The New Significance of Latin America


By JOHN B. GLENN, President, Pan American Trust Co.

Delivered at Forum of the New York Credit Men's Association in collaboration with the Robert Morris Associates, New York, N. Y., December 9, 1943

Vital Speeches of the Day, Vol. X, pp. 250-253.

THIRTY years ago the average American knew little if anything with regard to our Latin American neighbors. They were considered as backward nations, of no great political or economic importance, and prone to revolutions and economic disorders which we thought, at that time, required the policing of Uncle Sam to keep the peace and thus protect the tenets of our Monroe Doctrine.

Our trade, at that time, was practically all East and West, and our entire exports to the twenty Latin American countries in 1913 amounted to only $350,000,000, principally to Mexico, Cuba and Brazil.

Then came World War I, when Latin America really discovered us, due to the closing of the European markets, and our sales to those countries began to increase. Five years later, 1918, our exports to these countries amountedto $697,000,000, almost double the record of 1913. In 1941 our sales to Latin America had passed the $1,000,000,000 mark, due largely to World War II, but I see no reason why we cannot keep them around this figure and further increase our sales to these countries, provided we take the proper steps to this end.

All of you gentlemen here today are credit men accustomed to analyze thoroughly each proposition placed before you, weighing carefully the three C's of credit, and, in addition, where a foreign country is involved, the political and economic conditions of each country, its debt record, trade restrictions, facilities for obtaining dollar exchange, and whether or not it is a one or two product country producing raw materials which, at that particular time, may have an active or slow market.

In accepting your very kind invitation to speak to you today, I shall present to you my opinion on the new significance of Latin American credits.

What is Latin America:

Latin America, which extends throughout the West Indies, and all the way from our Southern border to Cape Horn, a distance of about 6,500 miles, is composed of 20 countries with 130,000,000 inhabitants and, in size, is two and one half times larger than the United States. Of these countries, 18 speak the Spanish language, while Portuguese is spoken in Brazil, and French in Haiti. In population, 82,000,000 speak Spanish, 45,000,000 Portuguese, and 3,000,000 French.

All of these countries were colonized by Europeans, mainly Spanish and Portuguese, so that the culture and architecture is predominantly of these two nations, and the religion is Catholic.

One must not make the mistake, however, to consider all of these countries alike, for although they all have similarities, none of them are the same, and each should be classified strictly on its own merits.

The Argentine, Uruguay, and Southern Brazil, are of strictly European extraction and have a larger percentage of whites than our own United States. Other countries such as Bolivia, Ecuador, E1 Salvador, Guatemala, Honduras, Nicaragua, and Paraguay, are predominantly Indian; Haiti, Santo Domingo and Cuba have a large Negro-American population, Brazil, Costa Rica and Panama are a mixture of many races, and in Chile) Colombia, Mexico, Peru and Venezuela, the population is divided on a basis of approximately 30 per cent Indians, 60 per cent "Mestizos" and 10 per cent Whites.

In education, the upper classes are highly advanced, not only in their own schools and universities, but also in the highest institutes of learning in Europe and sometimes in this country. The education of the masses is now progressing most satisfactorily and every Latin American hopes that with the new era after the war, illiteracy will be at a minimum.

Many of us, who pride ourselves on our universities and our great centers of learning, should remember that the Universities of Mexico City and Lima, Peru, ante-date our first University at Harvard by nearly one hundred years.

In nearly all of these countries there is a very small middle class and an immense disparity between the upper class and the masses, and. consequently, a struggle for a decent daily wage, better living conditions, and land, which was the cause of the revolution in Mexico, and in some of the other Latin American countries.

I feel sure I would not be far from right if I said that today a cross section of all the southern countries would show purchasing power for what we consider the ordinary necessities of life of only 35 per cent of the entire population.


All of the 20 Latin American countries are republics, somewhat similar to our own. All fought for their independence from European powers, and all are zealous to maintain their national status and liberty of independent action. Collectively, they are all out for the solidarity of this Hemisphere, and, with a single exception, regard us as allies and friends, but they are all anxious to see this friendship confirmed in our future attitude towards them after the war, when the threat of invasion by the Axis powers is no longer to be feared.

Sometimes we have had in some of the Latin American countries what we are pleased to term benevolent dictators, due, perhaps, to the temporary need of a strong central Government for the best interests of the nation as a whole.

Of all the countries to the South, I would consider Mexico, Chile, Colombia, Costa Rica and Uruguay as the most democratic.


With a diversity of climate from the tropics to perpetual snow, Latin America produces every type of vegetation from coffee, cocoa, rubber and tropical fruits, to com, beans and wheat in the temperate zones. Brazil, as we know, exports 57 per cent of the world's coffee, Cuba 50 per cent of the world's sugar, and the Argentine is the largest exporter of meats, corn and wheat in the entire world.

