Raul Prebisch 1901-1986 - Biografia e Tempos de um Economista

Edgar J Dosman The Life and Times of Raúl Prebisch 19011986 TH E L I F E A N D T I M E S O F R AÚ L P R E B I S C H This page intentionally left blank The Life and Times of Raúl Prebisch 19011986 E D G A R J D O S M A N McGillQueens University Press Montreal Kingston London Ithaca McGillQueens University Press 2008 isbn 9780773534124 Legal deposit fourth quarter 2008 Bibliothèque nationale du Québec Printed in Canada on acidfree paper that is 100 ancient forest free 100 postconsumer recycled processed chlorine free This book has been published with the help of a grant from the Canadian Federation for the Humanities and Social Sciences through the Aid to Scholarly Publications Programme using funds provided by the Social Sciences and Humanities Research Council of Canada McGillQueens University Press acknowledges the support of the Canada Council for the Arts for our publishing program We also acknowledge the financial support of the Government of Canada through the Book Publishing Industry Development Program bpidp for our publishing activities Library and Archives Canada Cataloguing in Publication Dosman Edgar J The life and times of Raúl Prebisch 19011986 Edgar J Dosman Includes bibliographical references and index isbn 9780773534124 1 Prebisch Raúl 2 Banco Central de la República Argentina Biography 3 United Nations Economic Commission for Latin America Biography 4 United Nations Conference on Trade and Development 5 Latin American Institute for Economic and Social Planning Biography 6 Latin America Economic conditions 20th century 7 Latin America Economic policy 8 Economists Argentina Biography 9 Executives Argentina Biography I Title hc1725p74d68 2008 338092 c20089035291 This book was typeset by Interscript in 1013 Baskerville To the memory of David H Pollock Friend Colleague Pioneer This page intentionally left blank Contents Acknowledgments ix Illustrations xii Introduction 3 Childhood The Dreams of Tucumán 7 University in Buenos Aires 21 Apprenticeship 43 Taste of Power 62 Central Banker 89 Opening to Washington 117 The Pearl Harbor Squeeze 144 The Wilderness 168 Discovery of Latin America 188 Solitary Scholar 211 Triumph in Havana 231 Claiming ecla 250 The Creation of Latin America 273 Paradise Lost 297 Return to Santiago 321 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 viii Contents The Kennedy Offensive 350 Global Gamble 378 The Gospel of Don Raúl 410 Trials in Washington 442 Prophet 473 House of the Spirits 498 Acronyms 503 Notes 507 Bibliography 555 Index 583 16 17 18 19 20 21 Acknowledgments If I can claim any success in achieving the goal of writing a comprehensive biography of Raúl Prebisch it is largely thanks to the gracious collabora tion of family friends and close associates of Prebisch beginning with David H Pollock codirector of the project until taken by illness and death and to whose memory this book is dedicated He was everything a col league can ever be generous and wise and a devoted friend of Prebischs since 1951 I miss him dearly and he is similarly mourned by scholars and practitioners in development Along with David Pollock the unstinting support and encouragement of Adelita Prebisch and Eliana Prebisch have been crucial in the research and drafting of the text and facilitating access to interviews with Prebisch family and others in Argentina and I wish to underline my gratitude for their kindness and patience with my repeated requests for information and additional interviews The Prebisch Papers in Santiago collected and maintained by Adelita Prebisch are an indis pensable scholarly source and the Prebisch Foundation formed under the leadership of Eliana Prebisch in Buenos Aires has published Prebischs Obras Collected Works 19191948 making most of his writings available from this early period Since the United Nations inexplicably destroyed the entire registry files and archive of ecla between its founding in 1948 through the Prebisch period to 1970 interviews were indispensable in assembling data and per spective and the generous assistance of scholars officials and associates consistently demonstrated their commitment to Raúl Prebisch and his memory A full list of interviews is provided in the bibliography and I wish to thank every colleague who helped in this way Certain individuals deserve a special note of appreciation Enrique Iglesias with his unparalleled knowledge of both Dr Prebisch and interAmerican relations Rangaswami Krishnamurti who also donated his personal papers x Acknowledgments to the project and senior Argentine scholar José Nun offered consistent encouragement over the long years of preparation Their vast experience and advice helped to bridge moments of uncertainty Among the others Ernesto Malaccorto Mario Bunge and Julio Gonzalez del Solar were particularly invaluable sources on Prebischs home and student years and the pre1943 period in Argentina For the ecla and ilpes years Sir Hans Singer Celso Furtado Victor Urquidi Enrique Iglesias Alex Ganz Alfonso Santa Cruz Anibal Pinto Adolfo Dorfman Osvaldo Sunkel Carlos Lleras Restrepo Fernando Henrique Cardoso Benjamin Hopenhayn Oscar Bardeci Ricardo Cibotti Norberto Gonzalez Robert Brown Gert Rosenthal William Lowenthal José Nun Sheila Pollock Margery Fones Lucy Jull and Bodil Royem were extraordi narily helpful Key Washington sources and officials from international financial institutions included Enrique Iglesias William D Rogers Edward M Bernstein Jacques J Polak Lincoln Gordon Sidney Weintraub Viron PVaky Nancy Birdsall and Jerome Levinson Key UN and unctad advice was generously provided by Philippe de Seynes R Krishnamurti Diego Cordovez Yves Bertholet Zamit Cutajar and Jorge Viteri de la Huerta Raúl Alfonsin Bernardo Grinspun Juan Sourrouille Enrique Garcia Vasquez Arturo OConnell Aldo Ferrer and José Luis Machinea were par ticularly helpful on the subject of Prebischs return to Argentina The Life and Times of Raúl Prebisch examines the interplay between the key themes of Prebischs career development ideas institutions the UN Latin American integration and international governance For these con texts the book builds on rich existing literatures particularly on Argentine history and Latin American political economy and multilateralism and therefore owes a huge debt to Prebisch scholars in these fields While the bibliography and notes reference these sources a number of Prebisch scholars were consulted individually in the course of the research Without repeating earlier acknowledgements they include Joseph Love Adolfo Guerrieri Manuel Fernando Lopez Carlos Mallorquín Gregorio Weinberg John Toye Richard Toye Ronald Sprout and Eric Helleiner I wish also to acknowledge the extensive correspondence with authors in Latin America Europe and North America during the project While acknowledging my personal responsibility for all errors or omis sions I wish to recognize the assistance of the archivists who facilitated access to Argentine US UN and other regional and global sources particularly Bárbara Duranti at the University Di Tella in Buenos Aires José Besa Garcia and Carmen Vera Arndt in eclac Santiago Marilla B Guptil chief of processing at the UN in New York Alison Hicks idb Felipe Herrera Library Stella Villagran at the oas Charles Ziegler at the World Acknowledgments xi Bank Katherine Nicastro and Sally M Marks at the US State Department Peter B Field US Department of Commerce and David C Mulford Department of the Treasury At York University the library staff headed by Brent Roe as well as cerlac Centre for Research on Latin America and the Caribbean and ciss Centre for International and Security Studies actively supported the project with special mention to Professors Louis Lefeber David Dewitt Aleks Nicolic and Heather Chestnutt Not least I wish to underline the financial support provided by the Canadian Social Science and Humanities Research Council I am particularly grateful to Robert Fothergill for editing the entire man uscript and to R Krishnamurti Manuel Uribe Carlos Mallorquín and Eric Helleiner for their detailed comments and suggestions as the text pro gressed McGillQueens University Press particularly Jonathan Crago John Zucchi Joan McGilvray and Claude Lalumière has been unfailingly atten tive and supportive To lifepartner Maureen Whitehead there is an extra appreciation not just for tolerating so much time and resources diverted or even the end less patience and encouragement to keep so complex a project alive but for the quality of advice research and editing to make the The Life and Times of Raúl Prebisch a worthwhile biography To Maureen and the whole family an even greater thanks than last time around Raúl Prebisch at eighteen months The Prebisch family Raúl on bicycle Raúl with Uncle Segundo Linares Jujuy 1911 Military service 192425 Prebisch when he was undersecretary of finance 1930 Raúl and Adelita in Geneva 1932 Prebisch and the directorate of the Argentine Central Bank 1935 Raúl at the weekend house outside Buenos Aires Adelita at the weekend house outside Buenos Aires Prebisch meeting Chris Ravndal next to Prebisch and the US delegation 6 December 1941 Prebisch in Havana 1949 From left Gunnar Myrdal ece executive secretary Raúl Prebisch Dag Hammarskjöld and PK Lokanathan ecafe executive secretary in Bangkok 1956 Raúl and Adelita returning to Buenos Aires October 1955 John F Kennedy launches the Alliance for Progress 1961 Presbisch is third from the right David Pollock Sidney Dell and Raúl Prebisch Forty Days around the World 1963 Prebisch launching unctad 1964 Prebisch at unctad headquarters in Geneva 1965 R Krishnamurti chef de cabinet with Raúl Prebisch Prebisch at unctad II 1968 the final appeal Prebisch in New Delhi with Indira Gandhi 1968 Prebisch with Soviet Premier Alexei Kosygin 1968 Raúls last team the cepal Review 1976 Raúl Prebisch and Enrique Iglesias centre with ecla executive secretaries 194885 from left Carlos Quintana Gustavo MartinezCabañas Enrique Iglesias Raúl Prebisch and José Antonio Mayobre Prebisch and President Raúl Alfonsin Buenos Aires 1984 Prebisch as prophet TH E L I F E A N D T I M E S O F R AÚ L P R E B I S C H This page intentionally left blank Introduction I met Raúl Prebisch in 1978 and was determined to explore this most unusual figure among twentieth century personalities His working life as economist spanned most of the twentieth century and the assessments of the man have tended to extremes supporters have revered him and critics vilified him in equal measure In part this book is a response to the strength of his personality in part also to the challenges he faced in the political tur moil of his home country Argentina Cold War Latin America and North South relations The Life and Times of Raúl Prebisch which traces Prebischs development from childhood and student days through his work as an econ omist in Argentina to his wellknown regional leadership in the Economic Commission for Latin America ecla and his international role as head of the United Nations Conference on Trade and Development unctad attempts to present a balanced perspective on Prebischs contribution to development economics and international institutions The main challenge it became clear was Prebisch himself or rather in tegrating the personal and professional dimensions of this complex man Prebisch was reticent about discussing his personal life and it had been largely overlooked in the large but specialized literature on specific issues such as international trade or his UN career Curiously large segments of his life such as the World War II period or the transition years between Argentina and the UN 194349 had not yet been systematically re searched Prebisch in short remained an enigma only a biographical ap proach could capture the essential unity of his life and work The task however proved enormous beginning with the sheer scope of the project Prebisch began his studies in Buenos Aires in 1918 during the final phase of the First World War and when Argentina was in the First World his thinking and writing mirror the entire course of Latin American economic thought in the twentieth century Entering the United Nations 4 The Life and Times of Raúl Prebisch in 1949 he was one of its leading figures for twentyfive years and he re mained intellectually active until his death in 1986 The many interrelated facets and personal challenges of this remarkable life had somehow to be uncovered and explained while avoiding a minihistory of the times in which he lived The breadth and scope of my research allowed me to pene trate Prebischs thoughts and feelings without sacrificing scholarly accu racy In the end his life and work came together and if the search for the essential Raúl Prebisch was more complex and much longer than antici pated it was rewarded by a deeper personal understanding of a leader of rare accomplishment and enduring legacy Raúl Prebischs funeral on 20 April 1986 was a busy affair in Santiago Chile There were the crowds tributes and dedications befitting an econ omist whose ideas had changed the twentieth century A cardinal of the Church presided in Santiagos cathedral presidents and dignitaries mourned with his family Speaker after speaker intoned his enduring leg acy as Latin Americas Keynes as the father of development whose cha risma warmth and generosity changed the lives of those who knew him as one of the few Latin Americans whose energy and leadership had made him a global personality But most of the mourners were middleaged or older colleagues who had known him in his prime people retired from the United Nations who remembered Prebischs heroic stature as a man of power and the embat tled champion of economic justice and of the spread of material and social progress to all of humankind Where were the young For them Prebischs views seemed hopelessly old fashioned compared with the new economics and better consigned to the historical dustbin Indeed his ideas about development and socalled North South relations were massively out of favour in Ronald Reagans Washing ton and the West in general including his own Latin America The essence of Prebischs message had been the danger to all countries of polarization between rich and poor and therefore the need for both sides to cooperate in their mutual longterm interest By 1986 the mainstream had moved on to Margaret Thatcher and the Reagan Revolution leaving Prebisch and his dwindling band of supporters and followers from the old days in its wake as they bade farewell to their hero in his beautiful cliffside garden overlooking the Maipo River against the snowcovered Andes So complete was his eclipse that Prebisch has been neglected by biogra phers the only great economist of the twentieth century to endure this I Introduction 5 doubtful distinction By the end of the century however after twenty years of being dismissed as passé or even dangerously misguided the originality of his call to civilize globalization was rediscovered by this time he was long since dead Fashions were now reversed even the famous twins of lib eral capitalism the World Bank and imf paid Prebisch the compliment of recognizing his work The Prebisch legacy however was unusually opaque To many observers he remained an enigma a puzzling figure with a fractured identity Born in 1901 his life had spanned nearly the entire twentieth century when he died in 1986 the Cold War was drawing to a close His life therefore re flected the development of modern Latin America its successes and fail ures few careers reflected the contradictions and turmoil of this brutal century with such intensity Raúl Prebisch was an outsider born the son of a German immigrant fa ther in the traditional Argentine interior arriving in the capital in 1918 as the First World War entered its climactic last phase Educated at the Uni versity of Buenos Aires he rose rapidly to become the countrys most pow erful economic manager but the corrupt political regime that he served was overthrown by a military coup in 1943 and he himself was dismissed shortly thereafter for his proAllied views and defense of the autonomy of the Central Bank After six years of search and rejection Prebisch finally joined the UN system in 1949 beginning with the Economic Commission for Latin America ecla and as founding secretarygeneral of the United Nations Conference on Trade and Development unctad a leading ad vocate for NorthSouth dialogue and a powerful moral and intellectual force for international justice Thus unlike most economic thinkers he was much more than an academic Rather he was a person of diverse tal ents who not only produced new theories but also created institutions to give them form from which emerged new policies and practices Through out his life Prebisch was driven by a search for historical moments in which the timing of a new concept could transform an organization into a movement Theory machinery and policy this powerful trinity linking an idea to a historical mechanism comprised the core of the Prebisch vision Although a Latin American culturally embedded in his region Prebischs message was universal Few historical figures have been as vilified and misunderstood or as un critically acclaimed Observers and critics saw two different lives and per sonalities The cia kept him under surveillance during the 1950s as a dangerous radical but he was always firmly anticommunist and had worked closely with the US Embassy and US Federal Reserve a decade earlier In Argentina he was viewed overwhelmingly as a symbol of the old 6 The Life and Times of Raúl Prebisch oligarchy but he disparaged the military and was never accepted by the elite He loved Buenos Aires above all cities in the world and when he re turned in 1983 after democracy was restored there were no monuments to one of its most famous citizens Prebisch quite simply was hard to place Even in his last years he radi ated energy and charisma he was amusing articulate and charming Con versations with him were like living history he grew older but he never seemed to age But while easy to meet he was difficult to know below his evident public accessibility Prebisch guarded his persona with an impene trable inner reserve He delighted in ideas and career anecdotes but he never discussed the turbulent and conflicted personal life that so intrigued friends and foes The inner struggles that underlay his thought and work remained hidden by reticence and vulnerability It has therefore seemed valuable to understand the Raúl Prebisch of fact rather than fiction and to weigh the competing claims of supporters and critics What really was his legacy When his life and work are inte grated some of the mystery is dispelled despite the apparent contradic tions Prebischs long public career demonstrates a remarkable unity of purpose and approach and a surprising coherence in his approach to innovation From the young administrator who served the Argentine state to the economist who challenged the international economic system he projected an ethical imperative that demanded commitment and left no justification for inaction beginning with himself Moulded by family and upbringing and repelled by the injustices he witnessed strong in passion as well as intellect he was an idealist among cynics and ultimately a lonely and misunderstood figure preoccupied that his work had failed in a country of broken promises and a continent of lost dreams 1 Childhood The Dreams of Tucumán Buenos Aires was something fantastic Raúl Prebisch marvelled after his first stroll through the capital1 He was seventeen and had lived a sheltered life in the distant interior of Argentina without a sip of wine or a cigarette or holidays on the Atlantic coast The train pulled into the station at noon on his birthday 17 April 1918 surely an auspicious beginning for his new life as a university student in the national capital Having only imagined the great city from boyhood in the faroff Andean mountains he hoped the reality would equal these dreams From the station Raúl marvelled at the sights of Buenos Aires gawking at streetcorners like the provincial he was his boyhood expectations hugely exceeded2 He saw for the first time the Plaza de Mayo the central focus of Buenos Aires since 1580 an oblong square anchored by the ele gant Casa Rosada Government House which faced the National Con gress at the end of the Avenida de Mayo where it met the Boulevard 9 de Julio This was the widest street in the world bold and grand but no more so than the overall architecture of a capital into which most of the national wealth of Argentina had poured since independence in 1816 Buenos Aires was comparable only with New York in vitality and moder nity in the New World a thriving cosmopolitan centre unique in Latin America Its population had grown from 663854 in 1895 to more than two million by Raúls arrival a hundred ships were in the port each day making it the busiest in the southern hemisphere A new subway had just been completed to complement the exclusive pedestrian sectors for shop ping and restaurants urban services such as mail and telephones were reli able and efficient the city parks were proud urban symbols and the citys cultural life had blossomed with the building of theatres and palaces by French architects The premiere of Il Trovatore with Enrico Caruso at the El Cine Teatro in 1872 had set off a competition for luxurious settings that 8 The Life and Times of Raúl Prebisch culminated in the opening of the 3500seat Colon Opera House in 1908 with Verdis Aida Henceforth Buenos Aires was part of the Milan London and Berlin ballet and music tour during the summer months The mansions built along Avenida Alvear celebrated the unprecedented new wealth in the country and the Jockey Club in Buenos Aires surpassed the opulence of New York clubs for high society Nightlife of all kinds thrived and the tango swept the city across its districts from gritty Mataderos or New Chicago from the old slaughterhouses on which it was built to old Palermo with its Plaza Italia and monument to Garibaldi Anything and ev erything could be experienced in this incredible city and for Raúl every building or street corner had a special quality or historical meaning Prebischs passionate love affair with Buenos Aires began that autumn in 1918 It captured his ambitions he was determined to succeed and shape the future of a New World capital that would be the leader of the South American continent As a young man Raúl Prebisch stood on the thresh old of a new life but the special features of his personality had been formed during his childhood and school years in the remote provincial capital of Tucumán in Argentinas northwest Andean region Raúl Federico Prebisch Linares was born on 17 April 1901 in Tucumán to Albin Prebisch and Rosa Linares Uriburu Raúls mother Rosa was a product of the old Spanish colonial order in aristocratic Salta in the Andean Northwest of Argentina The Linares family line could be traced directly back to the conqueror Francisco Pizarro and Rosas forebears in cluded senators bishops and generals The Uriburus a tough ambitious Basque family arrived later in the 1750s from Guernica in Spain Her greatgrandfather Joseph de Uriburu presided over the family during the wars of independence and the Uriburu clan remained one of the most powerful families of the oligarchy in the new Republic of Argentina during the next century Rosas grandfather Pedro one of Josephs nine children had married Cayetana Arias Cornejo from another traditional family in Salta no house was grander than their mansion in the centre of the city Rosas mother Luisa was the youngest of their nine children and grew up while Pedro was active in politics eventually presiding over the National Senate in Buenos Aires in the early 1860s Thereafter his economic for tunes changed for the worse and he lost the famous Uriburu House to wealthier relatives with a sounder economic base3 Luisa Uriburu appeared to have escaped financial turmoil by marrying Segundo Linares y Sansetena a member of a notable family in Salta whose brother was the local bishop and whose uncle was rich enough to own a private railway car Indeed his early career as a capable minister in the provincial government and then as Senator of the Republic gave every Childhood 9 indication of continuing success But after a promising start his fortunes crumbled After falling out with the political elite in the 1870s he retired to the neighbouring capital of Jujuy where he taught Latin at the local Colegio Nacional and supplemented his income by consulting on legal matters a small practice with few clients since he was not a trained lawyer The family was short of funds but they lived in faded elegance their house with multiple courtyards and one of the best libraries in Salta and Jujuy covered an entire city block its elegant stainedglass windows over looked the main square and framed the snowcapped Andes But Segundo Linaress money was gone and this lifestyle was impossible to maintain Clearly outside the rich and powerful branches of the Uriburu family he and his wife raised their children in genteel poverty in their beloved but crumbling colonial mansion with its leaking roofs and aggressive termites Rosa was raised with aristocratic sensibility tempered with financial desper ation Her sister had married back into money in a union with Julio Cornejo a Conservative Party deputy in the National Congress but Rosa was out of school at sixteen and her prospects were decidedly uncertain when she met her future husband and Raúls father Albin Prebisch Prebisch was a firstgeneration German immigrant who had recently found his way to Argentina from a village near Dresden in Saxony where his family had a prosperous farm His motivation for leaving Germany was not so much financial as to escape from the tedium of farming and rural life Restless anxious to get out of Europe and see the world he began his global wanderings in England where he made ends meet by teaching German and then took a ship to India Unhappy in the noise and confu sion there he set out again searching for a frontier country where he could begin a new life when his voyage around the world landed him in Buenos Aires Prebisch knew at once that he had found his new homeland Here lay a country of the future a million miles square so huge that Germany would fit inside it many times and so geographically diverse that it included the Andean region the rainforests of the northern lowlands and the endless grasslands of the central pampas extending all the way to Patagonia Here at last he felt welcome In this New World dream country seven thousand miles distant from New York or the English Channel he could build the life he pleased Plunging into his new world and picking up Spanish as he went Albin drifted from job to job beginning in Buenos Aires but moving out of the capital to survey prospects in the sheepraising south before heading to Mendoza the central winegrowing province against the Chilean border The vineyards of Mendoza were as unappealing as the sheep pastures he had just left in the south he had finished with farming when he left 10 The Life and Times of Raúl Prebisch Germany and needed something else to satisfy his yearning for adventure Albin therefore left for the distant Andean provinces and found a job in Jujuy with Mensajerias an overland transport company with mules and horses shipping mail and coach passengers between northern Argentina and Bolivia It was hard work setting out from the compact colonial capital though indigenous areas and isolated mountain passes that were the only route between the two countries Albin met Rosa Linares Uriburu in 1887 when she was sixteen and he twentysix Although they were an unlikely couple given their social back grounds acquaintance quickly developed into a serious courtship Her family disapproved Segundo Linares was worried that Prebisch lacked both family and a stable position and he fretted over losing his young daughter to a complete stranger who was a lapsed Protestant into the bargain But Rosa had fallen in love and Albin pressed If this insistent for eigner attracted her affection she represented for him a coveted link with the romantic colonial Argentina of his imagination Segundos opposition gradually yielded to necessity his own financial situation was sufficiently precarious to prevent a veto and Albin finally overcame parental hostility to his marriage proposal by promising that he and Rosa would have their children baptized and raised as Catholics If Albin Prebisch thought that marriage into a famous family would yield financial prospects and social recognition he was to be seriously disap pointed At first the couple remained in Jujuy but life was not easy their family was enlarged with the birth of their first child Amalia and the stag nant economy made work hard to find Finally one of Rosas wealthy uncles in Buenos Aires Francisco Uriburu arranged a job for Albin as an accountant in the local branch of the Bank of London and they left for the capital with two children a second daughter Maria Luisa having recently expanded the household In Buenos Aires the young couple were treated like secondclass relatives The Francisco Uriburus were scions of society and their sumptuous mansion at Lavalle 371 one of the most extrava gantly appointed in Buenos Aires was a hub of high society Albin and Rosa were not welcome It was not that all immigrants were excluded from the Uriburu house and the oligarchy it represented the Bunges Tornquists Shaws and Bembergs were welcomed and were also guests at their family ranch north of Buenos Aires Villa Elisa with its 5000 hectares and house built with materials imported from Europe to which the symphony orchestra from the capital was invited to perform on special occasions What these accepted immigrant families had in common were fortunes se rious wealth from anywhere could enter the Argentine upper class Albin was a mere clerk and the Uriburus left no doubt that they saw him as not Childhood 11 fit to cross their threshold in town or country Unable to tolerate the snub but still unwilling to break free from the family mystique he left the capital to work on Francisco Uriburus vineyards at Caucete in San Juan province located to the north of Mendoza along the Chilean border However he found supervising 350 abject peasants who toiled for an absentee landlord in Buenos Aires even more unattractive than clerking in a major bank He had not come all the way from a farm outside Dresden for this Albin Prebisch realized that he would have to make his own way and he and Rosa with three children after the birth of their first son Ernesto re turned to settle permanently in San Miguel de Tucumán The new location was a happy choice Sensing an opportunity Prebisch decided to go into business for himself rather than work for others He used his meagre sav ings supplemented with borrowed money to buy a small and struggling printing shop La Velocidad To the surprise of his relatives he revealed a flair for entrepreneurship and rapidly built it into one of the largest printing establishments in northwestern Argentina Capitalizing on an ex panding regional market he then diversified his operations setting up a commercial sawmill and founding a major bookstore in Tucumán Within twenty years of his arrival in Argentina with empty pockets he had emerged as a respected businessman in the city with sufficient free time to teach English at the local Colegio Nacional be a director of the Banco Comercial de Tucumán and serve as the Dutch Honorary Consul for Northwestern Argentina Albin Prebisch had correctly anticipated Tucumáns economic potential at the turn of the century Although it was the smallest province in Argentina comprising only 08 percent of the national territory it was an agricultural paradise nationally it was known as the Garden of the Republic or more poetically Americas Eden When the enterprising Jesuits arrived they discovered that sugar cane could be grown profitably in these soils and sheltered valleys and had created a major sugar industry by the time of their expulsion from Spanish America in 1767 Fifty years later in 1821 another Catholic dignitary Bishop José Eduardo Eusebio Colombres re started sugar cane production and turned it into the backbone of the local economy but it took the arrival of the railway from Buenos Aires in 1876 to open the national market4 Sugar production exploded from 5000 to 135000 acres and priests gave way to oligarchs Tariffs kept out cheaper Cuban and Brazilian sugar and the region experienced a boom that created fortunes for its sugar barons When Albin Prebisch entered business in 1893 the national economy was in deep recession following the financial collapse of 1890 and it was far from clear when or whether it would recover But he was correct in 12 The Life and Times of Raúl Prebisch predicting an early recovery although no one could have anticipated the pace of that growth After 1896 the Argentine economy took off and by 1914 it had become the worlds leading exporter of meat and grain To anchor its export trade economy the railway network expanded from 2516 km in 1880 to 16563 in 1890 and 33510 in 1914 By 1914 Argentina had entered the group of ten top trading nations with a per cap ita income double that of Italy and a third more than France Enriched by a flood of 33 million immigrants from Europe between 1857 and 1914 the country was bursting with entrepreneurship and energy Over three quarters of industrial and commercial establishments were owned by foreignborn citizens The most advanced public school system in Latin America had produced a large middle class with expectations of social mo bility and by 1914 Argentina had become the second wealthiest country in the world after the United States Tucumán shared in the economic boom with its expanding sugar refin ing industry and the city recast itself as the pearl of the north A tramway a telephone system and streetlights were built as well as a new provincial legislature a new University and National Secondary School the Odeon Theatre and the Fine Arts Museum Grand banks and government build ings competed for attention in a city evidently on the move and the rebuilding of the Belgrano San Martin and Alberdi plazas and the comple tion of the stunning 9 de Julio Park by the French landscape architect Carlos Thay made Tucumán a symbol of optimism in the future of Argentina By 1914 it had become a major centre servicing the entire Argentine Andean region growing to 91000 people by 1914 unlike its sister cities Salta and Jujuy which stagnated at twentyeight thousand and eight thousand respec tively and were envious of Tucumáns growth and vitality They were depressed towns looking to the past not so Tucumán where there were opportunities for the quick and willing While Albin and Rosa Prebisch were not wealthy his income permitted a comfortable middleclass life for the family with a large house in the centre of the city enclosing courtyards lush with jasmine and gardenia sheltering flocks of tiny hummingbirds much loved by Rosa The rest of the children were born and raised here Three sons Ernesto Julio and Alberto followed the first two daughters Raúl was the fourth and last boy Another two daughters completed their family Later Julio Gonzalez del Solar Rosas orphaned nephew was also welcomed into the household It was an open and friendly home where hospitality was generous but there were no luxuries and Albin and Rosa did not own their house Rosa made clothes for the children on her sewing machine and only occasionally brought out the family Dresden china In contrast Albin was a careful Childhood 13 dresser demanding tailormade suits and English cashmere sweaters Rosa maintained close relations with her own family in Jujuy but the Prebischs lived outside the upperclass Uriburu circle and the local society of Tucumán and Salta As in Buenos Aires they were not invited to the great houses Nevertheless a middleclass income meant that domestic servants could be hired for manual work along with a fulltime nanny An underlying social ambiguity surrounded the Prebisch family in Tucumán given its evidently upperclass heritage but also the immigrant origins on Albins side While having a foreignborn father would not have been exceptional in Buenos Aires Rosas decision to marry an immigrant and raise her children in Tucumán gave them an uncertain social status Buenos Aires was multiethnic like New York where half the population were firstgeneration immigrants and where these immigrants controlled a good portion of the citys wealth and financial power The provincial city of Tucumán was a very different case society remained stratified and tradi tional and less than 5 percent of its population were immigrants Raúls family could not be in the Argentine oligarchy because his mother had married a firstgeneration German immigrant nor was his family even remotely connected to the sugar barons in Tucumán Immigrants were visible in the professions and local business in Tucumán people knew their place and family mattered Albin was aware of this and insisted that his children identify with their mothers deep roots in Argentine history rather than the German heritage from which he had broken He always spoke in Spanish to his children and would not tolerate the use of German at home for fear it would undermine the childrens patriotism While they were expected to learn foreign languages particularly English and French given their commercial importance in Argentina he discour aged German at school and none of his children ever spoke the language or interested themselves in German culture or history Albins inculcation of national values proved effective despite his evidently central European surname it never occurred to Raúl that he was anything other than an un hyphenated Argentine and he was always offended by innuendos that he was a foreigner By the time of Raúls birth his father had distanced himself emotionally from the family The moment Albin stepped out of the family home he changed personality and the demanding dutiful parent who insisted on discipline and education was transformed into someone unrecognizably different First there was the Albin of the Tucumán German Club Here he would revert to German at the first opportunity eventually becoming the clubs president and even reviving contacts with his birthplace in Saxony Here he would smoke and drink no alcohol or tobacco was allowed at 14 The Life and Times of Raúl Prebisch home to corrupt the children or dull their appetite for success Neither Rosa nor the children ever entered this world although at the club Albin displayed their superior school report cards with parental pride Beyond the German Club Albin Prebisch created another entirely covert reality which reflected a bohemian streak a wildness and abandon Rosa could neither understand nor satisfy In fact the outwardly upright patri arch kept another household woman and children hidden on the other side of Tucumán It was as if Rosa and her eight children formed the official household but the marriage was not a success or it was not enough he also needed a different woman outside of society and convention Unable to contain this passion but also torn by guilt he managed to conceal this se cret life from Rosa and the entire family for twenty years in a busy shuttle between the two households which left him increasingly less available emo tionally for either certainly for Rosa and their children To Raúl his father seemed distant and cold but he craved his affection and admired his inde pendence trying to please him through academic excellence Rosa therefore became a prime influence over her flock of children guarding their development and their faith The household was devoutly Catholic and Raúl like his siblings proceeded through the steps of Holy Communion to Confirmation The LinaresUriburu tradition of conserva tism and formality was followed at home and the Prebisch children never used the familiar form of address with their parents Raúls dependence on his mother grew in the absence of his fathers affection and Rosa became the central influence in his childhood He in turn was his mothers favou rite among the children with his quick sense of humour and evident intelli gence Family photographs show him in repose at eighteen months on the abundant maternal lap confronting the camera with the amused slightly ironic aspect characteristic of Raúl the adult Even physically Raúl seemed drawn entirely from his mothers side of the marriage he shared her fea tures and the erect aristocratic Uriburu bearing She gave her son an oil painting of her grandfather Pedro Uriburu with its startling likeness in features eyes and bearing Rosa would sew special clothes for him to wear on National Day she was unconditionally loving and the wellspring of his intellectual selfconfidence Her humanism was the source of Raúls life long generosity and sensitivity to the underdog and human suffering and he reciprocated his mothers affection with an unqualified loyalty in a life long intimacy that extended to her death in 1943 In the absence of paternal support Raúls grandfather Segundo Linares played a fatherly role his importance magnified by the complete absence of inlaws or family connections of any kind with his German relatives The old crumbling mansion in Jujuy became Raúls favourite vacation destination Childhood 15 where his grandfather would entertain him with colourful stories of the co lonial days embellished with library readings and walks together in the mountains Segundo recognized Raúl as a future leader and encouraged his interest in Argentine history as they walked hand in hand through the nar row streets his long white beard blowing in the sharp Andean winds and the young boy became obsessed with his country invoking his four centu ries of Argentine blood and determined to shape its future5 Segundo Linares was a great storyteller and it was from him rather than from his parents that Raúl learned the compelling history of family region and country From his earliest years his grandfather instructed Raúl in the drama of the colonial past and the greatness of Argentina He wove stories of Pizarro and his band of Spanish invaders creating garrison towns like Jujuy to guard the hostile passes how to the immediate north of Tucumán lay its sister province of Salta shaped like a boomerang enclosing the even more remote Jujuy tucked in the farthest corner of the country against the Andean Cordillera and the borders of Chile and Bolivia and how Tucumán officially San Miguel de Tucumán y Nueva Tierra de Promisión was founded on 31 May 1565 by Diego de Villarroel and his troop of Spanish soldiers to defend their transportation routes from the Diaguita Indians only to be swept away by a flood and forced to higher ground at the foot of San Javier mountain Segundo described how Tucumán Salta and Jujuy prospered after their founding in the 1560s sharing in the wealth of empire because they occupied a strategic location in the Spanish empire Madrids core interest was extracting wealth from the mines of Potosí in Bolivia for its royal monopoly over gold and silver and maintaining Lima as its colonial capital and centre of operations therefore the role of these three provinces was to protect the long overland colonial route from Lima across the Andean Highlands and then southward into Argentina where it branched west at Cordoba over the Andes to the port city of Santiago Chile Raúls grandfather recounted how Spanish policy had deliberately isolated Buenos Aires from the interior for two centuries to maintain Spains control of precious metals because it had lost control of the South Atlantic after its naval defeat by England in 1588 this had resulted in the stagnation of Buenos Aires or the Puerto de Nuestra Senora de Santa Maria de Buenos Aires so that it could claim no more than ten thousand inhabitants in 1750 two centuries after being founded in 1536 and still exchanged animal hides as the local currency despite all the kings gold and silver from the Andean mines But Segundo continued as Spain grew weaker and the silver and gold mines failed the pull of Buenos Aires and the Atlantic grew stronger and forced King Charles III of Spain to reorder his colonial holdings by 16 The Life and Times of Raúl Prebisch creating a new viceroyship of the Plate River in 1776 with its capital in Buenos Aires which also included Tucumán Salta and Jujuy as well as Paraguay and Uruguay Segundo recounted tales from the wars of indepen dence and the exploits of the Uriburus in those wars how the creation of the new viceroyship of the River Plate was too late and became the final stage in the collapse of Spanish rule in the Americas as the US and French Revolutions shook the New World before Napoleon conquered Spain and Portugal to end the authority of the Spanish crown and unleash indepen dence movements from one end of Latin America to the other He de scribed how British forces attacked Buenos Aires twice during 180607 and how the patriots repelled them in handtohand fighting how the vice royship of the Plate River ceased to exist on 25 May 1810 and the patriots sent troops to free the rest of the viceroyship including Uruguay Bolivia and Paraguay from Spain but how after long and bloody wars including with Brazil which wanted to annex Uruguay these territories became independent countries and were lost to Argentina Raúls grandfather lovingly recalled the formal declaration of independence by a congress of Argentine statesmen and generals on 9 July 1816 which made Tucumán the cradle of the nation Segundo pointed out to Raúl that Tucumán had raised more than its share of national leaders boasting landmarks such as Independence House with its bronze busts of national heroes and Inde pendence Plaza lined with flowering orange trees Alas national independence spelled decline for the historic Andean re gion Buenos Aires now became the economic and political centre of the nation the shift of population and resources to the capital accelerated a parallel isolation and decline of the interior As Buenos Aires dominated Argentinas political life the picturesque colonial capitals of Salta and Jujuy watched their glory and leadership fade Segundo Linares loved the Andes but his years in Buenos Aires were equally unforgettable and he filled Raúls head with the beauty of the capital its gomero trees and flow ering jacarandas forming a sheet of purple colour over the city and its romantic streets Alvear for example which he compared with the Faubourg St Honoré in Paris or Ayacucho with its wroughtiron street lamps over the crowded cafés and sidewalks Young Raúl dreamt Argentine history with his grandfathers mysterious fall from power in the capital only heightening his fascination It moulded his sense of purpose in life his mother and her ancient family represented the glory of the past but also the promise of the future that he had a re sponsibility to honour He took his legacy seriously service to his country was expected and considered a bond with the many generations in the New World since 1565 Raúl was therefore devastated by Segundos death Childhood 17 in 1910 and became even more emotionally dependent on his mother The subsequent decay of the old mansion in Jujuy pained him as it tottered toward demolition and was finally pulled down with the complete loss of his grandfathers library Raúl Prebisch thus grew up between the old and the new Argentina His mother represented the old oligarchy with colonial roots while his father was entirely a selfmade person who owed nothing to connections Salta and Jujuy were declining Tucumán was a dynamic and growing city on the rise But the old oligarchy remained a formidable power in the new econ omy of Argentina and the Uriburu clan that would have nothing to do with the lowly Albin Prebisch family counted heavily in the region and Buenos Aires They seemed to be everywhere José Evaristo Uriburu had been vicepresident and president of the Republic in 188588 Francisco Uriburu was a central figure in the ruling circles of Buenos Aires a senator minister of finance in the Province of Buenos Aires and a leading banker in the national capital Luisa the older sister of Rosas mother had mar ried General Teodoro Garcia who had fought with Roca in the desert and been rewarded with a mansion in Belgrano General José Felix Uriburu had been director of the elite Superior War School since 1907 and was a powerful figure in the military establishment The provincial governments of Tucumán Salta and Jujuy were still run by the traditional oligarchy which included Uriburus at the top of the social and business hierarchy Like his father Raúl grew up with a middleclass disdain for the Argentine oligarchy loathing in particular the sugar barons in Tucumán whose la bour practices made it the most socially backward province of the country The exploitation of the sugar cane workers hung over the city like the smell of molasses from the twentysix sugar mills ringing the booming city a visceral reminder that left Raúl with a permanent revulsion against such injustice toward the weak Here also Tucumán was a bridge between the new and old Argentina While most sugar holdings were small a few magnates led by Robustiano Patron Costas owner of the largest sugar con glomerate in Argentina dominated the industry Also connected by marriage to the Uriburus Patron Costas symbolized for Raúl the failings of the Argentine oligarchy as well as its power to complement his wealth Patron Costas was also governor of Salta a stalwart of the most intransigent wing of the Conservative Party and he maintained close links with the Argentine military General José Felix Uriburu was his closest personal friend Between midMay and August each year Patron Costas and the other big owners hired thousands of migrant workers Bolivian Indians mestizo and black labourers who worked in conditions rivalling those of colonial times Tucumán thus became a backwater of social exclusion and 18 The Life and Times of Raúl Prebisch poverty having the highest illiteracy and infant mortality rates in the coun try The migrants shacks and makeshift shantytowns encircled the city Tucumán was too small to hide their misery and the discrimination they suffered Social violence against Indians was still widespread and broadly condoned In 1903 a police chief and fourteen soldiers north of Tucumán attacked and killed one hundred Indians in retaliation for the alleged rape of a white woman6 Men women and children were tied to horses in groups of ten and dragged by their feet into the river where their heads were cut off There were no arrests As a child Raúl played with Indian children during the harvest season when they filled the streets of Tucumán begging for food he refused to run inside and was scolded for associating with them7 His boyhood experi ence therefore was broader than that of children from most middleclass families in Argentina and it was formative in his ethical development mak ing him part of Argentinas generation of 1910 committed to balancing Argentinas economic success with a just society His dislike of the oligar chy and military were therefore not accidental or derived from theory and his pursuit of land reform and a modern state were similarly grounded in his experience growing up in Tucumán But Raúl also grew up knowing how close he was to the powerful that they were blood relatives of his mother and therefore his own family as well Altogether his mothers leg acy instilled an intimation of destiny a calling to serve his country and a responsibility for its future greatness but also a lovehate relationship with the oligarchy represented by his own family Education played a central role in the Prebisch household in Tucumán it was the key to success and both parents demanded the highest grades in school In turn they were blessed with unusually gifted children and the commitment to learning went beyond the mechanical issue of grades The house was full of books wellthumbed by his older brothers or sisters be fore Raúl got to them and