Open Veins of Latin America

by Eduardo Galeano

  General Riograndino Kruel told the congressional investigating commission that "contraband in materials containing thorium and uranium amounts to an astronomical one million tons." Shortly before, in 1966, 138

  Kruel (then federal police chief) had denounced a U.S. consul's "insolent and systematic interference" in the open trial of four U.S. citizens accused of smuggling Brazilian atomic minerals. To the general's mind the fact that forty tons of radioactive minerals had been found in their possession was enough to convict them. Soon afterward three of the contrabandists mysteriously fled the country.

  The smuggling was no new phenomenon, although it had greatly increased.

  Through clandestine leakage of rough diamonds alone, Brazil has for some years been losing more than $100 million a year. But the need to smuggle is only relative: legal concessions deprive Brazil, without any inconvenience, of most of its fabulous natural wealth. To give but one example--just a new bead on a long string--the world's largest niobium deposit, in Araxa, belongs to an affiliate of the Niobium Corporation of New York. Niobium is alloyed with various other metals which, because of their resistance to high temperatures, are used in constructing nuclear reactors, rockets, space ships, satellites, or simple jet planes. Along with the niobium, the concern incidentally extracts substantial quantities of tantalum, thorium, uranium, pyrochlore, and rare mineral-rich soils.

  A GERMAN CHEMIST DEFEATS THE WINNERS OF THE WAR

  OF THE PACIFIC

  The story of the rise and fall of nitrates is a good illustration of Latin America's illusory fortunes in the world market: how transient the blissful breezes have always been, how crushing the catastrophes.

  In the middle of the last century Malthus's dark prophecies hovered over the Old World. With Europe's population climbing steeply, it was, urgently necessary to revive exhausted soil so that food production could grow in the same proportion. The value of guano as fertilizer was demonstrated in British laboratories, and after 1840 it began to be exported from Peru on a large scale.

  Since time immemorial pelicans and seagulls, feeding on the prodigious shoals of fish in the coastal currents, had been accumulating mountains of excrement rich in nitrogen, ammonia, phosphates, and alkaline salts: on these rainless shores the guano had remained in a pure state.( The guano producers, wrote Robert Cushman Murphy long after the boom, were the world's most valuable birds in their dollar yield for each digestive process: they surpassed Shakespeare's nightingale that sang on Juliet's balcony, 139

  the dove that flew from Noah's Ark, and, of course, the sad swallows of Gustavo Adolfo Becquer.4) Soon after guano was launched in the international market, agricultural chemistry discovered even greater nutritive virtues in nitrate, and by 1850 it was being used intensively to fertilize European fields. Old World wheat-growing lands, impoverished by erosion, hungrily absorbed the cargoes of sodium nitrate shipped from Tarapaca (then in Peru) and later from Antofagasta (then in Bolivia).5 Thanks to the sodium nitrate and the guano lying on Pacific coasts, almost within reach of the ships that came to fetch them, the specter of hunger departed from Europe.

  The uncommonly arrogant Lima oligarchy continued enriching itself and amassing symbols of its power in the palaces and Carrara marble mausoleums which sprouted amid sandy deserts. Once it had been Potosi's silver that nourished the great families of the capital city; now they lived from bird-droppings and the shiny white clots in the nitrate fields--more vulgar means to the same elegant ends. Peru thought it was independent, but Britain had taken Spain's place. The country felt rich, according to Jose Carlos Mariategui, and the state carelessly used up its credit, living prodigally and mortgaging its future to British high finance. In 1868, the state's expenditures and debts far exceeded the value of its sales abroad. The guano deposits served as guarantee for British loans, and Europe juggled prices. The plunder of the exporters created havoc; what nature had accumulated over millennia on the islands was squandered in a few years. Meanwhile, out on the nitrate fields the workers survived in hovels hardly higher than a man, made of stones, nitrate, rubble, and mud.

  The exploitation of saltpeter rapidly spread into Antofagasta, although the business was not Bolivian but Peruvian and, more than Peruvian, Chilean.