In addition, nearly all of these countries are rich in oil, minerals and precious stones. Mexico is the largest producer of silver, Chile of copper, Bolivia of tin, and Brazil of manganese, while Venezuela, Mexico and Colombia are the largest producers of oil.

In every Latin American country, with the exception of Mexico and Ecuador, a maximum of three products usually represents more than 60 per cent of total exports and, in the case of twelve countries, a single product represents more than 50 per cent.


Going back to 1913 we find that Great Britain exported to Latin America 24.4 per cent of her purchases, Germany 16.6 per cent, and France 8.3 per cent, and while our sales, amounting to 25 per cent, were the largest of any individual country, these three European nations were controlling 49.3 per cent of total sales, which was almost double our proportion. By 1938 Great Britain's Latin American exports had dropped to 12.2 per cent, Germany had increased to 17.1 per cent, and France had dropped to 3.5 per cent, while our sales had gone up to 35.8 per cent, or 3 per cent greater than Great Britain, France and Germany combined. In dollars, in 1938, our sales amounted to $534,300,000, and our purchases $579,700,000. During 1940 we sold $790,000,000 and purchased $610,000,000. In 1942 we purchased more than we sold and today our imports from the various Latin American countries amount to over $1,000,000,000 a year.

Future Trade Prospects:

Latin America offers today the most promising field for immediate development in the entire world.

What we must keep in mind above everything else is that we must find ways and means to buy from the Latin American countries, if we want them to purchase from us.

To encourage reciprocal Latin American trade, and to protect ourselves against any future shortage of strategic materials, we should do everything in our power not only to continue our present purchases of all types of materials, but to assist in the cultivation of those tropical products which are mostly needed by us. In the past, we have committed the error of purchasing 94 per cent of our essential tropical crops from the Far East, and bringing them a distance of 12,000 to 18,000 miles, although many of these products originally came from the Americas and all can be produced on this Hemisphere, many within 500 to 1,000 miles of our Southern border.

Many of our important companies are so thoroughly convinced of the opportunity which presents itself that active planting of these tropical crops is now being made in Mexico, Central America, Haiti, Brazil, Ecuador and Peru, with the expectancy of large future sales to the United States and, in any event, to fill the local needs of commerce and industry of each producing country and its inter-American trade. Some of the products now being grown to advantage are rubber, abaca, hemp, roselle, an important jute substitute, rotenone, an insecticide of which we consume annually six and one half million pounds, cinchona from which we obtain quinine, camphor, and tea.

By buying from Latin America and making shipments of goods, as required by the conditions and trade of each country, we can easily keep our exports in excess of $1,000,000,000 a year.

Our natural zone of influence extends to the Northern part of South America, including Colombia, Venezuela, and the West Coast, for Brazil, Uruguay and the Argentine are closer to Europe than to us. Brazil, however, ties in very closely due to our need of her products, but Uruguay and, the Argentine will naturally sell to Europe as their agricultural products are competitive to our own.

The Latin American countries prefer American goods on the basis of quality, but have been tempted to purchase from Europe on account of more receptive cooperation and understanding, and longer credit facilities. How well we hold our Latin American business against post-war competition will depend largely upon the facilities of credit we are willing to grant and whether we are also willing to meet keen competition in shipping, packing, and complying with the customs and needs of each country instead of a take-it-or-leave-it attitude, which, at times, has been much resented by our Latin American friends.

In any event, our relations in trade will be greatly facilitated in the future through better and faster transportation, communications and improved banking facilities. In the final analysis we will find that sales markets are built and maintained principally by the worth of the product, the Sales Agent, and the amount of advertising dollars one spends.


What we will now find in Latin America is a strong trend towards industrialization. All of the larger countries are anxious to establish their own industries and look forward not only to supplying their own needs, but to selling their manufactured products in inter-American trade as j well. Mexico and Brazil present a golden opportunity with an abundance of raw products and cheap labor and little, if any, competition, for, until now, our Southern neighbors have specialized chiefly on the products of agriculture, mining and oil.

New factories and mills are constantly being built, and within the last few months, a number of our idle plants have been shipped and transplanted to Latin America, where the wheels of industry will turn for new fields and higher profits.

American capital is needed and welcome in all of the Americas and will pay splendid dividends, provided it is invested in conjunction with local capital and not as a wholly foreign owned enterprise. Today many of the principal industries of these countries pay dividends of 10 to 15 per cent, and, quite often, even more.

In making these investments, we render a service to our own country as well, for, with the rise of manufacturing industries in Latin America, through our investments, the closer our friendship becomes, and the higher their per capita wealth, the greater their purchasing power and, consequently, the greater facility for purchasing American goods.

Trade records show that our export sales thrive best in an expanding industrial market and that the most highly industrialized countries have always been the best markets for our manufactured goods.