Rosa read all her children to sleep For primary education Raúl was sent to the College of the Sacred Heart run by French Jesuits who taught a strict classical curriculum with tough exams and de manding homework to a largely middleclass group of children the oligar chy sent its sons and daughters to the Mitre Roca and Rivadavia private schools Raúl was a brilliant and headstrong pupil across the subjects taught in school with his grandfathers love of books and with an intellec tual selfconfidence that astonished his teachers The Prebisch family be came mildly famous for the scholarly ability of their many children but Raúl was the brightest of them all and regularly earned top prizes for his grades The new Colegio Nacional which Raúl attended for secondary school was also of high quality and scarcely less regimented His years Childhood 19 there coinciding with the First World War were marked by a growing antiGerman sentiment in Tucumán which may have added to his own antiGerman bias Certainly the French Jesuits at the College of the Sacred Heart were passionate French nationalists which meant hostility toward Imperial Germany In his penultimate year and for reasons which remain unclear Raúl participated in a student strike at the Colegio Nacional and his parents lodged him with his grandmother in Jujuy to complete his final year there rather than in Tucumán Whatever the cause of the strike and Raúls role it left no mark Unlike his gregarious brothers Raúl was not interested in team or con tact sports From the beginning he was quiet and studious a loner who had acquaintances but few friends Apart from his mother and Segundo he was closest to his old nanny Mercedes Frias or Mametela who re mained devoted to Raúl and corresponded with him into the 1930s8 He preferred spending time at home reading or with his mother or oldest sis ter whose weakness left her unable to complete school or leave home His one physical pastime was hiking in the surrounding hills where he would disappear for long solitary walks on weekends Raúl obviously missed his fa ther He was a quiet boy rather than a rebel and a teenager without disci plinary problems selfpossessed and firm in his likes and dislikes As Raúl neared the completion of secondary school the choice of uni versity and career became increasingly pressing There was no doubt that Rosas boys would go on to postsecondary education and she insisted that they study in the capital rather than in the new University in Tucumán or the old colonial academy in Cordoba Since Buenos Aires dominated Argentine life her children were going to attend the best academic institu tions the country could offer Raúl himself was ready to move on but he was uncertain about a career His three brothers had made their choices and left home Alberto was already a student of architecture Julio was in medical school and Ernesto was about to graduate as an engineer This coverage of the obvious professions seemed to leave law for Raúl and it was the traditional path for upward mobility in Argentina But Raúl was not interested He had seen a newspaper article regarding the new Faculty of Economic Sciences at the University of Buenos Aires incorporated on 1 March 1914 and sent off for a prospectus9 He knew little about the sub ject but the materials he received from the faculty in Buenos Aires in trigued him It advertised itself as the foremost school of economics in Latin America the only economics program that had so far established itself as a discipline separate from law Economics was a relatively new discipline in Latin America and a course of study that offered few job prospects compared with law Within 20 The Life and Times of Raúl Prebisch the academy in Argentina it had not attained the prestige that it had in the US Britain or the continental universities nor was it seen as a step pingstone for success in either the public or private sectors When asked later what had stimulated his interest in economics Raúl could only re count several boyhood anecdotes a storekeeper complaining to one of his brothers about running out of change for a cigarette purchase and blaming it on the financial crisis what was this crisis he had asked He overheard conversations with general references to inflation and land speculation in Argentina Why cant they print more money he asked his sister Amelia10 In any case as his seventeenth birthday approached Raúl elected to be a nonconformist and entered the Faculty of Economic Sciences in the university In the end his choice of career reflected his commitment to addressing the social question he had experienced in Tucumán Its goal or what Prebisch understood to be the principal ob ject of enquiry in economics was understanding the condition of busi ness and labour in Argentina to improve the overall public good Boarding the train for the trip to the capital Raúl was seen off by his mother his sisters and his grandmother with farewell presents of sweets and cured meats from the North The inevitable dread of leaving behind family and home was real enough as they disappeared in the distance and the train descended into the wide horizon of the pampas en route to Buenos Aires but it had already dissipated long before the train ap proached the city of dreams and promise 2 University in Buenos Aires On his arrival in Buenos Aires Raúl moved in with his widowed Aunt Luisa Uriburu de Garcia whose old mansion in Belgrano served as the gathering place for the UriburuLinaresPrebisch flock in the capital Her husband General Teodoro Garcia had fought with Roca against the Araucanian Indi ans and his looming memory in the enormous fauxMoorish house with its large and wellgroomed private park set the conservative tone for the large household Raúls uncle Dr Julio Cornejo who was a member of the Na tional Congress also lived in the house and venerated the generals memory and values which included a lively hatred of economists Why do you do this sort of thing he would badger Raúl at dinner maintaining a tiresome lecture until the poor student fled from the table Nevertheless his Aunt Luisa somewhat moderated the shock Raúl experienced at the contrast be tween the worlds of an adolescents Tucumán and Buenos Aires1 Raúls older brothers Alberto and Julio also lived with their aunt All three shared a room with Ernesto who was about to graduate and return to Tucumán Albin provided fifty pesos a month for the older boys and forty for Raúl but Alberto was always short of money and invariably bor rowed from Raúl at the end of each month His brothers ridiculed him for his continuing religious orthodoxy and regular church attendance they were now proud urban atheists Raúl at age seventeen was too sheltered to participate in their nightlife in La Boca the port area across the downtown core from upperclass Palermo and chic Recoleta a sliver of land facing the Atlantic on one side and the Riachuelo River on the other This had become the most lively and picturesque quarter of greater Buenos Aires where a community of Italians Greeks Arabs and Jews lived in precari ously built but brightly painted houses standing on piles to allow for floods and the centre of brothels and nightlife of all kinds the only place in the capital where the tango was not prohibited Instead Raúl was a 22 The Life and Times of Raúl Prebisch model student during his first year at the Faculty of Economic Sciences Studious and disciplined he maintained a Prussian schedule of eight hours of study each day in classes or the library After 900 pm he would put aside his economics texts and read Cervantes Shakespeare and Balzac he would then carefully prepare his agenda and work plan for the next day and go to bed On Sundays he broke his routine by attending mass in the morning followed by a movie Such an evident disregard for café life in the capital yielded a reputa tion as a social recluse but Raúl felt blessed in his choice of discipline His arrival in Buenos Aires and entry into the Faculty of Economic Sciences coincided with the opening of the last German offensive in the First World War and with its failure the end of the war was imminent For an aspiring economist like Raúl the challenges faced by postwar Europe and Latin America were of consuming interest and the very turbulence and richness of life in Buenos Aires provided intellectual discoveries from one day to the next The governing Radical Party Radical Civic Union ucr under President Hipolito Yrigoyen born of the 1890s financial and political crisis was hardpressed at this point during the First World War Yrigoyen had won the 1916 national elections by a margin of only one electoral vote over the pan the conservative National Autonomist Party which had ruled since 1880 when Roca took power in the interests of the traditional oligarchy and its newer moneyed allies in Buenos Aires The Radical Party appealed to a broader constituency particularly the emerging middle class Yrigoyens long political struggle therefore centred on one critical reform ending a restricted and often corrupt voting system based on property in favour of universal compulsory and secret male balloting as in North America and Europe women did not have the vote in national elections But the pan had not gone easily Luis Roque Saenz Peña elected in 1910 under the old system had sensed eventual defeat on this issue and preempted the Radi cal platform in 1912 by passing the socalled Saenz Peña Law But having reformed the electoral system he as well as Roca suddenly died two years later leaving no strong Conservative presidential candidate for the 1916 elections so Yrigoyen had won however narrowly2 The result was a new government taking power at the height of World War I amidst great expectations from the country and Radical Party follow ers Instead there was disappointment and letdown patronage spiralled spending doubled and the public debt increased eightfold in six years with little to show for it Yrigoyen seemed exhausted by success having fought courageously all his life for the single objective of democratic re form he had few other ideas about domestic or foreign policy As the First University in Buenos Aires 23 World War intensified after 1916 and allied pressure built for Argentine entry into the war against Germany Yrigoyen could neither make a deci sion on war policy remaining neutral even when Brazil declared war in 1917 nor cope with Argentinas mounting social problems as the conflict destroyed prewar trade patterns and businesses Urban unemployment had tripled from 67 percent to 194 percent between 1914 and 1917 and inflation cut the real wages of industrial workers by onethird3 The result was an upsurge in strikes and labour violence which employers countered with private police and paramilitary groups such as the Argentine Patriotic League The Russian Revolution in November 1917 further radicalized the workingclass districts and terrified the propertied classes Change even revolution was in the air The war in Europe was closely followed by all groups within the country The majority of Argentine immigrants were from Italy 55 percent and Spain 26 percent but there were also strong communities from Britain Germany Eastern Europe where the Jewish Colonization Association founded in 1891 had selected Argentina as a set tlement area and other countries In 1910 three out of four adults in Buenos Aires had been born in Europe bringing with them new political ideas and movements from the continent such as socialism and anar chism Alicia Moreau founded the Socialist Womens Centre in 1914 to provide care for middleclass women in the capital and her upperclass counterpart Victoria Ocampo led the womens suffrage movement4 Discontent and tension in the capital were deepening as Raúl arrived in Buenos Aires and six months later there was a pitched battle between packinghouse workers and police By January 1919 a metalworks strike degenerated into a week of street fighting between anarchist gangs and Patriotic League thugs that left over a thousand dead The socalled Tragic Week stunned the country President Yrigoyen called in the army to re store order but otherwise provided no clear leadership or initiatives for dealing with the causes of this class warfare5 The result was a heated public debate in Buenos Aires on the future of the country both within and outside the Congress Modelled on the US Constitution the Argentine Congress had two houses a Senate and Cham ber of Deputies since the Senate remained under Conservative control it could block reform legislation introduced by the government However the Chamber of Deputies was rich in the quality of discourse if not necessarily in effectiveness Besides the Radicals and Conservatives it included the Argentine Socialist Party which had been founded in 1896 by neurosur geon Dr Juan B Justo the translator of Marxs Capital and Argentinas most internationally recognized intellectual in European circles He advocated land reform to break up the large estates labour rights and unemployment 24 The Life and Times of Raúl Prebisch insurance to protect industrial workers a welfare state rural electrification and cooperatives and free trade to lower food costs for consumers and pre vent handouts to the corporate sector La Vanguardia became the official newspaper of the Argentine Socialist Party The partys base was in Buenos Aires and in March 1914 it had defeated its Conservative opposition in the city by a margin of two to one in the elections for the Chamber of Deputies Besides Justo the Socialist Deputies included some of the best minds in the country men like Augusto Bunge Federico Pinedo Alfredo Palacios Nicolas Repetto and Antonio de Tomaso all of whom were militant defend ers of free trade to protect consumers against special interests To the left of the Socialist Party was its bitter enemy the new Moscowdominated Argen tine Communist Party created in 1921 when the international socialist movement split into supporters and opponents of the Russian Revolution The Progressive Democrats formed another small but influential party headed by Lisandro de la Torre a powerful Senator and cattleraiser from Santa Fe province north of Buenos Aires Born in 1868 into an old and wealthy family in Rosario he studied law and local government in Buenos Aires was elected as national deputy for the Radical Party between 1890 and 1893 but broke with Yrigoyen over party strategy and fought a duel with him which left them mortal enemies for life He thereupon founded the Progressive Democratic Party as an alternative to the Radicals and served again as a national deputy from 1912 to 1916 Hoping to appeal to the Conservatives in the 1916 elections he only managed to split the anti Yrigoyen vote and thereby facilitated a Reform Party victory Lisandro de la Torre was however the best orator in the country and remained a colour ful and potent political personality A vigorous press in Buenos Aires followed the debates in Congress and engaged the public the normally dry subjects of trade money and infla tion were recognized as major issues linked to the revival of Europe and the global economy and discussed everywhere in the capital Buenos Aires was an exciting crossroads of new ideas and people and the metropolis of Latin Americas artistic and literary world Close links with Italian Spanish and French intellectuals such as Vilfredo Pareto and José Ortega y Gasset maintained a steady flow of news regarding developments in Europe The looming power of the US was also a more salient theme than before 1914 American seizure of Cuba Puerto Rico and the Philippines during the SpanishUS war of 1898 had had the effect of kindling fears of Washington throughout Latin America and the nationalist impulse and renewal of the Mexican Revolution echoed throughout South America as writers sought antiimperialist options6 The fascination and concern over the North American colossus were hugely magnified by the near defeat of University in Buenos Aires 25 Britain and France in the First World War and the potential of even greater disparity in USLatin American relations What was the destiny of Latin America Young Argentines were exploring their own inheritance and wanting to escape from the stranglehold of foreign ideas In contrast the Faculty of Economic Sciences Raúl encountered seemed stodgy complacent and boring From his opening class his experi ence with courses and professors was disappointing He had expected an engaged faculty he had anticipated quality teaching and the prospectus had promised the first economics class using mathematical modelling in all of Latin America7 Instead his professors seemed out of touch with the postwar world oldfashioned in teaching methods unable to link theory and practice uninterested in the international scene and in any case busy elsewhere in the city with fulltime jobs and never available for students In theory the faculty had a large staff in practice they were rarely available for teaching The curriculum was deficient in the essential tools for quality teaching and independent research languages training in methodology and applied research statistics and comparative work It was all too much like high school in Tucumán The professors seemed content to rely on for eign textbooks and teaching materials and lacked the skills or interest for re search that would help clarify the existing situation faced by Argentinas policymakers It was very frustrating Argentina confronted major postwar di lemmas but the faculty seemed mesmerized by Europe and North America and therefore were unable to examine critically the Argentine economy in the international system In fact his own faculty still taught economics as if the school were located in London rather than in South America This was the case before the First World War and it remained so after 1918 as if the war had been an unfortunate aberration with no lasting impact The orthodoxy remained the classical political economy imported from England before 1914 particularly the theory of comparative advantage8 Developed by David Ricardo and elaborated by his successors John Stuart Mill and Alfred Marshall among others this theory supported Latin Amer ican specialization in raw materials in agricultural products in Argentinas case for export to industrial countries in exchange for importing manu factured goods The doctrine of comparative advantage also reflected the elite structure of prewar Buenos Aires At its pinnacle were the English who owned and controlled the railroads and much of the meat trade Overwhelmingly reliant on its one trading and financial partner Argentina was virtually a sixth Dominion of the British Empire It was the most clas sic staple producer in Latin America no other Latin American country ex cept Cuba was more dependent on a single foreign market In short not only the wealthy English but also the members of the Argentine oligarchy 26 The Life and Times of Raúl Prebisch whose wealth came from the export of staples primarily beef to Britain endorsed classical economic theory since it fit so well with the policies and trade patterns that created and protected it Consuming 94 percent of total global beef exports in 1913 and therefore controlling the market Britain relied on Argentina for 64 percent of these products In the more technologyintensive chilled as opposed to frozen beef trade Argentina was much farther ahead of its main competitors in Britain Australia New Zealand and Canada with 994 percent market share The Faculty of Economic Sciences reflected this proBritish stance be ginning with Dean Eleodoro Lobos who had been minister of finance and agriculture in the last Conservative Governments before the 1916 Radical victory While the outbreak of war in 1914 had thrown Argentina into a deep recession as exports to Britain fell and consumer goods and capital markets dried up in effect subjecting it to a forced isolation in the inter national economy neither this experience nor Britains evident weakening relative to the United States as a world economic power had undermined the facultys singleminded AngloSaxon identification when Prebisch en rolled in 1918 The assumption was that the prewar world centred on London would revive after the end of hostilities and that Argentinas fu ture in the international economy could be secured by trade in staple products such as grain beef minerals and coffee Outside the faculty it was different The theory of comparative advan tage and the benefits of free trade were vigorously challenged by Alejandro Bunge a professor at the National University of La Plata unlp Bunge advocated industrialization as a complement to agricultural specialization taking a different lesson from the First World War experience than Raúls professors He argued that Argentina had in fact benefited during World War I when it could not get industrial imports at any price because this forced isolation had nurtured a process of industrialization that was al ready under way before 1914 Industries allied to the export sector such as meatpacking had emerged and already accounted for no less than 17 percent of gross domestic product Labour in machineshops alone had grown from 28000 in 1895 to 78800 in 1914 Women already comprised 14 percent of the labour force and two waves of industrial strikes had swept Argentina before the war feeding socialist and anarchist unions On industrys side employers had created the uia Argentine Industrial Union as early as 1887 to lobby the national government on behalf of its mem bers9 In Bunges view however the war provided an additional powerful stimulus for industrialization increasing the number of new factories from 48000 to 68000 between 1913 and 1923 with industrial employment in creasing by almost 200000 for a total of 600000 He argued that these University in Buenos Aires 27 gains should not be squandered that this sector should now be protected and encouraged to expand there was no need to label these new indus tries artificial and kill them off by resuming unrestricted free trade with the industrial countries Instead Argentina should reduce its dependence on Britain and the US by building its own capital goods industry for all its apparent wealth the country still lacked an iron and steel industry and therefore was in the weak position of importing virtually all of its higher technology industrial goods while paying for them in agricultural sales to Britain10 Raúl had no access as yet to people like Bunge Classroom attendance was mandatory during his first year but the effort was irrelevant given the quality of teaching Raúl became so enraged by Professor Luis Roque Gondras mechanical repetition of statistics on the Roman Empire in his seminar on Economic History that he and a new friend Enrique Siewers staged a class boycott and were sent in to Dean Lobos to explain them selves Lobos listened to their demand that teaching be improved in the faculty and then consulted with Gondra who to their surprise agreed to change the structure of the class After the incident Dean Lobos took a special interest in the young Prebisch from Tucumán giving him private weekly sessions each Thursday at 1200 in his downtown law office It was Raúls first positive brush with the powerful in Buenos Aires But aside from Dr Lobos there were few professors to whom he could turn for di rection Mauricio Nierenstein secretarygeneral of the university was in terested in economic thought and promoted the translation of works by international figures such as American Henry George into Spanish Salvador Oria a young professor of public finance in the faculty also encouraged Prebisch but Oria was closely linked to the Radical Party and busy cam paigning for a senior government appointment Raúl was thus largely on his own unable to find the professorial supervi sion or research materials he sought he immersed himself in library work instead By his second year a new university reform law had been passed by the Yrigoyen Government eliminating mandatory classes and he rarely at tended faculty courses thereafter I studied by myself because I did not find anybody to guide me he later noted11 He was therefore essentially self taught and always regretted that he was at a disadvantage relative to peers in US or European universities because of the lack of disciplined course work in a serious economics program But while continuing work on the English economists from Ricardo to Marshall he also encountered Continental and US economists and his thinking broadened Raúl had underestimated and came to respect Gondra for example who introduced him to Con tinental economists such as Maffeo Pantaleone and Hugo Broggi12 28 The Life and Times of Raúl Prebisch Nierenstein invited Raúl to translate a book by the Italian economist Enrico Barone a follower of Léon Walras and Pareto and through Lobos he also translated John Williamss PhD thesis Argentine International Trade Under In convertible Paper Money 18801900 which questioned conventional trade theory But he lamented the mediocrity and deficiencies of the faculty and missed the challenge of a disciplined program My great aspiration at that time was to go to Harvard Prebisch recounted to study with Frank W Taussig and the recently hired Williams13 There were also gaps Although his reading included Marxs Capital as well as some works by Lenin and the European socialists who had broken with bolshevism he did not have access to Marxs earlier more humanistic writings Prebisch found that the faculty journal would publish his work and while this Journal of Economic Sciences was not a refereed journal and re mained well below international quality it was at least a reliable outlet for youthful first articles His short piece La cuestión social written when he was only nineteen dismissed the relevance of Sovietstyle Marxism in the Argentine situation but this was an assertion rather than a reasoned con clusion typically Catholic and conservative reflecting his upbringing and current surroundings in Belgrano home of the Buenos Aires Polo Club embassies and palaces14 During his first two years he wrote numerous short articles for the facultys Journal of Economic Sciences on a variety of top ics ranging from postwar stabilization in Europe to monetary issues and reviews of articles or books published abroad supplemented by short com mentaries These early research notes of 191819 revealed little more than the future promise of a young but exceptionally talented and traditional student who wrote with confidence and fluid style Even the most ardent admirer of Prebisch could claim no more from these articles15 In 1920 a personal crisis challenged Prebischs conservatism and ex panded his intellectual and political horizons during his remaining univer sity years The first shock was discovering his Aunt Luisa dead of heart failure He had returned unexpectedly after lunch to find that she had not awakened from her regular siesta he was the first on the scene and it was the first time he had experienced death first hand Besides losing a close friend Raúl found himself without a place to live He moved to lodgings not far away in Belgrano but this time he lived alone His two brothers had left Buenos Aires Julio for Tucumán and Alberto for Paris to study with Le Corbusier Raúl was now alone for the first time Coincidentally Raúls faith evaporated In the middle of Sunday mass shortly after his aunts funeral he suddenly and without warning lost belief A veil fell over my eyes he noted I had to leave church16 In fact the change was part of a broader awakening provoked by the exposure of his University in Buenos Aires 29 fathers secret family17 In mid1920 Rosa finally uncovered the humiliat ing truth and the secret spread quickly to Ernesto who told his brothers and sisters Angry and insulted Raúl now realized that he had never known his father at all he had not suspected anything like this to explain Albins long absences on business or his constant criticisms of his family or his aloofness and lack of emotional support The curious lack of money de spite his business successes was now readily understandable It was a blow to Raúl because he had sought so hard to win his fathers acceptance and he admired his fathers achievements dynamism work habits and entre preneurial spirit He called it good German blood If Raúls national commitment intellectual selfconfidence and personal warmth bore the stamp of his mother and her family he was also his fathers son in energy determination to succeed and relentless capacity for work Raúl never forgave Albin for betraying the family while selfrighteously demanding discipline from Rosa and their children It was one thing for Argentine men to keep a mistress and the practice was widespread in the in terior but it was another for a German like his father During the next decade he rarely visited Tucumán and communicated only intermittently by letter despite his fathers repeated overtures for reconciliation and protesta tions of parental affection Nor did he meet or try to establish contact with his halfbrothers and sisters on the wrong side of Tucumán Like a lingering shadow the sense of rejection by his father continued to haunt Raúl I hope relations with my son will be better that mine were with father he con cluded18 Raúl may also have reacted so strongly because he sensed his fa thers bohemian streak in himself and feared so unwelcome an inheritance The family crisis made him even more determined to prove himself and instilled a fanatical desire for financial independence from Albin The re sult was a burst of activity in which he became as obsessed with work as his father and continued a joyless student lifestyle despite the new freedom from religious inhibitions He had arrived as a first year student from the provinces without independent means knowing that his future depended entirely on talent and energy He now began an almost frantic work sched ule beginning with his first job on 1 September 1920 as teaching assistant second class at a salary of one hundred pesos a month Financially it was a major step forward in what he called the emancipation from my father19 but it was also a tough assignment since he was given responsibility for the facultys Research Seminar even though he had neither formal training in social science research methods nor fieldwork experience apart from his own ad hoc research20 He worked hard to prepare for seminars and his success earned him a rapid promotion in August 1921 to first class assistant with a pay raise to 150 pesos a month 30 The Life and Times of Raúl Prebisch Raúl also enrolled in Alejandro Bunges seminar at the National Univer sity of La Plata and worked briefly as his assistant leading a research group that compared purchasing power in Argentina and postwar Europe publishing its findings under the title of Salary Adjustment and Cost of Living in the NovemberDecember 1920 issue of the Revista Económica Argentina Bunge had just founded this journal in 1918 and had also re cently published a major work Argentine Trade 190117 one of the few reli able sources of data in Raúls major field of interest21 Bunge was one of the more interesting scholars he had met since leaving Tucumán a home grown economist unorthodox and multifaceted Born in 1880 he was an engineer leader of the Catholic Workers Group Circulos de Obreros Catolicos and Director of Statistics in the National Department of Labour from 1913 to 1915 before becoming director of the National Statistical Office 191520 and again 192325 His training as an engineer inclined him to scientific methods and he insisted that his students undertake field work to support their findings He thought big and Raúl liked him There was more to him than his wellknown challenge to the theory of compara tive advantage and support for industrialization Bunge was well connected internationally multilingual and wellread He intrigued Raúl by advocat ing the economic integration of Argentina and the other Southern Cone countries Chile Bolivia Paraguay and Uruguay If Raúl respected Bunges knowledge and statistical fluency the profes sor appreciated the younger mans seriousness and commitment to empir ical research He invited him to use the National Statistical Office in his teaching and research and suggested that Raúl work with him when his sec retary was absent Bunge also helped Raúl secure a position in the Faculty of Social and Legal Sciences at unlp to teach a research seminar at a rate of 250 pesos per month beginning 4 April 1921 This was a more visible appointment as a full course director rather than as a teaching assistant and it was in a new university outside Buenos Aires where he felt a greater freedom than in his own faculty The new city of La Plata south of the cap ital was home to the powerful provincial government of Buenos Aires built in defiance of federal authorities after Buenos Aires was taken from them and declared the federal capital in 1880 Planned on a grand scale like Washington DC it was laid out as a grid of streets numbered in the American style creating blocks five hundred metres square with an overlay of radials converging on the central square in front of the provincial Parliament The optimism of the decade was reflected in ambitious public buildings and a speculative bubble that burst in 1890 but unlp was never theless created in 1906 as Argentinas third university after Cordoba and University in Buenos Aires 31 Buenos Aires and was known for its progressive ambience In this more open environment Raúl vented his frustration with his facultys backward curriculum by preparing a course outline with a stinging attack on the quality of university training in economics in Argentina He advocated sweeping changes and now could finally implement the teaching methods that he found conspicuously absent at the University of Buenos Aires uba Students and faculty must redesign their professional responsibili ties he insisted dogma delivered from on high by parttime professors had to give way to scientific methods and serious students must accept eco nomics as a vocation rather than a parttime diversion With his unlp niche Prebisch became more assertive personally and intellectually within his own faculty Taking advantage of the 1918 University Reform which ended compulsory attendance and granted students the right of co governance Raúl demanded a reshaping of the Journal of Economic Sciences with a joint facultystudent editorial board which of course included him22 He also vigorously promoted links to European universities such as the University of Paris to enrich the curriculum and welcomed the visit of public finance specialist Gaston Jeze from that university even though cer tain faculty professors felt personally slighted by the addition of a foreign expert in their areas of concentration Despite his respect for Alejandro Bunge Raúl rejected his advocacy of industrialization rather than free trade While he agreed with Bunge that the economy had grown during the 191418 war Raúl could not be per suaded that Argentina should support artificial industries nor would he accept comparisons with countries such as the US and Germany which had built large competitive enterprises behind tariff walls before 1914 Bunge then challenged Prebisch with the experience of Canada where similarities with Argentina were obvious Canada had not been content with free trade instead the federal government had introduced a national policy of high protective tariffs in 1879 and already by 1901 had a domes tic steel industry for building its great railway systems Now it had an emerging heavy industrial sector and had become one of the leading farm equipment manufacturers in the world after 1918 while Argentina seemed content to remain the worlds largest pasture serviced by British owned and operated railways Should not Argentina follow Canadas ex ample and discard the belief that free trade was an immutable principle never to be challenged Prebisch rejected this entire argument turning the doctrine of comparative advantage against Bunge Canada had unlim ited and accessible supplies of high quality iron ore Argentina did not and it was therefore cheaper to continue to import steel He also noted 32 The Life and Times of Raúl Prebisch that Argentina had a higher per capita income than Canada 1750 vs 1500 in 1914 confirming that the staples model remained the most effi cient for Argentina in terms of resource allocation23 Prebisch would develop a stronger bond with Alejandros elder brother Augusto Bunge who occupied an even more conspicuous niche in Buenos Aires The founder of empirical sociology in Argentina Augusto Bunge was born in 1877 and completed his medical training at the age of twenty three after which he devoted himself to the promotion of public health and politics in Argentina24 He had toured Europe in 1906 while heading the industrial health section of the National Department of Public Health and his book Las Conquistas de la Higiene Social 1911 which advocated a German socialinsurance model remained the authority in the field for a decade The two brothers came from a large and famous family grandsons of Karl August Bunge von Reinessend und von Renschenbusch who had arrived in 1827 as consulgeneral for Prussia and had stayed and married into the aristocracy With his brother Hugo Karl August founded a huge business and banking conglomerate and amassed a significant fortune Neither grandson had entered business preferring careers in the profes sions instead but their similarity in this broad aspect gave way to sharp dif ferences in ideology and politics Unlike Alejandro Augusto Bunge was a socialist who taught at uba and served as a national deputy for the Socialist Party for five consecutive terms between 1916 and 1936 Prominent in the Argentine Socialist Party hierarchy he also edited a party journal La Hora as well as the influential Buenos Aires daily Critica and was one of the most passionate critics of Yrigoyens social and labour policies Augustos sprawl ing house in the district of Florida was built when the wealthy families of the capital had moved north from San Thelmo south of the Plaza de Mayo after the yellow fever epidemic of 1871 But unlike his wealthy relations Augusto was uninterested in money he gave half his salary to the Socialist Party and lived in such spartan conditions that his house lacked running water and indoor toilet facilities He was in short a committed intellectual and writer caught up in a ceaseless campaign to reform his country now teaching and lecturing now writing or active in the Congress translating Goethes Faust into Spanish on weekends and late in the evening still su pervising the morning edition of Critica the first of three each day Prebisch had admired Bunge from a distance after attending one of his sociology seminars during his first year at the university but his main pur pose in meeting him was political Raúl had decided to join the Socialist Party of Argentina Before his personal trials of 1920 he had regarded reli gion and socialism as incompatible automatically rejecting the latter as atheistic In Tucumán there had been no political debate in the family University in Buenos Aires 33 home his father shunned all party involvement and such references as there were identified Rosas family with the Uriburu relatives from Salta including his uncle Dr Julio Cornejo who proudly represented the landed oligarchy in the Conservative Party Raúl later recalled meeting a fellow student promoting socialism but he had rejected this as an attack on religion and the incident left no lasting impression Now he could enter the national debate on the social question in Argen tina with a new freedom and come to terms with the sociopolitical and in dustrial crisis he had witnessed since 1918 The Argentine Socialist Party interested Raúl far more than the other alternatives He categorically ruled out the Conservatives The Radicals were almost equally unattractive al ready devoid of ideas and with a leadership almost as exclusive as that of their Conservative rivals Lisandro de la Torres Progressive Democrats were also no improvement Indeed the failure of de la Torres attempt to unite the Radicals and Conservatives after he broke with Yrigoyen summed up eloquently for Prebischs generation the bankruptcy of Argentinas po litical class The YrigoyenLisandro de la Torre duel complete with sec onds and ceremonial pistols in leather cases left a hole in de la Torres jaw that had to be disguised with a beard And if Raúl dismissed the pa thetic anachronism of duelling he also rejected out of hand the Leninism of the Argentine Communist Party This left the Socialist Party and he found much in its platform to his lik ing beginning with its position on land reform because he also viewed the concentration of land in the hands of a small class of largely absentee land lords as Argentinas crucially negative inheritance from Spanish rule Un like the US Canada or Australia where land colonization had proceeded through a homestead policy for European immigrants the power of the landed elite in Argentina continually frustrated the emergence of an effi ciently farmed and numerically large agrarian sector Few immigrants worked on the land and much of the enormous countryside was practi cally empty But the political power of the oligarchy continued and its pur suit of special privileges for big agriculture the Tucumán sugar barons made their fortunes with duties that kept out cheaper Brazilian imports made nonsense of the official policy of free trade The sugar plantations in Tucumán remained a vivid memory where the suffering of marginalized migrant workers was much worse than that of the urban proletariat in Bue nos Aires even if they were too cowed to rebel Fundamental reform was essential to break this power and integrate the agrarian sector more ratio nally within the Argentine political economy and the Socialist Party was the standardbearer of change Veteran Alfredo Palacios elected in 1904 although evicted by the party between 1912 and 1916 for duelling was a 34 The Life and Times of Raúl Prebisch political economist of continental rank and the first Socialist member of Congress in all Latin America others such as the younger brilliant protegé of Justo Antonio de Tomaso were outspokenly opposed to increases in the military budget and this also attracted Prebisch the very fact that Antonio de Tomaso had become the prime target of verbal abuse from General José F Uriburu increased his respect for the party25 The Socialist Party deputies in Congress dominated the parliamentary debates on Argentinas postwar economic and political future If rhetoric alone could win the party would long since have controlled Argentina So cialist deputies were intellectuals rather than workers or provincial politi cians from the interior such as Raúls uncle Cornejo and they were both hardworking and intelligent demonstrating a nonsectarian pluralism and breadth of opinion unique in the Argentine political spectrum Broadly speaking the party had three identifiable camps or tendencies united only in their opposition to Sovietstyle communism and their support of free trade Party Chairman Juan B Justo was the undisputed leader and com manded the middle ground with a reformism modelled on the Bernstein wing of the German Social Democratic Party he was in short a Marxist re visionist promoting change and accommodation within a democratic polit ical framework He was venerated by acolytes such as Nicolas Repetto and Enrique Dickmann To his right was the gifted maverick lawyer Federico Pinedo only six years older than Prebisch who had led the legislative cam paign for the creation of the Faculty of Economic Sciences and who re mained a member of its governing council The position of Pinedo on free enterprise and trade was so orthodox as to call into question his longterm commitment to social change or even democracy The left of the party championed by Augusto Bunge and Alfredo Palacios demanded social transformation and gender equity While it was a fractious party loaded with disagreements there seemed to be room for all26 Prebischs decision to join the Socialist Party was a symbolic break with Catholicism and a repudiation of the Uriburu Conservative inheritance and he turned to the left of the party with Augusto Bunge as his first contact An introduction was soon arranged by fellow student Luis de Francesco who had worked as Bunges secretary and Raúl was immedi ately welcomed into one of the most diverse and interesting social circles in Buenos Aires The Bunge house was a gathering place every Sunday for radicals refugees from Europe and Latin America and interesting people of all kinds from across the political spectrum During his first visits Raúl was embarrassingly socially inept when Augusto saw him adding sugar and water to a glass of good Mendoza red wine he discreetly took him aside for a goodhumoured fatherly chat These rougher edges soon disappeared University in Buenos Aires 35 Raúl became a regular visitor and a close personal friend whom Bunge asked to be godfather for his son Mario Raúl brought along boxes of treats sent from Tucumán He also brought along his friends from the university who were accepted into the generous Bunge flock as readily as Raúl himself27 The Sunday debates in the Bunge household were always memorable Thinkers from all over Latin America and Europe gathered to discuss ideas international developments and new theories over wine coffee and a permanent haze of cigarette smoke Every session was special in its unpre dictability The foremost political topic of the day was the Russian Revolu tion and its implications for the spread of socialism in Europe and Latin America The rise of Mussolini was also closely followed a sensitive issue among Italian veterans and their families in Argentina after the First World War So was the US growth of power during World War I and the evident unleashing of its Napoleonic instinct in the Caribbean Basin Encouraged by his experience with Augusto Bunge Prebisch picked up the application forms to join the Socialist Party coincidentally Bunge asked him to write an article for the party newspaper La Hora on postwar monetary policy and costofliving increases after the World War Raúl agreed He was researching this subject for a faculty seminar and had a text nearly ready for publication In fact the article was completed and published with the title Wages or Gold before Raúl had submitted his membership application to the Socialist Party office The Socialist Party had taken a clear stand on post war inflation maintaining that the gold standard which had been sus pended on 2 August 1914 should be reintroduced and that workers should be paid in gold rather than currency to protect their purchasing power But Prebisch disagreed arguing that it was both impractical and misguided because gold had also depreciated without being disrespectful to Justo he argued that he had understated the impact of this structural factor The pro verbial tempestinateapot occurred the great Dr Justo himself intervened complaining to Bunge that Raúls piece confused both party and public opinion by openly contradicting the partys platform as well as the leaders own wellknown views on the sanctity of the gold standard Justo even took the issue to the party governing council which formally criticized Bunge for inviting a nonmilitant and a mere student at that to write for La Hora Pre bisch tore up his membership application when he heard what had hap pened and never joined another political party for the rest of his life28 But he retained his personal links with Bunge and the Sunday gatherings and joined several of Bunges working groups on the Railway Workers Pension Fund for example which offered serious learning experiences But the Justo incident permanently soured Prebisch on party politics even though he supported the candidacy of Justo for dean of the faculty 36 The Life and Times of Raúl Prebisch Prebisch now became even more a person apart He craved a more seri ous research experience He had come to Buenos Aires to write and to join the great debates of the day as a participant with something to add and the difficulty of locating reliable information about the Argentine economy drove him to find likeminded students who shared this frustration and de sire to write and undertake research Other gifted young Argentines had indeed entered the faculty with the same sense of public commitment among them Ernesto Malaccorto Max Alemann Enrique Siewers Julio Silva and Julio Broide and they formed the inner core of a closely knit cir cle of friends and supporters with whom Raúl formed lifelong friendships They were united by the belief that Argentina had come out of the war greatly strengthened as an international player and could become an im portant power if it managed its affairs successfully Recognizing Raúls in tellectual qualities and academic virtuosity they formed ad hoc research groups under his direction to examine outstanding public policy questions and publish reports to stimulate debate in a modest effort to link policy with university research and promote fieldwork for students29 The scholarly results were soon evident Raúls research matured and the range of his interests and scholarly energy expanded after 1920 with serious writing based on broader and more serious reading and presented with greater authority as his selfeducation deepened Raúls interest lay in trade and monetary policy His two 1921 articles on the Brussels Confer ence of September 1920 in which he encountered and read John M Keyness Economic Consequences of the Peace took up the question of postwar monetary stability and its implications for Argentina30 Not having had the luxury of prior advanced training in economic theory he read back into the theoretical and historical literature after selecting an issue for research This method risked a helterskelter approach to the classics and required discipline to be effective but Prebischs remarkable article Notes On Our Money Supply published in five succeeding issues of the Journal of Eco nomic Sciences in 192122 proved his scholarly potential even if so hum ble an outlet for this work guaranteed invisibility within the discipline This misfortune does not detract from its boldness and insights31 The article was technically a review of La Moneda el Credito y los Bancos en la Argentina a book on the history of banking in Argentina recently pub lished by Norberto Piñero a private banker and briefly minister of finance in 1913 who also taught a course in the faculty and had written an earlier book on this subject in 1916 La Moneda Argentina But Prebischs interest had also grown after his translation into Spanish of now Harvard Profes sor John H Williamss book the most authoritative book available on the subject by a professional economist of rank Prebisch used the opportunity University in Buenos Aires 37 to review the banking sector since independence in 1810 examining his torical records and available secondary sources as well as the theoretical literature from European and American economists relevant to this field Piñero had written a descriptive and largely anecdotal account of the na tional banking system in a light text building from Buenos Airess humble beginnings in colonial times when it was a small Atlantic port isolated from the interior by Spains policy of favouring Lima as the heart of its Andean empire and only gradually developing into a powerful city after independence in the nineteenth century Piñero maintained that the busi ness cycle in Argentina essentially replicated the European experience in which excessive credit during prosperous times eventually produced imbal ance and crisis through excess consumption and a flood of imports with a resulting trade imbalance and flight of gold However an automatic cor rection would inevitably follow as interest rates rose to stop the bleeding and lure shortterm capital back into the market indeed this was one of the sacred assumptions of liberal equilibrium theory taught in the faculty Beginning with the first Argentine bank Banco de Descuento in 1822 Piñero