Axis of Andes

[DG Valdron]

Tacna and Arica

Chile won the war of the Pacific. Bolivia and Peru lost big time. Under the Treaty of 1883, Chile occupied the southern Peruvian Provinces of Tacna and Arica for a period of ten years, after which a plebiscite would determine the fate of its inhabitants.

The way these things go, ten years turned into fifty years. Unable to agree on terms for a plebiscite, the Chileans simply stayed and did their best to ethnically cleanse and colonize the region. This lead to breaks in diplomatic relations and more threats of war.

Eventually, the United States was brought in as a mediator. The compromise arrived at in 1929, was that Chile kept the province of Arica, with minor concessions to allow Peruvian port access. Peru had the province of Tacna returned, and further, was paid six million dollars (real money in 1929 terms)

The compromise, of course, satisfied no one. The Chileans, steeped on victory and feelings of national superiority were loathe to return Tacna. The payment of six million dollars on the eve of the depression was both a national humiliation and an unaffordable extravagance in a country that would soon go broke.

For the Chilean Nazi party, under the influence of the Ecuadorians, the return of Tacna and the payment of the indemnity amounted to a stab in the back. Chile had won the war, the province was its by right of conquest. But somehow, Chile had been forced to return and pay reparations? It was a raw injustice.

Oddly, this did not create a barrier between Ibanez and the Chilean Nazi's. This was largely a matter of realpolitik, since Ibanez had been the one to negotiate and sign off on the agreement. Rather, the Nazi's, in allying with Ibanez, took the official position that Ibanez, like the rest of Chile, had been betrayed by Jewish interests in America. Ibanez, rather than the perpetrator, was reassigned as a victim. Ibanez position on the subject was fairly nuanced, and became more ambiguous as time wore on, eventually allowing him to denounce a compromise he had engineered.

The bottom line was that by the late 30's, early 40's, much of Chilean society had emotionally repudiated the 1929 compromise, though there was little political will to do anything about it. Nevertheless, it remained a flash point of hostility.

Peru, of course, remained unsatisfied, having lost the provinces of Tarapaca and forced now to renounce Arica. The defeats and humiliations of the War of the Pacific continued to rankle. Once again, there was a lack of political will to do anything about it. But once again, there was a deep seated national and political hostility.

In and of itself, the fallout of the War of the Pacific, and the Tacna/Arica compromise could not and would not have lead to war. But in a situation of escalating tensions, the ingrained hostility and unresolved or re-alleged claims, brought the threshold of war considerably closer.

 

[DuQuense]

As for your discussion on the possibility of a 1930's arms race, that just sort of goes in with the general discussion of how all these nations are going to be reacting to the rise of fascist movements and militarization of some of their neighbors.

?Will any of these Countries try to build a Small Arms Industry?. Seems the type thing a Government might do to boost Employment.
You don't have to be a great Industrial Power -- See Israel's or Taiwan's Arms Industries.

 

[Shevek23]

?Will any of these Countries try to build a Small Arms Industry?. Seems the type thing a Government might do to boost Employment.
You don't have to be a great Industrial Power -- See Israel's or Taiwan's Arms Industries.

Argentina certainly did build a military aeronautics industry of sorts, after WWII. They hired Kurt Tank (designer of the Focke-Wulf 190 and other impressive German warplanes) to design them a native fighter/attack plane.

I don't know whether this postwar venture was based on any prewar infrastructure or was a grandiose fiat.

Brazil also eventually had its own aero industry which is going strong these days; again I don't know how far back its antecedents went.

And these are the countries DValdron is largely leaving on the sidelines, because they are the big leaguers whereas this is the story of the really small fry duking it out.

Chile ought to have the most capability (at least until we get up to Colombia and Venezuela).

If by act of sheer will, one or more of the small countries between them does force-grow some homegrown arms biz, the products probably would be markedly inferior to what one could get on the world market for a comparable or even lower price. But it won't be all about price or even effectiveness; it will indeed be partially about the Keynesian effect of employing local labor and the imponderables of national pride. Plus of course if say Ecuador or Bolivia can indeed make local guns and these are at least somewhat effective, and can keep the local arsenals going during a long hard fight, they may well be better off strategically and logistically than rivals who rely on commercially supplied ammo and replacement parts. They could keep reloading while their enemies might run out of rounds, and not have money to buy more.

