Since 1450, or more appropriately 1492, Latin America’s trade system has been molded and changed over the years due to industrialization, foreign investors, and other external and internal factors. The interactions of Latin Amerca with other nations along with its own regional factors have created those changes. Latin America starting out was near complete dependent upon foreign investors, would slowly build itself, and later on would become completely self-dependent.
The backbone of Latin America was its part in the Atlantic Slave Trade and Triangular Trade, African slaves. Indian annihilation lead to this need. Latin America had needed and been using African slaves for agriculture and mining, but around 1550, dependency increased. Between 1450 and 1850, 10 to 11 million slaves arrived to America. Between 1700 and 1800 was the highest import of African slaves. The Triangular/Atlantic slave trade went as follows: African slaves were exported to Latin America, where the raw materials and crops produced would be exported, through Spain, to the world, and finished luxury products would be exported from Europe to Latin America. This cycle would last all the way into the mid 1800’s.
Latin America’s trade and economy grew very slowly. Early discoveries of gold and silver production created the first basis of its economy. Mining of raw materials, metals, and especially silver would remain a huge source of Latin America’s trade and exports. The mines were usually started by private investors and companies, but backed by governments, primarily Spain. Mexico and Peru were the sites of huge silver mines which would continue to flow for years and years to come. The influx and import of so much silver would lead to higher prices and inflation in first Spain and later all of Europe. Silver mining/exports would make up more than 2/3 of Latin America’s economy, trade, and income.
Plantations, agriculture, and the crops produced would make up the majority of the rest of Latin America’s trade/exports. Sugar and cacao were two of the biggest major crops exported, but sugar was the ultimate largest. Sugar plantations would be and were set up from the very beginning of foreign investing, exploration, and discovery in Latin America. Sugar would also continue to be the major trade crop and economic booster and boom for Latin American nations and would continue to be a huge part, even into present day. There were still other trade crops as well, though. During the Bourbon reforms (the period when Spain was controlled by the Bourbon dynasty) state monopolies were formed on “essential” products such as tobacco and gunpowder. Cacao production/export was initiated by the private Caracas Company. There were strict limits on Latin American trade, contraband, and imports, which lead to complaints, rebellion, and conflicts between free-traders and those desiring import limits. Cuba’s economy boomed and became a plantation/slave colony, importing huge amounts of African slaves and exporting goods such as coffee, sugar, and tobacco. New demands for Latin American products cam around the 1850’s during expansion of the European economy. Brazilian coffee, beef and hides from Argentina, and grains and minerals in Chile created a base for growth. Guano, bird droppings used as fertilizer, was huge in Peru. Peru earned more than 10 million pounds from guano exports alone between 1850 and 1880. These economic boosts gave Latin America countries the ability to end Indian tribute and later on even slavery and completely coercive labor. This helped to almost “restart” Latin America.
After the many wars for independence of Latin America, the economy and trade staggered. The Industrial Revolution of Europe helped Latin America recover some from their wars for independence, but there were problems with this as well. During the time of industrialization, Latin America’s mining of minerals and resources also helped them and became a huge factor and part of their trade and the Industrial Revolution. There was almost no industry in Latin America though and they became nearly completely dependent on others and trading resources to them. There wasn’t enough capitol or investments in Latin America. But, as said, there were new, more demands for Latin American products (coffee, sugar, beef, drugs, guano). Latin America was then able to industrialize a bit and improve transportation and communication by introducing steamships and railroads. This helped open possibilities for trade with other countries. The U.S. though set up the Monroe Doctrine stating that no other countries could intrude in Latin American affairs or try any colonization. The U.S. was trying to cut off Latin America from the rest of the world and leaving Latin America’s resources, goods, and markets to them. Foreigners wanted the resources, though, and began investments, which helped Latin America immensely. Latin American economies were expanding due to exports. Each country seemed to have specialties; i.e.: bananas and coffee from Central America, tobacco and sugar from Cuba, and rubber and coffee from Brazil. These were extremely beneficial in allowing them to import more luxury goods and helping government fundings. They were risky though in that they were vulnerable and dependent on the condition of the outside world. They also lead to hostility and war, such as the War of the Pacific, in which Chile increased size by a third and Peru’s and Bolivia’s governments fell. Because of the rapidly expanding commerce and trade, there was a large interest from foreign investors from the major powers, the British, French, German, and the less major U.S. These investors helped the Latin American economy and provided capitol, but were lessening their independence. Much of Latin America began to industrialize. Foreign investments were encouraged and policies were changed to help promote investments as well. The U.S. especially began to take part and expand in investments. The U.S. backed Puerto Rico and Cuba in the Spanish-American War, but after helping them win independence, the U.S. took control themselves.
During WWI, Latin America had been somewhat cut off from the rest of the world in trade. Efforts during the Great Depression set estates to exporting more coffee, rubber, and sugar. Demands weren’t as high as production; therefore prices dropped and lowered demand for imports.
The success of the 19th century continued on into the 20th century during World War I. With each area/nation specializing in a certain crop, all they needed was demand to remain high and they would gain immense profit. Some immediate effects though from WWI would be the industrialization of Latin America. Being cut off from supplies of imports, they had to resort to producing these former imports themselves. Therefore, they experienced what some call import substitution industrialization. This was mostly light industry, such as textiles. Lack of capital, markets, and low technological advancements continued to plague them. WWI stimulated the economy at first, creating a high European demand for goods. This quickly dropped after the war and wages declined and conditions worsened. After the Great Stock Market Crash, investments and purchases declined and economic programs went bankrupt. After World War II, Latin America began to be isolated further. Towards the beginning of the Cold War, in the mid 1900’s, Cuba became public. Fidel Castro, a communist took control of Cuba, forcing the U.S. to isolate them and put a trade embargo on Cuba, meaning no one could trade with them. This was the last major event or change concerning the trade of Latin America. They still are huge agricultural producers and traders. Now, there is also a mass amount of drug Cartels, or major organizations devoted to or controlling a certain market (such as drugs such as cocaine, heroine, marijuana), in Latin America.
Latin America has had an ever-changing trade commerce. Since 1450 to present day they have undergone many different stages and ways of trade. Foreign investing, industrialization, wars and conflicts, and other internal and external factors have created the changes in Latin America’s part in the international trade network.