argued governments and business had sought to accommodate the ebb and flow of the international market with increasingly sophisticated banking instruments and step by step they had succeeded in laying the foundation for the great trading nation that Argentina had become by 1914 He concluded that the government should expand the powers of the Exchange Office to build on its successes Prebisch and his team undertook a detailed historical analysis of the boomandbust cycle from independence in 1810 to the First World War trying to identify recurring features in each crisis which could either verify Piñeros conclusions or point to other explanations The research results demonstrated that neither Piñero nor the few other Argentine economists who had written in this field had researched the subject in depth A closer analysis of the specific dynamic of each cycle and the role and behaviour of Argentine banks and governments showed a much more complex picture International and Argentine markets were linked to be sure but instead of merely imitating the European experience the boomandbust cycle re vealed an interaction of factors peculiar to Argentina and absent in the European business cycle The very vulnerability of Argentina in the international economy pro pelled its banks into a depressingly familiar pattern of errors A narrow tax ation base and the lack of domestic capital markets made it dependent on international borrowing Argentina had already borrowed heavily from London in 1824 creating a financial system largely destroyed in the 1824 26 war with Brazil But banking institutions remained fragile for political 38 The Life and Times of Raúl Prebisch reasons property taxes were too unpopular to impose effectively leaving customs receipts responsible for funding 90 percent of federal income and thereby leading to a crisis whenever the British chose to blockade its ports The analysis of banking and monetary policy before and after speculative bubbles or when harvests failed or prices dropped showed a pattern re peated with almost monotonous regularity in which an immature banking system invited disaster by excessive loans and sale of bonds in European markets thus provoking a boom in what Prebisch called nonessential imports and a speculative frenzy This ascending part of the cycle was fol lowed by severe crises as in 1873 or 1891 when money dried up abruptly halting speculation and plunging the country into recession The discovery projected a new perspective on our monetary problems Raúl noted32 There were vital policy political and psychological differ ences at play in Argentina relative to England or Europe Money fled the country for safe havens during the downward part of the cycle but unlike in Europe high interest rates alone could not reverse the outflow by halt ing capital flight and attracting new investment to fuel an economic recov ery Although accurate for Europe the theory did not fit the Argentine reality He used the terminology of centre and periphery for the first time in this article terms that he would make famous twentyfive years later in his structuralist critique of liberal orthodoxy but in this context they reflected the ongoing debate in Argentina regarding the relationship of Buenos Aires with the dependent interior of the republic33 Instead of the more balanced urbanrural development characteristic of Canada or the United States the Argentine capital had extracted wealth from the interior until it dominated the economic political and cultural life of the country No one including Raúl himself realized the significance of what he had produced or its potential theoretical implications for the study of in ternational trade and monetary policy Prebisch had entered into the study of the business cycle a neglected area of enquiry which for decades had been separated from that of general economic theory and which in any case had never been applied systematically to dependent agricultural economies or to the role of international money markets and balance of payments Raúl had discovered that while local monetary mistakes by Argentine banks and governments did not cause the periodic crises the international business cycle inevitably clobbered Argentina as well the de veloped countries the course severity and dynamics of each crisis were in deed the product of local circumstances Argentine authorities were not merely victims but also actors and their decisions could mitigate or ag gravate the impact of international recessions University in Buenos Aires 39 Raúls work opened a huge opportunity for future investigation but there was no one in Buenos Aires to tell him what he had done and there is no indication that the article was reviewed or even read by his professors Prebisch had taken his historical analysis to 1914 and promised to cover the war years later He also underlined his interest in studying the rela tionships of the money markets or in other words the functioning of the international monetary system34 But while his 1921 paper had ignited a lifelong interest in this subject he had struck a conceptual barrier that dis empowered him namely the assumption that Argentine governments could not influence or correct the business cycle So rather than following this line of research he moved on instead to ad ditional work on postwar stabilization plans Like the earlier major work it centred on the review of an economists book on the subject in this case Stabilizing the Dollar A Plan to Stabilize the General Price Level without Fixing In dividual Prices 1920 by US economist Irving Fischer35 Written with more theoretical flair than Notes on our Money Supply with references to the Eng lish classical economists including Stanley Jevons and FW Taussig as well as FA Fetter and Edwin Kemmerer from the US Prebischs review ex plored the complexity but eventual necessity of reintroducing the gold standard in the context of the growing financial destabilization in Western Europe In fact the situation deteriorated further with the French occupa tion of the Ruhr Valley and a fantastic surge of inflation in Germany that destroyed the deutschmark Prebisch did acquaint himself with the work of Kemmerer who would become the foremost US economic advisor to Latin American governments in the interwar years but he wanted to move on from this subject as well In fact Prebisch was looking beyond the university given the quality of teaching and resources in his subject in Buenos Aires there was nothing more for him here the scholars he respected most such as the Bunges or Lobos were engaged public figures who could never be fulltime research ers He would have to go outside the university to learn more about his coun try There was of course the possibility of continuing his training abroad as a professional economist his brother Alberto had managed to get a scholar ship to study with Le Corbusier in Paris But there was no similar possibility in economics and graduate work for him in Europe or North America was therefore impossible for financial reasons Raúl knew that university teach ing in Argentina was not viable financially as a fulltime career and he there fore decided to leave uba with a diploma as chartered accountant But the compelling reason was not money The chief interest of his un dergraduate work was policy rather than economic theory and his evident 40 The Life and Times of Raúl Prebisch goal was to understand Argentinas position in the international economy in order to serve his country in a practical job His vocation his mission lay outside the university which could never offer enough to satisfy his deeper ambition of service to the Argentine state Imperceptibly but with a certain logic Prebischs choice of career was narrowing to the Argentine public service but he did not arrive at this position from his flirtation with the Socialist Party While he accepted its platform calling for the return of the gold standard and free trade he was difficult to pin down ideologically after he rejected membership when crossed by Justo and he showed no interest in the Radicals Conservatives or any of the other smaller parties Yet it is a weak passion that can be extin guished by one disappointing experience and Raúls quick withdrawal from political engagement offered an important early clue to his intel lectual development He showed little enthusiasm for socialist doctrine or class analysis his earliest writings on trade and monetary issues were con cerned instead with understanding policy cast largely within a liberal trade and monetary perspective Nor could he accept the notion that the state was a mere tool of the oligarchy without autonomy his own sense of power to shape events ruled out such determinism The truth was that though Raúl was committed to social justice from his childhood in Tucumán par ticularly the advancement of labour and human rights in Argentina after the First World War he did not see his role as a reformer within party poli tics While the social question drew him to Augusto Bunge and the left of the Socialist Party he was to a remarkable degree indifferent to political campaigns and meetings or demonstrations of any kind Instead Raúl was drawn to the belief that a technocratic elite could lead a reform process using the state as an instrument of change rather than a tool of class or special interests The Argentine state was weak it could not even impose taxation on the elite and fiscal reform was a measure of capacity and institutional development Canada had implemented an in come tax in 1917 Australia had also reformed its tax system but every time an Argentine government had attempted a reform package it had fallen before political resistance in favour of the easy way out external borrowing From 1888 to 1896 for example Argentinas indebtedness per capita had tripled The country in short needed an administrative elite to modernize the public sector In this sense it was Pareto rather than Marx who proved the most important influence on Prebischs choice of voca tion Raúl had encountered his work while translating Barone during the 1922 presidential election campaign and its results confirmed his disillu sionment with Argentinas electoral politics36 Notwithstanding six years of blatant ucr Union Radical Civica or Radical Party patronage and broken University in Buenos Aires 41 promises and the onset of a serious postwar recession the welloiled po litical machine of the Radical Party delivered another huge victory with 235 delegates compared with sixty Conservatives ten for Lisandro de la Torres Progressive Democrats and only twentytwo Socialists Marcelo T Alvear replaced Yrigoyen as president but he was as much part of the oli garchy as his boyhood friend General José F Uriburu Argentinas politi cal stagnation confirmed for Raúl Paretos diagnosis of corrupt liberal states In Argentina as in Italy and France a speculative elite incapable of reform was endangering the future of the country Paretos vision of an al ternative a technocratic modernizing elite guiding the state with rational policymaking above special interests therefore engaged Raúl at a critical moment and clarified his future roles in Argentine public life37 An engineer by profession born in Paris in 1848 to an exiled Genoa Marquis Pareto was a lifelong opponent of both Marxism and the deca dent liberal regimes he observed in Italy and France He viewed socialism as simply an attempt to replace one elite with another where the party bu reaucracy spoke in the name of the proletariat but was no less concerned about power than the capitalist state it wanted to supplant The triumph of Leninism in 1917 confirmed his cynicism that Marxists were hypocritical about democracy But the ruling groups in Europe formed so speculative effete irresponsible and shortsighted an elite that they also richly de served to fall Although Pareto diagnosed a much more complex power struggle in societies than Marx in the end he recognized only two elites within any society locked in a constant struggle over the ages first the gov erning elite in power and second the nongoverning challenger History demonstrated a continual process of challenge and replacement of ruling elites as they grew out of touch and unleashed sufficient fury from below for their overthrow and replacement Wise governments would eliminate abuses by timely reforms in order to adjust and survive if they failed and became flabby and corrupt the nongoverning group would eventually rebel and take power in their place Successful countries therefore de pended on good government and this required rational technocrats re cruited on the single criterion of merit who worked for the public rather than special interests Prebisch understood from Pareto that the leadership of any successful society in the twentieth century depended on creating and sustaining such a modernizing elite and nurturing it represented the principal challenge facing all countries if progress and justice were to be maintained This was an analysis that conformed to Raúls observation of the political challenge in Buenos Aires while the mainstream political parties were cor rupt and merely played at change the longterm needs of the country were 42 The Life and Times of Raúl Prebisch being frustrated The failure in land and social reform revealed the same disastrous tendencies as in Italy or France before 1922 while the opposi tion was too divided and internally fractious to develop an alternative plat form for common action against the regime The missing link in Argentina was an anchor in the state a strong trained rational and disinterested public sector that could carry on the work of the nation above the noise and chaos of the endless political battles which led nowhere Its credibility would stem from its quality and honesty its legitimacy would come from performing essential roles Prebisch and his colleagues were the first generation in Argentina that had the skills and idealism to claim this role of a modernizing elite within the state He knew the energy and capacity of Malaccorto and his other friends who shared his own commitment to Argentina and its future like him they saw the state as an instrument of change Raúl in short was committed to serving Argentine society through policy and public service rather than partisan politics Raúls choice of vocation in the public sector also resolved the ambigui ties stemming from his early years in Tucumán by choosing to reform the Argentine state from within the public service above class and party politics Raúl found an outlet for his idealism compatible with his mixed heritage By an accident of birth he was outside the social networks that au tomatically conferred power Raúl and all the Prebisch children knew that they would have to be selfmade that while their maternal link with the LinaresUriburu clans provided a possible calling card and a source of per sonal status and confidence it was too diluted to ensure work or social ad vantages Tucumán left no room for a political vocation Prebisch could not compete with Robustiano PatronCostas nor did he seriously consider this option He never wanted to be a politician or felt himself to be presiden tial material At the same time his entire early life from Segundo Linaress tales of colonial days to his own encounters with indigenous children in the fetid slums of Tucumán pressed him to serve his country If Raúl had now made a firm decision about his future career he had no idea how he would find the right path toward his eventual goal of being an influential insider He was only twentyone years old he had learned a great deal since arriving in Buenos Aires but he had no experience out side the university In short Prebisch needed work 3 Apprenticeship Prebisch turned to Dean Eleodoro Lobos for advice on job openings A deep international recession following the unwise overproduction and in flation of the first postwar years gripped the Argentine economy just as President Yrigoyens term ended The mood of the country was grim and employment prospects poor Lobos whose dual academic and public pol icy careers offered a model for Raúl and whetted his appetite agreed to keep an eye open and recommend him for promising opportunities Raúl could not have found a more effective ally Lobos was a key interloc utor with the Buenos Aires elite a former editor of the powerful daily La Prensa one of the foremost lawyers in Buenos Aires and a former minister of finance and agriculture under Conservative Saenz Peña from 1910 to 1916 before his appointment as the second dean of the faculty But he was also close to the present Radical Government because his brotherinlaw Rafael Herrera Vegas was appointed by Alvear as the new minister of fi nance It did not take long for Raúl who was then leading his research seminar at La Plata University to receive an offer of a oneyear contract in finance as secretary to a special budgetary commission set up by the minis ter with a monthly salary of four hundred pesos Before Raúl could respond to finance another and much more interest ing opportunity arose from an unexpected quarter when Lobos was asked by the Argentine Rural Society sra to locate an economist to work in their head office in Buenos Aires Founded in 1866 the sra was the lobby for the largest cattleraisers with the most elite membership in the country Often seen as synonymous with the Argentine oligarchy the sra crossed party lines to include Radical oligarchs such as Yrigoyen and the current President Marcelo T Alvear as well as familiar Conservative figures such as the Uriburus but it also remained open to new members depending on wealth The sras major event each year was the July Agricultural Fair in 44 The Life and Times of Raúl Prebisch Palermo which could not be missed by high society and at which the pres ident of the republic would appear in a horsedrawn carriage with cavalry escort to award the grand prize at the closing ceremonies But its goal was more than social The sra also promoted the modernization of agriculture and its members formed so powerful a national organization that they also led the Argentine Industrial Union uia industrys main association from its founding in 1887 until the war in Europe in 1914 The entire pri vate sector stood in awe of the agroindustrialists1 Dean Lobos immediately recommended Prebisch who was then inter viewed by sra President Ernesto Bosch and a director Enrique Uriburu It was a formidable team with both men charter members of the Conserva tive oligarchy Bosch had been close to every Conservative president since the 1880s either as private secretary or minister serving as minister of for eign affairs in Saenz Peñas government before the 1916 Radical victory Uriburu was Franciscos son and heir having inherited the family mansion on Lavalle 371 and now married to the daughter of exPresident Quintana Twenty years older than his second cousin Raúl Enrique Uriburu was a dealmaker in Buenos Aires a key social figure in the capital a parttime professor in the uba Law Faculty and of course he also retained the family estates It was Raúls first meeting with Uriburu since arriving in Buenos Aires four years earlier like his parents he lay outside this social circle The sra job involved setting up a new research office to study the causes and implications of the postWorld War decline in international beef prices Prebisch would have to work alone without an assistant for statisti cal work on one of the most important and controversial economic issues of the day At the end of the interview Bosch offered him the job despite his reputation for socialist leanings and support for agrarian reform He then asked about salary expectations On this tricky subject Raúl was hesi tant He thought of holding out for three hundred pesos per month but decided to wait for an offer since he had no previous experience with pri vatesector rates and had forgotten to ask Loboss advice on this point2 Wisely he let Bosch do the talking and was dumbfounded to be offered eight hundred pesos a month He accepted and work began on 5 June The sra wanted to know and if possible to prove that Argentine cattle producers were being manipulated by the big British and US meatpacking firms that controlled the transport of meat products to foreign markets with their monopoly of refrigerator cargo vessels Since Britain had stopped importing live animals in 1900 after an outbreak of hoofand mouth disease in Argentina the beef trade depended on shipping either frozen or chilled products in refrigerator ships and this change in ship ping technology gave a handful of British and US multinational firms Apprenticeship 45 Swift Wilson Armour Smithfield and Vesty control of the market Only the Sansenina Frozen Meat Company remained Argentineowned The meatpackers were therefore highly visible and prone to criticism on na tionalist grounds a familiar object of hatred in Buenos Aires during reces sions The meatpackers for their part argued that the international shipping conference set up in April 1914 to regulate the beef trade pre vented ruinous fluctuations in the market and that their pricing reflected supply and demand as registered in the London Smithfield market As Prebisch began his research prices were falling sharply reaching onehalf their 1920 values by 1923 and the sra demanded state intervention to protect a core national industry against a foreignowned and controlled monopoly like the sugar barons of Tucumán it was pro free trade in gen eral but more than willing to wrap itself in the flag to protect the special interests of its members3 Prebischs research project became even more politically hot as the crisis deepened the sra left no doubt that he was a consultant and that his find ings were meant to support its lobbying position Fresh out of university Prebisch had landed a wellpaying job but he could not have found a tougher assignment While the same charges against the meatpacking in dustry were being heard in other meatexporting countries in the US and Australia parliamentary commissions were at work to distinguish myth from reality In Buenos Aires a young economist in his first work experi ence was caught between two business groups and their political allies In practice the research drew Prebisch into the complex dynamics shap ing Argentinas most important export trade with Great Britain This mar ket was in transition after the war but the insecurity went deeper than the bungled return to markets after 1918 with an immediate postwar boom to satisfy pentup demand leading to oversupply and recession by 19214 As before the war Britain was the main global importer of meat in 1921 it comprised 94 percent of the entire international market with 64 percent in beef products and with Argentina accounting for 64 percent of these imports Argentina was gaining on its Australian and Canadian competi tors because consumer tastes in England were changing toward chilled rather than frozen meat and here Argentina had a comparative advantage Between 1920 and 1921 British imports of chilled beef more than tripled from 510000 to 1883000 tons in effect recovering from the steep drop off during the war and 907 percent of this product was shipped from Argentina In effect Britain was the global market regulator while Argentina was overwhelmingly its single largest import source5 Considering the significance of the beef trade for the entire Argentine economy it might have been expected that researchers in Buenos Aires 46 The Life and Times of Raúl Prebisch would have specialized in the dynamics of this sector but Prebisch found the opposite Systematic work had not been undertaken in Argentine uni versities and national statistics on the prices paid to ranchers by the meat packing firms had never been collected in Argentina without them an ac curate overview of the industry from the farm gate to the London market was simply not possible In one of his earliest research notes for the faculty journal he had reviewed the post1918 efforts in many countries to up grade their statistical capabilities he now understood their significance in a modern state In practical terms Raúl faced the task of filling this gap if he hoped to understand all the elements in the sector prices paid to local producers the structure of the producing industry fluctuations in the London Smithfield market the impact of shipping technology prices on the local Buenos Aires Liniers livestock exchange and finally the policy options of the Argentine state toward the meatpacking sector Laboriously he began to assemble these data in the meat sector with the assistance of the meatpackers and this patient statistical research eventually yielded the first integrated analysis of the industry produced so far in Argentina Six months after joining the sra Prebisch had amassed a credible statis tical base for the study and was able to present a first draft of his findings to the directors Unfortunately it was not the tame and supportive document they had been expecting Instead he had prepared a carefully documented and balanced report describing a complex dynamic in the sector that ruled out simplistic solutions Clearly he argued the meatpackers took high profits and used their technological advantage to operate as a trust6 Obviously prices on the local and London livestock markets were not de termined by supply and demand alone given their small number the firms could unofficially divide the market among them to improve their profit margins But Prebisch could not conclude that the markups by the meat packers were the determining factor explaining the postwar collapse in prices and the existing rural crisis in Argentina The main problems hurt ing Argentine producers stemmed from the oversupply of chilled beef and the price sensitivity of this product British demand for chilled beef had risen rapidly and prices would also have risen if the supply had not in creased proportionately even more Postwar Argentine producers in the great hinterland of the vast pampas were flooding the market and driving down prices Too many cattle were being raised for too few consumers Beyond this key factor market conditions in the industry as a whole were imperfect with 80 percent of Argentinas ranchers having fewer than two hundred head of cattle leaving a fragmented producers group with out the market power to confront the wellorganized meatpackers whose profits reflected their monopoly position7 Apprenticeship 47 As a result Prebisch did not recommend government control of the meatpacking sector despite his criticism of pricefixing in the industry The sra was not happy Bosch and Uriburu were no longer on the board after elections had resulted in a more protectionist leadership that was highly critical of his study Successfully exploiting nationalist sentiment against the foreignowned meatpackers and refrigerator cargo fleets the sra was almost insurrectionist in its denunciation of the socalled meat trust and insisted on government action to take it over and break its con trol It was naïve of Prebisch to think that the sra would accept a nuanced report with balanced recommendations when the goal was immediate ac tion and his findings were dismissed in a direct appeal to President Alvear The government gave in to sra demands by establishing a minimum price for cattle brought to market but the meatpackers retaliated by closing the Buenos Aires stockyards provoking a major economic crisis Within days Alvear back down and revoked the minimum price The new sra leader ship now turned on Prebisch blaming him for undermining its political campaign and attacking him as proBritish and antinationalist Prebisch was sacked without notice and had no opportunity to respond or explain his report in detail Los violentos as Prebisch called them had prevailed8 Dejected Raúl went home to his mother in Tucumán where he licked his wounds and completed the final draft of Notes Regarding the Beef Crisis published in January 1923 in the facultys Journal of Economic Sciences in which he laconically gave his title as ExDirector of Statistics Argentine Rural Society9 It was written in an acerbic style which did not curry favour with the countrys most powerful lobby he even attacked the sra for its shortsightedness and tightfistedness in refusing to support scholarly research in the faculty dealing with this important economic sec tor But Prebisch overestimated his setback Academically the publications that emerged from his sra work were visible and well received Moreover he had not cut his links with the sra both Bosch and Enrique Uriburu re mained strong supporters and these men had influence well beyond the ranks of the sra In addition the political row with the meatpackers was forgotten because of an upturn in the British economy and the recovery in chilledbeef prices for Argentine cattleraisers masked the temporary defeat of the sra Eleodoro Lobos remained a powerful patron watching Raúls fortunes keen to ensure that the political trap into which he had fallen in the sra would not compromise his career He himself like many Conservatives ap proved of Prebischs wellknown demands for land reform understanding with the Socialists that something had to be done10 He therefore inter vened personally with the minister of finance to hire Raúl as a consultant 48 The Life and Times of Raúl Prebisch to visit Australia and New Zealand and compare their incometax legisla tion and administration with those in Argentina In particular the minister wanted advice on incometax reform like Argentina they were agricultural countries he noted in a letter to Raúl but while they apparently had effec tive incometax systems his own advisors claimed that they were unwork able11 Since Australia in particular had a similar staplesbased economy where growth was related to the export boom of landextensive economies it seemed to offer an important comparison Since landowners in Argentina were resisting increased taxes it was obviously important to see what was happening on the other side of the world where the colonial inheritance was different On 24 October 1923 Prebisch sailed for Wellington via New York La Razon the Buenos Aires daily associated with the governing Radical Party criticized his appointment as a paid holiday at government expense but for Raúl it was an important opportunity to travel abroad12 Arriving in New Zealand on 13 December he worked for eleven days with Malcolm Fraser head of the Bureau of Census Statistics before proceeding to Aus tralia and celebrating Christmas at sea with New Years Eve in Melbourne his first holiday season away from home Prebisch found much to learn in Australia and New Zealand so similar in economic structure to Argen tina but so different in every other way He was struck by their equitable social structures relative to Argentina servants were rare and manual work was routinely performed by middleclass property owners Expectations were completely different Prebischs teachers in the faculty had fulltime domestic staff to clean and maintain their houses and gardens while Malcolm Fraser who was internationally famous lived in a modest bunga low In Argentina he and his wife would have maintained a fleet of servants Australian wheat production was only onequarter that of Argentina but the ratio of owners and tenants and income distribution bore no resem blance to the Argentine countryside A place like Tucumán with its povertystricken migrant labourers was unknown here Prebischs research visit helped him clarify his views on Argentinas loca tion in the world In many respects and despite its location its political culture was very different from neighbouring Brazil and Chile more highly developed economically and more urbanized with a larger middle class But Argentina still shared the Latin American curse like its neigh bours it had inherited from colonial days a powerful oligarchy that directed the state within a dependent agricultural export economy Geopo litically it was the strongest power in South America locked in a rivalry of long standing with Brazil and to a lesser extent with much smaller Chile Bolivia Paraguay and Uruguay formed buffer states between Argentina Apprenticeship 49 and Brazil But in its internal structure and global trade relations Argentina was closer to the small grouping of white Europeansettled overseas cereal producers comprising Australia New Zealand and Canada Australia and New Zealand offered a particularly useful comparative perspective since they were also distant from the core economies unlike Canada Like Argentina they had a high landlabour ratio a population shortage and mass immigration How had they fared in relative terms Economically according to Prebisch both Australia and New Zealand lagged behind Argentina and none of their cities could even remotely compare with spectacular Buenos Aires But although not as wealthy the per capita in come of Australia was estimated at 1590 compared with Argentinas 1700 these British dominions were developing on a sounder base while Buenos Aires lumbered on secure in its sense of superiority Land re form offered a good example of form versus content In Argentina entire libraries were filled with books and projects dedicated to land reform in cluding the most arcane details but nothing ever happened In contrast Prebisch could not locate a single published work in Australia on land re form Through the good fortune of a different colonial legacy it was able to implement an effective homestead policy because the land was not already controlled by a local oligarchy at the time of immigration This vital differ ence an outmoded class system and concentrated land ownership in which the Argentine oligarchy was allied with the state and could always block reform was a structural flaw that compromised an otherwise brilliant future In a speech delivered in English to the Henry George Club in Melbourne shortly after his arrival in Australia fortified no doubt by his recent experience with the Argentine Rural Society he underlined the negative effects of a dominant landholding oligarchy on the economic and political life of his country and the need for land reform He ex plained to his audience the colonial and postcolonial dynamic that had re sulted in an extreme concentration of land in few hands and absentee landlords in many cases and therefore the failure of Argentina to develop a homestead policy comparable to the US or the British dominions Since political power followed economic organization a rational landreform policy had proven impossible Instead of a thriving and populated country side the huge Argentine interior was depopulated instead of the home steaders who had created a rural massmarket in the British dominions or the US Argentina imported migrant labourers by the tens of thousand each year for the harvest The Argentine elite gave a bad example of luxury in the midst of rural and urban poverty The gay night life the jewels of the women the generous flow of champagne in night clubs and the 50 The Life and Times of Raúl Prebisch brilliance of our Buenos Aires cosmopolitan ambience Prebisch con cluded in Melbourne provoke exclamations by foreigners that it is the Paris of South America Little consolation for the working classes who drag out their lives between sweatshop and hovel13 Raúl narrowed his research to the two themes of incometax reform and national accounts working in the Department of Taxation in Melbourne with Sir George Knibbs the director of Statistics who was also a wellknown demographer Raúl discovered that Argentina was twenty years behind Australia in the modernization of the state its stronger civil society was reflected in a more developed state in which an efficient civil service and tax ation system were taken for granted Unlike Argentina it had modernized its statistical system after 1920 in line with Britain the US and Canada and it had introduced effective incometax legislation by using an averaging for mula to counteract annual fluctuations in farm incomes The system worked he reported in an article published in the Argentine Journal of Economics taxpayers were willing to pay and were fined if they did not Altogether Argentine public administration seemed soft by comparison lacking innova tion and depriving the country of the necessary tools and infrastructure to move forward As a case in point Argentinas National Statistical Office re quired new standards and technological innovation such as adopting the Hollerith system used in Australia which had automated recordkeeping using perforated cards if it was to maintain international standards It was as if Australias enormous contribution to victory in the First World War had strengthened and disciplined the state and brought capabilities and expecta tions into balance Argentina had escaped war but retained a flabby state14 The way to keep peace in Buenos Aires was to postpone taxation The consultancy was meant to run until midApril but in late March the newly appointed Undersecretary of Finance Salvador Oria cabled Prebisch to return home immediately President Alvear had changed ministers and his contract was cancelled Prebisch had long considered Oria a friend and supporter and indeed this young professor had helped him prepare his course outline for La Plata University But Raúl without realizing it had angered him by supporting the visit of Gaston Jeze in 1923 whose mild criticism of the Argentine economy had been condemned in La Razon15 Raúl had publicly mocked the newspapers provincialism not realizing that Oria had also opposed Jezes visit to the Southern Cone since he considered himself the national expert on taxation policy and felt that Argentina had nothing to learn from either Jeze or Australia Newly appointed to his position Oria decided to teach Prebisch a lesson termi nating the consultancy and leaving him stranded far from home Raúl was forced to complete his research at his own expense Apprenticeship 51 Prebisch began his long sea voyage home on 17 April with stops in Perth in Western Australia and then Europe where he travelled in France Italy and England before continuing to Argentina Like his father he discov ered the joy of travel and would also have visited the US if funds had been available Having written on postwar adjustment in Western Europe from the considerable distance of Buenos Aires he now had an opportunity to see Paris Rome and London for himself but he was also on vacation and he enjoyed visiting the historic capitals of the old continent reviving his French and finding books unavailable in Buenos Aires His brother Alberto was part of the large Argentine community in Paris studying with Le Corbusier The two young men roamed the streets together noting the poverty of postwar Europe with crowds of damaged veterans even in a victorious country For all its problems Argentina seemed so obviously suc cessful by comparison Not only was it richer by far than Europe but it was also at peace and not victimized by rival nationalisms Raúl also used the trip to deepen his reading of Pareto and was all the more convinced of Argentinas potential as a rising power in the New World By the time he embarked at Cherbourg for Buenos Aires in early July Prebisch was anxious to get back home and when he arrived at the port the new prosperity of Buenos Aires struck him like a gale The labour wars and dislocation of the immediate postwar years were over and the prewar optimism had returned Capital again flowed into the country with invest ments increasing from 524 million to 26 billion pesos business expanded as in the golden years before 1914 Prebisch rejoiced at being home even if the political pressure for change had also been dissipated by the return of prosperity16 In neighbouring Uruguay the government used the eco nomic revival as an opportunity to introduce longdelayed reforms and social policy dominated Chilean politics as well But in Buenos Aires there were fewer successes Augusto Bunge kept demanding action and remained busy organizing public campaigns for reform and his Sunday gatherings to which Raúl returned with pleasure remained as lively as ever But Alvears Radical Government took advantage of the 1920s hiatus to post pone action again on the social question the fierce debates in the Con gress in the first years over trade and monetary policy lost their edge in a premature sense of selfsatisfaction in Buenos Aires as if prosperity had re turned for good Buenos Aires was too prosperous to consider the serious ness of its social and economic deficiencies in the fools paradise of the 1920s or to challenge the doctrines of free trade and comparative advan tage which dominated the academic and political life of the capital While in Paris Raúl had worried about finding work after being out of the country for eight months but he managed to resolve this problem 52 The Life and Times of Raúl Prebisch aboard ship where he encountered Argentinas minister of agriculture Tomas Le Breton who was returning to Buenos Aires after a round of visits to European capitals Another powerful member of the Argentine oligar chy Le Breton was a former president of the Argentine Rural Society and a close friend of Bosch and Uriburu He had heard of Prebischs experi ences with the sra in 1923 and wanted to hear his side of the story and he also wanted to discuss the results of Australias agricultural colonization program in New South Wales17 After an initial coolness Le Breton devel oped a liking for the younger man and they discovered a common plea sure in long afterdinner walks on deck As Prebisch discussed his work in Australia and New Zealand as well as his impressions of postwar Europe he gained another powerful patron in the capital The day before their arrival in Buenos Aires during the final stop in Montevideo Le Breton surprised Raúl by asking him if he would work for him inviting him to go to Canada as consulgeneral to study its grain mar keting system But Prebisch who had now been fired twice had learned a lesson No he smiled I lack experience18 He explained that without a career appointment he would be defenceless should ministers change and he could not afford to leave Buenos Aires before his career was launched Le Breton understood but still wanted Raúl to work for him as a personal consultant The day after his return on 24 July 1924 Le Breton installed Prebisch in his office as special assistant at 800 pesos a month with the offi cial title of Technical Advisor to the Under Secretary Raúl was able to com plete two reports for Le Breton on rural taxation and land colonization that drew on his research in Australia and he remained a close daytoday advisor of the minister Much of this latter work concerned the accu mulated backlog of land grant certificates thousands remained outstand ing from many years back and Raúl was given authority to interview applicants and recommend either rejection or approval The work was personally challenging dealing facetoface with frustrated people in emotioncharged circumstances but it was only a job Prebisch needed a career and his interest flagged He also faced compulsory military service which he had so far success fully avoided by remaining a university student But now he could post pone no longer Le Breton therefore gave him a leave of absence from January to April 1925 and Raúl enlisted with No 1 Infantry Regiment Patricios located on the outskirts of the capital Raúl would shudder at the memory19 However brief this interlude of military service it was one of the most unpleasant experiences of his life He hated the cursing and swagger ing male camaraderie of the barracks and the violence of the training His lack of coordination amused the much younger recruits while angering Apprenticeship 53 the ncos Marching was torture as his frequent faux pas singled him out for nco derision and punishment to which he could only respond with silent and ineffectual rage During his last weeks in the barracks the University of Buenos Aires of fered him an appointment on 1 March 1925 as acting professor of Political Economy despite his lack of a doctorate in Economics and without a formal competition for the position His former professors Mauricio Nierenstein and Luis Roque Gondra had appealed to the facultys Board of Governors on Prebischs behalf realizing that only once before in 1883 had any faculty in the University granted such an exception and then in Medicine Raúl had established himself in university circles as a confident teacher and had earned the support of colleagues and particularly Dean Lobos with his pub lications thirtyseven articles that showed a capacity and range of interests badly needed in the faculty He had written on monetary policy and postwar stabilization and he was the accepted authority on the Argentine beef trade his experience from Australia had appeared in articles on taxation policy and land reform He spoke three languages and was au courant with the ac ademic and business literature in Europe and the US Such breath of knowl edge was rare in the faculty Prebisch never felt that his appointment in the faculty had the same weight as an appointment to the great US or European universities and perhaps for that reason he was evasive about his lack of advanced academic credentials It meant a great deal for him to be called Dr Prebisch and he went so far as to sign his articles as graduate of the Faculty of Economic Sciences This error of judgement underlined a con tinuing insecurity and courted embarrassment by enemies who could throw Prebisch the public accountant in his face as a constant reminder of his unnecessary claim to being Dr Prebisch Prebisch had coveted a professorship in the faculty with the opportunity to design and lead a research seminar it was an opportunity to continue his academic work in international trade and monetary policy and it was an invaluable link with students and economists But the chair titled Eco nomic Dynamics which involved one research seminar per year was not enough to meet his financial needs or his ambitions He had returned to Argentina to be a national leader in the public service and he had been with Le Breton long enough to realize that he had to move on to advance his career Le Breton understood Prebischs choice and although he wanted him to remain supported him in a nationwide competition for a permanent position as Deputy Director of the National Statistical Office Raúl applied and was selected for the job The new appointment was not a success He had applied because he had seen in Australia the necessity of national statistics and he realized that 54 The Life and Times of Raúl Prebisch even compared with Brazil and Chile not to mention the developed coun ties Argentina was seriously deficient Moreover he had remembered the office under the exceptional stewardship of a firstclass mind such as Alejandro Bunge who was also committed to reform But after arriving in his new job Raúl understood the obstacles to change Even Bunge had not been able to break the resistance of his superiors to new ideas or new data processing technology even when the US agreed to give three Hollerith ma chines at no cost the government refused Bunge had now retired to edit the Journal of Argentine Economics and the new director Alfredo Lucadamo lacked the standing and energy to break an ingrained bureaucratic resis tance to interdepartmental cooperation or to obtain the resources re quired for an adequate National Statistical Office20 Innovation was annoyingly difficult the office remained addicted to the old colonial system of dictating numbers to clerks working in longhand at their ledgers and Prebischs efforts to introduce Hollerith dataprocessing came to nothing until he rented a model for a staff demonstration Al though the effectiveness of the National Statistical Office depended on in terdepartmental coordination agencies jealously guarded their data or refused altogether to set up statistical sections Raúl was convinced that pop ulation statistics should be correlated with trade and other economic indica tors he not only failed to get authority from the Statistical Office to lead this task he also failed to convince the Hygiene Directorate of the Depart ment of Health to begin this work He had better success in the banking sec tor where deposit and loan data since 1910 were assembled for the first time with the cooperation of the private banks He could also take some credit for setting up the first National Statistical Conference held in Cor doba In August 1925 Prebisch published an article outlining the existing deficiencies as well as the vital importance to the country of national data se ries as reliable as those of its competitors closing with a challenge for the Al vear Government to introduce the reforms outlined by the British Empire Statistical Conference held in London in 192021 But by the end of the year he was bored and worried that he might be stuck in a middlepaying job eight hundred pesos with diminishing interest and potential Intellectually Prebisch used his time in the National Statistical Office to prepare a more reflective article Notes on Demography published later in Bunges journal which allowed him to develop his thinking on a subject that had interested him since arriving in Buenos Aires in 1918 and that had been stimulated by his work with Malcolm Fraser in Australia22 It also reflected a natural preoccupation as an immigrants son and his concern for land reform and rural development in general Raúl decided to cor relate the rise and fall of Argentine business cycles using a historical Apprenticeship 55 approach going back to the first reliable statistics in the 1860s with popu lation trends He found an almost perfect correlation between export fluc tuations on the one hand and marriage licences births and migration in Buenos Aires on the other The study of demography was in its infancy Prebisch therefore pointed out the importance for Argentine scholars to start working in this field with scholars abroad because globalization im plied interdependence Argentinas birth rate for example depended on prosperity in Britain given its symbiotic connection via staples production Any sharp recession in Britain meant a certain crisis for Argentine trade and with it a sharp reduction in marriages and migration Other popula tion trends in Europe and North America had implications for Argentina as well In England the sharp population rise associated with the Industrial Revolution in the nineteenth century had changed course after 1875 with greater prosperity and urbanization moreover only the lowest uneducated classes were still having large families The same was occurring in Canada Quebec excepted New Zealand and Australia which Raúl described with Argentina as countries of recent colonization The Argentine data given the poverty of its national statistical services only Buenos Aires could be researched suggested the same tendency As prosperity advanced par ents chose to have fewer children but raise them with higher expectations and greater availability of reliable methods facilitated voluntary birth con trol Meanwhile in Brazil Asia and other nonEuropean geopolitical areas the population increase was still alarming as claimed by neoMalthusian writers such as Cambridge Professor Harold Wright In a bestseller re leased in 1926 he demanded international action by the West to safeguard the race from the fastbreeding Asian hordes Prebisch refused to be drawn into Wrights argument although he noted that Keyness otherwise unre markable introduction to the book was an indication of the future impor tance of the subject Argentinas population problem was the imbalance between Buenos Aires and an interior so empty that it could not sustain local services the country was like a head with no body and the problem would eventually have to be addressed by the national government23 Raúl felt trapped in the National Statistical Office he couldnt stand a boss even a good one and there was limited career scope given the lack of staff and freedom He wanted out but the alternatives were not immedi ately apparent either inside or outside the government In this situation the last