Obviously my personal thing is aviation, which is something of an extravagant frill in this context; guns are way more fundamental and I don't know much about their relative merits nor their economics.

 

[DG Valdron]

Pretty much everyone is a small fly in Latin America. Here's a table of the 1930 and 1940 populations of the parties.

Ecuador - 1930 - 1.9 million. 1940 2.4 million

Peru - 1930 5.6 million. 1940 6.6 million.

Chile 1930 - 4.3 million. 1940 5.0 million.

Bolivia 1930 - 2.4 million. 1940 2.7 million

Colombia - 1930 7.4 million. 1940 9 million.

Paraguay 1930 0.9 million. 1940 1.1 million.

Argentina 1930 - 11.9 million. 1940 14.1 million

Brazil 1930 - 33.5 million. 1940 41 million.

Basically, with the exception of Brazil, population limits the potential size and capacity of all of these economies. There's just not enough people to sustain an industrial productive infrastructure of significance. Particularly when these countries are all essentially trapped in a neocolonial model of export/import.

Only Brazil is comparable in population to Italy or Spain, and is likely far less industrialized than even Italy.

Now, there are some caveats to this. Since the ascension of Bonifaz in 1932, there's been an effort to develop local manufacturing and production through import substitution, and this takes off somewhat when Henry Ford becomes involved after 1937. Ecuador develops industrial production lines for small arms, ammunition and artillery pieces, and there's even a plant which turns out trucks and vehicles, which is partially repurposed. The trouble is raw or semi-refined materials and spare parts create production bottlenecks and the inbuilt inefficiencies and wastes of a force grown, jury rigged system. More subtle aspects are significant, the Ecuadorians turn out very good combat boots, important for an effective infantry. Still, its impressive just how much and how far the Ecuadorians get, with the little they have to work with and the short period of time.

Chile has probably the best prospects for semi-industrialization. However, a lot of the key industrial policies that built industrial infrastructure in Chile were the work of Pedro Cerda, beginning in 1939. His regime is butterflied away, and comes too late. Chile is not planning for war and doesn't make an effort to put its economy on anything like preparation for a war footing. But Chile has much more of its economy laying around in a way that can be adapted for war production.

Peru, meanwhile, I think falls mostly to the Chilean side, but has been rearming somewhat like Ecuador.

So, overall, we can probably count on effective small arms and rifle industries and production, as well as ammunition production. As well as war materials such as boots, uniforms, etc. This will see serious intermittent production bottlenecks.

There's also a lot of stuff that will get repurposed from the Civilian economy, but not necesarily in a coherent or efficient way.

There'll be enough local expertise that you'll even see efforts to jury rig car or truck frames into armored vehicles or tanks, but such locally produced armour will be fairly rubbishy. Think partially armoured, fast moving, with gun or artillery mountings. Still, if used well, and in the situation of shortages, they'll be effective.

Real tanks and heavy armaments will have to be imported. We can expect enough technical sophistication to keep the things running, and to be able to repair or cannibalize parts or jury rig to extend the functional lifespan of these objects, provided they're not destroyed in combat.

Aircraft also would have to be imported. I just can't see an indigenous aeronautics industry showing up anywhere in Latin America, not even Brazil. Again, there'll be bottlenecks, some degree of mechanical skill will keep these things running, but aircraft are a lot twitchier than ground vehicles. There may also be some efforts to repurpose civilian aircraft by jury rigging weapons systems, but some of those will not turn out well at all.

Still, its going to be nasty enough. At peaks, we may see as many as a million to a million and a half under arms and in combat.

 

[DG Valdron]

La Paz, Bolivia - 1935 /1937

Following the end of the Chaco War, Velasco Ibarra had succeeded in signing a mutual aid treaty between Bolivia and Ecuador, with Bolivian President, Sorzano.