  When the Bolivian government proposed to tax those nitrate fields on its territory, the Chilean army invaded the province, never to leave. Until then the desert had served as a damper on latent conflicts between Chile, Peru, and Bolivia, but now nitrates brought them to the boil. The War of the Pacific broke out in 1879 and lasted till 1883. Chile's armed forces, having occupied the Peruvian nitrate ports of Patillos, Iquique, Pisagua, and Junin in 1879, finally

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  entered Lima as conquerors and the fortress of Callao surrendered the next day.

  The defeat brought mutilation and bloodletting to Peru. The national economy lost its two chief resources, productive forces were paralyzed, the currency collapsed, and foreign credit was cut off. (Peru lost the nitrate province of Tarapaca and some important guano islands, but retained guano deposits on the northern coast. Guano remained the chief fertilizer for Peruvian agriculture until the fishmeal boom wiped out the pelicans and seagulls after 1960. The fishing concerns, mostly from the United States, quickly destroyed the anchovy shoals near the coast to feed U.S. and European pigs and poultry with Peruvian fishmeal, and the guano-producing birds took off after the fishing boats, ever further out to sea. Without the strength to fly back, they fell in the ocean, others stayed put, so that in 1962 and 1963 one could see flocks of pelicans hunting for food along Lima's main avenue; when they could no longer take wing, they died on the streets.) But, as Mariategui notes, the collapse failed to wipe out the past: the colonial economic structure was untouched even though its sources of sustenance had been removed. As for Bolivia, it did not realize what the war had cost it: the most important copper mine today, Chuquicamata, lies in the province it lost to Chile. And the victors?

  Nitrate and iodine accounted for 5 percent of Chile's income in 1880; ten years later, more than half came from the export of nitrates from the conquered territories. In the same period, British investments in Chile more than tripled: the nitrate region became a British factory. The English took over nitrates at bargain rates. The Peruvian government had expropriated the nitrate fields in 1875, paying for them in bonds; five years afterward, the war had reduced these documents to a tenth their former value. Such daring adventurers as John Thomas North and his partner Robert Harvey turned this to good account.

  While Chileans, Peruvians, and Bolivians exchanged bullets on the field of battle, the English bought up the bonds, thanks to credits graciously afforded them by the Bank of Valparaiso and other Chilean banks. The soldiers were fighting for them without knowing it. The Chilean government promptly rewarded the sacrifices of North, Harvey, Inglis, James, Bush, Robertson, and other industrious businessmen: in 188 1 by which time half the bonds were in the hands of Britain's speculating wizards-it ordered the return of the nitrate fields to their "legitimate owners." Not one penny had left England to finance this masterpiece of looting.

  In the early 1890s Chile was sending three-quarters of its exports to Britain and getting almost half of its imports from that country: its 141

  commercial dependence at the time was even greater than India's. The war had given Chile a world monopoly on natural nitrates, but the rate king was John Thomas North. One of his enterprises, the Liverpool Nitrate Company, was paying 40 percent in dividends. North had landed at Valparaiso in 1866 with only L10 in the pocket of his dusty old suit; thirty years later princes and dukes, top politicians and great industrialists, sat at table in his London mansion. He had appointed himself "Colonel" and, as befitted a gentleman of his standing, had joined the Conservative Party and the Kent Masonic Lodge. Lord Dorchester, Lord Randolph Churchill, and the Marquis of Stackpole graced his extravagant parties, where North danced in Henry VIII costume. Meanwhile, in his remote nitrate kingdom Chileans put in sixteen-hour work day
s without even Sundays off and were paid in script that lost about half its value at the company stores.