option Raúl could possibly have imagined for his release was the sra which he assumed he had alienated for good after his 1923 report on the meat trade and subsequent dismissal But the big lobby had again re newed its executive board and was now led by Luis Duhau who was a friend of both Bosch and Uriburu Duhau had decided to visit the US and 56 The Life and Times of Raúl Prebisch since he spoke no English he needed an assistant Uriburu and Le Breton recommended Prebisch for the position given the quality of his earlier work despite its subsequent fate at the hands of the sra executive board24 In other ways beyond languages Raúl was a logical candidate for a travel companion he had worked with US sources and periodicals since his first year in university he had studied international trade and monetary policy he had been in Australia and New Zealand and he had worked for Tomas Le Breton in the Ministry of Agriculture Prebisch was also willing to travel again Stuck in a dull job the prospect of visiting Washington was a relief and he correctly saw it as a rare opening to understand the new issue of ArgentineUS trade relations and appreciate the enhanced US role in in ternational affairs after 1918 Duhau requested that the National Statistical Office release Raúl on loan and they were soon bound for North America The US was a foreignpolicy puzzle for Argentina which had remained firmly in the British zone before 1914 despite the growth of US influence in the rest of Latin America Britain had even managed to retain its domi nant role in Argentina after the First World War despite the heavy costs in curred and unlike in Mexico or the Latin countries in the Caribbean Basin the US had not displaced Britain as its main trader during the 1920s But US investment was increasing rapidly in Argentina a major new office in Buenos Aires was among the twelve branches set up in Latin America by the First National City Bank of New York during the war25 More important Argentinas dependence on the US in the 1920s for the import of machin ery was growing particularly the new agricultural equipment required to keep up with rapid technological changes in this sector Since the outer limit of the land frontier had been reached in Argentina in 1910 and since prices for wheat had not recovered from the war increased produc tion with new technology was the only way to maintain farm incomes26 Im ports from the US were therefore bound to increase in the future because the US rather than Britain produced the technology and capital goods it required This situation created a serious longterm dilemma for Argen tina namely the emergence of a trade triangle in which increasing imports from the US created a trade deficit that could only be paid with the surplus gained in Argentine beef and agricultural trade with Britain The US was a temperate country producing largely the same range of commodities as Argentina and thus didnt require Argentine agricultural products There were other trade problems most important Argentine meat products were prohibited because of intermittent outbreaks of hoofandmouth disease Most of their three months abroad were spent in Washington where Duhau had discussions on limiting US restrictions on imports of meat wool linseed oil and other products from Argentina with officials in the Apprenticeship 57 Hoover Administration Raúls role during the trip was to prepare back ground documents and speeches for Duhau set up meetings with officials in the State Department and the Department of Agriculture as well as with congressional staffers and legislators and to be on hand to translate and follow up with the media as necessary The mission was a discovery for both men and the experience went well beyond trade their continuing sur prises left Prebisch and Duhau permanently close friends Thrust into the tough world of Washington politics they quickly appreciated the complex ity of US decisionmaking and consensusbuilding with a protectionist US Congress Despite the official rhetoric it fell to Duhau to preach the gos pel of free trade with few expectations of success The reality of US power was also indelibly imprinted on Prebischs mind from that visit and therefore the need to understand Washington and its institutions Given the prewar British and European connection the US was relatively unknown in Argentine society and US civilization was poorly taught in universities This included the banking system During the visit Raúl had an opportunity to acquaint himself with the US Federal Reserve System or the Fed set up in 1913 which divided the US into twelve dis tricts each with its own Federal Reserve Board and which performed the normal duties of a central bank What impressed him was its Research Department which maintained close links with US universities and had achieved a high level of acceptance and credibility in the financial and business communities27 While in North America Prebisch and Duhau also visited Canada to ex amine the grain elevator system set up to protect Western grain growers they travelled to the Winnipeg Grain Exchange and studied the operations of the Wheat Board in Regina where the introduction of quota books in local elevators had eliminated the intermediary operators who still con trolled the grain trade in Argentina Canada was similar to Australia in lacking a cosmopolitan capital like Buenos Aires As in Australia Raúl ex perienced a sense of kinship with a major staples producer far from Britain and dependent on agricultural markets and as in that earlier visit he saw how a modern state was creating a more solid basis for longterm growth than Argentina The challenge at home was to build on its achievements and strengths and catch up with the British dominions by remedying Argentinas deficiencies with timely reforms28 Duhau was impressed with Prebischs work during the trip to North America and with the support of his directors including Enrique Uriburu he asked him to stay on as his advisor and leave the National Statistical Of fice with its secure tenure Prebisch proposed a counteroffer would the sra agree to produce an annual Argentine statistical yearbook with special 58 The Life and Times of Raúl Prebisch reference to agriculture but comprising all sectors including foreign trade Despite his bad memories of the sra from 1923 he was interested in pursuing Duhaus offer but he was not willing to accept general advisory work without prior agreement on concrete tasks He also knew from his work in the National Statistical Office that the national government itself would not produce an annual statistical yearbook the Department of Finance refused to approve the necessary resources Duhau not only agreed to Raúls proposal but also asked him to undertake another special report on the meat industry the sra had set up a special commission to in vestigate the meatpacking firms again following another round of criti cism of the foreigndominated meat trust With this offer Raúl resigned from the National Statistical Office and plunged into the preparation of the first Statistical Yearbook on foreign trade in Argentinas history this time with sufficient resources to undertake an adequate national survey Entitled the Anuario de la Sociedad Rural Estadisti cas Economicas y Agrarias it was a massive and unique tome that filled an important gap as a research and policy tool29 Simultaneously Raúl began his second task of preparing the report on the meatpacking industry in Argentina with high expectations not just in the study itself but also be cause he felt that the publication would ensure his definitive appointment to the faculty professorship in Political Economy He need not have wor ried however because the sudden death of Professor Nierenstein opened a permanent position that Prebisch would retain until 1948 Raúl could now inform his father that he no longer needed additional money from the family Albin congratulated him in an affectionate letter You are the youngest son he said but the first to become financially selfsufficient He hoped Raúl would continue to send him his reports and newspaper ar ticles and worried that Raúl was working too hard he should be careful with his health Albin warned and in his next letter he included some money for entertainment Raúl was unmoved He remained sufficiently in need of affirmation from his father to send copies of his academic and newspaper publications and relations were correct but he still refused for giveness and reconciliation30 Neither of Raúls sra projects during 1927 prospered both the Statisti cal Yearbook and the meatpacking report were tarnished politically by their association with the sra and ultimately failed It was of course absurd that the sra rather than the National Statistical Office should have produced such a document The Statistical Yearbook was indeed a muchneeded na tional resource but in the end the sra was the instrument of the landed elite rather than the Argentine state Duhau had agreed to Prebischs offer because he had the skills and contacts for the task but the publication Apprenticeship 59 would not survive his tenure with the sra His successor was given another assignment and the project collapsed when the National Statistical Office once again refused to take up the challenge Prebischs 1927 Statistical Yearbook remained the single issue on the sra shelves His report on the beef sector was even less successful Entitled The Meat Packing Pool The Necessity for State Intervention it advocated state regulation of the big firms that controlled shipping in the beef trade given the strate gic role of the industry in the economy for both consumers and producers Prebisch argued that the inherent tendency toward collusion in the domes tic meat market justified state intervention but he stopped short of recom mending nationalization31 From a research perspective Prebischs report was not comparable in quality with his 1923 work on the beef trade but it remained an interesting case study of state policy in imperfect markets Even before it was pub lished however the report was condemned as selfserving propaganda for the most powerful interest group in Argentina and critics of the sra in Congress such as Lisandro de la Torre wanted his blood32 As in 1923 therefore Raúls report was a political bombshell that again exploded in Argentine politics not only was 1926 a year of low prices but Yrigoyen an nounced that he would run again for the presidency in the 1928 elections and politicians from all sides were positioning themselves behind national ist symbols Raúl denied the allegation of sra influence in his findings praising Duhau and Uriburu for their trust and objectivity but in the up roar his findings could not be judged on their merits and it was evident that he would have to resign Raúl now confronted a dilemma His second period of work for the sra in 1927 was as brief as the first in 1923 and certainly no happier but he wanted to avoid a second experience of retreating to Tucumán nursing hu miliation and empty pockets Once again his career had ended in a blind alley of controversy and rejection Although he had been in and out of many interesting assignments and jobs since leaving university and had benefited from lengthy research trips to the US Canada Australia New Zealand and Europe he had no firm or attractive prospects on the hori zon Moreover at twentysix he was no longer the wunderkind he had been on leaving the university at the age of twentyone He had tried a public sector job and found the National Statistical Office a stultifying experi ence more than he could bear He remained committed to Paretos vision and his own destiny within the Argentine state he was as unwilling now as before to go to the private sector Worst of all Raúl was not only developing a reputation for opportunistic jobhopping but he was also becoming iden tified with the Conservative oligarchy because of his personal links with 60 The Life and Times of Raúl Prebisch highly visible sra members such as Ernesto Bosch Enrique Uriburu and Luis Duhau Raúl dismissed such attacks as absurd Both his experiences with the sra had been disastrous he had been sacked both times Friend ship from such powerful individuals did not imply an obligation to serve the interests of the oligarchy and all the jobs he had obtained with or with out their support had been earned on a strict merit principle rather than patronage Nor did he believe that belonging to the upper class necessarily disqualified individuals such as Bosch or Duhau from serving their country as sincerely or effectively as their detractors from more humble origins Ernesto Malaccorto Raúls closest lifelong friend regularly endured Raúls diatribes against the Argentine oligarchy and its military allies and he dis missed any argument that his own work with the sra had been biased on class or political grounds His disdain for the oligarchy went back to his earliest memories of the sugar barons in Tucumán and he had never hid den his views of the land question either while travelling in Australia or at home when he openly spent every Sunday with a leading Socialist like Bunge If Prebisch had wanted personal wealth he would long since have been in one of Argentinas private sector conglomerates Raúl was therefore uncertain of the future in 1927 worried that options were closing He lived frugally still moving from one boarding house to an other Socially the Bunge house had become Raúls oasis his one secure link with the intellectual life of the capital other than the group of old friends from university days and colleagues in the faculty His academic ap pointment did not allay a growing anxiety at being on the sidelines and his own scholarly research and writing had stagnated since the early 1920s The university seemed even less relevant during the prosperous 1920s preaching the status quo and the gospel of free trade while critics outside the sheltered academy were forecasting the end of capitalism Raúl ven tured into this debate only once with a tough rebuttal of visiting Spanish Professor Luis Olariagas criticism that Argentinas foreign trade perfor mance since 1918 had lagged behind that of Canada Australia and the US Olariagas methodology was evidently inadequate Prebisch noted slanted to provide some basis for his argument that the Argentine econ omy was in crisis Any objective assessment of the data revealed instead that Argentinas performance was about the same as that of its competi tors Even 1926 which was a weak year hardly constituted the crisis claimed by the professor and given Argentinas success in attracting new investment in the chemical cement textile and newsprint industries this catastrophism of the left seemed ludicrous Argentina was hardly a failure despite its deficiencies internationally experts such as Saavedra Lamas a senior professor of Labour Law at La Plata University were active on the Apprenticeship 61 global scene with Lamas invited to preside over the 1928 meetings of the ilo International Labour Organization in Geneva In a world where child labour and racial segregation survived in the US the richest country of all and where the turmoil in Europe was far from resolved Argentinas record in the 1920s was hardly disastrous Raúl worried that the work of Olariaga and others like him provided comfort for special interests seeking government intervention and protectionism33 Meanwhile he supported the return of the gold standard on 25 October 1927 following Britains decision the year before hoping that it would solidify the return to stability and growth after the First World War34 The opening he needed the break that decisively changed Raúls career came unexpectedly in late 1927 when Duhau moved up from the presi dency of the sra to become a director of the Banco de la Nacion Argentina The bna was at the centre of Argentinas economy the financial institu tion closest to a central bank It had been created in 1891 to stabilize the sector after a devastating banking crisis and runaway inflation Duhau called Raúl immediately to let him know that he would propose a new Office of Economic Research within the Bank on the model of the US Fed eral Reserve and that he would also recommend his appointment as its first director Duhau had a major office in mind and was serious about commit ting resources he assured Prebisch that he would have complete freedom to design the new office select his team and publish its work in a new jour nal For Raúl this was the opportunity he had long sought the ideal posi tion from which to influence public policy combining applied research with a secure and prestigious institutional base Moreover the new director ate conferred status within the state and brought him into the first division of Argentinas economic managers Both financially and professionally Raúls apprenticeship was over 4 Taste of Power The Raúl Prebisch of 1928 contrasted visibly with the youth who had ar rived in Buenos Aires a decade earlier not knowing how to drink red wine His lifestyle had matured In 1925 having changed address eighteen times since his Aunt Luisas death in 1920 he had finally left boarding houses behind for an apartment But as his financial prospects advanced so did his ambition to buy a house of his own and this symbolic confirmation of personal independence became possible with his major promotion at the National Bank in 1927 A year later he moved into an elegant house at 1340 Luis Maria Campos A narrow but soaring fourstorey structure in the style of Le Corbusier it was designed by Alberto on his return from Paris the first structure of its kind in Buenos Aires Malaccorto and Max Alemann who shared the house had ensuite bedrooms on the third floor while Raúl occupied the master bedroom and study at the top with a terrace overlooking the city Raúl also had located a good tailor a comfortable income had made him a selective dresser like his father and he always arrived at the bna in expen sive and immaculate suits To all appearances he was one of Buenos Airess most eligible bachelors with a senior position close to the centre of power and with an assured future Yet Raúls continuing unidimensional lifestyle worried friends like Au gusto Bunge His work habits had not changed with greater financial secu rity without a discernible social life Raúls disciplined schedule centred on his work alone He still insisted on formal Spanish even with Malaccorto and Alemann who were his closest friends he was distant and severe took no part in their parties and had a reputation as a forbidding workaholic with a sharp tongue and a quick temper Otherwise he was quiet and studi ous like a retired academic Raúl would walk for hours along the riding paths of Palermo on weekends but he played no organized sports and Taste of Power 63 rarely left work before 900 in the evening The rich cultural life of Buenos Aires did not interest him Malaccorto and Alemann could only rarely draw him out even to the Colon Theatre where he was known to fall asleep during plays and concerts All of Raúls energies remained focused on his work in a singleminded will to succeed Only at the Bunge house on Sundays after his regular long walk in the country would he loosen up to show the different and more playful per sonality hiding under his wellpressed blue suits Throughout the 1920s Prebisch invariably attended these gatherings when he was in the city on weekends He retained his admiration for Bunge and took seriously his role of godfather to young Mario During these Sunday gatherings little Mario seemed to melt Prebischs formality he played puppets and word games regaling the boy with impersonations of the Argentine oligarchy or buying him outlandishly expensive birthday presents that horrified his parents such as a set of twenty popular novels by Hugo Wast Gustavo Martinez Zuviria considered sexually suggestive ultramontane politically reactionary and antiSemitic Mario responded with almost filial devotion calling him the most cherished and admired friend of my childhood with Raúl obviously playing the role of Segundo Linares during his own childhood in Jujuy many years before1 Augusto Bunge and his wife had just lost their only and much loved daughter and her early death deep ened their affection for Raúl who became almost a younger brother to Augusto They sensed that he was on the brink and needed a wife urgently to avoid permanent bachelorhood and isolation from normal society Prebischs new position was qualitatively different from his previous jobs no longer an employee at twentyseven years of age he was now a director a boss with an opportunity to test his leadership ability The bna delib erately severe and imposing occupying a full city block and located imme diately to the right of Government House in the Plaza de Mayo offered a privileged niche for his work The bnas mandate was simple to maintain sound money Immediately behind it stood the National Mortgage Bank another financial anchor of the country and guarantor of savings Bank President Tomas de Estrada gave Prebisch his full support in transforming the previous small Office of Economics Development and Statistics into a new Office of Economic Research modelled on the US Federal Reserve Board and European counterparts A working group under Raúls direc tion prepared a plan of operations for the new office and the design of a new publication titled simply the Economic Journal Revista Económica The goal was to establish a research team comparable in quality to those of other countries providing the same backup to the authorities responsible for monetary policy and it was not surprising that he chose Ernesto 64 The Life and Times of Raúl Prebisch Malaccorto as well as trusted friends including Max Alemann Edmundo G Gagneux Julio Broide and statistician Abraham Gerest Raúl used his perch in the bna to link up with other old friends from university days in the public and private sectors and to identify rising talent committed to re forming the Argentine state The new group was not merely gifted but also united by a group spirit and commitment to quality loyalty and purpose in Argentine public policy the nucleus of a modernizing elite that Prebisch saw as essential for rational state policy Prebischs research office in the bna provided a new element in Argen tina a group of young economists with the necessary resources to prepare economic reports for the minister of finance on request but also to present wellresearched and carefully presented articles on the economy in the Eco nomic Journal Planned as a monthly it sought a wider audience beyond the bna offering a regular and readable analysis of Argentinas economic and international trade prospects rather than scholarly or theoretically ori ented articles All articles were published as team research and remained unsigned but because editor Prebisch reviewed each issue and established the publication schedule they all bore his personal stamp The timing however was decidedly unpromising The first issue of the Economic Journal which appeared on 1 January 1928 coincided with the growing turbulence preceding the Great Depression While Raúl now had the opportunity for systematic work on his core interests since university days monetary and trade policy he confronted the task of interpreting the gathering international crisis and recommending appropriate responses to protect Argentinas economy Political warnings were also evident Yrigoyen was certain to return to power in the national elections scheduled for March 1928 the old man was intent on a comeback and controlled the electoral machine of the Radical Party throughout the country But while he was en sured victory he was also so widely disliked within his own party that a split could be foreseen As elsewhere Raúl and his team initially misinterpreted the warning signs preceding the Great Depression which began to affect Argentina before the United States Wheat prices peaked in May 1927 and the com modity markets turned downward in 1928 but the Economic Journal argued in January 1929 that there was no reason to panic Argentina had returned to the gold standard a year earlier a step Prebisch had long advocated and despite the negative trade picture he took an overall benign view of the business cycle hoping for the same rapid recovery as had occurred af ter the previous mild recession in 1926 Six months later the Economic Jour nal again reassured its readers that the worst was over noting that firm action had restored complete confidence in the German currency and Taste of Power 65 that Argentinas trade balance remained favourable This issue ended with a warning that a rise in US interest rates was sucking gold across the Atlan tic from all sides and could threaten international stability but it coun selled caution and continuity to ride out this newest downturn in the business cycle2 In the midst of this preoccupation about the international economy Prebisch faced an internal challenge within the Bank The 1928 elections had indeed returned the Radical Party with Hipolito Yrigoyen as the new president outgoing President Marcelo T Alvear moved out of his way to become Argentine ambassador in Paris Rumours circulated that Yrigoyen would eliminate the new Office of Economic Research in the bna because he disliked Duhau and the other Conservative friends of Alvear responsi ble for its creation and in any case it was certain that Estrada would be re placed as Bank President by one of Yrigoyens friends However the first months of Yrigoyens administration after his inauguration on 12 October passed without incident Then Estrada was fired with Dr Carlos Botto be coming the new Bank president Raúl and Malaccorto were certain they would soon be out on the street These fears in the Research Office deep ened when Prebisch was summoned to Bottos office and instructed to pre pare a report on the gold standard should Argentina stick to its policy of pesogold convertibility or should it be the first major country in the world to close its Exchange Office to halt the flood of gold to the US Prebisch and his team rushed out a recommendation against closing the Exchange Office arguing that the fundamentals in Argentina were sound Unlike in earlier financial crises Argentina was not experiencing a specula tive boom or inflation and the money supply was in check The preferred policy therefore was for Argentina to ride out the international storm and position itself for taking full advantage of the upswing of the cycle Raúl sent the report to the president and was given an appointment he prepared for the worst when he saw bank staff along the way ignore him as if they already knew the Research Office was consigned to history Instead Botto congratulated him Excuse me for not yet having made the acquain tance of a young man of your quality he said Your report is excellent and I sent it to President Yrigoyen who enjoyed it very much Prebisch left in a rush noticing that bank staff in the corridors now stood at atten tion as he passed to tell Malaccorto the good news that their Office of Eco nomic Research was safe for the time being3 In fact nothing could save the gold standard and Raúls advice was promptly overtaken by events Argentina faced ruin as the run on the peso accelerated and in December 1929 the Yrigoyen Government had no option but to salvage its remaining gold reserves by closing the Exchange 66 The Life and Times of Raúl Prebisch Office Confounded so completely by reality and swallowing his pride Raúl now accepted that the international depression was different than the downswing of a normal classic business cycle and the Economic Journal turned away from counselling longterm optimism to documenting the growing financial and economic recession in Argentina and the declining terms of trade facing it in the global economy By June 1930 the Economic Journal was blunt and bleak all of Argentinas inherited structural weak nesses and vulnerabilities which had been concealed during the 1920s were now exposed The export prices for its agricultural products col lapsed with receipts falling from 211 to 84 million pounds sterling be tween 1928 and 1933 while the prices Argentina paid for its industrial imports from the United States and Britain fell less steeply indeed this deterioration in terms of trade averaged 45 percent in this period gdp fell 14 percent from 1929 to 1932 This unprecedented situation created in creasing demands for assistance as businesses and farmers faced ruin4 In this worry and turmoil the Economic Journal became essential reading situ ating the country within the international economy and providing a con text for understanding what was happening in Latin America and to its key partners Britain and the United States With each month Raúl became an ever more influential advisor to Botto and the minister of finance President Yrigoyen seemed incapable of managing the government or responding to the depression and by mid1930 rumours began to circu late of a military coup Old and nearly senile he gave the impression of being alarmed at his misfortune in governing during this sudden adversity while his predecessor Alvear had presided over the happy 1920s he watched the approaching tide of depression with resignation He would not risk state intervention he had inherited orthodox economic policy and or thodox he would remain But unemployment and bankruptcies rose and labour strife increased sharply An antiYrigoyen faction spread within the Radical Party and grew bolder in its opposition after the 2 March 1930 elections for Congress revealed massive discontent with the president General José Felix Uriburu a second cousin of Raúls mother and a group of Army officers began to plot a coup under the slogan the father land is in danger5 Born in 1864 he had moved to Buenos Aires at thir teen growing up in a wealthy neighbourhood beside his boyhood friend Marcelo T Alvear Rising quickly in the military he was in the first graduat ing class of the War Academy created in 1900 with instructors from the German Army and he was selected as its director in 1909 after two tours in Germany where he met Field Marshall von Hindenburg Heavily influ enced by the geopolitical preoccupations of German military thinking re garding the threat of a twofront war Uriburu feared the growing power of Taste of Power 67 Brazil and Chile which forced Argentina to divide its forces between north and west Besides the failing economy and Yrigoyens passive response Uriburu was upset by the lack of funding for the Army antimilitarists in the Radical and Socialist Parties continued to block military appropria tions Then there was the Communist threat To Uriburus horror the first Latin American Conference of Communist Trade Unions was held in June 1929 in Buenos Aires and the Independent Socialists controlled the Federal Capital By August preparations for the coup were advanced enough for Uriburu to offer Lisandro de la Torre the Ministry of the Interior after the fall of Yrigoyen De la Torre declined but did not betray the plot General Agustin P Justo who had been Alvears minister of war in the 192228 govern ment was careful to offer no more than moral support to Uriburu in ef fect distancing himself from Uriburus clique and other officers including Justos protegé Captain Juan Domingo Perón were also far from enthusi astic about the coups chances of success6 Meanwhile the opposition to Yrigoyen gathered force in the Congress and the press forming a rare alli ance of disaffected Radicals Independent Socialists Conservatives and various other factions Both houses of Congress were paralysed The weekly sessions in Augusto Bunges home became increasingly less social and more politically intense as the crisis deepened in mid1930 Constitutional democracy in Argentina had long seemed secure fears of a rupture pressed even unemployment into the background as anxiety about the political future of Argentina gripped the capital Positions were being taken individuals and political parties were being forced to choose If Yrigoyens own Radical Party was divided the Socialist Party was in even deeper turmoil with the Independent Socialist Party having split from the main group in May 1927 taking with it with some of its leading personali ties such as Federico Pinedo Antonio de Tomaso and Augusto Bunge On 10 July Pinedo had signed a manifesto published in La Nacion declaring that Yrigoyen himself had annulled the Constitution by virtue of gross in competence meaning that he would support a military coup Pinedo was not representative of either half of the socialist movement he was so far to the right that he condemned Saenz Peña for granting universal male suf frage in 1912 as a dangerous sop to the illiterate mob in the capital But even Augusto Bunge now supported the overthrow of President Yrigoyen on grounds of terminal failure and more than any other group in society he represented the hard core of Argentine democracy The whole of Buenos Aires seemed obsessed Prebisch disagreed with this prorevolutionary groundswell calling military intervention most inopportune as well as dan gerous and shortsighted7 He argued that while Yrigoyen was incompetent 68 The Life and Times of Raúl Prebisch his term was already nearly half over and that a military coup would only deepen rather than resolve the political crisis He refused to accept the ar gument that only the military could provide the discipline required to lead the country in a time of crisis and depression At 730 am sharp on 6 September 1930 General Uriburu arrived at the National Military College in the Buenos Aires suburb of San Martin for a second try at a coup after an earlier attempt set for 30 August had failed The director of the college and his cadets hailed him as national liberator but the officers refused to join him in a march on the Plaza de Mayo in the capital and most other military units in the region were also loyal to the Constitution Faced by failure Uriburu had to make a choice between being shot in the barracks or in the Plaza de Mayo and with the instinct of a Prussiantrained soldier he decided to risk everything by leading his small band of supporters toward the centre of Buenos Aires What happened next impressed Colonel Juan Perón a young and rapidly rising Army offi cer as divine intervention the streets filled with people from every age gender class and party in the tens of thousands welcoming the military coup in a spontaneous orgy of public acclaim in the streets of the capital Flowers greeted the soldiers as they entered the Avenida de Mayo and the overwhelming civilian support overcame the reluctance of the military units that had refused to join Uriburu at the outset Perhaps most impor tant of all Dr Alejandro Shaw the doyen of Argentine financiers guaran teed a favourable loan of 1 million pesos which would stabilize the bond markets on the Buenos Aires and New York stock exchanges It was a virtu ally bloodless coup with Yrigoyen detained and sent to the island prison of Martín García in the Plate River Augusto Bunge was among those in the streets cheering Uriburus suc cess on 6 September in overthrowing the Radical Party Well give them three months he shouted predicting that Uriburu would fall under his own weight and create the preconditions for a Socialist victory8 La Nacion and La Prensa the countrys two most prestigious newspapers also sup ported Uriburu with the former calling the coup a real civic apotheosis The American ambassador John Barret agreed noting that Argentina faces an era of progress Most enthusiastic of all was German President Field Marshall von Hindenburg Uriburus hero and the first person he telephoned after the fall of the Yrigoyen Government9 Prebisch did not share in the public festivities that filled the streets of Buenos Aires with wildly celebrating mobs Instead he remained in his office tidying up the weeks work arriving home late and dining alone Malaccorto was reading in his room next morning 7 September when the telephone rang for Raúl Answering the call he said that Raúl had Taste of Power 69 already left for his customary long Saturday walk through the Palermo Woods But it was the new minister of finance Dr Enrique S Perez on the line and he wanted to speak urgently with Prebisch When Malaccorto re peated that he had no way to contact Raúl and that he would return in sev eral hours Perez simply mentioned that he would call later Raúl had often been pestered by his roommates with the prediction that he was destined to become undersecretary of finance when he returned from his walk and was told that Enrique Perez had telephoned he laughed it off as yet another Malaccorto joke Not only had there been no public announce ment of Uriburus new Cabinet but there were many claimants more se nior than himself for the prize of undersecretary Moreover Raúl had no experience in running a large department his only serious public sector experience was the small bna Research Office staffed with proven friends from earlier days Before he could change clothes however the doorbell rang to an nounce the minister himself on the doorstep requesting a meeting with Raúl Coffee was hastily brought to the fourthfloor study Raúl had never met Perez a formidable man more than forty years Raúls senior an estab lishment figure who had served as the last Conservative minister of finance before the First World War in 191014 so lined and wrinkled he almost crackled when walking With oligarchic authority Perez invited Prebisch to serve as his undersecretary in the Provisional Government Taken un awares by the offer Raúl blurted out that he was neither wealthy nor had he the backing of powerful industrial interests in Buenos Aires Perez re plied that the bna had presented a list of candidates on which he was the first choice but Raúl guessed that Luis Duhau and Enrique Uriburu both close friends and fellow sra associates of Perez had pressed for his ap pointment Raúl wasnt asked whether he accepted or not Instead Perez said only We start tomorrow Prebisch called it a moment of great exhil aration10 The offer was irresistible but he did call Augusto Bunge for his advice Bunge told him to accept Officially Raúl would retain his formal position at the bna as director of Economic Research while on leave to the Ministry of Finance Malaccorto would become acting director At the age of twentynine Raúl had captured a position at the epicentre of the Argentine state He moved immediately from the bna to his new office in finance not far since the joint financeagriculture building occu pied the same location to the immediate right of the Casa Rosada meet ing the new Cabinet which included Ernesto Bosch as minister of foreign affairs So meteoric a rise left him temporarily disoriented but Perez left no doubt that Raúl had to either take this huge department in hand or face the wilderness Overhauling finance meant clearing up an administrative mess 70 The Life and Times of Raúl Prebisch in which deliberately confused lines of accountability had produced a chaos of special deals negotiated in the corridors with the office of the un dersecretary With the support of Malaccorto Max Alemann and Israel Gerest he launched a modernization program in which the huge depart ment was reined in and divided into two divisions finance and administra tion with Prebisch himself heading the former and Alemann as the new budget director It was evident that he had an unusual talent for adminis tration a mind of his own and the confidence to manage effectively at the highest government levels after two weeks Dr Perez called Prebisch to his office to confirm his appointment11 This abrupt rise to power however ended the luxury of academicstyle armslength research in the bna Office of Research where Prebisch had had time to reflect on concepts such as deteriorating terms of trade As undersecretary of finance he now had to shoulder responsibility for tackling the Argentine crisis There was no time to think as it deepened by the month As trade and tax receipts collapsed a yawning budgetary deficit loomed Adopting the familiar orthodox policies practiced in other Western capitals Raúl attacked it in an adjustment package designed to attract new capital stabilize the economy and prepare for an upturn in in ternational markets Public sector salaries were cut by 10 percent and gen eral expenditures were slashed far harder12 At first Prebisch really believed that recovery was just around the cor ner But orthodox measures failed to revive the economy Real wages fell by 20 percent from 1929 to 1932 and unemployment was sufficiently dra matic to reduce strikes from 119 in 192930 to only seventyfour in 1931 3213 The crisis in the countryside was even more profound than in the cit ies as prices for meat and grains remained low and forced many farmers into bankruptcy Internationally the full dimensions of the Great Depres sion were becoming more obvious Production of steel in Britain had dropped from 96 million tons in 1929 to 52 in 1931 and the country de spaired of recovery Ramsay MacDonalds Labour Government was reeling In Brazil Getulio D Vargas had deposed the elected government on 25 Oc tober 1930 six weeks after the Uriburu coup The US Congress passed the SmootHawley tariff in 1930 closing its markets for foreign imports Argentinas best indeed only export customer was Great Britain but Canada Australia New Zealand and South Africa were demanding special imperial trade preferences in agricultural products to its disadvantage14 Pressure grew for special measures in Argentina as well The banking sec tor in Argentina was also near collapse but the government from General Uriburu down was terrified of inflation The imminent failure of the bna however produced the even worse nightmare of bankruptcy Using this Taste of Power 71 threat Prebisch overcame official resistance to reviving old dormant legis lation that authorized the bna Exchange Office to advance paper for com mercial operations and he placed Malaccorto in charge of a special commission to supervise these transactions There was no theory here at all the only policy was survival using the single criterion of trying and following practical initiatives that showed results After months of frustration with the evident failure to halt the economic slide Raúl faced the additional aggravation of political turbulence Gen eral Uriburu was not the tame father figure the multitudes who had cele brated the military coup had expected Only four days after seizing power Uriburu announced that he had suspended the Constitution dissolved the Congress and declared a dictatorship He also set up a special section within the federal police to deal with labour and leftist organizers and to beat up and torture opponents he followed the Nazi storm trooper model in organizing the Argentine Civic Legion by merging extreme nationalist groups fitting its members with brownshirted uniforms providing mili tary training and issuing them weapons and ammunition from the War Ministry Uriburu had turned to the most paternalistic and corporatist sectors of the Argentine establishment The result was the rapid growth of both domestic and international opposition He was now branded in London and Washington as a profascist dictator while the mainstream press deserted him Within the military itself it was evident that Agustin P Justo was far from happy with the Uriburu regime Confronted by an opposition it had underestimated Uriburus Provi sional Government agreed to permit free and fair elections in the province of Buenos Aires in April 1931 on the assumption that the Radi cal Party was discredited and that General Uriburus prestige would be strengthened by a triumphant victory In fact the Radicals won handily and Uriburu responded by annulling the results Finance Minister Perez like many of his conservative colleagues had viewed Uriburu as a transi tional figure whose ultimate respect for electoral democracy was not in doubt and he resigned when so clear an electoral victory was reversed Prebisch had to choose between staying and leaving with his minister Ini tially he decided to resign but changed his mind when Enrique Uriburu Perezs replacement appealed to him to stay with the argument that the end of the regime was in sight anyway Not only was Uriburu gravely ill but both General Agustin P Justo and Lisandro de la Torre had con vinced him to restore constitutional rule with national elections set for 8 November Raúl knew that the new minister supported him without qualification and with this added political support he now had more le verage to deal with the depression 72 The Life and Times of Raúl Prebisch Political instability in Britain strengthened Prebischs argument for greater innovation in Buenos Aires Ramsay MacDonalds Labour Govern ment elected in 1929 had been feared by the right but had been too timid in practice by far and was finally brought down on 31 August 1931 by the European financial crisis The subsequent National Government formed with MacDonald as pro forma prime minister was in fact domi nated by familiar Conservatives beginning with Neville Chamberlain as chancellor of the Exchequer The results were immediate and contradic tory The Labour Party although feared by the right had stuck to old policies while the National Government unhesitatingly adopted radical measures Britain abandoned the gold standard and devalued its currency with the pound losing 20 percent of its value overnight In November Board of Trade President Walter Runciman introduced legislation to im pose duties of up to 100 percent on imports deemed to be entering in ab normal quantities Free trade was replaced by protectionism a revolution by the very conservatives in London revered in Buenos Aires as the bastion of sound laissezfaire principles15 With times so out of joint the pursuit of principle in Buenos Aires had to give way to the realworld search for pragmatic measures to limit the dam age Prebisch realized that the mindless repetition of phrases such as the recovery is just around the corner or there is light at the end of the tun nel were clichés and wishful thinking and that the Argentine state must now pursue its own mix of policies according to the single criterion of re sults it could not afford to sit on the sidelines hoping for better times It was not so much a conscious break with orthodox approaches as a realiza tion that the disorientation in Argentina after 1929 was too deep to permit recovery with conventional approaches In October 1931 Prebisch reacted to Britains abandonment of the gold standard by convincing his government to introduce exchange controls to stem the outflow of gold and facilitate payment of Argentinas hard currency debt For this he assembled another group the Exchange Con trol Commission with three representatives from private banks including René Berger who had arrived in Buenos Aires three years earlier from France to avoid further devaluation and review exchange rates and export applications on a daily basis The exchange rate was pegged and the distri bution of foreign exchange was rationed distinguishing between essential imports remittances of public utility companies and immigrants personal travel and nonessential and commercial transactions These measures al lowed Argentina to respond on its own terms to the round of competitive devaluations underway in the global economy Prebisch also proposed im port duties and he decided that Argentina should explore setting up a Taste of Power 73 modern central bank to manage the economy This idea had already been explored by his group in the bna before 1930 and now he assembled a group of five experts drawn from finance and the bna to begin work on this project chaired by bna financial specialist Alberto Hueyo Malaccorto was sent to Chile to examine the operations of its Central Bank16 Most important Prebisch decided to launch an overhaul of taxation pol icy with a progressive income tax on the Australian model he had seen in 1924 Tax reform was difficult politically because it directly affected Gen eral Uriburus immediate supporters and neither Enrique Uriburu nor Duhau believed he would approve it Indeed both refused to present the is sue leaving Raúl to argue the case alone with the president He had been meeting Uriburu each day at the end of the afternoon and had developed a close relationship of trust on matters of economic policy He now pleaded with him that increasing revenue was an essential part of any program to stimulate the economy and provide support for struggling firms The gen eral reluctantly agreed not on grounds of equity but rather economic emergency and the law was published on 19 January 1932 Prebisch eased the public relations issue by calling it a revenue rather than in come tax It was a key victory Never again would I enjoy such direct ac cess to power such complete confidence of the Minister and such direct access to the President of the Republic Prebisch later explained17 Prebisch was overworked and exhausted completely without social life apart from the company of Malaccorto and Alemann in their home and he had not taken a day of vacation for three years Moreover his friendship with Augusto Bunge his strongest personal bond and destination in Buenos Aires was endangered by conflict over Raúls continuing to work for the military government Bunge acknowledged his own error in sup porting the military coup and supported Raúls decision to work for the Provisional Government but he now saw the 1930 coup as a fundamental turning point in Argentine political history and claimed that Prebischs work indirectly strengthened the dictatorship by giving it legitimacy Bunge was being harassed by the police he threatened to break his rela tionship with Raúl if he stayed in his position But Raúl refused defending his decision to work for General Uriburu He prided himself and his team on their honesty and commitment in serving the Argentine state during a period of domestic and international turmoil They had finally got the income tax for which the Socialist Party had fought for a generation Prebisch also viewed Uriburu as a simple and wellintentioned man easily duped and manipulated by clever intriguers who painted him unfairly as a dictator At a personal level Raúl had grown fond of Uriburu Raúl recounted that the general had made a point of seeing his mother when 74 The Life and Times of Raúl Prebisch he visited Tucumán in early 1931 recalling the days when they had played together as children in Salta18 This painful confrontation with Bunge was resolved on 21 March 1932 when Prebisch unexpectedly resigned The 8 November elections had been won by General Augustin P Justo now the new President of the Re public Justo and his running mate for vicepresident Julio A Roca had defeated Lisandro de la Torre and Nicolas Repetto but the victory was tainted because the Radical Partys candidate Marcelo T Alvear was not al lowed to return to Argentina to stand for election When he was locked out the Radical Party boycotted the election but it was generally agreed that Alvear would have won over the JustoRoca team in a fair contest For opponents the fraudulent election symbolized the infamous de cade of the 1930s the socalled Concordancia or Conservative revival with the Argentine Army playing a central role in the background behind a pseudoconstitutional facade From another perspective the Concordancia reflected the political entropy suffered by the major parties in Argentina in which the political centre was collapsing Not only had the Socialist Party split after the Russian Revolution in 1917 and then again in 1927 but Nicolas Repetto had actually stood for vicepresident with Lisandro de la Torre in November 1931 in a new formation called the Democratic Socialist Alliance After the election Antonio de Tomasso joined Justos Cabinet as minister of agriculture the most important portfolio after for eign affairs and finance thus becoming the first Socialist ever to hold of fice in Latin America19 The Radicals and Conservatives were also split Prebisch did not resign from finance on principle he left because Justo chose Alberto Hueyo as his new minister of