According to the terms of the treaty, each nation was obliged to come to the defense of the other, if attacked by Peru. The treaty was invalid if either country attacked first, an incentive against military adventures. The Treaty explicitly recognized Ecuadorian territorial claims to the Oriente, and defined a Peruvian invasion or occupation of the Oriente as aggression. In turn, the treaty recognized Peruvian claims to the coastal provinces of Tarapaca, Arica and Tacna held by Peru and Chile. Only Tacna was in Peruvian hands. The Treaty specifically precluded Ecuador's involvement in disputes between Bolivia and Chile.

Although secret, rumours of the Treaty began to circulate within a few months. Indeed, the Bonifaz regime itself tacitly spread rumours to deter what it considered to be Peruvian aggression. To the extent that these rumours reached Lima, they had the opposite effect in encouraging militarism and hostility, and worsening relations with Bolivia.

The crown jewel of Velasco Ibarra's diplomacy, however, was short lived. By May, 1936, barely six months after the Treaty was signed, Sorzano was overthrown in a military coup by war hero Colonel David Toro.

Toro promoted a brand of 'military socialism', advocating wide ranging social reforms, but with little in the way of a concrete agenda.

Ibarra and Alba together, in June 1936, travelled to La Paz to meet with Toro, and received lukewarm assurance that the treaty would be honoured. Despite this, the Ecuadorians had reason to be less than sanguine. Ideologically, the Toro regime was leftist, anti-war, focused on domestic issues and utterly uninterested in foreign involvement. The promise of Tacna province had lost its luster. For Bolivia, and for Sorzano, the promise of a pacific coastline had become a national obsession. But Tacna was poorly suited to Bolivian transport requirements.

Nevertheless, Alba's personal relationships with Bolivian officers, particularly Toro, together with sentimental notions of the debt owed to Ecuador kept the treaty intact.

Ecuadorian diplomacy had reached an impasse. Entreaties to the United States had proved fruitless. The American government being largely unconcerned and uninvolved with disputes between Latin States. The Roosevelt administration did offer mediation, but the Bonifaz regime, fearing favouritism to Peru declined. The United Kingdom, previously a major power in the region had essentially renounced interests. The governments of Argentina and Brazil were largely indifferent.

With no support from either Columbia or Chile's governments, efforts to find an ally to guarantee Ecuador's security had essentially come down to Bolivia as the sole deterrent. And that deterrent grew increasingly shaky.

In July, 1937, David Toro was overthrown by Colonel German Busch. Once again, Ibarra and Alba travelled to La Paz, but this time the reception was less cordial. Busch pointedly declined to meet with them, instead providing a written letter, which stated in part.

"....our nation shall never forget and never abandon the graces and assistance by our brothers in our time of strife and need. Although divided by distance which cannot be bridged, in God's spirit we shall always be joined. As to the agreements made on behalf of the Bolivian people by the disgraced former ruler Sorzano, be assured that we shall continue to be bound by the spirit of friendship between our nations. As we have seen recently, matters of war must be considered on the occasion which they arise and not before. Only God may know the future."

The letter, together with Busch's failure to meet directly, was interpreted by both Alba and Ibarra as a renunciation of the Sorzano Treaty, though it was not explicitly terminated.

Ecuador's security deterrent had fallen apart. There were no allies or guarantors to be found in South America, or with the traditional great powers. The mood, in Quito was one of despair, fueled by a series of border incidents, there was a sense of impending war.

With Bolivia gone, the last chance to create a working security deterrent was Chile, except that Chile had shown no interest whatsoever. Nevertheless, Ibbara, in August and September was sent on another fruitless diplomatic mission.

It was during this mission, that Ibarra renewed contact with the Chilean Nazi leader, Von Marees. Through Von Marees, Ibarra was introduced to operatives working out of the German consulate, which brought them to the attention of Admiral Canaris, head of the German Intelligence service....

***********

Berlin, December, 1937.

“I regret,” Hitler began, “that the press of European matters, particularly the struggle of our brother, Commander Franco, does not allow us much time. But be welcome, tell us of matters in South America.”

“Thank you, Great Fuhrer,” Velasco Ibarra began....

B

 

[CCA]

I wonder what Canaris' angle here is. IIRC the man was a noted Anti-Nazi so he may be setting this meeting up to waste German resources and time...

