ones, that Great Britain has $2,000,000,000 in South American investments, of which $300,000,000 to $350,000,000 may be assigned the West Coast; Germany has from $475,000,000 to $500,000,000, with possibly $150,000,000 in the Pacific countries; and France, with about the same amount, has West Coast investments reaching $100,000,000, her Chilean holdings amounting to $42,000,000.

The relative characteristics of the two principal European competitors in South America are very marked. The Germans are slow, cautious, persistent; taking few pioneering risks, but always on the ground, filching markets and industries on a thoroughly scientific system. They are very largely in the commission trade and in banking. It may be said without injustice, that, in proportion to the amount of actual capital risked, Germany has contributed the smallest share of all the leading European nations to South American development, and has done least for industrial projects.

Great Britain on her part has gone in with her capital, roystering and swaggering, and always has blundered boldly and courageously. The personnel of her enterprises has been honeycombed with younger sons, dependants of the London directors, and the whole class of inefficient parasites which clog the administration of English industrial undertakings abroad. Her capitalists have built railroads in the mountains, where the tropical torrents require enormous resisting works, just as though they were constructing lines across the plains of India or from London to Liverpool. The stolid and dogged British investor has paid for it all, and has kept on pouring more money into these enterprises. So it came that he floundered into the untold wealth of the Peruvian guanos, stumbled into the nitrates with their incalculable riches, drifted into the golden stream of mining lotteries, and even fell upon fortunate and undeserved surprises in the way of profitable railway projects; while the expansion of his banking facilities, sometimes undertaken with a recklessness that would paralyze conservative bankers, brought him returns that justified further plunges into doubtful financial enterprises. As a whole, this blundering, or even stupid, English policy of investments has paid pretty regular dividends,—in all probability greater in proportion to the capital than the timid and over-cautious German investor has received. When the United States fully appreciates the field which the Panama Canal opens on the West Coast of South America, her captains of industry will be as bold as the Britishers, but not so recklessly stupid, in their preliminary plunges.

These observations bring the subject back to the point that in international rivalry the country does best that meets its competitors on the vantage ground of better and cheaper goods, rather than by dependence on racial sympathy or fraternal sentiment. The great point for the United States is the very marked advantage in which it is placed with reference to the West Coast countries of South America by the Canal. The trade centres of the Eastern States and of the Mississippi Valley will front on the Pacific, as they now front on the Atlantic and the Caribbean. Proximity of markets is a clear gain, and it will help the commerce of the United States to adventure abroad. In that sense, for a section of South America it definitely enlarges the commercial basis of the Monroe Doctrine.