finance and the two men dif fered sharply in both style and substance Hueyo was a wealthy and inde pendent Conservative a determined anglophile who admired everything English from his Scottish nanny and waistcoats to his cavalry twills pipes and blazers and even spoke Spanish with an English accent More impor tant the two differed over approaches to inflation and the formal occasion for Raúls resignation was their disagreement over Hueyos insistence on terms for a patriotic bond offering which Raúl rejected as inflationary he also rejected the Central Bank project proposed by Prebisch In any case Hueyo turned more to private sector bankers for advice than to his own undersecretary and Raúl found this lack of confidence intolerable20 On 21 March 1932 he handed in his resignation and Bunge was de lighted that his friend had finally come to his political senses Critica vi ciously attacked Prebisch and rejoiced at his departure calling him the sphinx and the financial face of the dictatorship whose departure was a prerequisite to saving Argentina Taste of Power 75 Raúl badly needed a change He remained an employee of the bna but applied for and was granted a twomonth leave of absence for an ex tended trip to Europe with Paris as his first destination He intended to rendezvous with exPresident Uriburu who had embarked on 12 March for Berlin where he was to undergo an operation in an Army hospital His condition deteriorated rapidly and forced emergency treatment in Paris the surgery failed and Uriburu died on 29 March 1932 while Raúls ship was in the middle of the Atlantic Ocean Among his old friends only Ernesto Bosch was able to bid him farewell on his deathbed Bosch had re signed from the government when Uriburu had vetoed Alvears return and had been appointed Argentinas ambassador to the Conference on Disar mament in Geneva but he had remained loyal to the general as a friend and rushed to his side in Paris for his final hours This was a poor start to the trip When Raúl arrived in Paris he read the news of Uriburus state funeral in Buenos Aires at which his boyhood nem esis Robustiano Patron Costas had delivered the eulogy Depression ridden Paris seemed remote from his happy memories of 1924 when he and Alberto had roamed the Left Bank and drunk cheap red wine long into the night it now was short of joy and energy as well as prosperity preoccupied by the imminent triumph of Nazism in Germany Rome was triumphalist Berlin was terrifying So far from providing a break from rou tine Europe was depressing His vacation was also damaged by a wounding insult from Buenos Aires which caught up to him in Italy shortly after leav ing Paris when he was informed that Hueyo had frozen his salary by spe cial ministerial decree on suspicion of concealing or removing a Treasury certificate after being fired Hueyo even refused to authorize Prebischs ac cumulated holiday entitlement leaving him stranded without cash and re quiring him to take a loan to remain in Europe Cutting back his planned twomonth holiday Raúl landed at the port in Buenos Aires and headed straight for the Ministry of Finance to confront Hueyo showing him where the Treasury document in question was filed and personally locating the allegedly concealed certificate Only then after this entirely unsatisfactory break did Prebisch return to his house at 1340 Luis Maria Campos where Malaccorto and Alemann surprised him with a welcomehome party but he was grumpier than ever Prebisch was at loose ends upset and preoccupied Although he re tained his job at the bna as director of Economic Research he had tasted power He prepared his seminar at the faculty he took up the reins of the Economic Journal he even advised Finance Minister Hueyo who had elabo rately apologized for his gaffe Raúl pondered his future and the lessons of his brief period in power He experienced the outsiders dilemma the 76 The Life and Times of Raúl Prebisch legacy of his Tucumán inheritance He now realized fully his vulnerability and dependence on powerful patrons he was without consistent political support an institutional base or serious wealth of his own How could he move beyond a subordinate advisory role in the Argentine state into a posi tion impervious to the flow of ministers and political appointees How could he construct a core institution within the Argentine system from which he could direct an autonomous technical elite capable of moderniz ing the economy at a time of national emergency and political decay Just when the Ministry of Finance was reorganized and with a new team in charge political change at the top had eliminated him from the scene On 15 August Raúls dark reflections were interrupted by a telephone call from Adela Moll inviting him on a blind date a performance of the Comédie Française at the Colon Theatre She was a friend of Ernesto Malaccorto and particularly Max Alemann whose family had been close to the Molls for many years Eight years younger than Raúl she was diminutive in size and thus was called Adelita by her friends The daughter of a GermanArgentine businessman bankrupted during the Great Depression who had departed for Germany a year earlier she gave piano lessons sold life insurance worked as secretary to Frau Keller the wife of the German ambassador and arranged music for the Colon Theatre to make ends meet Her only sister Alicia lived in Holland and she had two brothers also older Carlos in Spain and Alfredo a local businessman in Buenos Aires Adelita explained to Prebisch that a group of eight friends including his two flatmates had tickets expensive tickets at 15 pesos each but that her date an Englishman had been called out of town at the last minute Malaccorto she continued had suggested that he might be free Would he come She didnt want the ticket to go to waste Adelita thought it unlikely that he would agree given his reputation as an irritable bachelor but Malaccorto felt he had changed somewhat recently he seemed more civ ilized since he got back from Europe Raúl said he would be delighted to come and the two met for the first time After the show Raúl invited the whole group of eight back to his house for coffee and before Adelita left Raúl invited her for dinner on Sunday Would you like to buy some life insurance she smiled I prefer you he replied21 The Bunges reacted quickly to this promising development they knew the Moll family in the Buenos Aires German community and approved Adelitas father Carlos had followed a similar path to that of Albin Prebsich as global wanderer before settling down in the capital marrying French immigrant Alicia Buffe and he had prospered in the exportimport boom preceding the First World War He had even been elected president of the Taste of Power 77 prestigious German Club before the depression Severely affected by the 191418 war he had rebuilt his company and took his entire family on a visit to Germany in 1926 only to lose everything again in 1930 and be forced at seventytwo to return for good to the home of his birth as empty handed as the day of his departure over fifty years before Mrs Bunge flustered to promote the romance and insisted that Adelita also come to their next Sunday meetings But her efforts were unnecessary by the time of Adelitas first visit the romance was irrevocable Soon the two were seen together everywhere in the capital and five weeks later on 21 September they were engaged Raúls mother disapproved of an alli ance to a woman she had never met and from a family she didnt know Her eldest son Ernesto the engineer was happily married and well on his way to becoming president of the University of Tucumán Alberto had also married well not only into Buenos Aires society but also to a woman who could control his spending Alberto Maria Mercedes Lerena would bellow back to your drafting table But her other son Julio had made a disastrous choice that was threatening a promising medical career with depression and substance abuse Raúl himself was unconcerned and the couple did not visit Tucumán for a formal introduction to his parents before their wedding although Adelita took the initiative and wrote to her future motherinlaw on 10 October reas suring her that All I want is to be his loyal friend I love him so much that I cannot tell you what this means to my life22 When asked by Malaccorto whether he knew that Adelitas brother Carlos Moll was a fugitive and a con victed swindler who had skipped jail in Buenos Aires following a notorious business fraud crossed the Plate River abandoning wife and children in a motor launch and then forged an e on Moll in his passport to get a visa to Spain where he had for the moment dropped out of sight Raúl replied simply I am marrying Adelita not Carlos Enrique Uriburu told Raúl that he was a fool to damage a brilliant career with a marriage outside society and that he should send her back to Germany instead To Adelita Raúl con fided If I cant have you I wont marry anyone23 Events now accelerated their marriage At the request of the bna the Argentine Government nominated Raúl to work in Geneva with the League of Nations Preparatory Commission for the forthcoming World Economic Conference to be held in London the following summer As director of the bna Research Office Prebisch was a logical nominee moreover he could scarcely refuse this invitation The longdelayed World Economic Confer ence followed two years of fruitless international attempts to deal effectively with the Great Depression and it was recognized as the most important con ference since 1919 If successful it offered a unique opportunity to restore 78 The Life and Times of Raúl Prebisch stability and growth in the international economy Raúl was keen to take up this job at the Preparatory Commission and help the League play a successful role in economic diplomacy in London anxious to believe that it could oversee new rules for an effective international trade regime to reverse the vicious cycle of protectionism since 1929 Saavedra Lamas was a strong supporter of the League and was determined that Argentina re claim its membership after walking out in 1920 when its absurd demand for universal Council membership without vote or application was over whelmingly defeated24 Accepting the assignment meant leaving quickly for Geneva He re quested and received another leaveofabsence without pay from the National Bank he also asked Adelita to marry before the departure date of 25 October or he warned they would have to wait a year In fact Raúl did not want to go to Geneva alone and Adelita was similarly committed to be ing with him It was agreed that the marriage would be Catholic in defer ence to Raúls mother and it was scheduled for 900 am on 25 October at Santo Cristo Church the last possible opportunity since their boat was in the harbour and sailing for Geneva that evening But a final problem oc curred when their priest discovered a liturgical error the couple had for gotten to post the customary banns or announcements of intent to marry on the three preceding consecutive Sundays and he balked at proceeding with the ceremony Raúl insisted that the service be held anyway and fi nally threatened to find a Protestant minister or rabbi if the priest main tained his intransigence To their relief he relented although in poor humour with a brief ceremony sandwiched between masses in a side cha pel of the church with Adelita and Raúl wearing working clothes rather than the usual gown and formal suit There was no reception instead both left the service immediately to clear away loose ends before departure Augusto Bunge was their witness and signed the marriage certificate Raúls parents did not come from Tucumán But a large group of friends gave them a memorable combined wedding party and sendoff on board the SS Duilio in Buenos Aires harbour and their life together began with a private champagne toast as the ship slipped out to sea with fireworks light ing up the city skyline Snapshots from the long European honeymoon frame a radiant couple against the smooth Atlantic on the boulevards on Lake Geneva on bridges over the Seine in Amsterdam and Piccadilly Before returning to Argentina Raúl gave Adelita a gold locket engraved with Austen Chamberlains tribute to his wife She has been privy to all my plans she has never divulged one She has rejoiced in my successes she has encouraged me in my disap pointments she has guided me with her counsel she has warned me Taste of Power 79 off dangerous courses and she has never allowed me to forget the humanity that underlies all politics25 Housing in Geneva had been arranged by Enrique Siewers Raúls old friend from the faculty who now worked with the ilo International Labour Organization He had rented a wellappointed apartment for them in the Place St Pierre the home of a French baroness The idyllic circumstance in cluded the discovery of winter after the summer heat of Buenos Aires and the surprise of frozen milk bottles in the morning but a more romantic en trance to Europe could hardly have been imagined A maid arrived each morning to clean and polish they ate one meal at home and dined out for the rest While Raúl worked at the League Adelita hiked around the lake and in the snowclad mountains around Geneva There was time to travel given the Leagues leisurely work schedule and they visited Italy like vaga bonds Adelita wrote going from one interesting town to the next in local trains until they reached Rome and then Paris From Paris they travelled north to spend Christmas at her sisters home in Holland where they were reunited with her parents who arrived from Germany to see them This is the best present Raúl could have given me she said They accepted Raúl like a son and he reciprocated discovering that the Moll family was titled with its own coatofarms and owned one of the most distinguished houses on the Baltic coast When they were back in Geneva on 6 January apologiz ing for not having written earlier Adelita wrote to Raúls mother I am so happy with Raúl that I dont know how the time flies by26 Later in January they were successful in locating and making contact with the Albin Prebisch family in Germany but this trip was a failure Here also Raúl discovered that the Prebisch name was more recognized in Saxony that he had supposed ex tending to the Prebisch Gate a natural bridge formation across a canyon in the nearby Hartz Mountains While Adelitas parents were solidly antiNazi and worried by the growing power of Hitler in Berlin Raúls relatives were Nazi supporters and had already completed their genealogical tables prov ing undiluted Aryan purity The beautiful countryside of Saxony surround ing the Prebisch lands and the splendid city of Dresden contrasted with a pervasive and suffocating sense of foreboding Adelita and Raúl left as quickly as they could decently extricate themselves from a longdelayed fam ily reunion and were relieved to be back in Geneva Raúls months in Geneva from December 1932 to April 1933 were a forceddraft education in the theory and reality of international trade Glo balization or the crossborder flow of goods services and capital had reached an advanced stage before the First World War only to break down definitively with the onset of the Great Depression The US had played the lead role in the postwar recovery of the 1920s having replaced Britain 80 The Life and Times of Raúl Prebisch as the chief international lender but after the 1929 stock market crash Washington took a wrong turn by undermining global trade with the SmootHawley Act of 1930 thereby leaving its debtor countries without the ability to service their US loans Foreign gold reserves poured into the US from around the world but trade collapsed in a downward spiral of protec tionism and competitive devaluation taking down the US economy as well Prebisch had witnessed the results firsthand in Buenos Aires adopting state intervention in 1931 as a defensive measure under Uriburu But it was quite different to view the Argentine experience from the cen tre of Europe and particularly from the League of Nations which remained a bastion of freetrade orthodoxy The Leagues Economics Department comprised earnest blue suits such as Swedens Charles Rist who stood in awe of official thinking in the Bank of England and US Federal Reserve Un derneath this blandness however and indeed stimulated by some of the Leagues own commissioned studies Raúl encountered a crossroads of ideas and debates on international trade and precisely the terms of trade is sue he had raised in the Economic Journal after 1928 The Swedish economist Gustav Cassel had produced a commissioned paper for the League in 1927 in which he noted that a very serious dislocation of relative prices has taken place in the exchange of goods between Europe and the colonial world27 The pricescissors problem he had identified of a widening gap between industrial and agricultural prices in the late 1920s which worsened as the depression advanced was global in scope Agricultural and raw materials producers were the chief sufferers from the deteriorating terms of trade that stemmed he contended from the protectionism monopolies and labour and trade unions of the industrial West Eastern Europe led by Romania had tried unsuccessfully to create an agrarian bloc after 1930 and Romanian economist Mihail Manoilescu advocated protective tariffs and in dustrialization in Eastern Europe as a defense against declining terms of trade in his Theory of Protection and International Trade Labour productivity he argued was always superior in industry than in agriculture a different position from Argentinas Alejandro Bunge who saw industrialization and agriculture as complementary and mutually reinforcing Although Manoilescus book was available in English Prebisch neither read it nor did he meet Manoilescu who may have been in Geneva for part of this pe riod28 However Raúl did meet conservative financial advisors to the Leagues Economic Committee such as Britains Sir Frederick LeithRoss with whom he lunched at the Beau Rivage Hotel and who shared with Raúl his worries about the commitment of the major Western governments to the World Economic Conference LeithRoss maintained his belief in a natural division of labour between industrial and agricultural producers but he Taste of Power 81 complained that protectionist policies in the leading industrial states were ruining the prospects for the recovery of international trade He heard the same message from Jean Monnet in Paris when he visited Luis Duhau who was serving as Argentinas ambassador to France Later it was revealed that Norman Montagu governor of the Bank of England had stated that noth ing would come out of the Conference but Raúl on his arrival in Geneva was not at first cynical or discouraged by its prospects29 On 11 December 1932 he presented a paper from his minister of agriculture entitled Suggestions Regarding the International Wheat Problem which proposed a voluntary reduction of acreage to reduce the huge wheat surplus which had ballooned to 18200000 tons when world commodity trade collapsed after 1929 Argentina itself had an exportable surplus of 2907000 tons The price per bushel had also plummeted to 059 in 1932 falling from 135 in 1928 The International Wheat Conference led by the four major exporters Argentina Australia Canada and the US had met in London in 1931 without success Raúls text of the Argentine proposal therefore rec ommended that voluntary crop reduction be placed on the agenda for the International Economic Conference Although the concept had been raised in 1931 the scope of the Argentine proposal made it a first in international economic diplomacy30 Prebisch quickly shed his optimism He had arrived in Geneva eager to work but he found that the League and smaller countries such as Argentina counted for little among the world powers The currency of international trade was power and the market concealed the power relationships that stratified the global system into a core of dominant subjects with a broad band of heterogeneous peripheral objects There was indeed a single global trading order but with a hierarchy divided into two distinct group ings At the apex were the Western industrial countries already identified by their membership in the Leagues Permanent Council including the US even though it was not a member of the League At the bottom were the agricultural and raw materialsproducing countries Within this cate gory were the large and politically independent but nonindustrialized countries Argentina Canada Australia Eastern European states such as Romania which depended on the trade rules set by the industrial powers For all the size and comparative splendour of Buenos Aires Argentina was as politely ignored in Geneva as Canada and Australia No one seemed to care much about these producers whatever their impressive territorial size or per capita wealth and Prebisch felt that he had been invited to work in Geneva as a mere symbolic overture to placate these farflung regions Argentinas 11 December proposal on voluntary acreage reduction was ignored Smaller countries than Argentina were even more marginal at the 82 The Life and Times of Raúl Prebisch Preparatory Commission Prebisch himself had no recollection of even meeting other Latin Americans in Geneva and prepared to return home earlier than expected Scheduled to embark for Buenos Aires on the SS Giulio Cesare on 31 Jan uary Raúl instead received a cable from the Argentine Government with instructions to remain in Europe until August to join a mission to Britain headed by VicePresident Julio A Roca to negotiate outstanding debt and trade issues His stay to Europe therefore expanded from a relatively brief and targeted mission to a significantly longer and more complex diplo matic experience dealing with the two priorities facing Argentina in the Great Depression Arriving in London in February after meeting the Roca delegation in Paris and accompanying it to Britain Prebisch assisted the vicepresident in a successful round of debt negotiations Argentina had ar rived with a clear strategy aimed at reducing interest rates achieving a twentyyear amortization schedule and avoiding a risk premium Praised in the Buenos Aires press the outcome was better than Roca had expected and eased the immediate crisis somewhat But the difficult part trade lay ahead The success of Argentinas trade mission to Britain was vital for preventing the loss of its most important beef market and with it any possibility of economic recovery Argentina had de veloped a triangular pattern of trade with Britain and the United States in which it accumulated a significant surplus in trade with Britain its primary export market Exports to the US were limited the US raised its own cattle and in any case had higher sanitary standards that kept out Argentine beef The US however was increasingly important for industrial imports and the surplus from British trade balanced the endemic deficit with the US The beef trade remained the lifeline of the Argentine economy and there was simply no alternative market to Britain In effect the Great Depression had hit Argentina from two directions First it encountered the price scissors faced by all agricultural producers as the price of exports fell rela tive to their imports of industrial products from advanced countries second its exports to Britain were threatened after London introduced high protective tariffs in 1931 and signed the Ottawa Accords a year later giving preferences to its former colonies and Argentinas principal com petitors Canada and Australia The British Government was fully aware of its leverage over Buenos Aires and already in 1929 had threatened to cut Argentine exports unless it was offered trade and investment concessions President Yrigoyen had accepted this bitter pill in the DAbernon Treaty named after the British chief negotiator Viscount DAbernon but the 6 September 1930 military coup intervened and prevented its ratification Now the British again threatened to block Argentine beef imports with Taste of Power 83 trade accounting for a quarter of Argentinas gross domestic product the future of the economy lay with VicePresident Julio Roca and his delega tion in London The bilateral trade negotiations between Britain and Argentina got un der way on 12 April Prebisch first served as expert and then de facto sec retary of a strong delegation including the prominent lawyer Guillermo Leguizamon Dr Carlos Brebbia and Miguel Angel Carcano two of Argentinas leading agricultural experts and Manuel Malbran who was Argentine ambassador in London The outlook for Roca and his delega tion was not good however and even the first meetings with their British counterparts in the Carlton Hotel were most unpromising Walter Runciman president of the British Board of Trade headed the British ne gotiations and he wanted to exploit his position of strength An old Lloyd George Liberal turned protectionist his dry manner and acid tongue left no doubt that Britain wanted greater concessions than those offered in the failed DAbernon Treaty three years earlier Britains adverse trade balance with Argentina had more than doubled from 18100000 to 38000000 pounds between 1913 and 1932 Runciman in fact was in a bloody mood after the fighting and snubbing he had absorbed in Ottawa during the Imperial Economic Conference from 21 July to 20 August 1932 While the Argentines viewed the resulting trade preferences for its Canadian and Australian competitors as a prover bial sword of Damocles the British thought they had been skinned Its large delegation including journalists had arrived from London with the expectation of a mutually happy bargain with the Kings loyal subjects in which they would grant preferences in exchange for concessions on their manufactured products31 But having assumed an easy ride and barely prepared for the conference the British not only confronted tough and professional negotiators but also found themselves sharply attacked as heartless imperialists whose stupidity in World War I had cost Canada 66655 dead and another quarter of a million wounded Now the old crew was coming back to suck the blood of Canadian and Australian farmers and destroy their new factories set up after the war The climax came with an allnight negotiating session on 1920 August which Neville Chamberlain left in disgust but which narrowly avoided complete breakdown with an agreement that nevertheless left London very displeased Facing Roca in London on 11 April 1933 Runciman was in no mood to tolerate another fracas with delegations of uppity colonials or semi colonials in the Argentine case Meeting in London meant that he had the British media to soften up the Argentines with their howling protection ism and unlike in Ottawa his delegation this time did its homework 84 The Life and Times of Raúl Prebisch Armed with tariffs as a weapon the glacial Runciman was negotiating sev enteen bilateral agreements with smaller agricultural producers including Argentina and he presented Julio Roca an unyieldingly tough package of demands with the same arrogance he would display five years later in blud geoning Czechoslovakia to accept Hitlers demands Prebisch was least re signed to Argentinas impossible mission At one point he replied sharply to Runciman for which he was criticized by Leguizamon in his own delega tion Roca subsequently learned that Leguizamon had been retained by British railway interests in Argentina and removed him from the meetings But Roca was trapped Member of a charter family in the Republic he had already served as national deputy ambassador and governor of Cordoba before his vicepresidency under Justo His father had even embedded public duty in Julio A Rocas own name the A standing for Argentino Now in London in the negotiation that would identify him in history books he was bound to fail An insomniac Roca would pace during the night or work on his translation of Shelleys Adonais Runciman was inflexible and there was little room for manoeuvre since Argentina had no alternative to the British market the terms of the draft RocaRunciman Treaty announced on 1 May should not have surprised anyone following international trade politics during the depression years While Britain guaranteed a quota of meat imports equalling 1932 sales except in unforeseen circumstances and promised not to raise tariffs on its wheat the Argentine Government agreed to numerous conditions tar iff reductions on British industrial goods benevolent treatment of British investment and preference to British machinery and vehicles over all other competitors payment of Argentine debts to British creditors in sterling earned from foreign sales and an agreement to reserve 85 percent of the meat export trade to Britain for the Britishowned meatpackers in Buenos Aires32 In effect Roca could not prevent Britain tying the foreign ex change that Argentina earned from its British beef exports to bilateral trade and investment privileges that would force a reduction in US exports to the largest economy in South America As with the other bilateral trade agreements negotiated by Britain a better bilateral deal than Runcimans agreement with Denmark for example the British press blasted him for not squeezing harder Faced by these British editorials The Worst Bargain of All or simply Sold La Nacion in Buenos Aires praised the agreement as the best possible in an imperfect world and gave consider able space to the role of Prebisch in the negotiations But for Raúl it was a painful demonstration of Argentinas international weakness Roca left for home immediately on 10 May with the actual signing date of the Roca Runciman Treaty set for 27 September in Buenos Aires33 Taste of Power 85 Argentinas attention now turned to the muchheralded World Eco nomic Conference in London scheduled to open on 12 June Prebisch was again requested by the government to be part of the delegation again as secretary and he therefore remained with Adelita for another two months in the British capital Tomas A Le Breton was named as its head with the delegation also including Ambassador Malbran Carlos Brebbia who came up from the International Agricultural Institute in Rome Ernesto Hueyo brother of the new minister and Anibal Fernandez from Buenos Aires Argentina hoped that traditional trade patterns could be restored in a re vived multilateral order and notwithstanding his doubts from the prepara tory session in Geneva Prebisch shared the same sense of expectation and anticipation as governments and media around the world Earlier that year Raúl had opened the Times of London on 16 March to discover the first of four articles titled The Means to Prosperity by John Maynard Keynes offering a new approach for reviving the multilateral trading order34 Prebisch knew little about Keynes apart from his Economic Consequences of the Peace written in 1919 and the less than memorable 1926 introduction to Wrights Population He was therefore taken aback by the daring concept and magisterial prose in the Times as Keynes proposed a new path to attack the causes of the Great Depression and thereby revive growth and international trade In essence Keynes advised the great pow ers to agree on a series of initiatives at the World Economic Conference to stimulate demand clean up overburdened financial markets and thereby reignite growth and the exchange of goods A new international authority should be created to provide central banks with up to 5 billion equivalent hardcurrency credit to restore activity in heavily indebted countries He included Argentina with the US UK Germany France Japan and Spain in a group of seven senior economies to receive the maximum 450 mil lion and act as motors to revive the world economy This dramatic reintro duction to the work of Keynes made a lasting impression on Prebisch who rushed to acquaint himself with his previous work as scholar journalist bureaucrat and most recently as a member of the National Economic Council set up in 1930 to meet monthly under Prime Minister MacDonalds chairmanship It was an enviable record and career In his Times articles Keynes had challenged Britain to take the lead at the conference with concrete measures and Raúl made the mistake of thinking that Keynes represented the official thinking of the British Government prior to the World Economic Conference No doubt also flattered by Keyness inclu sion of Argentina among the top seven countries in his proposed plan he suffered a premature lifting of spirits For most signs suggested impending failure Adolf Hitlers election as German Chancellor on 30 January 86 The Life and Times of Raúl Prebisch deepened the gloom in Western Europe he had already announced a policy of economic autarchy massive rearmament and the penetration of Eastern Europe Across the Atlantic the election of President Franklin D Roosevelt had revived hopes of US international leadership but these had diminished after his devaluation of the dollar on 19 April While international develop ments reinforced the sense of urgency in London for the success of the World Economic Conference in combating the Great Depression and thereby reducing international tensions it was difficult to see which great power would take the lead in reviving multilateralism when they all were themselves struggling for survival in a confusion of contradictory policies King George formally opened the great assembly on 12 June and Prime Minister MacDonald himself presided a sign of British seriousness lending hope that the Conference objectives of reviving trade raising commodity prices and stabilizing exchange rates and currencies would be realized For once the United States was a participant in a major League event with Secretary of State Cordell Hull leading a large delegation But Maxim Litvinov and Hjalmar Schacht also arrived from Moscow and Berlin respec tively carrying a powerful scent of nationalism and militarism It was left to Neville Chamberlain to set the tone and give form to the Conference as British chancellor of the Exchequer and host of the Con ference his leadership role was vital to craft a consensus on the key points also acceptable in Washington Without a coordinated AngloAmerican ef fort the prospect of success was dim Chamberlains speech was delivered in a rasping voice that gave a Dickensian overlay to an otherwise clichéd arrogant and fatuous address His undoubtedly principled civilservice mind failed to hide a scorn for the less fortunate unable to seize the moment with great ideas he was left invoking the virtues of discipline Weaned on a pickle a Labour MP noted35 Roosevelts message was conveyed by radio on 3 July and then presented to the Conference by Cordell Hull Not only was it barren of practical mea sures it also alarmed delegates by blaming the crisis on the machinations of international bankers and then destroyed hopes for a successful confer ence by rejecting the concept of an international agreement to regulate currencies as an intolerable League intrusion into US domestic affairs Washington would deal with the Great Depression in its own way and in its own good time Maxim Litvinov and Hjalmar Schacht spoke vigorously for the Soviet Union and Germany with both seconding Roosevelts condem nation of international financiers but agreeing on little else The Soviet Union trumpeted its first Five Year Plan Germany arrogantly rejected co operation in building a new multilateral order with Schacht attracting con siderable applause Prebisch saw Keynes in the corridors but they did not Taste of Power 87 meet it was apparent that his proposals had little support The high point of the Conference was the Guildhall banquet on 26 June with a table in cluding Birchs Punch Gonzalez Sherry Liebfraumilch Hock 1921 two champagnes Bollinger 1923 and Geo Goulet 1921 Offley Port 1910 and a superb 1814 brandy with assorted liqueurs Roosevelts speech in effect ended the World Economic Conference ter minating the prospects for an early end to difficult times with a multilateral solution to the Great Depression the Western leaders had decided to con tinue their pattern of ad hoc defensive measures in their shortterm inter ests bottomfeeding so to speak at the expense of the vulnerable It was the last great international conference of the interwar years and its failure a foretaste of the doom that awaited Europe The Argentines now knew it was sauve qui peut with every country for itself in an unpleasant world They were on their own and Buenos Aires had to be agile to survive The RocaRunciman Treaty had to be swallowed and signed vain expectations of collective action had to be avoided in a singleminded national mobiliza tion to survive Opportunities had to be seized where possible the Confer ence failure convinced Canada and Australia as well as Washington to join Argentina in convening the International Wheat Conference on 21 Au gust at which agreement was reached on a series of modest measures to protect both importing and exporting countries but it was not clear how they could be enforced After his European tour Prebisch was no longer an innocent with Keynes and the World Economic Conference in London underlining his gathering conviction from Geneva that the laissezfaire theory and practice of pre1914 globalization was damaged beyond recovery He had jettisoned his prior neoclassical economic theory already frayed by his year and a half of experi ence in the Ministry of Finance and entered a new and uncharted world in which the choice of policy options would be based on the single criterion of effectiveness He recognized that all countries particularly large but vulnera ble traders such as Argentina required a stable international trade regime but multilateralism depended on the leadership of the core economies and more particularly the US and Britain who had demonstrated their lack of in terest at the London conference Buenos Aires could not survive in a world of dreams bilateralism was in the ascendant and the RocaRunciman Treaty was a lesson to Argentinas policymakers not to be laggards in understand ing and adapting to the realities of international trade To surmount the Great Depression Argentina needed an activist state without the hoary aca demic baggage of the 1920s The corollary of Prebischs new intellectual toughness was his ambition to return to Buenos Aires to take up where he had left off in 1932 as 88 The Life and Times of Raúl Prebisch undersecretary of finance After ten months away he was both homesick and determined to introduce new ideas and policies to end the Great Depression Meanwhile a major Cabinet shuffle was under way in Buenos Aires with Finance Minister Hueyo announcing his resignation on 28 June leaving Argentina rudderless at the worst period in the Great Depression for Argentina The other key portfolio agriculture had also become va cant when Minister Antonio de Tomaso unexpectedly died President Justo therefore had an opportunity to renew his Cabinet appointing maverick Federico Pinedo as his new minister of finance with Luis Duhau brought back from Paris as his counterpart in agriculture Pinedo asked Raúl to be his undersecretary though they had clashed often during the Uriburu pe riod Raúls experiences in Europe along with his previous successful stint as undersecretary made him a logical choice But Luis Duhau also asked Raúl to serve as undersecretary in his ministry an offer nearly as tempting as finance given the international trade problems in meat and grains after their many long years of friendship it was a difficult request to turn down Raúl disliked having to take sides Unwilling to choose one or the other but interested in both Raúl negotiated an unusual position outside the line bureaucracy as senior advisor to both ministers while retaining his for mal job title with the bna Technically therefore he would remain direc tor of the Research Office in the National Bank in practice he would be available to both ministers working fulltime in developing a plan for na tional economic recovery He was bursting with energy and determined to succeed where Geneva and the World Economic Conference had failed he would be no less daring in Buenos Aires than John Maynard Keynes had been in London 5 Central Banker The Prebischs returned from Europe in late August to the damp and cold of the declining winter season in Buenos Aires but Raúl was aglow with optimism He knew finally what he wanted if not yet how to get it Between meetings in London Prebisch had pondered his dilemma how could a rational hardworking bureaucratic elite lead the state Techno crats like himself had neither wealth nor power no roots party or sup port compared with the politicians who came and went appointing and dismissing officials with no consideration for ability or the future of the country They claimed the authority of the state but were in fact account able to no one These were the violentos but they had power Raúls ex perience after 1930 had reinforced his belief that Argentina needed a managerial elite but until he understood the British system he remained uncertain how to build and protect it Prebisch had visited Britain only once before and then briefly in 1924 Now he had time on his hands to study Whitehall and the informal power structure of government in London The hapless Ramsay MacDonald was prime minister in the National Government but in fact he was a figure head within a Cabinet of much tougher men Looking deeper below the Cabinet however even the bulldog Chamberlain and bully Runciman were eclipsed by the hidden figure of Montagu Norman governor of the Bank of England with his caste of clever officials extending seamlessly into Treasury Here was real power above political parties an anchor of un touchable stability capable of ensuring continuity in the state Protected by convention rather than statute his status made him politically untouch able but his shadowy hand provided the essential touchstone of continuity legitimacy and influence Argentina needed an analogous institution as a backbone in the state currently there was no shield against corruption or the erratic political shifts so characteristic of Buenos Aires 90 The Life and Times of Raúl Prebisch Prebisch had been convinced of the need for a central bank since 1931 but it now dawned on him how such an institution could be structured to achieve so central a policy role that it would answer Argentinas predica ment It was a discovery he knew he had found a breakthrough concept that could be tailored to Argentinas special circumstances But he didnt know yet how he could design and lead such an institution at his young age At thirtytwo years he lacked seniority and there was still a great deal of opposition in the country to creating a central bank While waiting for the World Economic Conference and the outcome of the RocaRunciman beef talks in London he had met Sir Otto Niemeyer the acknowledged expert on Latin America in the Bank of England who had recently returned from Buenos Aires After Prebischs departure in 1932 Alberto Hueyo had invited him to study the Argentine situation and prepare recommendations for the creation of a central bank when Niemeyer learned that it was Raúl who had initiated this during his period as undersecretary he invited the young couple to his country house for a weekend visit of long walks and whiskeysodas The talks convinced Raúl all the more that while Sir Otto did not understand Argentina the general concept of a central bank was essential for its future But Hueyo had re signed and when Justo had replaced him with Federico Pinedo the entire project was shelved in favour of developing a national recovery plan The dream of a central bank receded before this immediate challenge there fore but Prebisch was going back to a splendid job for which he felt pre pared and confident and he could scarcely ask for more Raúl and Adelita were happy to be home at last the visit to Europe had lasted nearly a year and now they could finally reoccupy their house at 1340 Luis Maria Campos Malaccorto and Alemann had both married and moved leaving the newlyweds with the agreeable task of creating a home together The year abroad with its wealth of experiences and personal hap piness had also given Raúl a new serenity and perspective on his father he had finally come to terms with his hostility toward Albin with a new under standing of the turmoil hidden in restless wanderers Raúl had not seen his father for years but he increasingly recognized in himself Albins peculiar blend of strengths and weaknesses Anxious now for reconciliation he planned an early trip to Tucumán with Adelita to rebuild the family But the trip to see his father was delayed there was simply no time as Prebisch was summoned immediately by Pinedo and Duhau his new mas ters and given the task of coordinating the work of finance and agriculture for a first draft of the Economic Recovery Plan to be ready by November He therefore reoccupied his office in the bna and got down to work in a pattern of daily meetings with Pinedo Duhau and Enrique Uriburu now bna president Central Banker 91 This left Adelita with the work of equipping and furnishing the house and it also meant travelling alone to Tucumán for her longdelayed first meeting with Raúls family Although she worried about arriving cold and unknown the visit was mutually agreeable and an obvious success Rosa Linares saw in Adelita a person of shared values beginning with affection for her favourite son a friend as well as daughterinlaw and the two women be came close and lasting companions Albin proudly introduced her to the German Union which Raúl himself had never entered delighted in her fluent German and pointed with proprietorship to the Dutch flag flying over their house Prebischs work designing the Economic Recovery Plan in late 1933 was of such consuming interest that he barely noticed the passing of weeks and the approach of the Christmas season His calendar had one deadline only For the first time since the Great Depression in 1929 a combination of national and international factors opened an opportunity for policy inno vation in Argentina paralleling that in Washington under Roosevelt As in the US an irresistible pressure was mounting for government leadership Argentine industrialists were clamouring for help and the uia was now led by Luis Colombo a selfmade immigrant millionaire who knew how to mo bilize privatesector support1 The homeless were everywhere looking for food even at Raúls own door at 1340 Luis Maria Campos Both ministers and President Justo accepted the need for a radical new departure and the failure of the World Economic Conference cleared away any lingering loy alty to 1920s orthodoxy The Economic Recovery Plan was written by Prebisch 100 percent ac cording to Malaccorto but it was announced by Minister Pinedo on 28 No vember 1933 to a full Congress2 While building on the tentative small steps taken after 1929 this package of measures struck a new direction in Argentine economic history The first step a major government bond of fering to restructure the public debt actually preceded the 28 November announcement Launched on 13 November its success was a precondition for the Plan and Prebisch and Pinedo were initially worried Prebisch planted an anonymous article in La Nacion predicting success and this me dia vote of confidence may have helped to ensure that the offering met its target Next the peso was devalued easing to 15 per pound sterling which had the effect of supporting Argentine exports3 The rigid exchange con trol system introduced in 1931 was also changed to a prior permit or dual exchangerate system where importers had to apply for a permit to obtain exchange at the official rate or turn to the free market which according to law had to be 10 percent above the official rate This differen tial was increased to 20 percent in 1935 Setting official exchange rates be low foreign market values and forcing importers to apply for licenses 92 The Life and Times of Raúl Prebisch discouraged imports and promoted the creation of subsidiaries Tariffs were also raised to promote import substitution In overall trade terms the system gave Britain a 1520 percent price edge over US exporters since ac cess to the cheaper official exchange rate was conditional on the impor tance of Argentinas exports relative to import needs4 Meanwhile the surplus created by the exchange margin was used to fund public works projects to get people off the streets and provide money to buy goods from the new industries A vast highwaybuilding program was launched and a national merchant marine was established Real government expenditures expanded 50 percent over 1929 No fewer than 30000 kilometres of allweather highways and improved roads were to be added to the pre1930 total of only 2100 kilometres Another thrust of the Economic Recovery Plan became apparent on 20 November when the government created a wheat board Junta Reguladora de Granos on the Canadian model which Duhau and Prebisch had exam ined during their trip to North America in 1927 This was followed by the new National Meat Marketing Board set up on 26 December The pace of change continued A month later on 29 January 1934 one of Prebischs pet projects since his student days was finally realized with Minister Duhaus announcement of the Official Colonization Plan whereby the bankrupt farms now owned by the National Mortgage Bank and the bna would be resold to farmers in an orderly way to resettle the countryside5 The Economic Recovery Plan was well received nationally Luis Colombo applauded the support of a more activist state the public works projects finally offered jobs to the unemployed But the British reaction pleased Prebisch best of all In a backhanded compliment they correctly saw the Economic Recovery Plan as a riposte to the RocaRunciman Treaty which evened the bilateral score the new tariff barriers and other direct and indi rect measures had the effect of squeezing out British imports while the new highway program undercut the monopoly of the Britishowned and operated railway system Selling the Plan was a delicate public relations exercise Much of Prebischs time was spent writing articles for La Nacion which were pub lished as interviews with senior officials with whom we have been in regu lar contact6 He was that contact and the apparent ambiguity of the Justo Government over industrialization reflected the prevailing state of public opinion On the one hand it was clear that the Economic Recovery Plan strengthened local demand and promoted importsubstitution industrial ization isi using import controls variable exchange rates and large pub lic works programs in an expansionist approach similar to Keyness work which Prebisch had absorbed in London Officially however the authors of the Economic Recovery Plan justified it as an emergency response to the Central Banker 93 Great Depression rather than a program to replace imports with national production and thereby transform Argentina from a dependent agricul tural producer to a less vulnerable industrial economy It would have been impossible to gain acceptance for the Plan if the objective of industrial ization had been explicit and communicated as such to the public Unlike in the US the mainstream Argentine press including the quality La Nacion and La Prensa as well the political parties including the Socialists remained free traders and opposed any measures that risked an inflationary cycle The nightmare memories of hyperinflation in 1891 still hovered over Argentina severely curbing the appetite for reform initiatives and the Socialist Party still supported free trade on ideological grounds The gov ernment therefore appeared alternately enthusiastic and apologetic7 In December 1933 Luis Duhau who had previously opposed state interven tion gave a major speech in the Congress heralding the end of free trade and called on Argentines to depend on their own resources Yet he also sup ported a US initiative for tariff reductions that month at the PanAmerican Conference of 1933 and signed a bilateral trade agreement with Belgium on 17 January 1934 The team that planned the Economic Recovery