 

[Death]

Merry Christmas happy new year and so on. Great up dates its great reading the best update yet.

There is one thing id like to know is a bit of back ground info on Henry Ford manufacturing genius. For example is he native to Ecuadorian because some how the name does not sound Spanish or South American to me.

 

[Leistungsfähiger Amerikan]

Great updates! Feliz navidad!

 

[DG Valdron]

I wonder what Canaris' angle here is. IIRC the man was a noted Anti-Nazi so he may be setting this meeting up to waste German resources and time...

Canaris, from what I've been able to find out about him, seems to have been a very odd duck indeed. There's a lot that's been written about him, through his involvement with the Spanish Civil War.

I'll confess, I don't have a strong handle on the man at all. He was an anti-Nazi, true. But at the same time, he functioned well in the Nazi government. His loyalty seems to have been to Germany, and yet his career as spymaster placed him anywhere but Germany, embroiling him in foreign governments and schemes.

In this particular context, I don't think that Canaris advocates for the Bonifaz triumvirate to Hitler and his cabinet. Rather, this is a situation sufficiently unusual, with sufficient prospects and connections, that he simply passes it on upstairs. He's not saying yes, he's not saying no, he's simply going 'hmmm, strange' and kicking it on up the ladder.

Hitler's vague directions are carried out by Canaris, and the German intelligence service, but South America isn't a huge priority for him, so most of the work is done by ambitious underlings.

 

[DuQuense]

Real tanks and heavy armaments will have to be imported. We can expect enough technical sophistication to keep the things running, and to be able to repair or cannibalize parts or jury rig to extend the functional lifespan of these objects, provided they're not destroyed in combat.

OTL there are a lot of 1950's American Cars in Cuba. They are keep running by taking any broken piece to the local Machine shop, & making a new exact copy as a replacement Part.
?So I wonder if there are any WW 1 surplus still floating around.?

Apparently So
http://en.wikipedia.org/wiki/Renault_FT-17

 

[DG Valdron]

Very cool Tank, and showing up in Brazil in 1921. It's likely that South America during the twenties and thirties saw a fair bit of WWI or post-WWI cast off technology.

The Chaco War, for instance saw Bolivia employ three six ton Vickers tanks, and a few tankettes. We don't even have tankettes nowadays, think of those as an 'inter-war years' notion that didn't work out.

 

[General Tirpitz]

A very good TL! One of the most interesting ones I have read so far. Keep working

 

[imperialaquila]

Merry Christmas happy new year and so on. Great up dates its great reading the best update yet.

There is one thing id like to know is a bit of back ground info on Henry Ford manufacturing genius. For example is he native to Ecuadorian because some how the name does not sound Spanish or South American to me.

Henry Ford was an American, founder of the Ford Motor Company, introduced assembly-line production to many areas. Here's his Genocide page, if you want to know more. I find it somewhat hard to believe that you've never heard of Ford.

 

[Communist Wizard]

Excellent! Your style and format is refreshing as always, and I say continue sketching historical South America and the pre-war developments. The war itself will be enriched by all the background you provide.

 

[DuQuense]

Geez, sorry, I thought interest had faded. I was getting ready to go back to Green Antarctica. I'll get back on it and start posting.

Faded Whe are waiting with Baited * Breath for the updates.

Ecuador at the height of war might potentially put as many as 250,000 men under arms. Basically, population is about 2 million, with large labour surpluses in good times, so lots of surplus combat age males can be enlisted before the civilian economy starts to creak.

I think that the number of men is less important than how they are lead/used.
If whe have a learning experience for some of the Officers & NCO's in Spain, and the leaders are willing to listen. ...................

Should love to see war where Tankettes actually make a difference in the outcome.

* short fat juicy ones, long thin slimy ones -- yum yum WORMS

 

[Leistungsfähiger Amerikan]

Faded Whe are waiting with Baited * Breath for the updates.


I think that the number of men is less important than how they are lead/used.
If whe have a learning experience for some of the Officers & NCO's in Spain, and the leaders are willing to listen. ...................

Should love to see war where Tankettes actually make a difference in the outcome.