Credit Standing and Dollar Exchange:

Those of us who have been doing business with Latin America for many years past, are fully convinced of the honesty and integrity of the well established firms. We know that they are proud of their position and reputation, which once lost, below the border, can never be regained. We know too that they are capable businessmen, thoroughly familiar with the customs, psychology and business trends of their respective countries. That our Latin American trade has been profitable to us has been substantiated by the Foreign Credit Interchange Bureau which rates commercial credit in all of the Latin American markets as "Good" and classifies all as "prompt" as regards collections. Dun & Bradstreet's Survey of Latin American transactions shows that during the past ten years, credit losses amounted to only 2/5 of 1 per cent, which compares most favorably to our own.

Another thing we must consider in our credit analysis is that all of these countries, through increased exports and reduced imports, due to the war, are building up large balances to their credit in the United States, which, at present, amount to over $1,000,000,000 and which will steadily increase for the duration.

Such balances will place these countries in a better financial position than at any time in their previous history. Commitments on public and commercial debts are being greatly reduced and each of the Latin American nations should emerge from this war in a much stronger economic position. Most Latin American countries already have ample gold and foreign exchange with which to stabilize their currencies, which should be further augmented by a healthy tourist trade after the war is over, and transportation renewed.

Whether a World Bank is established or not, I feel that Latin American exchange will be tied closely to the dollar and that New York will become the financial clearing house of all of the Americas, with the possible exception of the Argentine and Uruguay, which will undoubtedly operate closely with London, as their products will find a readier market in Europe.

Governmental Aid:

During recent years our Government has done everything possible to increase American trade with the Latin American countries. This has been done by means of reciprocal trade agreements, lend lease by our Federal Government, and sundry measures under OUT Good Neighbor Policy carried out by the Office of the Coordinator of In-

ter-American Affairs. We have done much to aid our Southern neighbors and to secure their friendship. Government financing through the Export-Import Bank has also been helpful in the development of these countries and establishing good will towards us. This has been chiefly of a self-liquidating character and profitable to the Export-Import Bank, for local governments have participated in sharing the burden of these loans. On June 30, 1943, the outstanding Latin-American loans of the Export-Import Bank amounted to $405,300,000. Actual drawings of the American Republics against their available credit facilities with the Bank had aggregated $173,400,000 between 1934 and 1943 but repayments to June 30 reduced the net indebtedness to one half that sum; leaving $317,800,000 at their disposal due undoubtedly to their improved dollar exchange position and wartime difficulties for deliveries of materials.

Post War Planning:

Nothing is more difficult than post war planning. All of us have ideas, but none of us knows definitely just what the situation will be and how we should meet it. What we all know is that first we must obtain the unconditional surrender of the Axis Powers to be followed by the military policing of the enemy countries and immediately afterwards relief, rehabilitation and economic stability. This applies principally to Europe and the Far East. Latin American post-war planning is much easier; in fact, it presents primarily the problem of materials. All of these countries will be most desirous to buy the goods they need and, at least, for the first phase of the post-war period they can only be obtained horn us. We, for our part, will have a larger amount of goods to sell after the war, for with our industries intact, we should have the greatest abundance of merchandise ever known in our history and we must keep this huge new production, in full operation, for our own best interests. With replacements in our own country and the demands from our Allies in former Axis occupied countries, we may be severely taxed to furnish all the goods which Latin America may need. We must endeavor to keep this business for the future and we should grant to them our best credit terms commensurate with sound business judgment.

Today many of our exporters are demanding cash on presentation of a certificate of manufacture or payment against shipping documents. Tomorrow, under the stress, of competition, we must be prepared to accept letters of credit at 90 days or longer, drawings directly against clients at 30, 60, or 90 days sight up to six months or more, and even on open account.

The Export and Import Bank has been of much help to the American exporter with regard to long term credits, purchasing outright a percentage of foreign bills without recourse. In addition, it has been of great assistance in making large dollar exchange loans to foreign central banks, as well as special export letters of credit.

All of us realize, I am sure, how important it is to our exporters for the foreign importer to be able to obtain U. S. dollars with which to cover his purchases from our country. In many instances, in the past, where payments at times may have been slow, it has been due almost entirely to the difficulty of obtaining readily U. S. dollar exchange.

In our post-war planning, let us remember that this Hemisphere is the richest section in all the world and has vast future possibilities; that never in our history have our relations with Latin America been more cordial than at present, never have we been working more wholeheartedly together and that we should do our utmost to keep these satisfactory relations which are so conducive towards peace, understanding and mutual prosperity.

We should always keep before us that nothing is more conducive to international friendship than satisfactory trade relations; that all the countries of this Hemisphere have a common destiny; and that our strength lies in our ability to cooperate and work together and in the sacrifices we are willing to make for our mutual welfare.