Plan was not radically protectionist like Manoilescu in Romania and Prebisch cer tainly cared less about textbooks than evolving a new balance between indus try and agriculture in the uncharted waters of the Great Depression Prebischs immersion in the Economic Recovery Plan was interrupted by the death of his father on 3 February 1934 He had suffered a sudden and completely unexpected heart attack which left Raúl devastated Nothing had ever gone right in their relationship and now even the last hope of reconciliation had been lost to his unwillingness to spare even one week for Tucumán after his return from London This time it was totally his fault he had allowed himself to become absorbed in the Economic Recovery Plan to the exclusion of everything else including his family Now this ambiguous relationship would remain forever unre solved and his earlier anger was swept away by a wave of sadness for op portunities lost The funeral was sparsely attended and one could sense an undercurrent of embarrassment and anxiety as if unwanted inlaws might show up at the ceremony In fact none did the other secret family remained hidden to Rosas relief Only eight days earlier Albin had been elected chair of the local German Union and its members had turned out in force to hear the German viceconsul contribute a humiliating eu logy along the same lines as the Nazileaning Deutsche La Plata Zeitung which had described his father as a tireless defender of our beloved Fatherland and new German Empire8 Raúl grieved that his father had not been given an appropriate farewell But this chapter was now definitively closed 94 The Life and Times of Raúl Prebisch Raúl and Adelita returned from Tucumán to another personal blow Augusto Bunge had long threatened to break with Raúl if he continued his work for the Concordancia but he now delivered an ultimatum Prebisch had to make a choice unless he resigned Raúl would no longer be wel come at his home and they could no longer pretend to be friends Bunge admitted that Justo was not a dictator in the style of Uriburu but he still maintained an authoritarian regime keeping a narrow oligarchy in power Genuine Congressional control over the executive did not exist nor had Justo abolished the Special Section or the Argentine Civic Legion The 1932 change in government was cosmetic merely another chapter in the Conservative Restoration and it was unacceptable for Prebisch to work for it Bunge was particularly upset with Raúl for agreeing to work for Pinedo a turncoat and archenemy suspected of illegal land speculation in Bariloche apart from his reactionary views The issue was one of principle if Raúl did not leave the Concordancia they would never speak again Prebisch came over to the house at once to talk things over with his clos est friend and confidant apart from Adelita The confrontation was all the more painful because of their mutual affection and the special place Raúl occupied in the family as godfather to Mario The Bunge house was almost like home and the Sunday gatherings there were events not to be missed a diversion from a heavy workload and a place where new and interesting people could always be encountered Augusto Bunge was also a magnifi cent human being Uncompromisingly principled Bunge had denounced Stalinism when he visited the Soviet Union in 1933 repudiating his earlier book The Red Continent which had given a glowing account of Soviet tri umphs naively assumed from afar and he was one of the most outspoken Argentine opponents of Nazi Germany after 1933 Critica published three daily editions in a tireless duel with the conservative press and Bunges op position to the regime risked harassment from the Special Section whose gangs would periodically break up his Sunday meetings arresting and jail ing both Augusto and his guests9 But Prebisch also had made a clear choice He and Bunge were on dif ferent paths reflecting fundamentally opposed responses to the crisis of the 1930s While he admired Bunges courage and his intellectual honesty Prebischs position was just as firm He agreed on the lack of genuine de mocracy in Argentina but saw that the left was as intellectually barren of economic ideas as the mainstream parties equally incapable of offering a credible alternative to the Concordancia In an age of fundamental transi tion such as the 1930s all the inherited orthodoxies appeared outdated and inadequate and to limit oneself to the selfabsorption of Socialist poli tics seemed both selfindulgent and disempowering There was obviously Central Banker 95 no impending revolution What Prebisch did know was that the moderniza tion of the state was necessary for Argentina regardless of who was in power Here as a public servant he could make a major contribution to his country and he would not stand aside now when he knew what to do to im prove the economy for the masses Prebisch did not see himself as a tool of the oligarchy or the sra but rather as a professional economist and na tionalist who had chosen to participate rather than protest from the side lines a patriot who was leading a modernizing elite from an institution he had created as his answer to the political failings of the Concordancia The two men parted with mutual regret Saddened by the loss Raúl turned and left the Bunge house for good embracing his godson Mario outside the front door in a final farewell I am not a politician Marucho Raúl said I am a technocrat and believe in technocracy and technicians are politically neutral10 Henceforth when Augusto and Raúl happened to meet on the street they would stride by each other in wooden silence With this the Argentine left turned its back on Prebisch identifying him with the Conservative restoration he never met again with other prominent Social ist leaders such as Alfredo and Alicia Palacios These setbacks were counterbalanced by an unexpected telephone call from Pinedo who in his usual dry tone asked Prebisch to prepare legisla tion for a new central bank Pinedo stated simply that he had changed his mind that the current banking crisis had brought several private banks in the country close to bankruptcy and that the bna had insufficient powers to deal with the emergency A central bank was therefore unavoidable if the Economic Recovery Plan were to succeed Prebisch was to lead a work ing group to design the new institution and draft the required legislation Duhau and the Cabinet were in favour and President Justo also supported the initiative personally but it was a politically delicate topic and Prebisch would have to guard a strict secrecy Prebisch knew immediately that his lifetime opportunity had arrived It was as if the emotional ordeal in Tucumán and now with Augusto Bunge had been rewarded with a unique and spectacular career breakthrough If he had his way the central bank he had in mind would be the core institu tion for economic leadership heretofore lacking in Argentina following a concept he had developed gradually since 1930 it would have a unique structure and role and Prebisch hoped that authoring the legislation would also yield the prize of directing it At age thirtythree he stood on the threshold of an unprecedented leadership role all his previous work was coming together in a grand synthesis much more quickly than he had thought possible He had proven his administrative competence in manag ing finance under Uriburu in Europe he had experienced international 96 The Life and Times of Raúl Prebisch power politics firsthand and since his return he had been absorbed in the Economic Recovery Plan Designing the new central bank the capstone project of his career would modernize the Argentine state and equip it for international success When Pinedo added the central bank project to Raúls other responsibili ties Adelita became even more the widow Prebisch He had two lives dur ing 1934 On the one hand he mobilized a small project team staff headed by Edmundo Gagneux and René Berger to develop the concept in fact Pinedo gave him free rein to design the new central bank and as winter and spring progressed the proposed legislation for a comprehensive reform of the entire sector took shape On the other hand and in parallel to the cen tral bank initiative Raúl continued his work with Duhau and Pinedo on the Economic Recovery Plan until late 1934 when the Justo Government finally introduced the new legislation in the Congress after which he would be poised to assume a leadership role in the new institution In this latter role as advisor to the two ministers during 1934 Prebisch was gratified by an upswing in the Argentine economy The first air conditioned skyscraper in Latin America the thirtytwostorey Art Deco Kavanagh Building at 1065 Florida across from the flowering jacarandas in the Plaza San Martin began construction in 1934 and the dramatic ar rival of the Graf Zeppelin from Germany on 30 June underlined the return of Buenos Aires to the first league of world capitals The longawaited eco nomic recovery was finally under way Industry grew and as Luis Colombo became more expansive the government became more confident in pro moting industrialization On 19 July 1934 in a speech to the uia written by Prebisch for Luis Duhau the minister noted that We have opened one era and closed another committing the government to the healthy and orderly growth of the industrial sector and stressing not only job creation but also the new energy and entrepreneurial spirit that was transforming national values in Argentina11 In fact the basis was laid for a jump in in dustrial employment and new factories after 1935 compared with zero growth in the US and Canada as the harvest failed again in North Amer ica and with a weaker expansion in Australia The onset of drought in Canada and the United States eliminated the international wheat surplus easing the downward price pressure on Argentine farmers to the point where the Justo Government abrogated the 1931 International Wheat Agreement on 14 July 1934 charging that its two North American competi tors had violated their commitments12 But prosperity could not be restored as quickly to other agricultural sectors given the low prices for beef exports as Prebisch wrote in an article published on 16 June when the countryside is suffering in Argentina everyone suffers except bondholders and he and Central Banker 97 Duhau proposed a series of measures to ease the pressure13 A meat export promotion board was announced on 3 August 1934 to match the subsidies used by competitors to market their products below market rates with Duhau claiming an immediate success in selling ten thousand tons of beef to Italy14 A wine marketing board was set up on 8 November to aid the ail ing producers in Mendoza with a similar board for milk producers in a continuing overhaul of the rural economy that Raúl had directed since his return in 193315 Meanwhile Raúl continued his steady stream of articles for La Nacion always without a byline explaining government policy in complex areas such as the new exchange control system or foreigntrade problems in the wheat and meat sectors But his heart lay in his other task of designing the Central Bank While his 1931 internal report offered the actual point of departure for this work the 1933 Niemeyer proposal would have to be presented as its initial point of reference in order to gain the support of the Argentine Congress Niemeyer had a godlike reputation in banking and political circles in Buenos Aires along with Edwin W Kemmerer from the US Federal Re serve Board he was considered expert without peer in an informal Anglo American division of labour in Latin America Kemmerer gave advice to the Andean region Sir Otto dealt with the Southern Cone It was as if no Latin government could set up a central bank without the blessing of one or the other representative of the two major Western powers Niemeyer in 1933 had cleared the way for the Central Bank by rejecting all other alter natives including the bnas lastditch effort to expand its own mandate rather than create a new institution but his recommendations were of the generic variety that external consultants applied generally to Latin coun tries without regard to their special needs and differences He seemed un aware for example of the precarious situation of the banking sector in Argentina The Niemeyer Central Banks were independent of the political executive but with limited powers apart from money supply their emphasis was on sound money not banking or monetary policy and certainly not rescuing an entire sector near bankruptcy In fact the Latin American cen tral banks built with the advice of both Niemeyer and Kemmerer during the 1920s had not functioned well during the Great Depression every South American country except Argentina had either failed to meet its in ternational debt or was hovering at the edge of default Raúl acknowledged his debt to the British master but in fact fundamen tally reshaped the Niemeyer vision in his own image As introduced in Congress on 28 March 1935 the Central Bank legislation offered a new approach to accommodate Prebischs vision of Argentinas special needs Instead of a financial institution with limited authority and regulatory 98 The Life and Times of Raúl Prebisch instruments the new Argentine Central Bank that he proposed would be the core central agency in the countrys banking and financial system First the banking legislation brought under one roof the various banking activities that had developed separately in an ad hoc fashion and now re quired integration the Treasury the Exchange Control Office Conversion Fund Caja de Conversion and certain bna functions were merged into a single institution with one thousand employees The gold standard re mained suspended and the Bank was free to adjust exchange rates and ad minister the exchange control system Second the transitional Institute for the Liquidation of Bank Investments was created as a mechanism for sani tizing the bankrupt commercial private banks by taking over their frozen assets in exchange for cash or redeemable bonds16 Two major banks were totally bankrupt El Banco El Hogar Argentino and El Banco Argentino Uruguayo El Banco Espanol de Rio de la Plata had greater questionable loans than capital reserves and the bna had lost a good percentage of its capital resources With the creation of the Institute for the Liquidation of Bank Investments to restore confidence in the system the National Mortgage Bank was authorized to grant loans to expedite the sale of prop erties that had been seized or acquired Third the powers of the new Cen tral Bank bore little resemblance to Niemeyers concept of a largely passive role instead it was allowed open market operations designed to manage the fluctuations of the international business cycle by absorbing excess fi nancial flows in the upswing of the cycle and releasing them later in the downturn It also managed a new office the Superintendent of Banks which supervised the private banks Given these diverse functions on the one hand and its policy role regarding money supply interest exchange rate policy and the management of import controls on the other the Central Bank envisaged by Prebisch would be the heart of the Argentine fi nancial system He had drafted and supervised the legislation to create a unique hybrid with farreaching regulatory powers over monetary policy fortified by openmarket operations in bonds certificates and Treasury bills that could absorb liquid funds by redeeming the governments for eign debt Its control over the credit policies and practices of the domestic and foreign banks and its strategic position over foreign exchange added further to its stature In general and reflecting the enormous role of the external sector in the Argentine economy the new institution was equipped to manage the business cycle as well as to check inflation17 Finally the new Argentine Central Bank was both closer to the state but also more independent of the political executive than the Niemeyer concept Prebisch sought to institutionalize the autonomy of the Bank of Central Banker 99 England in Argentine circumstances and this required a unique public privatesector balance The new Bank was therefore created as a mixed enterprise protected in both direct and indirect ways from political in terference but constituted very clearly as the financial agent of the gov ernment reporting through the minister of finance But its structure provided a farreaching autonomy from the presidency Of its twelve Di rectors only one would be named by the government with the remain ing chosen from a wide base one each by the bna and the Bank of the Province of Buenos Aires and the other shareholding provincial banks three others would be selected by the Argentine commercial banks and an additional two would be chosen by an assembly of the foreign banks in the country Finally four directors were to represent the major economic sectors an agriculturalist a livestock producer a manufacturer and a merchant The boards responsibilities were restricted to administrative oversight and general policy the financial policy of the government and the inspector of banks were outside its purview remaining strictly matters between the president of the Bank represented by his general manager and the minister of finance The president and vicepresident had to be Argentine citizens were to serve for seven years and were to be selected by the government from a list of candidates picked by the board of direc tors representing their manifold shareholders The general manager would be chosen by the president of the Bank and approved by the direc tors he would be the chief executive officer to serve at the presidents discretion without a fixed term The two foreign bank directors on the board added another source of domestic leverage and international legit imization in a period of rising nationalism Prebisch had taken the best features of the US and UK banking systems but moulded a truly national and powerful instrument to steer the economy independent of daytoday political events he had sought and found an equilibrium between public accountability and operational autonomy between state power and the private sector Pinedo proposed Prebisch as founding president of the Central Bank but General Justo balked because he considered Raúl at thirtyfour too young for such a senior position Instead he reached into the old Conser vative establishment and named Ernesto Bosch as president with José Evaristo Uriburu as vicepresident to confer legitimacy on the new institu tion Bosch had enormous prestige domestically within the Conservative Restoration while Uriburu son of exPresident JE Uriburu 189596 had been ambassador in London had read history at Cambridge which had also awarded him an honorary doctorate cherished his stamp collection 100 The Life and Times of Raúl Prebisch one of the most impressive in Argentina and membership in the Royal Historical Society and therefore represented a valued interlocutor with the British Embassy Prebisch knew Ernesto Bosch to whom he owed his first job while the older man admired and trusted Raúl The two were logical and enthusiastic partners and Raúl readily stood aside in favour of Bosch He also thought himself insufficiently recognized in Argentina for the top job but the position of general manager also suited him better be cause it controlled policy and administration while the presidents func tions were front office and honorific On 9 May 1935 Prebisch was officially named general manager with Dr Bosch and the first board of directors already in place and an official Central Bank startup date of 31 May Only one jarring note marred the ap pointment One of the new board members was not happy when Dr Bosch nominated Raúl none other than Salvador Oria from previous acquain tance who now surfaced as director of the Banco Popular Nacional and one of the representatives of the national banks Oria could not block the ap pointment but protested that Raúls salary should be below those of ceos from the private banks Bosch squashed him Otherwise the Buenos Aires press was positive on Prebischs appointment At the inaugural reception on 6 June Pinedo turned to Prebisch and asked who was going to pay for the champagne Raúl smiled You my Minister Pinedo declined No Sir This lunch is on you18 Thereupon President Justo gave the toast and commit ted his government to respect the autonomy of the new Central Bank The youngest Central Bank chief executive in Latin America Prebisch firmly and unequivocally took charge and established his leadership chair ing a fourperson commission to give form and direction to the new entity and working out of the old Exchange Control Office until permanent quarters for an institution of this size could be located His objective was the completion of preparatory work for the new Institute for the Liquida tion of Bank Investments by 1936 and in fact Raúl opened the Institutes operations on 30 December 1935 with the four bankrupt banks absorbed by a new company called the Banco Espanol del Rio de la Plata19 But al ready by midJuly 1935 the financial markets had seen enough to register their verdict on the new system the orderly consolidation taking place un der Central Bank leadership had restored tranquility and stability with the creation of the Central Bank and the rescue of the banking system the worst of the Great Depression was over for Argentina Argentina had never before possessed a comparable public sector insti tution devoted entirely to excellence where hiring was completely sub ordinated to merit rather than family wealth ethnicity or connections It was staffed by a selfconscious managerial elite that called itself the Central Banker 101 Prebisch brains trust The new building selected by the government on 275 San Martín was the old Foreign Exchange Office across from the Templo de la Merced it was imposing but rundown and Adelita and the new staff joined Raúl on weekends during the renovation Its location and architecture expressed Prebischs vision of the Central Bank in the national economy although its facade was impressive with a bronze clock and marble entry its entrances and the gateway to the basement vault un derstated its size which in fact covered most of the block up to its other entrance at 266 Reconquista Inside it was luxuriously appointed begin ning with the Banks mission attached in gold letters in the foyer The first and fundamental task of the Argentine Central Bank is to preserve the value of our money It exuded quiet power Here immigrants and economists from established families competed equally and were accepted without distinction or discrimination as long as they survived the annual formal evaluations demanded of all employees in cluding the general manager Raúl lived on his salary he did not speculate and offered a model for his troops Indeed he ran the new Bank along military lines with uniforms for the nonprofessional staff and formal suits for the rest and inspected offices daily for tidiness More important he provided intellectual and administrative leadership building the most co hesive and effective cadre of administrators in Argentine history and com manding their respect and loyalty Conscious of their steering role in the economy and proud of their elite status in the state Raúls team bonded all the more behind a leader who could write his own reports including the final drafting of each Annual Report These reports were analytically based and thoroughly researched serious and wellwritten documents on Argentinas economic prospects Although a team research effort their preparation was directed by Prebisch himself down to insisting on profes sional editing to ensure fluid prose Prebisch moved his core team from the bna to the Central Bank and created an expanded Office of Economic Research with the best library and resource centre in the country to help guide Central Bank operations and prepare its Annual Reports In general Raúl had the luxury of building his institution without obligations he could draw on his proven brains trust and widen it with the best talent in Buenos Aires while placing key individuals in complementary positions in the senior public service His goal was to staff the Central Bank with a worldclass modernizing elite with links into the senior ministries selfconsciously adopting the Bank of England model of directing monetary policy from behind the scene Malaccorto became undersecretary of finance for example working with Edmundo Gagneux Max Alemann Israel Gerest Walter Klein Roberto 102 The Life and Times of Raúl Prebisch Verrier A Muschietti and the others in the Central Bank The Prebisch team occupied the strategic centre of national economic decisionmaking united behind a coherent vision of national policy and public sector inno vation able to coordinate its policies with finance and other ministries to provide the public and private sectors with continuity in troubled times For Prebisch the creation of the Central Bank was a moment of enor mous personal satisfaction He had worked toward this goal all his life and it embodied his commitment to Argentina and its future It was a truly na tional institution above factions dedicated only to the public good But in stead of receiving recognition for his work as a national milestone to be celebrated not to mention for the evident success of the Economic Recov ery Plan he was overwhelmed by a virulent political storm in Buenos Aires This vindictiveness toward Prebisch had been building since the 1933 RocaRunciman Treaty Even before its official signing in Buenos Aires on 27 September by British Ambassador Sir Henry Chilton and the Argentine Minister of Foreign Affairs Carlos Saavedra Lamas it had become the most detested foreign agreement in the history of the country greeted with incredulity by an aroused Congress and public Prebischs long absence in Europe during 193233 had isolated him from the political scene in Buenos Aires and he was unprepared for the fury All the members of the negotiating team including Prebisch were vilified in the media as lackeys of the oligarchy and betrayers of Argentinas national honour cynical ma nipulators willing to convert the country into Britains Sixth Dominion for money Luis Colombo organized a public demonstration of seventy thousand workers against the RocaRunciman Treaty Prebisch simply had not anticipated his notoriety in Buenos Aires and the personal nature of these attacks even Malaccorto called it a betrayal of Argentina as if the Roca delegation had committed a crime The very violence of the attacks suggested a certain pathology Who could possibly believe that negotiations with Runciman one of the most unpleasant men in England would convert anyone into an anglophile Roca Prebisch and every other member of the Argentine delegation had experienced the most depressing time of their lives they deserved the compassion rather than the anger of their fellow citizens But instead of blaming the real culprits for an unequal trade pact the Depression Britain and the realities of Argentinas vulnerability the opposition in Buenos Aires attacked local and therefore more easily identifiable scape goats such as Roca and Prebisch who could not possibly have achieved a different outcome Indeed in Raúls case he had joined the delegation almost by accident because he was already in Europe Formidable Senator Lisandro de la Torre was smarting from his unsuccessful challenge to Central Banker 103 Justo and Roca in the 1932 elections in combination with Socialist Nicolás Repetto and he led the charge in this heroic fallacy detecting a conspir acy of the sra and meatpackers allied with the Justo Government as if the Roca mission could have manufactured an option other than the British market out of thin air Duhau and the sra fumed at de la Torres charge insisting that they were the historic opponents of the foreign owned meatpackers At the inauguration of the Agricultural Fair in 1934 Duhau was so angry that he could hardly speak Imagine he thundered the big beefproducers the sra no one has fought harder to control the meatpackers20 Prebisch never apologized for his role in negotiating the 1933 Roca Runciman Treaty defending it as a necessary if unpleasant defensive mea sure required to maintain markets and buy time for restoring prosperity and economic growth He argued that Argentinas inherent strength under sound economic management would permit a rapid recovery if breathing space could be achieved through a bilateral agreement with Britain and in this the treaty was eventually successful Once Argentina had rebuilt its public finances it could manage its way out of the Roca Runciman Treaty ignoring it just like the British or Germans would in sim ilar circumstances The way to get back at Britain was not to scream but rather to undermine its railway monopoly in Argentina by building a net work of competing roads Prebisch admitted that the phrase in the treaty granting benevolent treatment to British investors had been a public relations disaster the adjective equitable might not have been as explo sive but overall he saw it as a reflection of the global trading system which was breaking down into bilateral regimes21 Argentina was the victim of a staples model anchored in Britain which could only be changed gradually through deliberate state policy Yet his opponents selfstyled Argentine nationalists who endlessly repeated Prebischs sellout to Britain seemed incapable of understanding this elementary fact During 1934 Prebisch ignored the insults and concentrated on his work assuming that the attacks would diminish as recovery took hold but this relative calm was broken by Lisandro de la Torre who now launched an other round of the Meat Debate which also reopened the unhealed wounds of the RocaRunciman agreement As in previous times of low prices and trouble on the land there was a ready audience and political opposition to Agriculture Minister Luis Duhau and his advisor Prebisch mounted within and outside Congress just as the Central Bank legislation was being drafted De la Torre charged that the beef trade was rigged in a conspiracy pitting the beef barons of the Argentine Rural Society and their US and British allies in the meatpacking plants refrigeratorcargo vessels 104 The Life and Times of Raúl Prebisch and stockyards against Argentine interests including his own wing of the cattle industry the breeders and the public The meatpackers were again singled out as the main culprits and de la Torre demanded a Congressio nal investigation into their alleged monopoly of the beef industry Week after week Prebisch was identified as the backroom advisor behind Duhau and Pinedo directing policy in the Concordancia On 23 August 1934 the Buenos Aires humorist Titiritero anticipated the looming con test with a football metaphor with team captain Lisandro de la Torre and his ragged mates of poor ranchers and enemies of the establishment glar ing heroically at their opponents the rich ministers officials the men of the RocaRunciman treaty the directors of the sra representatives of the foreignowned meatpacking firms railway barons and the landlords of Buenos Aires province On 14 September 1934 the personal attacks on the agriculture minister had reached a point where Prebisch wrote the text of a formal response for Duhau calling attention to de la Torres record in abusing erstwhile friends from across the political spectrum and making it clear that the senator himself was far from being the victim he claimed to be22 This tactic backfired when Lisandro de la Torre correctly identified Prebisch as the author of Duhaus letter and ridiculed him all the more By late autumn the Lisandro de la Torre campaign against Duhau and Prebisch momentarily exhausted itself with a vote to set up a special Senate Commission to study the meat industry again and report in mid1935 but the government was evidently rattled The Cabinet activated the Joint Com mision established with Britain to broaden the investigation and requested that Sir Otto Niemeyer chair it because of his credibility in Argentina Niemeyer did not consider himself an expert in the meat trade and de clined the British proved slow in providing information on the meatpackers and shipping lines Instead the National Meat Board began its own inves tigations of the refrigeratorcargo shipping firms and identified one of them Anglo Shipping as evasive and suspicious23 De la Torre now shifted his attention to Pinedo the budget and the Central Bank adopting a broad populist cloth There has not been a word of consideration for the anxious state of the Argentine economy ruined by the loss of value of our products he cried complaining about Pinedos callousness This is quite logical given his fiscal policy Only the capitalist merits consideration not the consumer the producer industrialist or merchant But Pinedo was a tougher opponent than Duhau and stood his ground congratulating Prebisch in the Senate as the most careful hard working and serious of his public servants24 The budget was duly passed but political opposition broadened when the Central Bank legislation was introduced La Prensa opened its campaign on 14 January 1935 claiming it Central Banker 105 to be inflationary sprung on the country without meaningful debate and designed for the sole purpose of rescuing the corrupt bna It correctly saw that the Niemeyer model had been changed but failed to understand the thrust of the new legislation and forecast a repetition of the 1891 crash For thirtynine consecutive days it ran long editorials condemning the proj ect comparing it unfavourably with Canada as well as the Bank of England and the US Federal Reserve By 20 February the attack had become so bit ter and unbalanced that Pinedo made an official response to La Prensa in La Fronde denouncing its journalism as excessive and irresponsible25 Lisandro de la Torres attack was different Like La Prensa he attacked the bill because the government would have more control than under the Niemeyer approach but he also criticized the private sector influence on the Board taking aim at Leo Welch of the National City Bank of New York and Leopold Lewin of German Transatlantic claiming that the Central Bank would be manipulated by these US and German interests In fact it is doubtful if de la Torre had even read the proposed banking legislation Under Pinedos political leadership however the Central Bank was ap proved in March despite these criticisms President Justo took the extraor dinary step of inviting opposition Senators to private meetings with him in the Casa Rosada including Socialists Alfredo Palacios and Nicolás Repetto to explain the new banking legislation and respond to their concerns La Prensas violent attacks eventually bored the public by their excess even Critica came out in support of the new Central Bank Lisandro de la Torre undermined his credibility in these debates by gross errors of fact that Pinedo quickly turned to his advantage Moreover the senator from Santa Fe it was suspected was himself sufficiently financially compromised in the troubled banking sector that he had no alternative but to support the cre ation of the Institute for the Liquidation of Bank Investments26 Since the institute was included within a unified legislative package and could not be extracted from the bill he could not stop the momentum of the Central Bank initiative But de la Torre now took his revenge in a spectacular rekindling of the Meat Debate which captivated the media and overshadowed all other is sues in national politics The new stage of the crisis began in June 1935 just as Prebisch and his new team were moving into the new Central Bank building when the Senate commission issued its report concluding that the Argentine beeftrading system was fundamentally sound although in need of regulatory reforms which it addressed with a set of recommenda tions These findings did not satisfy Senator de la Torre who issued a dissenting report denouncing the greedy triumvirate of beef barons government and foreign shipping and financial interests and accusing 106 The Life and Times of Raúl Prebisch Pinedo and Duhau of personal corruption and complicity in swindling Argentine meat producers and the Argentine state Duhau he charged manipulated markets for the sale of his own cattle and Ministry of Finance officials inadequately supervised the foreign shipping interests and deliber ately obstructed the work of the investigating committee These charges were magnified by the discovery of falsified accounting books of the ship ping firm Anglo seized by police in the hold of the SS Morning Star about to set sail for London Prebisch spoke with Leith Ross at the British Treasury to examine the shipping lines from London their control of the market and their exorbitant profit margins While Leith Ross agreed to undertake an audit the British Government had no interest in pursuing the matter and de la Torre chose to blame Buenos Aires rather than Lon don for the impasse Everyone knew the problem but short of refusing to ship its meat products Argentina lacked bargaining power Prebisch chal lenged de la Torre to propose a boycott but the Senator demurred know ing that producers in Canada and Australia would replace Argentine meat in Britain Nationalization was simply no option De la Torre decided to place Prebisch at the centre of the scandal vilify ing him with a bitterness and personal edge that often exceeded his attacks on Duhau and Pinedo Unlike his ministers Prebisch had no weapons for a counterattack except coaching Pinedo and Duhau during the debates and neither could match de la Torre Pinedo was cerebral and spouted reams of figures to disprove the attacks but he was so cold a fish personally that he was mocked publicly as a candidate for selfinflicted frostbite Duhau was rambling and ineffectual Defenseless Prebisch had to absorb de la Torres personal insults from the benches I dont call him Prebisch public accountant to diminish him because I bear no illwill toward him laughter in the Senate but rather given my habit of telling the truth de la Torre scoffed Mr Prebisch knows more than many doctors but I under stand that he has a doctorate in nothing whatsoever laughter in Senate not even in Economic Sciences which is a cheap doctorate laughter in Senate27 He labelled Prebisch the Minister without Portfolio or the Little Minister as the power behind the throne manipulating both Duhau and Pinedo writing their speeches and their reports Caras y Carretas published a cartoon depicting Raúl in pinstriped trousers guiding his two ministers forward between outstretched arms and holding a briefing docu ment in front of them with the caption And tomorrow whom do we ap plaud or whistle at28 Public attention grew with the mudslinging and melodrama escalating into sensationalism when de la Torre challenged Pinedo to a duel with pis tols to settle issues of personal honour Pinedo accepted the challenge to Central Banker 107 grotesque media infatuation But both shots went wide of their mark and they resumed verbal conflict in the Congress De la Torres popularity surged while Pinedo Duhau and Prebisch defended their personal and profes sional conduct and dismissed his charges of corruption The animosity fi nally came to a head when a Conservative Senator shot and killed Lisandro de la Torres friend and party colleague Senator Enzo Bordabehere where upon de la Torre unilaterally terminated the debate in a flourish and retired as the obvious victor in the publicrelations war None of his allega tions was ever substantiated but the mythology of Lisandro de la Torre as the persecuted patron of the weak driven to his death he committed sui cide in 1939 by vested interests in the Concordancia became entrenched as national legend Pinedo and Duhau offered their resignations and left the Cabinet at the end of the year Prebisch was not in danger of losing his new position but the affair succeeded in wounding his public image and reputation and en raging Argentine nationalists of all stamps He retained the confidence of Bosch and the Central Bank directors as well as of President Justo and his daytoday work with his staff in building the bank was not impaired But the personal toll of overwork in this atmosphere of hostility finally affected his health and at the height of the controversy in 1935 he became so ill with shingles that he had to leave the capital for a month to recuperate On his return to Buenos Aires he found that the political campaign against him had subsided29 To his relief his name gradually left the head lines and he and Adelita could recover among family and loyal friends withdrawing from society and becoming almost invisible in Buenos Aires Although his position in the Central Bank made Prebisch a powerful figure within the state it did not yield social recognition by the oligarchy for which he worked Only very occasionally would Raúl and Adelita be invited to the homes of Ernesto Bosch Luis Duhau or Finance Minister Santamarina Enrique Uriburu never invited Adelita once as if she came from an unac ceptably low immigrant class Alberto was the more newsworthy Prebisch by far Already a leading architect in Buenos Aires he had recently built the Rex Theatre to general acclaim But he now proposed a 140metre obelisk in the centre of Buenos Aires on the Avenida 16 Julio as part of a grand scheme to rebuild the central artery of the capital on its 400th anni versary into an Argentine Champs Élysées This concept polarized the pub lic and preoccupied the media almost as much as the Lisandro de la Torre affair eventually succeeding despite the Great Depression and the obelisk converted Alberto into a celebrity he became a professor of Architecture at the National Academy of Fine Arts gained a seat on the board of the Colon Theatre and eventually was propelled into the Mayoralty of Buenos 108 The Life and Times of Raúl Prebisch Aires Raúl and Alberto lived in different worlds Alberto was in the Argentine Whos Who and a prominent guest in the great homes of the cap ital Raúl in contrast was never invited to join the Jockey Club Instead the Prebisch home was reserved for family Adelitas mother La Flia had come from Germany to live with them after the death of her husband Carlos on 7 December 1934 and Tucumán provided a steady stream of visiting relatives Ernesto was now president of the Univer sity of Tucumán providing the progressive leadership that was attracting faculty and students from all over the country and Ernesto Sabato his nephew was emerging as a leading writer in the capital Complementing family and established friends such as Malaccorto and Alemann were Raúls newer acquaintances from the business and diplomatic sectors in cluding Carlos Brebbia undersecretary in the Ministry of Agriculture and then roving Argentine ambassador in Europe Chris Ravndal from the US Embassy after his arrival in Buenos Aires in 1937 and Leo Welch from the National City Bank René Berger and Raúl amused themselves by import ing French wines An ironic and amusing veteran of the 191418 war whose experience in the trenches had soured him on marriage and chil dren Berger became inseparable from Konrad Dutenbach of the German Embassy after they discovered that both had fought on opposite sides at the Somme Dutenbach was therefore added to the Prebisch household until 1938 when Berger was posted to France Prebisch and Adelita spent occasional weekends outside the city in a simple tworoom country cottage that they bought with Edmundo Gagneux planting trees and mowing hay with a scythe Prebischs professional life centred on perfecting the Central Bank and managing the national economy This was more than enough challenge He had sought and achieved the position and leadership role he desired and for this he did not need political headlines quite the reverse Like Montagu Norman in the Bank of England he preferred a low public profile in Buenos Aires secure in the knowledge that the Argentine Central Bank was quickly becoming recognized as indispensable in the capital and one of the most in novative financial institutions in Latin America if not the world Albin would have been pleased to note Raúls disciplined work habits arrival at 800 am for a work day that lasted until 700 pm with a bag lunch in his office fol lowed by a short siesta on a reclining chair before returning to his desk His one regular weekly outing was to the Faculty of Economic Sciences where he revived his course on the international business cycle in 1936 once the Central Bank was established The seminar offered not only a respite from a demanding workload but also an opportunity to test new ideas for the An nual Report in an academic setting and to hunt for new talent for his bank Central Banker 109 As the national elections of 1938 approached the Central Bank was fully established as the core of the Argentine financial system Already in 1936 its open market powers were expanded with the right to negotiate Treasury bills up to 100 million pesos and in the next year gold and Foreign Ex change holding certificates To confront the 1937 boom therefore Raúl could orchestrate an anticyclical policy that he might have dreamt about in 1921 but never dared to think possible until the creation of the Central Bank he expanded the market for domestic public debt with the sale of bonds and refinanced the debt to lower the burden of payments to leave more funds for employment programs and public works whereas in 1932 only 5 percent of state expenditures were directed to public works com pared with 29 percent for the debt in 1938 public works had risen to 20 percent with funds for the debt dropping to 20 percent30 Foreign in vestment including flight capital from Europe was moving to industrial production rather than commodities production While overall annual gdp growth did not return to the 5 percent level of the 1920s Argentina was clearly outperforming both the US and Canada in economic growth in 1939 gdp was 17 percent above the 1929 level Not only was Argentina the one Latin American country with moderately sophisticated financial markets it alone in South America along with Dominican Republic and Haiti in the Caribbean serviced its national debt Brazil and Chile de faulted in contrast and while servicing its debt cost Argentina in growth relative to its neighbours its decision elevated its international standing Refugee capital flowed to Argentina as Buenos Aires emerged as a stable international financial centre It was an exhilarating personal triumph for Prebisch given the backdrop of crisis that surrounded the international economy while credit for these successes was by no means Raúls alone the Central Bank had become the directing force in Argentinas fiscal monetary industrial and international trade policy that he had envisioned on its creation Internationally Argentina had also become a major player with an active regional and international foreign policy The aristocratic Foreign Minister Saavedra Lamas who married a presidents daughter and wore the highest collars in the capital had broken with Uriburus geopolitical hostility to Brazil and Chile and instead had drawn his neighbours along with the US Peru and Uruguay into a successful sixpower effort to end the bloody Chaco War between Bolivia and Paraguay In 1936 Saavedra Lamas was awarded the Nobel Peace Prize for mediating an end to this conflict which had cost more than 100000 lives since 1932 Argentinas regional leader ship role was additionally confirmed when Brazilian President Getulio Vargas made a state visit to Argentina in 1935 and the two countries 110 The Life and Times of Raúl Prebisch opened a new period of bilateral dialogue led by Colonel José Maria Sarobe who was sent as Argentine military attaché to Rio With the stron gest and healthiest economy in Latin America Saavedra Lamas also felt confident enough to rebuild relations with Washington and Europe Just as Argentina became known as the one major Latin country that paid its debt so also it was increasingly respected as a reliable multilateral actor in the Americas At the global level Saavadra Lamas was elected to chair the League of Nations Council in 1937 in recognition of his Nobel Peace Prize and with neither the US nor Brazil in the League Argentina became its principal interlocutor state in the New World The Nobel Committees presentation speech on 10 December 1936 awarding its Peace Prize to Saavedra Lamas underlined Argentinas advan tages over Europe during the 1930s its peaceful environment and its enviable political stability and prosperity But below this external glitter Argentinas internal problems were serious and worsening even if they were hidden from afar It was true that the large middle class in Buenos Aires prospered that kiosks in the new subway system were loaded with good and affordable books and that the Mendoza vineyards and the beef pastures of the pampas provided food in an abundance unknown in Europe and equivalent if not superior to the US The dance halls of Buenos Aires were jammed and the tango swept the country The Conser vative oligarchy was corrupt but also educated General Justo was not a Pinochet A personable man and an avid reader his vacation house in Mar del Plata was not guarded If the 1930s were a decada infama it was either a soft dictatorship a dictablanda or a false democracy a democradura But that was the problem its structure was unsound because the political system harboured a fatal contradiction At the top was a narrow oligarchy that could not broaden beyond the rich banking and industrial circles of Buenos Aires while the Argentina below this narrow elite was changing and booming a growing and broadening body escaping the control of its tiny head The social and political turbulence beneath the Concordancia was there fore gathering force year by year Industrialization was creating not only a large labour force in Buenos Aires but also a growing underclass of mi grants to the capital after the Economic Recovery Plan took hold in 1934 These socalled cabecitas negras occupied the slums around the inner city and were courted by the yellow press such as El Pampero Industrialization had also created big industrial towns like Rosario Cordoba and Tucumán in the interior which for the first time could challenge the capitals domi nance for the location of new factories This new economy with new entre preneurs and workers demanding support by the central government was Central Banker 111 typical of the 1930s phase of industrialization it was based on the use of labour rather than capital and advanced technology and took place in smallscale plants producing goods that replaced imports In this sense Argentina was following a trend in South America Chile for example had substituted 90 percent of its imports with national manufactures by the mid1930s Major international investment had simply dried up for temperate South America and it responded with a higher level of indus trial activity in the 1930s relative to preDepression days than other regions in the world economy31 But because Argentina was the most advanced ec onomically of the Southern Cone countries and the most urbanized the new economy transformed the social structure more dramatically with a looming confrontation between the ossified Concordancia and the boiling masses in Buenos Aires and the interior who were not being brought within the divided and foundering mainstream political parties No leader and no party seemed capable of channelling this growing political force on the streets and even the interest groups seemed split with the Union of Argentine Industrialists representing the big businesses of Buenos Aires but unable to incorporate the new and smaller labourintensive industries in the provincial cities Instead of broadening to adapt to these social changes the Concordan cia was narrowing and failing It was keeping afloat through bargaining and manipulation and the hovering threat of military intervention the 1938 national elections confirmed this pattern Roberto Ortiz of the Con cordancia became the new president but he could not have won