* short fat juicy ones, long thin slimy ones -- yum yum WORMS

Hi, I'm Leistungsfähiger Amerikan, and I approve of this post.

 

[dogsbody]

I've just found this thread and have spent the last few hours reading it all.

It's a fascinating ATL. I'm most interested in where this may go.

Bravo, DValdron. Well researched and well written.




Chris

 

[DG Valdron]

Peru - A thousand sunsets - 1880 to 1920

Prior to 1879 and the War of the Pacific, Peru was an essentially feudal caste society. At the top of the Social Order were the the Spanish Europeans, or those of their descent. Before independence that caste had been divided further, between those actually from Spain and those born locally. Beneath the Criollo elite, were a Criollo middle class caste, below them various grades of Meztizo or mixed breeds of spanish and indian, the more successful of whom emulated spanish culture and adopted spanish language, and the indians, Quechua, Aymara and Guarani predominantly.

As with other Andean nations, Peru was a layered state. 12% of its territory was a coastal strip, due to currents, much of it was dry and desertlike, with fertile areas fed by rivers coming down from the mountains. Today that coastal strip encompasses 40% of the Peruvian population, but most of that is the result of runaway urbanisation over the last century and last decades.

Beyond the coastal strip, roughly a third of the country is the sierra - three andean ranges running north to south, with intervening valleys, hills and table lands, watered by rains and glacial waters, the former heartland of the Inca empire, and home to the majority of Peru's population, historically. Because of the tortured and broken patterns of mountain ranges, many valleys and hills make transportation and communication difficult. The trend is towards isolation. Perhaps for this reason, there are as many as 18 dialects of the Quechua language spoken. Through the 19th century. The Sierra is rich and productive, but difficult to get into and out of, markets tended to be local or regional. Haciendas, export crops and mining operations tended to be small.

Beyond that, of course was the selva or jungle, half the country, but with a fraction of the population, largely unknown, mostly inaccessible, of little value or economic impact.

In this sense, with minor variations, Peru resembles the other Andean nations we've examined - Chile and Ecuador, and overlaps with Bolivia and Colombia.

Unlike Chile, however, which had quickly displaced or extirpated its native population, the Spanish in Peru found themselves ruling over the heartlands of Andean civilization - of which the Inca were merely the latest heirs. They dominated densely populated, agriculturally and culturally sophisticated native populations.

So, while the Chileans could indulge in pretensions of Europeanization, the Spanish in Peru could only impose themselves, creating a feudal, caste society, somewhat like South Africa. A minority in their own country, the Peruvians kept the closest ties to spain, and in fact, were the center of royalist resistance during the wars of independence.

Thereafter, with independence, a Peruvian spanish elite ruled uneasily and ruthlessly over an elaborately stratified, infinitely divided and divisive society. It was an archaic nation, feudal in character, tenuously held together. Which perhaps explains how and why Peru did so poorly in its 19th century wars with Chile.

Of course, all this began to change with the humiliating defeats of the War of the Confederation and the War of the Pacific. In part, these defeats took place because of the unwillingness of the European elites to risk the sort of social efforts that would disrupt the class structure. Indeed, there was at least one major Indian revolt during this time. In the end, Peruvian elites chose stability over victory.

The transformation of Peru, to the extent it transformed, was not the product of these defeats. Rather, it was the same shift to neocolonialism which was taking place throughout latin America. International trade, the rise of cash crops and mineral exports, produced an economy based on exports of raw materials and imports of luxury goods. Between 1880 and the low point of the Pacific war, and 1920, the value of Peruvian exports increased tenfold, or one thousand per cent.

Each Latin state brought its own particular wrinkles to the process. Unlike Chile and its nitrates, Peru did not have a single overwhelming cash commodity. Rather, its export productions were divided across a handful of mining and farming regions in the interior and the coast, profitable, but not exporbitantly so, and distributed rather than centralized.

As Peru fell further into the neocolonial orbit, it drove consolidation and expansion. Small mining operations were replaced by bigger more efficient industrial operations, small haciendas were squeezed out by bigger and bigger ones. The subsistence economies of the Indians and Meztizo were under pressure. Between 1880 and 1920 over a third of indian lands were taken up by the expanding haciendas, producing protracted conflicts.