  Between 1886 and 1890, the Chilean state under President Jose Manuel Balmaceda undertook the most ambitious development plan in its history. Balmaceda promoted some industries, carried out important public works, modernized education. took measures to break the British Pacific . He announced in 1888 that the nitrate areas must be nationalized through the formation of Chilean enterprises, and refused to sell state-owned nitrate fields to the British. Three years later civil war broke out. North and his colleagues generously financed the rebels, and British warships blockaded the Chilean coast while the London press fulminated against Balmaceda, a "butcher" and "dictator of the worst stripe."( The Congress headed the opposition to the president-- the weakness of many of its members for pounds sterling was notorious. The bribery of Chileans was "a custom of the country," according to the English, and North's associate Harvey described it thus at the trial of a lawsuit brought against him and other Nitrate Railways Company directors in 1897 by some small shareholders. Explaining a PS100,000 expenditure on bribes, Harvey said: "The public administration in Chile, as you know, is very corrupt.... I don't say that one has to bribe judges, but I think many members of the Senate who were short of funds got some part of that money in exchange for their votes, and that it served to prevent the government from flatly refusing to listen to our protests and claims....."6) Balmaceda was defeated and killed himself.

  The British ambassador informed the Foreign Office: "The British community makes no secret of its satisfaction over the fall of Balmaceda, whose victory, it is thought, would have

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  implied serious harm to British commercial interests." State investments in roads, railways, colonization of new land, education, and public works promptly slumped as British enterprises extended their dominions.

  On the eve of World War I, two-thirds of Chile's national income came from nitrate exports, but it was a prosperity which, far from developing and diversifying, only heightened the country's structural deformations. Chile functioned as an appendage of the British economy: the biggest supplier of fertilizer to the European market had no right to its own life. And then a German chemist, sitting in his laboratory, defeated the generals who had won the day on the battlefield. Perfection of the Haber process, which produces nitrates by fixing nitrogen from the air, decisively displaced Chilean nitrate and sent Chile's economy into a tailspin,

  In the thirsty desert of Tamarugal, where the land dazzles one's eyes with its brilliance, I have stood beside the ruins of Tarapaca. During the boom there were 120 nitrate fields here; now only two remain in operation. Since the pampa is without moisture or moths, it was not only possible to sell the machine as scrape but also Oregon pine boards from the best houses, zinc sheets, and even intact nails, nuts, and bolts. Workers specializing in taking towns apart appeared on the scene: they were the only ones who could get a job in these razed and abandoned immensities. I saw the debris and the empty holes, the ghost towns, the dead tracks of the nitrate railway, the silent telegraph wires, the skeletons of nitrate fields mangled by the bombardment of years, the cemetery crosses buffeted at night by the cold wind, the whitish hills of slag piled up beside the excavations. "Here money flowed and everyone thought it would never stop," I was told by the surviving residents. They idealize the past as a paradise; even Sundays-which in 1889 did not exist for the workers, and were won later by determined strike action-are remembered with nostalgia. "Each Sunday on the nitrate pampa," a very old oldster said, "was a national fiesta for us, a new Independence Day every week." Iquique, the biggest nitrate port--"a first-class port," according to its official citation-was the scene of more than one massacre of workers, but its municipal theater in the Belle E poque style once drew Europe's best opera stars before they went to Santiago, the capital.

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  COPPER TEETH IN CHILE'S FLESH

  Copper soon replaced nitrates as the pillar of Chile's economy, while U.S.

  predominance took the place of British. On the eve of the 1929 crisis, U.S.

  investments in Chile exceeded $400 million, almost all made in the exploitation and transport of copper. Anaconda and Kennecott, two concerns with close links as parts of a single world consortium, remained masters of the best copper deposits up until the Unidad Popular victory of 1970. In half a century they bled Chile of $4 billion, sent to their home offices under various headings; yet by their own inflated figures they invested no more than $800