without the help of a fraudulent electoral system A Radical who had broken with Yrigoyen in 1930 Ortiz had a talent for political cooperation and retained a measure of respect even among the party loyalists he had abandoned but the army and General Justo himself remained the dominant political ac tors in the country The faultlines in Argentinas political edifice apparent during the 1920s when they had brought out crowds in support of the 6 September 1930 Revolution widened into cracks after 1938 The new industrial masses were restless and there was an upsurge of religious and ethnic intolerance pressures for change were building but the political system was blocked National frustration created an anomie that affected all social actors and gave a magnified intensity to the ideological debate after the rise of fascism in Italy and Germany The outbreak of the Spanish Civil War in 1936 directly affected the second largest community in Argentina and fur ther polarized the population It seemed that the political stalemate at home was so profound that it released Argentines to fight over the future of Europe On May Day pro and anti Franco and Mussolini forces locked 112 The Life and Times of Raúl Prebisch in ferocious combat Argentine political life was a bizarre world of conflict ing images and lack of dialogue with the great European struggle a meta phor of Argentinas insoluble political paralysis The Concordancia itself was split in its response to political developments in Europe General Justo was strongly antifascist and a year earlier had supported the founding of the Committee for the Struggle Against Racism and AntiSemitism which included senior personalities from across the political spectrum including Augusto Bunge but the military was split as the Spanish Civil War forced a choosing of sides The longstanding admiration for the German Army characterized by General José F Uriburu remained a powerful tendency and fed on the string of Nazi successes after 1936 and Francos interven tion in Spain against the Republican forces The widespread antiBritish feeling throughout Argentina and the Concordancias association with Britain also generated sympathy for Germanys desire to overturn the humiliation suffered after World War I Prebischs horizon was narrower His concern was banking and the econ omy and by 1938 he was again seriously worried despite the excellent results of 1937 Argentinas relative success in dealing with the Great Depression did not ease his growing apprehension about the future as Britain France and Germany strengthened their sterling franc and mark blocs while the United States used its bilateral clout to ensure onesided reciprocity agreements All were using their bargaining strength to shield themselves from the Great Depression rather than expanding international trade Prebisch saw this undermining of the global trading system as self defeating and illogical but he had no illusions about the cost to Argentina as a small and vulnerable player still dangerously dependent on exports to one market As if to drive this lesson home again the British announced a new meat import tax and used it to force additional concessions from Argentina when the RocaRunciman Treaty was renewed Prebisch ruefully remem bered his 1927 defense of Argentinas trade policy based on the theory of comparative advantage ten years later the Achilles heel of trade in staples and dependence on Britain was maddeningly obvious The US market also remained closed after fruitless bilateral trade negotiations Argentina con fronted a difficult period internationally on the downward slope of the busi ness cycle The 1937 boom had flooded luxuryconscious Buenos Aires with imports overheating the economy and the US economy fell once more into recession The drought in Canada continued but Argentina would again face tough competition when climatic balance was restored and interna tional prices were certain to fall in the event of a wheat glut In the pattern established since his return from London in 1933 Raúl continued his edu cative work on banking policy through unsigned articles in La Nacion32 Central Banker 113 The gathering political crisis in Europe made these concerns increasingly urgent since the German threat in Europe aggravated tensions in the whole structure of international trade Prebisch insisted that trade with Nazi Germany be limited to hard currency operations he wanted to prevent Argentina from getting sucked into dependent barter trade where essential agricultural products would be swapped for military hardware or worthless marks as had happened in Eastern Europe Unlike Brazil or Mexico there fore Argentinas trade dependence on Germany fell sharply after 1933 to only 5 percent of total exports and imports by 1939 Because of his influen tial role in the Central Bank the German Embassy courted Prebisch ex tending him a decoration in November 1937 signed by Chancellor Adolf Hitler which was promptly consigned to his personal memorabilia Building on his European contacts from the Geneva and London years Prebisch had a network of friends and associates who provided detailed private accounts of the diplomatic crisis Carlos Brebbia Argentine ambas sadoratlarge after 1938 travelling around the continent from his base in the Netherlands and René Berger who was now employed at the Banque de lUnion Parisienne in Paris were his most trusted advisors in Europe Both confirmed the rapid dissipation of hopes for peace after Neville Chamberlains dramatic visit in September to see Adolf Hitler and discuss Czechoslovakia instead the Munich Agreement had merely opened Cen tral Europe to German arms without a fight while failing to contain Hitlers ambitions By autumn 1938 the prospect of war could no longer be ruled out Writing to Prebisch from Paris on 23 September 1938 René Berger ridiculed Chamberlains grotesque voyage calling it immoral and treason visàvis Czechoslovakia and predicting that 1939 would be the year of the big settling of accounts In France Prime Minister Edouard Daladier and his Foreign Minister Henri Bonnet were imbéciles et vendus two tired men without ideas or character of Neville Chamberlain and Walter Runciman who had taken the lead in forcing Czechoslovakia to accept Germanys demands the less said the better The pogrom against German Jews soon after Munich known as Kristalnacht deepened Bergers worries as Western leadership continued to weaken France seemed unable to pull itself together despite the Nazi threat and its humiliation after Hitler tore up the Munich Agreement France had become subservient to a British government and business class that appeared equally defeatist British bankers seemed willing to do anything to avoid armed conflict with Germany Carlos Brebbia who had observed the Munich crisis from Budapest reported Germanys rapid penetration into Eastern Europe us ing bilateral trade deals with weaker partners in which Berlin provided ar maments surplus goods or unconvertible marks in exchange for valuable 114 The Life and Times of Raúl Prebisch raw materials The great game is now under way Berger predicted Nazi Germany had captured the momentum before a cowering Europe and an isolationist United States It is impossible to overestimate the importance of these events for Argentina and South America Berger wrote The months and years ahead will be vital for their future33 While Berger and Brebbia reported the approach of war in Europe Prebisch introduced measures to mitigate its financial and economic fallout On 7 November 1938 he recommended a decree that expanded the pow ers of the Central Bank even more strengthening its system of import con trols to include all commercial transactions in the free market as well Since all purchases of foreign exchange had to be authorized by a prior permit it allowed the government to direct trade along bilateral lines or even to embargo certain imports in order to bargain effectively with competitors to ensure an overall trade balance The policy was borrowed from the sra slo gan of the 1920s to buy from those who buy from us while it simply re sponded to the prevailing bilateralism in the international system the Great Powers strongly opposed it Washington complained that the policy was bi ased in favour of Britain because of the RocaRunciman Treaty34 In effect the November decree recognized that the Argentine trade and economic situation was the most difficult since the 193132 period The predicted wheat surplus materialized as Canada and the US with bumper crops saturated international markets Argentina also faced a foreign exchange problem already apparent in two mild currency devalu ations in 1938 which raised sufficient concerns in New York about the stability of the peso that Prebisch delayed a bond issue planned for spring 1939 In effect Prebisch had developed a contingency plan should war break out in Europe but the immediate threat of conflict ebbed some what in the months after the Munich Agreement Prebischs actions prompted worries of excessive state intervention Berger warned him not to go too far Argentina remains a veritable oasis of economic liberal ism he wrote hoping it would remain so35 He saw no future in Europe for himself and returned to Buenos Aires in mid1939 to a senior position with the Banco Francia By summer 1939 Argentinas prospects had not improved and the whole fragile interwar structure of international trade appeared to be breaking down Increasingly trade reflected purely political criteria as the powers struggled for position In 1939 to balance Germanys growing in fluence in Eastern Europe Britain purchased 500000 tons of wheat from Romania rather than Argentina similarly a 625000 ton purchase from the US again in preference to Argentina reflected a desperate prewar British diplomatic opening to Washington The US for its part was aggressively Central Banker 115 bartering wheat and cotton for rubber and other strategic materials Argentina faced diminishing markets and the threat of another currency devaluation with the consequent loss of international confidence in the peso In a letter to Brebbia on 15 July 1939 Prebisch shared his fears for Argentinas delicate financial situation in the face of the unlikelihood of finding markets for her wheat the potential problem of declining interna tional confidence in the peso and the urgent need on behalf of Minister of Finance Dr Pedro Groppo a close friend of both to explore the possi bility of a loan with Dutch bankers36 Brebbias initial discussions with banking and government officials in Amsterdam were positive particularly at Mendelssohns where Prebisch had personal contacts Its managing director Fritz Mannheimer was confi dent that a major loan could be negotiated in the near future In a conver sation on 16 July 1939 he assured Brebbia that Argentina was a favoured country far from the battle zone and with a good credit rating despite the shortterm financial shortfall37 Mannheimer explained however that the Dutch banks were still digesting a major loan to France of 155 million Florins to consolidate its debt This loan primarily Dutch with the partici pation of Switzerland was essentially political to shore up France as it pre pared for war But it was a Dutch political priority Mannheimer explained and all the banks were following on national security grounds He himself a Jewish exile from Germany was a strong supporter of the plan The delay however was problematic Prebisch was disappointed and pressed for ac tion But on 10 August Mannheimer unexpectedly died and the Argentine loan proposal was shelved With it went any hope of easing the shortterm problem with a European loan Therefore on 21 August Prebisch again tightened import controls by introducing a system of special foreign ex change permits in another attempt to bring the trade account into balance and halt the drain on Argentinas gold and foreign exchange reserves accumulated at such cost during the Great Depression An article in La Nacion explained the special circumstances requiring this policy of a strict matching of imports with payments adding that the country is far from adopting the dangerous doctrine of autarchy38 Argentinas decision went unnoticed however as the deepening Polish crisis consumed the Great Powers On 23 August the surprise agreement between Stalin and Hitler to share spheres of influence in Eastern Europe opened the way for Germanys invasion of Poland As the Polish Army crumbled Britain and France finally were forced to act and their ultima tum to Adolf Hitler and subsequent joint declaration of war on 3 Septem ber confronted the world with the reality of a second European conflict in twentyfive years The Great Game indeed had begun 116 The Life and Times of Raúl Prebisch The German invasion of Poland totally transformed the European finan cial scene The Germans easy victory over the Polish Army was no great surprise after the NaziSoviet pact and this left Hitler free to turn his Army to the Western Front Now menaced directly the Western European gov ernments were consumed by mobilization for war While the private banks of Holland assured the Argentine Legation that they were only too ready now to get their money out to safe havens such as Argentina by buying Treasury bills the Dutch Government had categorically refused to permit its Central Bank to facilitate the export of capital Holland was putting 2 million florins a day into defense Britain was investing every pound avail able 6 million pounds sterling daily Any European bank that underwrote a loan to Argentina in these circumstances would be labelled a traitor in both official and public opinion Gold was flowing in a river to the United States as Europe borrowed to the limit at any cost Europe in short meant flight capital for the New World but for the duration of the war at least it was closed as a source of lending New York was now the only alternative the financial centre of the world Brebbia wrote Prebisch recommending caution The shock of the rapid Nazi victory over Poland and its partition as Soviet forces moved into the country from the east closed out the 1930s as definitively as 1914 had ter minated the nineteenth century The German Problem had not been solved by the First World War it would now be settled at far greater cost to the peoples of Europe and the international system From the periphery in Buenos Aires so far away but so linked to Europe with personal ties black flags greeted the return to war and the new decade 6 Opening to Washington So long feared and anticipated the Polish crisis and actual outbreak of war in Europe were not as traumatic as expected for Argentina Local interest in Buenos Aires remained focused on the Match of the Nations under way at the Teatro Politeama the muchanticipated international chess final that had brought grandmasters from all over the world to South America including the nowwarring Europeans and the Soviet Union Despite con flicting nationalisms and recall by governments the match went ahead any way but by its end Polish grandmaster Mieczyslav Najdorf had already lost his country he took up permanent residence in Argentina as Miguel The spectacular German advance into Poland created an immediate fi nancial panic however with the beginnings of a serious run on the Buenos Aires stock market and Argentine bonds but decisive Central Bank action succeeded in stabilizing markets with the announcement that it would pur chase all bonds sold by nervous investors and peg the peso to the pound ster ling By the end of the month an absolute calm had returned to Argentinas financial markets and pressure on the peso disappeared as the end of the GermanPolish war restored an uneasy diplomatic interlude in Europe Prebisch had gambled that national and international confidence in Argentinas economy would return quickly if the strong hand of the Central Bank were seen to be in charge and the events of 1939 proved him right Investors were attracted by Argentinas inherent longterm strengths as a stable and prosperous democracy far from Europes destruc tive wars and with the required strong financial institutions to adjust to ex ternal shocks European capital flooded to Argentina as a safe haven Between 11 and 20 September the Central Bank monitored the inflow of capital and adjusted the exchange rate daily against the pound sterling to cushion the adjustment setting it finally at seventeen pesos to a pound with a higher rate of fifteen pesos to a pound for certain import categories 118 The Life and Times of Raúl Prebisch On 4 December Raúl felt confident enough to float a 150 million peso bond offering to finance a major public works program it was immediately subscribed another mark of confidence in the Argentine currency and recognition of Central Bank prestige in the international financial commu nity Critics as well as friends could only applaud Prebischs handling of the September 1939 emergency The most immediate effect of the war was the curtailment of trade with Germany Like Roosevelt in Washington Argentinas President Roberto Ortiz announced a policy of neutrality in which commercial relations were retained but in practice German efforts to protect its commercial shipping proved futile as its ships were quickly swept from the oceans by a far supe rior British navy Indeed Buenos Aires was treated to a ringside demonstra tion of German weakness when the warship Graf Spee was cornered by the British in the Plate River and blown up by its crew in Montevideo harbour in December 1939 In any case the loss of trade with Germany was not a major problem because bilateral trade had declined by over 50 percent since 1933 when Adolf Hitler came to power and by 1939 comprised only 5 percent of Argentine exports and imports The GermanArgentine Eco nomic Agreement of 1934 permitted each country to buy as much from the other as it sold but no more This halted chilled beef exports to Germany although in 1935 Berlin agreed to a token quota of 25000 tons The decline in Argentine exports to Germany was later offset by increased Argentine orders from Britain and Western Europe as allied forces assem bled for war In fact Argentina picked up an unexpected bonus from the outbreak of war in 1939 ninety thousand tons of German shipping stranded indefinitely in Argentine harbours were sold at firesale price to the new Argentine merchant marine Once Argentina had adjusted to the onset of war it had to face the more complex problems created by the conflict in Europe It was not clear how long it would last or whether a diplomatic opening could be achieved be fore it spread further Argentinas distance from the European battlefields could not protect it from the economic impact of the war and the main problem was Britain still Argentinas dominant trade partner and source of investments four times larger than the US In October Britain stunned the Argentine Government by announcing its inability to pay for its meat and grain imports in pounds sterling This blocking of the bilateral sterling account was a far more serious problem for Argentina than the loss of German trade because it froze Argentinas primary source of foreign ex change leaving a sterling surplus piling up until the war was over but meanwhile creating a mounting Argentine trade deficit with the United States The result was a foreignexchange dilemma for the Argentine Central Opening to Washington 119 Bank While the British were technically only postponing payments until the war was over and they could resume normal commercial transactions Argentine producers could take little consolation in the accumulation of a huge but inaccessible account they needed their money immediately to survive Moreover the country had to somehow pay for its US imports in convertible currency If before 1939 the deficit of ArgentineUS trade had been balanced by a trade surplus with Britain the blocking of the sterling account presented a fundamental imbalance that threatened Argentinas longterm stability While Argentina needed US imports to maintain its economic growth it no longer could afford them Prebisch led the Argentine team trying to find a solution to this prob lem But in a replay of the RocaRunciman negotiations the British held all the advantages and were in addition desperate themselves The new agreement was unilaterally imposed and totally onesided For Prebisch this humiliating experience ended his patience for good and made him de termined to seek an alternative to a dependence the British kept abusing While the RocaRunciman Treaty was scheduled to expire on 25 January 1940 it was obvious that London would and could demand its renewal Meanwhile like a good colony Argentina was expected to continue all re mittances on its outstanding debt in Britain and the British Embassy in Buenos Aires rubbed it in by not hiding its intentions It is fully admitted that Great Britain is waving the meat club and using this threat to preserve its preferential status the US Embassy in Berlin reported to Secretary of State Cordell Hull1 Its broader policy of course was to force Argentina into a position of having to borrow from the United States to compensate for the blocked sterling in effect transferring these credits to Britain as a wartime bonus Washington therefore became the key to any solution International bor rowing could delay the crisis but it could not resolve the structural prob lem created by the war The immediate need therefore was to negotiate a new trade agreement but the longterm question concerned the future of Britain as Argentinas economic anchor While London guaranteed pay ment after the war its freezing of payments signalled the decline of power The old empire was under threat no longer powerful enough to prepare for battle with Nazi Germany as well as to maintain its international com mitments Argentinas star was fixed to a great power in evident decline while the US was emerging as the new dominant world leader and how ever much Buenos Aires might resent the Napoleonic pretensions of the Monroe Doctrine it had to recognize the opening of a new international order and adjust to geopolitical realities Argentinas traditional foreign policy orientation had sought to maintain a triangular relationship with 120 The Life and Times of Raúl Prebisch Britain and the United States keeping these opposing poles in balance to maintain its autonomy and interests in the South Atlantic But the new de velopments in Europe terminated this concept the US was destined to be the new global centre of finance trade and technology whether Latin America liked it or not and the entire Atlantic North and South would henceforth be in the US orbit Argentinas challenge was to enter it on fa vourable rather than dependent terms Washington proved as difficult to deal with as London It was hard to de cide which was worse the unselfconscious superiority of the Americans or the condescending arrogance from London After the British debacle Prebisch was entrusted by the Ortiz Government with the task of negotiat ing a reciprocal trade agreement with the US to reduce trade barriers and expand bilateral trade thereby compensating for the blocking of sterling Argentinas current account imbalance with the US in 1939 was unsustain able at 130 million pesos But Raúl failed as completely as with the British By 8 January 1940 and to the delight of the German press the talks broke off definitively The US State Departments later account of the failure in the Prebisch negotiations speaks for itself noting the Argentine lack of un derstanding of American character and conditions as illustrated by their apparent assumption that the American proposition represented an ex treme bargaining position that requests for haste were attempts at pressure and that the value of the tariff concessions was greatly exaggerated and genuine disappointment at the failure of United States to improve its offer especially as to imposition of customs quotas on two important products2 In plain English this meant a US ultimatum for Argentina either to capitu late and accept its terms or to leave with nothing Prebisch chose nothing High Argentine expectations of an agreement produced a backlash when the negotiations failed but there was not yet sufficient urgency in Washing ton to look beyond domestic politics The Americans rejected in principle the concept of buy as much as you can sell but in addition the Roosevelt Administration faced a campaign for reelection in 1940 and was unwilling to alienate domestic agricultural interests clamouring for protection3 Argentinas dilemma therefore remained unresolved as the war contin ued into winter The situation in Europe remained unclear into 1940 and all countries Argentina included awaited the next step Stalins attack on Finland in November 1939 and the Soviet Unions subsequent expulsion from the League of Nations diverted attention from Germany Eastern Europe stabilized after the fall of Poland and the Western Front remained calm Prebisch streamlined import restrictions to cope with a growing foreignexchange deficit tightening controls over luxury goods while facil itating the approvals process for essential products in the Banks Office of Opening to Washington 121 Exchange Control Nevertheless investor confidence in Argentina both foreign and domestic remained strong In early May 1940 Prebisch launched another 150 million peso bond issue it was oversubscribed the first day Tension mounted in April with Hitlers successful occupation of Norway and Denmark German and Allied forces massed along the French border On 10 May the German Army launched an allout attack on France through Belgium occupying Paris on 13 June and forcing the French Government to capitulate a week later The European balance of power was now destroyed with Britain itself in imminent danger of attack Italy jumped into the war on Germanys side leaving Britain and Canada alone against a triumphant Hitler controlling Western Europe while the Nazi Soviet pact gave him a tranquil Eastern Front The Argentine public was in credulous that the armies of France and Britain could have disintegrated within six weeks and that the British Army had fled at Dunkirk leaving all its arms and heavy equipment to the Germans The collapse of Western Europe directly affected Raúl and Adelitas friends and family particularly her sister who was now under German occupation in Holland Although René Berger had returned to South America in 1939 Raúls other French friends were either trapped or in exile Adelitas brother Carlos was safe in Switzerland however and Brebbia had also moved from Holland to Berne where he continued to cover the European situation for the Ministry of Foreign Affairs For the first time the Nazi threat seemed close rather than a fardistant menace concerning only the Old World and this was brought home by German foreign policy toward South America Confident of further victo ries and to the applause of his local supporters such as El Pampero and El Cabildo Hitler promised to resume trade with Argentina by October after subduing Britain adding to another round of stockmarket panic in Buenos Aires comparable to the one in September 1939 Once again how ever the same firm action of the Central Bank in offering to purchase all bonds offered for sale quickly reestablished confidence and calmed the stock and currency markets But the stakes in the war were now much higher for Argentina The scale of German victory meant that the world had changed radically and permanently for Argentina and Latin America What remained of the Allied forces were now dependent on the US for their survival not to mention eventual victory Raúl agonized over what to do His Jesuit education in Tucumán had made him a francophile he had visited Washington but Paris remained for him the centre of culture By background and inclination Western Europe was more congenial to him than the selfabsorbed and arrogant 122 The Life and Times of Raúl Prebisch US where politicians could demand free trade for everyone else but their own interest groups and insist on international human rights despite the racial discrimination at home But as a realist he was drawn to Washington after the Western Europe he knew had been destroyed He loathed the rac ism of German fascism The proNazi press in Argentina noisily criticized the many Jewish economists whom he had hired in the Central Bank and voiced its suspicions that he was himself of dubious background He feared the rise of profascist groups in Argentina and their ability to latch on to the nationalist banner During the 1930s he had remained an apolitical technocrat dedicated to serving his country despite a corrupt state But af ter the fall of Western Europe a choice had to be made the US was the key to Allied victory and much superior to the alternative And there was an other factor that underlined the growing attractiveness of the US relative to a Britain in decline if the manner in which London blocked sterling summed up perfidious Albion for Prebisch Americans seemed more open to new ideas and approaches He recalled meeting Professor John Williams in 1934 in Buenos Aires when he was on a US mission to examine price and exchangerate controls in Argentina What a pleasant experience that had been Williams unlike Niemeyer could listen as well as talk and could understand the conditions that had led Argentina to adopt new poli cies after 1930 Argentinas relations with Washington therefore had to be changed from adversary to privileged partner in the Americas and President Ortiz understood this challenge perfectly well But Ortiz was now so ill that his government was moribund It was the worst possible moment for a crisis of succession in the capital and Raúl did not think that VicePresident Ramon S Castillo could sustain the loyalty of the coalition supporting Pres ident Ortiz Four days after the fall of Paris and faced by growing govern mental paralysis Prebisch took action by establishing a direct link with the US Embassy On 17 June 1940 he met secretly with embassy officials in Buenos Aires to inform them of Argentinas precarious economic and fi nancial situation and to suggest a new opening in ArgentineUS relations While Raúl did inform Pinedo and Minister of Finance Dr Groppo he ac knowledged to US officials that his visit was outside official Foreign Minis try channels or presidential authorization and that he would deny it if word was leaked Indeed he scorned the reliability of Argentinas foreign affairs officials suggesting to US Ambassador Armour that he invite a US ex pert to visit Buenos Aires as soon as possible to assess the situation He ap pealed for a new beginning in their relationship noting that the Argentine Government was now probably better disposed toward the US and saw more nearly eyetoeye with the US with respect to the European situation Opening to Washington 123 than any other American republic4 Raúl argued that Argentina had only two alternatives after the fall of France to restrict trade with Britain and the US and therefore undermine support for the Allies at a time when German victories had substantially improved its public credibility in Buenos Aires or to sustain shipments of food supplies to Britain and im ports from the US by borrowing from commercial banks until Argentinas credit was exhausted Neither option was compatible with US and Western interests The former would undermine Argentinas vital role in the British war effort while the second opened the possibility of Germany breaching the American front5 Instead Prebisch suggested a third option which he felt would solve the dilemma a national recovery plan that would simultaneously promote the creation of a strong industrial economy as well as a new opening to the US in trade and foreign policy The result would be both an economic turning point and a new USArgentine understanding to cement Western Hemi sphere relations in face of the Nazi threat Argentina the strongest econ omy in South America would become the key US partner in Latin America maintaining pace with Canada and coming out of the war with the same network and advantages Such a new departure would require a package of US support measures including an ExportImport Bank loan to finance the exports of US products an additional loan to cover immediate shortages after the loss of European markets and the opening of US markets not merely to Argentine agricultural exports but also to new products that would replace the European suppliers shut out by the war Prebischs de facto leadership role continued after his discreet visit to the US Embassy as President Ortizs health collapsed he was no longer ef fective and his ministers prepared to resign with him as soon as he left the capital On 28 June 1940 Prebisch wrote a long article in La Nacion in which he outlined a new national policy to promote economic recovery and industrial development Meanwhile he continued his discussions with the US Embassy to bring Lee Pierson president of the ExportImport Bank to Buenos Aires for initial discussions with the Central Bank His own staff began drafting another national recovery plan6 The authority of the national government was finally restored on 4 July when Ortiz retired to Mar del Plata and VicePresident Ramon S Castillo was elevated to acting head of government to shape a new Cabinet Ortiz had been proAllied to the point of withdrawing government support for the antidemocratic Civic Legion and it was widely expected that Castillo in his choice of ministers would try to distance himself from his predecessor Instead Castillo coming from the mining province of Catamarca was more open to industrial development than Ortiz and the surprise appointment of 124 The Life and Times of Raúl Prebisch Federico Pinedo and Julio A Roca as his ministers of finance and foreign af fairs respectively gave a clear signal of continuity Pinedo had come around to the need for a proUS orientation and Raúl had kept in touch with him since their work together in 193435 Roca could also be counted on to sup port the opening to Washington and Brazil No two Cabinet appointments could have been as agreeable for Prebisch bearing in mind the association of both ministers with the debilitating political debates of the 1930s and Pinedo had the leadership skills to steer the National Recovery Plan through the Cabinet and Argentine Congress Although the National Recovery Plan concept preceded Pinedo and was drafted by Raúls team particularly himself Malaccorto and Guillermo Klein it became known simply as the Pinedo Plan in view of his ministerial role But this was irrelevant to the key point that Pinedo fully endorsed its main thrust particularly to break free from the Atlantic Triangle concept and recognize the reality of US power in the Western Hemisphere The Pinedo Plan was both a bold program to promote Argentinas national in dustry and a longterm strategic plan to assert regional leadership in the Southern Cone7 On the domestic side the government proposed the cre ation of a new industrial credit bank to promote industrialization fulfilling a longestablished demand of Luis Colombos uia and recognizing that Argentina had to strengthen growth with new stateprivatesector tools Borrowing from the French slogan If construction is healthy the econ omy is healthy the subtitle of the Pinedo Plan also endorsed a massive housing program for the poor and mediumincome earners in the Repub lic to stimulate employment 210000 jobs were to be created and the lo cal construction materials market It also committed itself to support agriculture with a new state agency that would buy unsold agricultural products sell them overseas and use the resulting profits to purchase nec essary industrial imports The Central Bank would finance the scheme by expanding credit and issuing government bonds to the commercial banks at 2 percent above the going interest rate for savings accounts Each of the main sectors agrarian industrial and urban got something positive in the Pinedo Plan business praised its support for industrialization the pub lic endorsed job creation and housing and economic nationalists saw in it a clever plan to leverage ownership of the Britishowned railways using Argentinas blocked sterling account in London as a down payment with the balance to be paid over a period of sixty years Based on the expansion of local demand and control of incomes Pinedo defended the plan as a social conservative by arguing that A sound economy and social structure based on general welfare and justice is as important for defense as a wellequipped army8 Opening to Washington 125 The international trade thrust of the Pinedo Plan was equally central and quite a new departure for Argentina It was not just a plan to promote national industry at any price instead it promoted a particular strategy of national development that aimed at export competitiveness in the US and regional Southern Cone markets to guard against artificial industries that would be swept away when the war ended The argument stemmed from what the authors called the three wheel dilemma of Argentine trade policy the three wheels representing the UK the US and neigh bouring Latin American markets The first wheel had broken with the war and the blocked sterling account this meant that Argentina would have to reorient its economy to the US and Brazilian markets To accomplish this on a permanent basis however Argentina would have to produce and ex port quality products beginning with nontraditional agricultural goods but also including valueadded products that would permanently replace the former European suppliers shut out of the Americas by the war The British of course were not happy with the weakening of its leverage in the region with the Embassy blaming irresponsible political forces for the Pinedo Plan Prebisch and Pinedo so long condemned by the popular press in Buenos Aires as irredeemable anglophiles were now recategorized by the British as radicals9 Since the success of the National Recovery Plan depended on building new relationships with the US and Brazil Pinedo Roca and Prebisch worked together closely during the winter and spring to lay the necessary diplomatic groundwork for successful missions to both countries Given geographic proximity all three would travel together to Rio but on 24 Sep tember Pinedo named Prebisch as chief of delegation for the trip to Washington It was already clear that the approach of US presidential elections meant the postponement of his mission until the reelection of Franklin Delano Roosevelt on 4 November 1940 Their first visit therefore was to Brazil Argentinas historic rival in South America Brazilian Foreign Minister Osvaldo Aranha welcomed the sugges tion for a bilateral meeting and President Getulio Vargas invited his Argen tine counterparts to a major conference on 36 October in Rio de Janeiro It was a propitious moment to break their long legacy of discord with a new era of cooperation Bilateral relations had been strengthened after 1930 un der Presidents Vargas and Justo and General José M Sarobes tenure as Argentinas military attaché in Rio had removed some of the historic distrust between the two militaries The Great Depression and the outbreak of war in 1939 gave an additional impulse for regional cooperation since both Argentina and Brazil needed expanded markets During the Depression both had erected tariff barriers against each other now Europe was at war 126 The Life and Times of Raúl Prebisch and both were dependent on the US It was time to explore a larger regional market to diversify that dependence At an interAmerican conference in Havana earlier in 1940 the Brazilian and Argentine delegations had agreed to discuss a new trade initiative in light of the wartime emergency The Pinedo Plan therefore revived a longstanding dream of the formation of a common market in the River Plate Basin anchored by Brazil and Argentina but including Uruguay Paraguay and if possible Chile which would bury their rivalry and together create a South American bloc in the world econ omy10 Pinedo had long been in favour of integration but Prebisch took the initiative in 1940 insisting that instead of Argentina and Brazil duplicating sectors for local markets the two countries should promote sectoral special ization for a regional market Fundamentally the Pinedo Plan sought to re activate the local economy and to expand and divert trade to nodollar zones like Southern America as well as to sterling and transferable exchange areas The BrazilArgentine Economic Conference was opened by Aranha on 3 October and brought together the key political and economic leaders from both countries Respective Chambers of Commerce also participated in the discussions as did Brazils leading economists Octavio Bulhões and Eugenio Gudin from the Ministry of Finance In a private meeting with Prebisch Roca and Pinedo President Vargas underlined his support for building a large regional market In place of the socalled Monroe Doc trine Brazilian Finance Minister Costa Souza noted we are proposing a new era for the new circumstances continental cooperation at the eco nomic level without prejudicing the right of any country of the Americas to manage their internal affairs according to their individual needs11 The underlying concept was a freetrade agreement beginning with sectoral accords starting with wheat and textiles and working forward to ward an increasingly comprehensive agreement on a stepbystep basis as re gional integration deepened Given the early stage of industrialization in both countries it seemed the right moment to determine relative sectoral comparative advantages achieve an agreement on priorities and thus build competitive industries with economies of scale capable of producing for a combined regional market the alternative was to view each economy as a wa tertight compartment protected by importsubstitution strategies Examples of the benefits of regional cooperation were readily identified Brazil was growing wheat and mixing manioc with flour because of its persistent trade deficit with Argentina yet Brazil was the more advanced of the two in certain textile products Brazil therefore agreed to expand wheat imports from Argentina in return for Argentinas purchase of Brazilian textiles worth 30 million pesos As a safeguard both parties agreed that reasonable overall trade parity would have to be maintained as the integration process Opening to Washington 127 deepened but they endorsed the logic of regional sectoral specialization to build exportcapable industries across the ArgentineBrazil divide The formation of an ArgentineBrazilian trade grouping implied a po tential diplomatic revolution in South America But if the Rio Conference signalled a historic departure both sides understood the challenge facing them in actually achieving this dream The ArgentineBrazil rapproche ment since 1930 remained fragile and since neither country had a steel or capital goods industry both looked to the US and UK as their primary trade partners for developing their economies But Aranha and Roca set a bilateral goal of a freetrade treaty open to the neighbouring countries and as a step toward a regional customs union In a special paragraph the two countries also supported a spirit of panAmericanism agreeing that Uruguay and Paraguay should be included in a Southern Cone trade agreement and that the participation of Chile should also be explored To allay suspicions of exclusion Prebisch had already sent a team to Santiago headed by Central Bank official Alizon Garcia to brief officials there on the Rio Conference In more specific terms the two large countries tried to calm the fears of the smaller neighbours Julio Roca met with his Uruguayan counterpart Foreign Minister Alberto Guani on 14 December in the bor der town of Colonia to endorse regional free trade and establish a bilateral Joint Ministerial Economic Commission All the governments agreed to participate in a Cuenca del Plata Conference to be held 27 January6 Feb ruary 1941 comprising the five River Plate countries Uruguay Paraguay Bolivia Argentina and Brazil to take the first steps toward regional inte gration and set up a secretariat for this purpose in Buenos Aires The Rio agreement cleared the way for the Prebisch mission to Washington Although the US criticized the prospect of a freetrade agreement or customs union in South America as a potential violation of the most favourednation principle the protest was surprisingly muted Prebisch and Aranha argued that improved bilateral trade cooperation strength ened all South American economies and should be supported in view of the Nazi threat and a press release from Sumner Welles during the Rio Conference ended by promising that despite its reservations about re gional free trade pacts the US might accept a Southern Cone Accord It is to be hoped Pinedo responded that human understanding has not be come altogether blind to the creation of new forms of living together12 On the eve of Prebischs departure for Washington therefore Argentina had scored a major diplomatic success that strengthened his hand in the forthcoming talks with US officials Prebisch arrived in Washington on 8 November 1940 His was the first foreign delegation to meet President Roosevelt after his reelection earlier that week Prebischs program for the US trip had been developed in close 128 The Life and Times of Raúl Prebisch cooperation with US Embassy officials in Buenos Aires particularly Christian Ravndal secretary of the embassy who travelled with him to Washington Prebisch had prepared a detailed background paper that would become known in Washington as the Prebisch Memorandum setting out the Argentine predicament with the war in Europe and the need for a bilat eral agreement with the US comparable with its wartime accords with China or Britain The objective was a special relationship a unique rela tionship between Washington and Argentina While the official purpose of the Prebisch mission was to seek financing from the US Government and the ExportImport Bank to accommodate its difficult foreignexchange cri sis the underlying goal was to achieve a longrange program of closer eco nomic and political cooperation between the two countries Following a decade of bitter fighting Argentina and the US both faced a watershed in their relations where an alliance appeared possible With Nazi Germany threatening Britain and Western Europe under Nazi control the two coun tries had something in common and needed one another If the US was the anchor of North America Argentina was the strongest power in South America They were obvious partners who paid their debts and de served some recognition for this good behaviour Pinedo was reported as asking Why does the United States not face facts and shift its policy to one that will give the Americas preference13 The objective of the Prebisch mission therefore was to forge a longrange financial economic and trade program to decrease Argentinas dependence on Europe including initial soundings regarding the establishment of a Western Hemisphere freetrade area and eventually of a customs union encompassing the Americas from Canada to Patagonia During Raúls visit to the US Presi dent Ortiz added his personal support for Western Hemisphere solidarity appealing on 20 November for a broad program of cooperation in the Americas to establish their defense against foreign perils14 Prebisch was accompanied by his foreignexchange expert Eduardo Grumbach and Roberto Verrier head of the Central Banks Economic Re search Department Settling into the Willard Hotel Raúl began discussions with US Treasury and State Department officials the next day while Adelita visited the battlefield at Gettysburg They met Secretary of State Cordell Hull and Assistant Secretary Sumner Welles who had served as Secretary in the US Embassy in Buenos Aires and spoke Spanish as well as Henry Morgenthau Harry Dexter White and Daniel W Bell from the US Trea sury Congressional leaders and Nelson Rockefeller who had recently been appointed coordinator of Commercial and Cultural Relations With the help of Chris Ravndal Prebisch explained the National Recovery Plan that Pinedo would be presenting to Congress on 14 November He Opening to Washington 129 clarified the proposed industrial development program to alleviate US fears of protectionism and underlined that improved USArgentine com mercial relations would allow the Central Bank to lift import restrictions The Prebisch Memorandum served as rationale for the specific credit re quest of the Argentine Government A stronger Argentine economy would have the additional effect of aid ing Britain in its war effort and Prebisch also used this argument of food security for promoting a special USArgentina economic relationship But although British officials met with their US and Argentine counterparts to discuss future plans it was evident that the British resented Prebischs mis sion to Washington and the concept of a special hemispheric link They knew that it would be at their expense a special US loan and Export Import Bank support to Argentina would not merely be financially un orthodox as they complained to London but it also gave the US an advantage in the Southern Cone that Britain could not match The British connection proved to be the main theme in Prebischs in terview with President Roosevelt which was arranged by Felipe Espil Argentinas ambassador to the White House A protocol visit of three min utes had been agreed to but Roosevelt kept Prebisch for an hour with Raúl periodically leaping from his seat on missed signals that his time was up mightily impressing Raúl with his charisma cordiality and aristocratic bearing But fdr really wanted to talk about the mutual USArgentine interest in limiting British power in the Western Hemisphere Just as Roosevelt had bought the last British bases from the Caribbean and Atlantic waters for fifty old destroyers several months earlier in a deal of question able loyalty so he also supported the Argentine threat of nationalization of the British railways as set out in the Pinedo Plan They have to agree to save their skins he concluded noting that Britishowned railways in South America were badly run in any case But he also warned Prebisch that railway investments were a losing proposition his family knew this all too well15 Prebisch informed the US that the Pinedo Plan also included the creation of a new trade export corporation the capi Argentine Export Promotion Corporation which had been approved on 29 November but not signed or released pending discussions with the US16 The capi con cept preceded the arrival of Pinedo as minister and Prebisch had actually discussed it with the embassy two months earlier but he now wanted to place this initiative on his Washington agenda The concept had emerged after the Central Bank was criticized by importers for restricting import and export permits for US products Raúl had explained that Argentina re quired essential goods first and foremost but that if the US were to import 130 The Life and Times of Raúl Prebisch Argentine manufactured goods the Central Bank would reconsider its policy in favour of a program that would link such exports with US imports17 Ravndal supported the plan to help solve Argentinas ballooning trade defi cit and encouraged Cordell Hull to accept it as well In his description the new Export Promotion Corporation was aimed at winning a place in the American market for articles new in Argentinas export trade but old in world commerce by replacing the French Italian Polish and Czechoslovakian exporters excluded by the war in Europe Such new product areas could include cheese ham wine and leather goods but other new and unan ticipated export articles might also be developed through a new form of privatepublicsector cooperation18 Exporting is not a function of gov ernment Prebisch argued but he insisted that government must con cern itself with making conditions favourable for export trade He didnt know if it would work but there was no justification in pointing to obsta cles as an excuse for not attempting to acquire a part of the orders Ameri can importers