You would have expected this would have resulted in some form of civil war or mass uprising. And to some extent, it did. The trouble was that Peru was a difficult place to have a broad based civil war. Endlessly divided into deserts, and river basins, mountain ranges, valleys, hill countries, it was hard for an uprising to really catch fire and get rolling. Geographical divisions were exacerbated by cultural and linguistic divisions. A third of the nation might have been quechua indians, but those quechua were divided into 18 dialects and regional cultures. Quechua were divided from Aymara, Aymara from Guarani, Guarani from Meztizo, etc.

Instead of the great uprisings (and there had been one in the 18th century, the last gasp of the inca), the 19th and 20th centuries featured what seemed to be an endless smolder. A weak central government largely left things drift. What you had, was at times a sort of wild west. Rival Hacienda's would literally fight their own wars, maintaining private armies of a dozen or more thugs, burning down each others plantations and buildings. Indians or meztizo would occasionally rise up, lynching unpopular officials, sometimes taking over a town, but usually going no further. The army would show up, taking things back, imposing a form of order. The uprising population would quiet down, the most hotheaded dying in futile gunfights, resorting to banditry or simply fleeing over to the next hills, the next valleys, the next towns. Reading local histories is absolutely amazing. There was a man who became wealthy through the expedient of moving into town and marrying a local girl, taking over a local farm, and eventually moving on somewhere else to do it again. It worked, when he died, he had eleven wives and ninety three children at his funeral. You have to think about the sort of society, the sort of nation, where that kind of thing could not only be gotten away with, but even celebrated.

The central government was weak and disorganized. But oddly, that was okay, because within Peruvian society, social resistance was even weaker and more disorganized. More relentlessly heterodox, more diverse and distributed Peruvian society did not see the same sort of polarization between the inland latifundistas and the coastal mercantile elites that we saw in Colombia and Ecuador. This is not to say that it was not there, but rather, that it was not so clearcut, it did not divide so readily into violent extremes. Rather, local latifundista as often as not found common cause with local mercantiles. It seemed that there was simply more breathing room.

And this seemed to permeate Peruvian society. If the Latifundista's and the rise of great Hacienda's expropriated vast amounts of Indian land and produced social and cultural stress, this didn't result in a drainage of migrants into coastal cities, which in turn produced a large labour pool with consequent cheap labour and social tension.

Instead, some indians retreated further into the hills and mountains, opening up and cultivating more marginal land, some became day labourers and sharecroppers in the new regime, others were taken up by local industrial mining operations. Or some simply moved, to the coasts, to river valleys, to mountain valleys. Economic dislocations produced population dislocations, but the country was big enough, divided enough, fragmented enough, that it could absorb these dislocations.

Although Indians were over half the population of the country, although meztizo were a third, although the european descended criollo elite was only a fraction, the Indians and meztizo, as with so many other latin nations, never radicalized, never challenged, and were for the most part, safely ignored. Their grievances were instead expressed in ten thousand acts of small rebellion, none of them ever becoming a raging fire.

Of course, radicalism did come about. As with Chile and Ecuador, it took root in the coastal cities, where the interface with European economies produced a functional working or urban class.

In Ecuador, a narrow export base, relatively simple commodity requiring little processing, and a large displaced surplus population produced a working class which was weak, impoverished and desperate. Labour strife, much more desperate, produced massacres.

In Chile, a more diverse export base, more inherent infrastructure and processing for those exports, and a relative hunger or demand for labour produced a wealthier more comfortable working class, but a key commodity also produced a more ruthless government willing to machine gun women and children, and produced massacres.

In Peru, we had a more diverse export base, more inherent infrastructure and processing, the working class was proportionately more comfortable than in Ecuador, but less narrowly based than in Chile. Like the other countries, Peru experienced its periods of strife, including general strikes and the rise of radical socialist or communist movements, but unlike the other countries, at least up to the 1920's, I don't think we saw the same level of extreme violence applied. (I could be wrong).

