The Impact of the First World War on Latin America

Key questions related to the discussion include:
- To what extent did the First World War affect the economy of Latin American countries?
- To what extent did the effects vary by country?
- To what extent did the war change the relative national power structure of Latin America?

Continuity: Elements that remained consistent before, during, and after the First World War.
Change: Shifts in political, economic, and social structures brought on by the war.
Consequence: The outcomes and effects of the war on Latin American societies and economies.

The late 19th century witnessed significant global economic integration.
- Increased movement of goods, people, and capital, aided by advances in technology.
- The uniformity in commodity prices allowed for a more globalized trade environment.
Latin America was deeply integrated into this economy, with substantial foreign investments:
- By 1914, the UK invested approximately $4 billion in Latin America, followed by investments from France ($1.1 billion) and Germany ($0.9 billion).
Foreign capital concentrated on communication and transportation:
- British telegraph companies dominated Argentina, Brazil, and Uruguay.
- The US-owned Central and South American Telegraph Company also played a crucial role.
Major exports from Latin America prior to the war included:
- Argentina: wheat, corn, beef, and wool.
- Chile: copper, nitrates, wheat, and wool.
- Brazil: coffee, prominent in the economy, accounting for over 50% of export value between 1870-1911, with major consumers being the USA, France, and Germany.
- Mexico: had a diverse export economy including ranching, mining, henequen, and oil by 1911.

Brazil: Declared war on Germany in 1918
Argentina: Declared war on Germany in 1917
Colombia, Venezuela, Peru, Chile: Neutral
Other Countries: Various statuses with some breaking diplomatic relations with Germany while remaining neutral.
Migration trends indicated a significant German presence:
- Over 250,000 Germans migrated to Brazil, 120,000 to Chile.
The pre-war economic environment began to change with the USA gaining prominence over the UK.

The war followed a short global economic recession that initiated a sharp slowdown in activities.
Material and financial systems were heavily disrupted:
- Credit ceased, insurance became scarce, and shipping was immediately impacted with skyrocketing rates.
- Latin American economies heavily dependent on foreign capital and shipping faced immediate hardships.
Immediate effects included:
- Calls for loans due to dependence on foreign credit, leading to bank runs and temporary debt moratoriums.
- Governments declared 'bank holidays' to stabilize operations.
Despite expectation for export economies to thrive in wartime due to increased demand, initial months were challenging:
- Example: Chile's nitrate sales were hindered by a surplus prior to the war and the British blockade.
- Recovery began around 1915 as the demand for raw materials increased.

By 1915, Latin American economies began showing signs of recovery driven by wartime demand, although numerous challenges persisted:
- Prices for exports surged, though the volume did not fully recover due to shipping interruptions.
- Domestic inflation followed, notably:
- Food prices in Argentina rose by 50% and clothing prices by triple in some instances.
Governments faced revenue shortfalls due to decreased import duties, exacerbating problems, particularly in Brazil, leading to inflation as money was printed.

The inflation and austerity measures led to volatile labor conditions:
- Employment upticked in Argentina, but with falling real wages, increasing union activity occurred.
- Notable unrest included the violent general strike in Buenos Aires in January 1919, known as the 'Tragic Week'.
- The aftermath included reprisals against ethnic communities based on unfounded associations with Bolshevism.

The effects of war on Latin America varied based on pre-war economic conditions:
- Countries like Brazil and Chile used wartime demand to expand industrial output.
- Peru and Colombia strengthened ties with the USA, easing their transitions during the war.
Economies less developed industrially faced greater disruption but returned to export dependency post-war.

Detailed export structure changes:
- Argentina: Shift in importance of commodities in exports (e.g., decreased wheat from 19.4% to 12.9% and increased frozen beef from 7.6% to 15.3%).
- Brazil: Overall decrease in rubber (from 27.9% to 8.8%) with relative stability in coffee exports.
- Chile: Significant decrease in nitrate importance from 86% to 74.6% with an increase in copper from 8% to 17.3%.
- Peru: Various shifts in commodities, notably copper increasing from 20.5% to 26.3%.

Ultimately, the war marked the USA's increased dominance in Latin America, although not a complete replacement of the UK.
The heightened importance of hemispheric economic integration was evident during the war.
The USA's growing economic influence and the push for nationalism shaped the landscape post-war for many Latin American countries, conspicuously manifesting in Colombia's strong stance on neutrality.

A letter from Brazil's Foreign Minister to Germany exemplifies the justification of Brazil's stance against naval blockades and rights in international law, shedding light on how similar resources were used by other nations like the USA and Canada to frame their own positions.
The delay in Brazil's declaration of war until October 1917 highlights the complexities of wartime diplomacy and national interest.

What other commodities saw increased demand during the war, and how has this evolved through the 20th century?
Analyze how these changes might influence global balance of power in the long term.