  million, almost all in profits taken from the country. (These firms process Chilean copper in their own distant plants. Anaconda, American Brass, Anaconda Wire & Cable, and Kennecott Wire & Cable are among the world's chief manufacturers of bronze and wire.) The hemorrhage kept growing as production grew, exceeding $100 million a year in recent times. The masters of copper were masters of Chile. On December 21, 1970, President Salvador Allende spoke to an excited multitude from the government palace balcony. He announced that he had just signed a constitutional reform project enabling the mines to be nationalized. In 1969, he said, Anaconda had garnered $79 million in profits from Chile--the equivalent of 80 percent of its global profits, although its investment in Chile was less than one-sixth its total investments abroad. The "bacteriological warfare" of the right--a planned propaganda campaign of terror to avoid nationalization of copper and other structural reforms proposed by the left-had been as intense as in previous elections. The newspapers had pictured heavy Soviet tanks rolling before La Moneda, the presidential palace; bearded guerrilleros dragging innocent youths off to death appeared on Santiago walls; every house waited for the bell to ring...... "Do you have four children? Two will go to the Soviet Union and two to Cuba," a senora explained. None of this worked; copper is "putting on poncho and spurs" and becoming Chilean.

  The United States, its feet caught in the tangle of Southeast Asian wars, has not concealed its official displeasure at the trend in the southern Andes.

  But Chile is not within reach of a sudden Marine 144

  expedition, and Allende, after all, is president by every precept of representative democracy preached by Washington. Imperialism is In the First stages of a critical new cycle whose portents have shown themselves in economics; its function as world policeman becomes ever more costly and difficult. And the price war? Chilean products are now sold in several markets and new ones can be opened up in the socialist world; the United States lacks the means to set up a universal blockade of the copper Chile is exporting. Quite different, of course, was the situation in Cuba twelve years ago, when 100

  percent of its sugar was destined for the U.S. market and was wholly dependent on U.S. prices. When Fret won the 1964 elections in Chile, the price of copper immediately rose; when Allende won the 1970 elections it was already failing and fell further. But copper, always subject to sharp price fluctuations, has in recent years enjoyed fairly high prices, and since demand exceeds supply, scarcity prevents any serious drop. While aluminum has substantially replaced copper as a conductor of electricity, aluminum also requires copper; furthermore, cheaper and more efficient substitutes have not been found to displace it from either the steel or the chemical industry, and copper remains the chief raw material used in gunpowder, brass, and wire manufacture.

  Along the Andean slopes Chile has the world's greatest reserves of copper, a third of all those now known. Chilean copper generally appears with other metals, such as gold, silver, and molybdenum-an additional factor which stimulates its exploitation. And Chilean workers are cheap: their low costs in Chile more than compensated Anaconda and Kennecott for their high costs in the United States, and Chilean copper, through the device of "expenditures abroad," paid more than $10 million a year to maintain the offices in New York.

  The average wage in Chilean mines in 1964 was barely one-eighth of the basic Kennecott refinery wage in the United States, although the workers'

  productivity was the same. The foreign personnel in t
he big mines inhabit a world apart, a little state-within-a-state where only English is spoken and where newspapers are especially published for the inhabitants. The worker's productivity has grown as the companies have mechanized methods of exploitation. Since 1945 copper production has increased by 50 percent, but the number employed in the mines has fallen by one-third.

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  Nationalization will put an end to a state of affairs that had become intolerable for Chile, and prevent repetition in copper of the plunder and descent into the abyss of the nitrate cycle. The taxes the companies paid to the state did not begin to compensate for the remorseless draining of mineral resources which nature bestowed but will not renew. Furthermore, the taxes have decreased in relative terms since 1955, when a system of lower assessments for higher production was established, and since the Frei government's "Chileanization" of copper. In 1965 Frei made the state a partner of Kennecott and allowed the copper companies to almost triple their profits: tax assessments were based on an average price of $.29 per pound, although heavy global demand raised the actual price as high as $.70. Radomiro Tomic, the candidate chosen by the Christian Democrats to succeed Frei, admitted that the difference between the fictitious and the real price had lost Chile a vast sum in dollars. In 1969 the Frei government agreed to buy 51 percent of Anaconda's shares in half-yearly installments, on conditions that set off a new political scandal and further swelled opposition ranks. Anaconda's chairman had, according to the version given to the press, previously told the president of Chile: "Excellency, capitalists do not conserve their assets for sentimental motives but for economic reasons. It is commonplace for a family to keep a wardrobe because it belonged to a grandfather, but corporations don't have grandfathers. Anaconda can sell all of its assets. It only depends on the price that is paid."