Rather, Peru became a sort of hotbed of left wing movements and internationalism. Labour unions and labour movements, intellectuals, radical politics found fertile ground for a time

 

[DG Valdron]

Henry Ford and the American Empire

The Monroe doctrine aside, for much of South America, the dominant economic and military power in the region was Britain, not the United States. American interest and activity seemed to concentrate instead in the Caribbean and Central America. Places like Peru, Bolivia and Chile were remote to both American power and interests.

In the early twentieth century, this began to shift. Andean exports to, and imports from the United States increased dramatically, on average running from around 10% at the turn of the century to 40% by the 1920's. American investment also increased dramatically during this time, as much as ten or twenty-fold.

American investment tended to differ in being rather more aggressive than British investment. There was, in both cases, a tendency to buy not just the product, but the producers, to acquire pieces of the economy. Railroads, for instance, were often built, run and owned by foreigners, with leased monopolies of sixty years or more.

By and large though, the British had tended to be wary of directly running aspects of the economy. A hacienda or a plantation properly run was a license to print your own money, a feudal kingdom on its own. But it often depended on acute local knowledge and complex pseudo-feudal relationships. A british overseer could well lose his shirt trying to run it. So British investment was often cautious, focusing on purchasing, on relationships, on selling, and on acquiring the more fungible parts of the economy.

American investment took things up to the next level. There were a couple of reasons for this. First, the American concerns often had more money to throw around they could invest on a larger and more aggressive scale. Second, the volume of production, the volume of exports had been climbing steadily, and with this steady increase of production, came social and economic changes, a weakening of the complex semi-feudal networks, an increasingly organized, cash oriented, production oriented economy. Essentially, the latin economies had grown and become sufficiently complex that it was becoming viable for foreign concerns to buy, own and operate plantations, mines and domestic production.

To some extent, this displaced or crowded local elites. But the money, and the further expansion of the economy was good enough that they could reliably embrace the American partnership. The middle class, historically a subservient rump was generally content to serve Americans as it was Latifundistas or local mercantile elites. No one ever cared what the Indians thought. The local working classes were often hostile, but powerless.

Indeed, the major source of friction with American interests was usually with local working classes and labour organizations, which resulted in a long running American hostility to what it perceived as communism in the region.

But for the most part, the United States, despite its increasing role in the economy and politics of South America, could hardly care less. Europe and Asia were vastly larger and more important trading partners, European and Asian theatres had the populations, the politics and the military threats.

To the extent that South American states figured in American foreign policy, it was a foreign policy driven by corporate interests. Americans through the 1900's to 1930's owned increasing chunks of Latin America - they owned mines, they owned plantations, they controlled vast territories, had timber rights, imported exported, and when those interests were threatened or confronted, those companies went straight to the US state department.

Not to put too fine a point on it, but American policy in Guatemala was dictated not by the needs, perceptions or concerns of the United States government, but by the United Fruit Company. When the American government thought about Guatemala, the voice it listened to was not Guatemalans, but rather, the United Fruit Company's. So it goes.

What this meant was that in American eyes, disputes between Latin American countries, tended to be expressed in terms of the relative political weight of American interests in those countries. Standard Oil covertly backed Paraguay in the Chaco War, and in subtle terms, so did the United States.

Going into the 1930's, what this amounted to for Ecuador was bad news. The scale and scope of American corporations in Peru, American investment in Peru, was far greater than Ecuador. While the United States professed neutrality, the accurate perception of the Bonifaz regime was that if push came to shove, America would favour Peru over Ecuador. An American negotiated settlement would not be in Ecuador's interests.

The result was a slow but definite chilling in relations between Ecuador and the United States, which culminated in the dispute between Labour Minister Enriquez Gallo, with the American owned mining concern, the South American Development Company over wages and working conditions for its Ecuadorian miners.

Nevertheless, Ecuador remained a relatively remote and small concern, and the perception of the Bonifaz government as a fascist outpost was only a minor issue to a handful of diplomats.

The 1937 visit of members of Bonifaz Triumvirate to Berlin, and the meeting with Hitler might have been a greater cause for concern, in and of itself. The Roosevelt government was becoming steadily more hostile to Nazi Germany, though American commercial interests remained friendly.

However, this chill was blunted by the involvement of Henry Ford in the Ecuadorian economy. Acting in conjunction with, and inspired by German initiatives, Ford focused on Ecuador as a base for his South American operations. Establishing assembly plants in 1938, Ecuador became the manufacturing and distribution point for Ford operations to Colombia, Peru, Bolivia and Chile. Ford's pressure on the American state department obtained government intercession to persuade the other Andean nations to cooperate.

Although Ford Ecuador was, on paper, considered to have more potential than Ford Argentina or even Ford Brazil, it never quite realized it. Start up costs, and transportation expenses ate into the projects operations. Balancing this, however, was a weak and quiescent labour force.

By 1940, Ford Ecuador was turning out respectable quantities of trucks for local and regional use, and although the Ford Company directly owned the production, economic spin offs ranging from importers, to local parts suppliers, manufacturers, mechanics, service men and gas stations were having a major impact on the Ecuadorian economy.

Ford's support also did much to blunt what otherwise might have been a hostile American government, which after 1939, was becoming more and more concerned about potential Nazi penetration of South America. A concern that was beginning to match or eclipse business fears of communism.

Bouyed by this, the Ecuadorian triumvirate became ebullient, even overconfident in their dealings with their lagging Peruvian rivals. A recklessness which perhaps contributed to the war.

Despite the significance of the Ford investment, it came too late and too piecemeal for Ecuador to enter the war as an industrialized or industrializing economy. As a manufacturing base, the Ford investment provided a seed, which would be strangled almost immediately by lack of parts and resources. Nevertheless, Ford's investment produced a brace of machinery, trained personnel, parts and equipment and infrastructural and economic spin offs that through repairs and retrofits extended Ecuador's short term military potential immensely.

In overall terms, both the Nazi investment and the Ford investment in Ecuador was comparatively tiny. For both the German government, and the Ford Motor company, the Ecuadorian project was relatively trivial in the larger scheme of things. Nevertheless, although much is made of the German influence, by far the most significant impact was through the investment and political support of Ford.

 

[DG Valdron]

More on Peru coming up, including the key developments between 1920 and 1940.

Several people had begun to wonder why the United States didn't simply march in and sort out everyone's hash.

So, I thought it was time to address it, essentially to begin showing the complexities and nuance of American foreign policy in the region.

Essentially, Bonifaz's bunch is correct when they form the opinion that the Americans are going to sell them out. America's official policy in Latin American disputes was neutrality, and on a number of occasions, America solely or with other parties arbitrated or mediated disputes. But American mediation tended to favour whichever countries American investment predominated most.

In OTL's Ecuador/Peru war, one of the outcomes was America basically endorsing the loss of roughly half of Ecuador's territory, something the Ecuadorians are still seething over. In fairness though, given the weakness of the Ecuadorian government of the time, and Peru's dominant military position, its pretty much a default option.

Nevertheless, in other territorial disputes, as between Bolivia and Paraguay, for instance, American business interests appeared to dominate historical or territorial arguments.

In this timeline, by far the most significant effect of Alba and Ibarra's visit to Hitler, was a word in the ear of Ford, and his involvement in Ecuador, which was partly reassigned investment from Ford Argentina and Ford Brazil, partly new investment, and partly funneled Nazi funds. It's a good investment for Ford, low risk, but overall not a big deal. Well, proportionately - it's relatively trivial to the Ford Company, but a big deal to the region.

But as noted, apart from the economic and industrial consequences, Ford's support with the State department does a lot to blunt or 'nuance' the American position in the Andes. Sure, there are heavier investments in Peru, but Ford's a heavy hitter. The American state department becomes increasingly nervous about the situation, but it's hard to take a position one way or the other vis a vis Peru and Ecuador. Behind official neutrality is genuine if tense ambivalence.

Elsewhere, in Chile, in Bolivia and in Peru, this ambivalence continues for other reasons. There's genuine concern about Nazi influence and German involvement in Chile for example. But is the alternative Chilean communism? That's even worse.

Peru might, under normal circumstances, be the clear favourite for American support, fighting a defensive war against two attacking fascist powers. But indigenous developments in Peru may well reinforce American ambivalence.

But that's a hint of things to come...

Anyway, back to Peru, and after that, let's get serious about getting this war on.