formerly placed in Europe19 The central idea was to woo Argentine producers out of the domestic market alone by giving them title to the foreign exchange created by exports with the right to use it for im porting goods otherwise subject to import duties The Central Bank would manage it and US business leaders such as Leo Welch were already discuss ing the mechanics of such an organization Prebisch hoped to find new approaches in meetings with the private sector in Washington and New York but above all he wanted to ensure that the US would not retaliate by imposing countervailing duties to offset the foreignexchange rate differ ential in Argentina By 5 December Washington had agreed to a 50 million stabilization loan for Argentina along the lines of a similar agreement with China a week be fore confirming a special relationship with Buenos Aires as unique in the region As such it carried a special political significance In the specific wartime circumstances the US was prepared to alter its relationship with Argentina Together with an ExportImport Bank credit of 60 million at 4 percent per annum Prebisch could return with a total commitment of 110 million In a lastminute flareup Prebisch refused a US Treasury de mand that Argentina guarantee its loan with gold although it was standard US practice at the time arguing that Argentina had not reneged on its debt payments during the Depression Finally Sumner Welles intervened on Raúls side You made monkeys out of them Ravndal confided20 The language of the ArgentinaUS Joint Statement on 20 December 1940 reflected a change in bilateral rhetoric from hostility to cooperation This is a cooperative arrangement between old and good friends it be gan Monetary authorities of the two countries expect to hold discussions Opening to Washington 131 in the same friendly spirit during the coming year and it is hoped that these conversations will enable both countries to reap the greatest possible benefit from the workings of the present agreement Henry Morgenthau hailed the compact as practical proof that the goodneighbour policy is a living force among American Republics21 Media reports in the US praised Argentinas remarkable adaptation to the loss of European mar kets after the fall of France and also supported the National Recovery Plan as a recipe for recovery22 But the Prebisch mission and the warm afterglow in Washington had changed the bilateral relationship in ways unanticipated before his departure Politically Washington and the US media noted the transformation of USArgentine relations following their December 1940 agreement Prebischs mission to Washington had been successful in establishing a framework for reviving a very complicated and poorly managed relationship On the Southern Cone freetrade front the Roosevelt Administration promised not to object to freetrade agreements with neighbouring states23 Prebisch remained in Washington until 21 December when he and Adelita went to New York to spent the Christmas holidays with her brother Alfredo who worked at the IG Farben Head Office in the US They went skiing in Vermont or at least Alfredo tried the slopes Raúl refused He was more interested in US universities and decided to contact John H Williams at Harvard whom he had met personally in Buenos Aires in 1934 Williams was receptive they met in Boston and discussed the possi bility of complementing the new bilateral opening with USArgentine aca demic cooperation Since Williams had close connections with the US Federal Reserve the concept emerged of a trilateral training program in which two or three young Argentine economists in the Central Bank would be selected for graduate studies at Harvard and would combine this theo retical work with an internship at the Federal Reserve during summer vaca tions They would then return to the Central Bank in Buenos Aires and be replaced by other colleagues in rotation For Prebisch the proposed pro gram solved two problems First the quality of training in economics at the Faculty of Economic Sciences at the University of Buenos Aires remained substandard Apart from his own seminar there was nothing that could be called graduate level work at all Harvard would therefore expose his gifted young staff to a quality curriculum with a faculty list that included Schumpeter Haberler Williams Hansen Mason Harris and W Leontieff Second the combination of Harvard and the Federal Reserve Board pro vided the best platform for understanding monetary policy in the ap proaching postwar era The openness of the US Government and its depth of talent gave it a strength entirely lacking in Buenos Aires Here links 132 The Life and Times of Raúl Prebisch between the private sector and universities were taken for granted and in formation was more readily shared and respected Since Argentina would be increasingly affected by US policy the Central Bank required a better knowledge of US institutions practices and personalities What better way to do this than to have a strong personal link with the ranking academic and banking institutions in the US itself Walter R Gardner at the US Fed eral Reserve considered Prebisch to have created one of the best Central Banks in the world and agreed immediately to the trilateral program with the first graduate students to arrive for the Harvard fall semester But Prebisch also saw the HarvardFederal Reserve connection as part of a larger effort to stimulate regular visits of US scholars and bankers to the Argentine Central Bank for joint research or study projects to maintain his Argentine Central Banks stature in the increasingly interconnected global financial sys tem The first US official from the Federal Reserve of New York to visit the Central Bank was scheduled to arrive in Buenos Aires in January 194224 Prebisch returned to Washington in early January 1941 on Cordell Hulls invitation to stay in the US and help relaunch the illfated negotia tions for a reciprocal trade agreement which had failed the previous year and produced an undercurrent of mutual resentment Pinedo and Roca agreed on condition that the talks remain secret and that all remaining obstacles be cleared away to prevent another failure25 The same problem remained as a year earlier while Argentine exports were now doing better in US markets the US still provided 30 percent of Argentinas imports but took only 16 percent of its exports When he met Secretary Morgenthau to begin talks he pointed out the section on trade in Adolph Berles new book New Directions in the New World Berle who had just been appointed assistant secretary of state for Latin America had written The captain of a Salem bark trading out of New England to Whampoa in China or to Valparaiso in Chile planned to buy as well as to sell the Agents for Gen eral Motors in Brazil who export to sell ought to be the buyers for Brazilian coffee In other words we must think a little less about selling and a little more about trading which is in its essence exchange Meanwhile political opposition to the Pinedo Plan had grown in Buenos Aires While it was approved in the Senate with broad support and few mod ifications Pinedo faced a Chamber of Deputies in which the Radicals had the majority and he opened a dialogue with its leadership in the hope of an early agreement Many Radicals opposed it because Pinedo had been a law yer for the railways and he was assumed to have a private interest in the deal Others criticized the financial oligarchy represented on the Central Banks board of directors resenting the Central Bank for its steady accumu lation of powers if adopted the National Recovery Plan would be managed Opening to Washington 133 by a threeperson commission within the Bank extending its already enor mous influence in regulating the economy26 It was noted that Prebisch had dominated the Washington mission acting virtually as a Cabinet minister and that while a foreigner like Leo Welch of the National City Bank sat on the Central Banks board of directors Argentine Cabinet members re mained at armslength from the Bank For some Radical Parliamentarians therefore the Pinedo Plan represented a lastditch effort by the corrupt coalition behind the Concordancia to establish a new legitimacy Another and more obvious reason for Radical opposition to the Pinedo Plan was its popularity approval would go far toward consolidating the Conservative re vival while its defeat would revive the old anger against Roca for the Roca Runciman agreement and Pinedo during the Meat Debate27 But the outcome was not predictable since the Radical Party also com prised factions across the entire political spectrum including supporters of industrialization and strong proAllied advocates While the Pinedo Plan hung in the balance and might well have been approved before the provin cial elections in Santa Fe on 16 December the assassination of Radical Party candidate Conrado Risso Patron sharply lowered the political barometer Two weeks later on 5 January 1941 electoral fraud in Mendoza claimed the life of another Radical Ernesto Matons After two overt cases of fraud the ucr boycotted the Congress opposing any cooperation with the govern ment on anything including endorsing the National Recovery Plan unless President Castillo intervened in these two provinces to restore due process Unlike Ortiz Castillo was too brittle to build political bridges with the Radi cals in place of dealing with the Santa Fe and Mendoza scandals he went on holiday to Mar del Plata As a final offering the Radicals insisted that Presi dent Ortiz return to the presidency to mediate the dispute but his health was too fragile The Pinedo Plan thereupon collapsed and both Pinedo and Roca resigned in an undignified and final exit from public life28 Brazilian Foreign Minister Aranha was so taken aback by the fall of Roca so soon after their meeting in Rio that he refused to attend the Cuenca del Plata confer ence in Montevideo which opened on 27 January 1941 The departure of Pinedo and Roca meant that in Washington Prebisch was now alone in bringing the USArgentine trade negotiations to a suc cessful conclusion By 6 February agreement had been achieved on the main points US tariff concessions in exchange for nondiscriminatory treatment and concessions on import restrictions Washington also agreed to downplay its criticism of the BrazilianArgentine agreement It was a re lief for both governments and although it was only signed on 14 October 1941 given the political complexity of both capitals it was ratified with only minor changes Hull noted his satisfaction that a bilateral accord was 134 The Life and Times of Raúl Prebisch finally in place As you know he wrote to Roosevelt We have sought over a period of years to bring about improved relations with Argentina a matter which is of course of fundamental importance at this time29 Prebisch also found US privatesector support for the proposed Export Development Corporation when he visited New York on 11 January and he recommended the publication of the decree in Buenos Aires three days later with a State Department agreement to begin detailed work on this topic Prebisch left Washington for Buenos Aires on 15 February in a warm bilat eral afterglow His many weeks in Washington and New York had offered an opportunity to meet regularly with reporters and sensitize the press to Ar gentinas needs and special circumstances For decades the US press had been hostile toward Argentina and Raúl set about to change this image He dramatized the impact of Britains decision to block the sterling account by describing the increase in bankruptcies and unemployment with unsold grain lying in the fields the unsustainability and unfairness of it all The US public was intrigued to learn that to save foreign exchange Argentines had been reduced to distilling corncobs into alcohol for liquid fuel By the time of Prebischs departure a more balanced media coverage of USArgentine relations had evolved as a necessary precondition for building a closer bilateral relationship30 Raúl and Adelita were now impatient to get home they had been away for a full three months but there was no escaping the boredom of wartime travel in the Americas with one uncomfortable and bumpy flight after the next and numerous stopovers Miami Mexico Panama Lima Santiago and finally Mendoza where they boarded a train for the last leg to Buenos Aires Back in his office in the Central Bank Raúl found the order and tranquility of a wellmanaged institution run in his absence by deputy Edmundo Gagneux The same could not be said for the government in a capital even more paralyzed by interparty warfare than before his depar ture Now however Prebisch had lost his chief supporters within the Castillo Cabinet Prebisch nevertheless soldiered on in the spirit of the Pinedo Plan con fident that a proUS alignment would eventually prevail in Argentina Nazi fortunes had diminished sharply since the fall of France Germany had lost the air war in the Battle of Britain ending the threat of a German cross channel invasion and US policy had shifted definitively to support for the Allied cause beginning with a first shipment of arms after Dunkirk and the subsequent adoption of a lendlease policy in March 1941 which permit ted fullscale reequipment of BritishCanadian forces Defense coopera tion in the Americas under US leadership was inexorably expanding and Opening to Washington 135 Germanys military fortunes were waning Hitler had to swallow his commitment to open trade with Argentina in 1940 and apart from subma rines the oceans were now definitively under Allied control Moreover the German invasion of the Soviet Union on 22 June shifted Hitlers war effort to the Eastern Front enlarged the Allied coalition and further under mined the likelihood of an eventual German victory In public opinion the combination of the Battle of Britain and Soviet entry into the war reversed an earlier tide of proGerman sentiment in Argentina after war had broken out in 1939 Maintaining his connection with the US Embassy Prebisch continued plans for the creation of the Argentine Trade Promotion Corporation capi to promote exports to the US which he had discussed with US offi cials during his Washington trip and on 9 May the capi gained President Castillos formal approval setting up its offices at 559 Bartolome Mitre in downtown Buenos Aires with Josiah B Thomas formerly head of the local US Chamber of Commerce as the first manager Leo Welch was chosen president of a tenperson board of directors comprising two Argentine and eight US citizens and its network included most of the big companies in Buenos Aires All dealings of the capi were to be controlled by the Central Bank reporting of course to the minister of finance but as anticipated it was selffinancing rather than supported by tax dollars and therefore avoided the political criticism of a publicly funded support for the private sector Instead the capi would retain 4 percent of the dollar exchange pro duced by exports for its operating budget with the rest going to the share holders of the corporation when they were successful in the US export market US business leaders from John D Rockefeller to commercial bank ers encouraged the State Department to support the initiative and a New York office opened in July as part of a major diplomatic campaign in the US The capi is making every effort to assure the Argentine exporter that this is not a temporary organization and that the opportunity exists for finding permanent and lasting markets in the United States markets that can be retained even after the war one New York banker noted31 Pinedo travelled to the US to speak on behalf of the new initiative and the private sectors in both countries were supportive32 Leo Welchs letter to Sumner Welles on 31 July requesting his official support was strongly en dorsed by senior US officials The capi Duggan noted in a covering memo seems to be an unusually promising effort to develop new Argentine ex ports to this country Sumner Welles replied that All of the officers in this Department who have had anything to do with interAmerican relations are I believe fully conscious of the need for the development of new comple mentary exports from Argentina to the US Rockefellers InterAmerican 136 The Life and Times of Raúl Prebisch Development Commission set up a special committee in August to help identify new Argentine exports for US markets a display was set up at Macys in New York and the Armour Research Corporation was retained to examine and strengthen trade opportunities Chris Ravndal had now been posted in Washington and he promoted this promising file from States Latin America Division with Josiah Thomas thanking him for his splendid cooperation in setting up his new office in New York In gen eral Ravndal stood guard ready to preempt charges that the Argentine Export Promotion Corporation was unfair to US suppliers in providing unilateral benefits to Argentina instead of demanding reciprocal treat ment It would be in order for the Secretary to send the Corporation a word of welcome at this time he suggested to Hull noting that it was a product of his reciprocal trade program33 Despite the failure of the National Recovery Plan therefore Argentine US relations were thriving in a special relationship centred on an export led industrialization policy and underwritten by the major firms on both sides Luis Colombo strongly supported this new drive official Washington as well as the US business community and wartime organizations were also on board In Buenos Aires the Central Bank was working closely with the American private banking and business sector with its own representative on the capi board of directors This benign climate in USArgentine rela tions had the additional benefit of supporting the ArgentineBrazil eco nomic agreement and its vision of a Southern Cone trade grouping On 23 May 1941 the embassy commented favourably that the two countries were committed to a program aimed at a progressive implantation of free trade and eventual customs union and that an approach was being made to include Chile as well34 The economic results for Argentina during 1941 were surprisingly fa vourable growth resumed and unemployment fell Industry and com merce expanded while bankruptcies were down by 273 percent Major strides had been achieved by Argentine industry which now accounted for 50 percent of gdp more than wheat and cattle combined The expansion of interAmerican trade particularly with the US and Brazil more than off set the loss of markets in continental Europe New trade agreements with the US and Canada and the opening of the capi underlined a historic trade reorientation toward the Americas Exports to the US doubled from 264 million pesos in 1940 to 562 million pesos a year later and Argentina had been able to arrange shipping for this increase despite acute Allied shortages Prebischs grim expectations after the German invasion of France were therefore premature the economic outlook had improved to the Opening to Washington 137 point where a special parliamentary committee had been appointed to study the import permit system with a view to the gradual elimination of import controls by the Central Bank Indeed by autumn 1941 given the strength of the economy and the money flooding into Argentina Prebisch was able to eliminate most import controls Prebischs concern had now shifted to the control of inflationary pressures Overall Argentinas eco nomic situation among the major economies in the world was enviable Prebischs dilemma in 1941 was the inevitable politicization of the Cen tral Bank as its powers increased and it became more visible as a political player his increasing activism did not go unnoticed and opponents won dered if he was general manager of the Central Bank or trying to be for eign minister and president By mid1941 to dilute the Central Banks influence his critics were endorsing the creation of a national economic council reporting directly to the president The Radical Party continued to condemn the financial dictatorship and the US Embassy captured the sense of frustration and unease in Buenos Aires as wartime demands in creased the powers and visibility of the Central Bank According to Ambas sador Armour there was a widespread feeling here that the group which controls the policies of the Central Bank as well as the Ministry of Finance and which is sometimes referred to as the brains trust has more or less a monopoly on the furnishing of expert advice to the President on economic matters industry and technical matters connected with international trade and finance and that some of the paternalistic views held by this group to gether with their arbitrary methods which it often considers necessary to follow are not consistent with the best interests of the country35 The proUS tilt in Argentine trade policy during 1941 was supported by the successful containment of Nazi influence during the middle of 1941 through the vigorous efforts of the Argentine Congress and civil society supporters and the intervention of the Central Bank During 193940 Germanys successes had resulted in important connections with powerful Argentine elites and alarmist predictions of a proNazi coup circulated in the media Augusto Bunge and his Critica denounced the encounters of German Ambassador Eduard Freiherr von Thermann with the Argentine social elite in the Jockey Club ProAllied forces mobilized Deputies led by Damonte Taborda warned that the German Embassy was actively promot ing antidemocratic forces particularly funding the Naziinspired newspa pers El Cabildo and El Pampero and successfully demanded the creation of the Parliamentary Commission on AntiArgentine Activities chaired by Taborda to investigate illegal German activities The Commission asked the Central Bank to investigate the possible existence of financial links 138 The Life and Times of Raúl Prebisch between the proNazi press the German Embassy and the two German banks that occupied the same building in Buenos Aires Prebisch sent two teams of inspectors that came up emptyhanded but the third was headed by Malaccorto and he found incriminating cheques from the Banco Ger manico Without asking the minister of finance Prebisch personally deliv ered the evidence to Taborda in the Congress giving him the concrete evidence he needed for a credible assault on the German Embassy36 On 17 September 1941 the Washington Post carried an editorial titled Pulling Together in which it applauded the subsequent Chamber of Deputies censure of the German Ambassador Freiherr von Thermann for overstep ping the functions of his office and abusing his diplomatic privileges37 There was only one dissenting vote and Thermanns position in Buenos Aires was now hopeless However Prebisch was targeted even more by Nazi sympathizers after the incident He was already the permanent enemy of El Cabildo and El Pampero for cutting off their paper supplies using the Central Banks rationing powers now he received a direct death threat in an anon ymous letter denouncing the betrayal of his fathers German blood But Nazi Germanys influence in Argentina plummeted after the von Ther mann affair and never recovered The Washington Post noted that the de velopment is a testimony to the manner in which all America is moving together in this greatest of world crises The British Ambassador in Bue nos Aires concurred referring to the socalled Nazi menace in mid1941 as an embarrassment rather than a direct threat The Atlantic was closed Germany simply could not access Argentina by sea or air As the historian of the period underlined the Argentine people had contained the Nazi threat by themselves before the end of 194138 But for all this positive economic and antiNazi news in 1941 a deepen ing crisis of political direction in Buenos Aires threatened to upset the proAllied balance of forces in the country Three foreignpolicy tenden cies were competing within Argentina each with a different political and social base Profascist supporters within and outside the armed forces en dorsed a policy of neutrality given Germanys distance from South Amer ica and the obvious fact of naval inferiority and lack of an air link neutrality was the most that Hitler or Mussolini could expect from any Argentine government A second camp endorsed President Ortiz pro Allied declaration in 1939 since Argentine food supplies were vital for British food security and neutrality allowed their shipment across the Atlantic without fear of German submarine attack Ironically therefore both Britain and Germany supported the same objective of neutrality in Argentine war diplomacy and both were suspicious of US intentions in the Southern Cone Castillo was a committed neutralist The third Opening to Washington 139 tendency which Prebisch endorsed after observing the eclipse of Western Europe and which was reflected in the Pinedo Plan substituted the traditional Atlantic triangle paradigm in Argentine foreign policy with a realignment toward the US and Southern Cone integration The confusion and uncertainty about war diplomacy remained unre solved Justos compromise between the Radicals and Conservatives had come unstuck with the departure of Ortiz and Argentina teetered at the edge of political instability In Foreign Affairs Dr E RuizGuiñazú Rocas successor was a committed neutralist with close ties to Francos Spain He suspected that Washington intended to replace British influence in the Southern Cone by clamping a military stranglehold of its own over the region on the excuse of countering the German threat and the British lobby around Castillo promoted this latent distrust of the US to maintain Argentine neutrality during the war and to maintain a postwar position of leverage in South America President Castillo seemed trapped by contra dictory pressures so evenly balanced that they yielded stalemate Nothing seemed consistent or predictable although it had rejected the Pinedo Plan in January the Radical Party supported the creation of the Industrial Credit Bank on 30 September 194139 Moreover the military was restive Colonel Juan Peróns career since the military coup of 1930 had involved assignments on the Bolivian frontier and as military attaché in Chile but his promotions were earned as profes sor of Military History at the Superior War School Between February 1939 and January 1941 when he returned to Buenos Aires he was based in Italy studying warfare in Europe These were the years of apparently invincible German and Italian advance He praised Hitlers Germany as an enor mous machine that functions with marvelous precision where nothing not even a tiny screw was missing and said that Italian fascism achieved effective participation for popular organizations in the nations life some thing which had always been denied to the people Until Mussolini came to power the nation was on one side and the worker on the other A fellow officer Colonel Enrique V Gonzalez lived in Germany in the same period and visited him in Italy Both were active in a secret Army lodge the gou Group of United Officers Like many other officers who played cards at the German Embassy in Buenos Aires they were disenchanted with the evident political chaos of the Concordancia The unrest in the military was not confined to profascist elements there were legitimate national security fears that concerned many other officers and that helped to undermine civilmilitary relations in 1941 For example the Argentine military was indignant over US plans for a major naval base across the River Plate in Uruguay at Punte del Este Agreed to 140 The Life and Times of Raúl Prebisch on 11 September the base dominated approaches to Buenos Aires and could only be seen as a threat nationalists also argued that provocative US military manoeuvres in the South Atlantic were aimed as much at Argentina as at Nazi Germany The deeper issue concerned the regional balance of power New armaments were required for modernizing Argen tinas defenses and these had to be imported But with the German market closed and Europe needing every weapon available the US domi nated this market as well It was therefore not surprising that the Argentine military feared that the US would favour Brazil and this fear became re ality in April 1941 when the US ExportImport Bank provided 20 mil lion in credits to build a major stateowned steel complex in Brazil the National Steel Company csn President Vargas convinced Washington that if the Americans refused the Germans would finance it instead given their strong position in Brazilian trade with 19 percent and 25 per cent of its exports and imports Unlike Argentina Brazil had therefore played the German card to its advantage while the conscious curtailment of bilateral trade by the Argentine Government after Hitler took power in 1933 left it with little leverage in Washington Previous efforts by Brazil to build a national steel industry with foreign capital had failed leaving it with only one small producer Belgo Minerva which was unable to fabricate heavy weapons In response to the creation of the csn the Argentine military urged the government to match Brazils emerging heavyindustry capa bility The politicians agreed including the proAllied Radical Party On 23 April a fiveyear rearmament program including the purchase of air craft was adopted by the Castillo Government On 9 October it followed up by creating the longdesired Direccion General de Fabricaciones a special secretariat controlled by the military to build an independent armsproducing sector by expanding industrialization40 At the diplomatic level however the ArgentineBrazil rapprochement was maintained and on 21 November Osvaldo Aranha visited Buenos Aires to sign a bilateral agreement that endorsed regional free trade Be neath the tension created by the personal dislike between the two foreign ministers a subregional concept was forming with a set of regional commis sions in which the five countries were beginning to coordinate policy on functional areas such as customs and transport and a regional office for Information and Economic Research was being organized in Buenos Aires The practical result was a lowering of ArgentineBrazil rivalry in the buffer states particularly Paraguay and Bolivia The inconsistency of the US contributed to the political uncertainty in Argentina it was sometimes unclear whether the US was trying to save the world or to buy it and take over the Western Hemisphere for itself When Opening to Washington 141 Prebisch was in Washington he promoted an ExportImport Bank loan to build an oil pipeline from Mendoza to the Atlantic US oil interests lob bied successfully against the project When the Central Bank cut newsprint shipments to El Pampero and El Cabildo the US Embassy again launched an official protest on behalf of their US paper suppliers The rapaciousness of the US in cornering Latin American strategic resources also affected US Argentine relations Having manoeuvred Bolivia into signing away its tin reserves in a longterm contract to feed the US war machine the US informed Argentina in May 1941 that it wanted a similar deal for three quarters of Argentinas tungsten production The request was accompa nied by an implied threat linking Argentinas flexibility on this issue to getting key exports such as tinplate from the US Prebisch turned down the offer flat In a note to Ambassador Armour he indicated that Argentina was anxious to cooperate but insisted not merely on a substantial im provement over the Bolivian deal but also an agreement at a price not far below that paid by Japan for diverting tungsten to the US The necessity of securing certain essential materials from the US was an absolute quid pro quo as was due regard for producers and their employees41 Even the mildmannered Carlos Brebbia worried about a world dominated by an overpowerful Washington with Europe in eclipse What will the Ameri cans do now that they have all the worlds gold in their possession he mused in a letter from Berne to Prebisch I sometimes imagine it may be like a person who has collected all the telephones in the world and can no longer ring up anyone42 In the Southern Cone the usas increasing pres sure on Paraguay was resented in Buenos Aires as interference in its sphere of influence a freetrade agreement had been in operation since 1916 Overall however the USArgentine relationship remained on track There were powerful voices in Washington sensitive to Argentinas inter ests reciprocated in Buenos Aires as bilateral trade grew The progressive deterioration of security in the Pacific as Japan extended its zone of influ ence also underlined the mutual interest in stabilizing and strengthening their special relationship The result was a series of positive steps that to gether marked an important rapprochement In July 1941 there was a major public display of solidarity between US and Argentine armed forces complete with parades and a fleet of B17 Flying Fortresses flying into Buenos Aires On 14 October the ArgentineUS bilateral trade agreement was finally signed ending a decade of fruitless negotiations and heralding greater cooperation Certain other contentious struggles ended in success in the end Argentina fended off a Bolivianstyle capitulation to US threats and got a satisfactory price for its tungsten But other irritants remained in both the security and economic areas and the Roosevelt Administration 142 The Life and Times of Raúl Prebisch therefore decided to send Chris Ravndal to Buenos Aires with a group of US diplomats to try to resolve outstanding problems The date for these talks was set for Monday 8 December 1941 As Prebisch awaited the arrival of Ravndal on 6 December to drive him from the airport to his hotel he could review a successful year achieved un der difficult circumstances The reputation of his Central Bank had been confirmed again and the missions to Brazil and particularly the US had been successful He had become a key player in Argentine wartime policy Despite the failure of the Pinedo Plan the economy was expanding In over all foreign policy neutrality balanced the conflicting demands of political groups at home by feeding Britain while containing Nazi political influence Meanwhile the US opening was moving ahead including his special project of sending young Central Bank economists for training at the Federal Reserve and Harvard In late June Julio Gonzalez del Solar Prebischs younger halfbrother and Francisco Coire had left Buenos Aires for New York steaming up the Brazilian coast and through the hot Caribbean ports ofcall on the SS Argentina That fall Prebisch had the luxury of memorable personal indulgences designing a full set of new peso bills and relocating to a new residence de signed by his brother at 134 Rivera Indarte in San Isidro a prosperous sub urb twentyone kilometres north of the downtown on the coast Friends called it the second Casa Rosada It was an oasis reserved for close friends and relatives he now ventured even less into the world of theatre or the broader social life of the capital and his few free hours were dedicated to planning the new twoacre garden set among tall elms and flowering dog woods Raúl also boasted a big green Packard a fond companion that he drove with great pleasure He had also bought a family antique from the sale of the contents of Enrique Uriburus mansion at Lavalle 371 a wall length desk with inlaid drawers and panels of superb woods Uriburu had died of a sudden stroke and the bankruptcy of an estate that included his fathers immense inheritance shocked Buenos Aires society as much as his premature death Raúl was too busy to attend the sale and sent Pedro Orradre his secretary with instructions to buy the desk at any cost Orra dre eventually persevered against rivals with a successful bid of two thou sand pesos equivalent to one month of Raúls Central Bank salary Raúl and Adelita eagerly awaited Ravndals visit to Buenos Aires They had last been together in Washington and he was almost family They planned a barbecue for Sunday 7 December in the garden of roses and flowering trees But Japanese forces attacked Pearl Harbor that morning and Ravndal was recalled to Washington without the opportunity to pass by the house and say farewell to Raúl and Adelita The aborted mission was a Opening to Washington 143 signal that a whole new era was beginning in which ArgentineUS relations were suddenly captive to a much bigger game South America would now be a military rearguard rather than a partner for Washington and the term special relationship would have a different meaning It was now a full scale World War and all of Prebischs successes were at risk 7 The Pearl Harbor Squeeze Prebisch could not have been surprised with his first task on Monday morning 8 December the day after Pearl Harbor Another run of panic selling on the financial markets had broken out and had to be managed in the pattern that had become almost routine after the two earlier panics in September 1939 and with the fall of France in June 1940 Business reac tion on the Buenos Aires Stock Exchange was no different in 1941 with nervous investors selling 93 million pesos for the security of government bonds offered by the Central Bank With the return of stability the Bank then disposed of these purchases through direct sales and on the Stock Exchange The operation was again swift and successful The shortterm problems created by the usas entry into the war were therefore quickly resolved and even Argentinas loss of trade with Japan was manageable since bilateral exports had shrivelled up anyway during the crisis months before Pearl Harbor The domestic political impact was more complex and on 16 December Acting President Ramon Castillo declared a state of siege that further underlined his political isolation Argentinas longterm international prospects were suddenly in ques tion Although far from Japan and Germany and insulated from physical attack its 194041 breakthrough in bilateral relations with the US was threatened by this new stage of the war The logic of Argentinas policy since 1940 and its opening to Washington had been a regional leadership role in South America in cooperation with the US within a neutral West ern Hemisphere Canada excepted since it had been fighting from the be ginning Its policy of neutrality visàvis Germany protected its primary role of supplying Britain with bully beef for its troops while tolerating but containing Nazi influence in Argentina Argentina had the best of both worlds it maintained strong ties with both Britain and the US as its leading external economic partners but it also expanded relations with South American partners particularly Brazil to enlarge the regional market The Pearl Harbor Squeeze 145 But Pearl Harbor eliminated this policy framework destroying the delicate international balance that gave Argentina room for manoeuvre among the powers from 1939 to 1941 Instead the Grand Alliance against Germany and Japan left Argentina out of step with both Washington and the rest of Latin America Although the US had been content to remain out of the war for over two years after September 1939 in an enviable and profitable rearguard role the Japanese attack unleashed a furious cru sading instinct the Roosevelt Administration now demanded immediate Argentine entry into the war on its side as a test of loyalty The Conference of InterAmerican Foreign Ministers was called for 1528 January 1942 in Rio de Janeiro to mobilize the Americas for war with Sumner Welles clearly stating Washingtons goal to obtain a joint declaration of all the American Republics that they feel it necessary to sever all relations with the Axis powers1 Argentinas predicament was both simple and fundamental while its policy of neutralism was certain to incur the wrath of Washington its internal divisions and nationalist tradition prevented joining the Allied war coalition It was marching to a different drummer and the collision course between Washington and Buenos Aires became apparent in the weeks preceding the Rio Conference Prebisch as general manager of the Central Bank was included in Argentinas delegation to Rio led by Foreign Minister RuizGuiñazú with his team of Foreign Ministry officials and naval and Army advisors As the constantly widening war brought greater centralization of trade and ex change controls the Central Banks role in the economy deepened to become even more the core financial institution in the Argentine state Fullscale US mobilization after 7 December implied fewer exports of capi tal and consumer goods available to Argentina at any price and therefore the need for the Central Bank to ration imports and plan their replace ment by local production A week after Pearl Harbor Prebisch informed the US ambassador that he would be participating in the Conference and asked him for an advance summary of the US recommendations that Sumner Welles would be presenting to his interAmerican colleagues2 Armour was supportive because he knew that Prebisch was in favour of breaking relations with Germany and Japan Prebisch had made his choice in 1940 Both ethical and political con siderations made him a firm Allied supporter and he advocated joining the war effort as soon as possible after Pearl Harbor Quite apart from the moral issue of helping to defeat Nazism Argentinas national interests dic tated becoming the privileged ally of Washington in South America After his trip to Washington and New York he had no doubt that Germany and Japan would be defeated and that the US would completely dominate the war effort and postwar reconstruction An immediate war alliance with 146 The Life and Times of Raúl Prebisch the US would consolidate Argentinas position as the anchor of Allied forces in the South Atlantic yield the same industrial benefits of war pro duction gained by Canada since 1939 and integrate Argentina within the diplomatic coalition shaping the postwar era Prebischs proUS tilt had al ready worried the British a year earlier over the Pinedo Plan but the stakes grew for them also after Pearl Harbor in the knowledge that while US en try into the war would ensure military victory against Germany it would probably also end their sphere of influence in Argentina Underneath their wartime collaboration therefore London and Washington were ri vals in South America with the British Embassy fighting hard to maintain its traditionally close links with the Concordancia But Prebisch did not control Argentine foreign policy and the Argen tine delegation to the Rio Conference sailed for Rio de Janeiro on 8 Janu ary aboard the SS Uruguay plagued by division and uncertainty Still acting in an interim capacity assuming office as president of the republic only in July 1942 Ramon Castillos position was far from strong with his declara tion of a state of siege both reflecting and deepening the political paralysis in Buenos Aires The Argentine military lay in the background but one sector of the Army and most of the navy supported the Allied cause while other groups including the gou Group of United Officers were neutral ists some with a proAxis perspective The political scene was divided and complex3 ProBritish and nationalist factions supported the existing policy of neutrality while the proAllied forces in Buenos Aires clamoured for war with Germany Foreign Minister Enrique RuizGuiñazú was not easy to place ideologically His conservative Catholicism inherited from his years as Argentine ambassador to the Vatican and his close family ties with Francos Spain and a daughter engaged to an officer in the Italian army suggested corporatist leanings Politically he had publicly restated his com mitment to a policy of strict neutrality as late as 24 November 1941 during Brazilian Foreign Minister Oscar Aranhas visit to Buenos Aires to sign their bilateral trade treaty But no one in Buenos Aires or abroad knew pre cisely where he stood He had variously condemned Nazi atrocities in East ern Europe objected to the Soviet Union forming part of the Western Alliance and supported greater abc Argentina Brazil and Chile coop eration in resisting US influence in the Southern Cone but he also on occasion had endorsed the principle of interAmerican solidarity and co operation A narrowly legalistic lawyer he was described privately by La Prensa journalist Gainza Paz as an inflated idiot4 In short the Concordancia was in complete disarray at the critical mo ment of the twentieth century when a new international system was taking shape Argentinas domestic crisis and the broader international transition The Pearl Harbor Squeeze 147 had separate roots but were to become linked after Pearl Harbor with Argentinas choice of Great Power alignment at Rio certain to be a deter mining factor in the struggle for power in Buenos Aires as well as its future prosperity Diplomats from the US roamed the region before the Rio Conference to enlist the majority of Latin American states in an interAmerican defense coalition and therefore isolate those governments that preferred a policy of neutrality In practice the only two states likely to resist moving away from neutrality were Argentina and Chile By the opening of the Confer ence nine Latin countries had already followed the US lead and declared war on Germany while Brazil and most of the rest were clearly sympathetic to breaking diplomatic relations Aranha recalled BrazilianUS coopera tion as allies during the First World War when Argentina had chosen to re main neutral and he informed Washington that he had no intention of supporting any grand gesture by RuizGuiñazú at Rio against USLatin American solidarity5 Chile was being courted by Argentina but its reluc tance to break relations had more to do with its long undefended coastline and the German submarine threat than conviction Washington had no doubt about Chiles eventual cooperation in support of the draft resolu tion it was preparing for the Rio Conference This left Argentina as the main target of US war diplomacy at Rio By 4 January Cordell Hull thought that RuizGuiñazú might well come around to the US position The Argentine people in their vast majority seem to be strongly opposed to the hesitant course so far followed by their Government he noted I am in clined to believe however that Argentina will not permit herself to be placed in a minority of one at the meeting even on an issue of this fun damental importance6 He knew from Prebisch that the majority of the Argentine delegation wanted to sever relations with Nazi Germany The opening chords of the Rio Conference on 15 January quickly lost their harmony however when RuizGuiñazú made it clear Argentina would not join the interAmerican wartime symphony and rejected the US resolution calling for the severance of relations with the Axis powers Ne gotiations bogged down in a tough standoff RuizGuiñazú maintained that his government faced such political disunity in Buenos Aires that no major foreign policy decision was possible before the upcoming March elections for the Argentine Congress in which the Concordancia feared defeat par ticularly in Buenos Aires Brazil in contrast welcomed the US resolution and played a cooperative role with Sumner Welles and his delegation Ara nha had been posted to Washington as ambassador and was close to the Americans making no secret of his distaste for RuizGuiñazú the Brazilian Foreign Ministry was primed to repeat its World War I cooperation with the 148 The Life and Times of Raúl Prebisch US and was neither surprised nor displeased at the evident disarray in Buenos Aires As for Chile the untimely death of President Pedro Aguire Cerda on 25 November gave its delegation the advantage of a lingering universal sympathy Argentina therefore was the conspicuous holdout among the abc countries and the pariah at Rio from Washingtons per spective After days of argument Sumner Welles walked out breaking off the talks and transmitted a warning to the Argentine Government through Prebisch that the economic and financial assistance which the United States can give the other American Republics will necessarily be given only to those nations which are wholeheartedly and effectively cooperating with us in the defense of the hemisphere7 This threat implied serious hard ships for Argentina with the unmistakable message that Brazil would be rewarded for good behaviour at Argentinas expense Three days later after gruelling negotiations RuizGuiñazú reversed his earlier position and agreed on a text brokered by Brazil for severing rela tions with Berlin The Chilean foreign minister also accepted the wording and it seemed that the diplomatic impasse had been resolved in a common panAmerican defense agreement8 But Acting President Castillo refused to approve the tentative agreement and the deal collapsed leaving the Argentine delegation in a hopeless position RuizGuiñazú effectively with drew his credibility shattered and Prebisch became the interlocutor with the US and Brazilian delegations in the search for a facesaving compro mise Raúls mission to Washington the year before had built sufficient confidence for the two sides to begin again and they found an opening in the wording of President Castillos communication to Rio he had rejected breaking relations with the Axis powers but had also promised that the Government was disposed to take all necessary steps to join in hemispheric defense9 Such language left some room for US and Argentine officials to devise a diplomatic formula Eventually and with a strong push from Prebisch Castillo and Hull agreed to a text that endorsed the cutting off during the present continental emergency of all commercial and financial intercourse between the Western Hemisphere and the nations signatory to the Tripartite Pact and the territories dominated by them as well as sus pending commercial and financial activities prejudicial to the welfare of the American Republics10 Sufficiently flexible of interpretation it allowed the delegations to leave Rio with a rhetorically robust communiqué claim ing yet another panAmerican milestone The wording of this clause adopted as Resolution V of the Rio Declara tion was indeed imprecise enough to permit both Argentina and the US to claim success but in practice it poisoned wartime USArgentine rela tions If Argentina could retain its policy of neutrality Washington gained The Pearl Harbor Squeeze 149 a multilateral instrument to force compliance on Buenos Aires The vague ness of Resolution V in defining activities prejudicial to the welfare of the American Republics guaranteed misunderstandings and accusations of bad faith with the US certain to demand the curtailment of German ac tivities in Argentina both public and private to a level equivalent with severing relations and to have no hesitation in punishing Argentina for footdragging Castillo for his part was bound to see US behaviour on Reso lution V as extreme and interventionist as nothing more that a convenient US club with which to beat Argentina The Roosevelt Administration and the US public reacted to the outcome of the Rio Conference by labelling Argentina as a traitor to the Allied cause and world peace Enraged US officials turned their backs on Argen tina in a highly personalized attack beginning with Secretary Cordell Hull whose antiArgentine crusade after Rio surprised his own staff I cant say I admire Hulls policy toward Argentina Merwin Bohan who joined the embassy staff in early 1942 as counsellor for Economic Activities ex plained It was a regular old Tennessee feud and every time he could sneak around the tree and see an Argentine in the sights of his musket hed let go at him It really became a personal vendetta I really feel that Mr Roosevelt more or less gave Argentina to Mr Hull to play with to keep him out of his hair11 The US media accused the Castillo Govern ment of proNazism and opened a press war against Argentina reversing the growing harmony in ArgentineUS relations that had developed during 194041 You can imagine the effect that the position of our Government has produced in this country Julio Gonzalez del Solar noted to Prebisch in a letter from Harvard University on 10 February12 If Julio Gonzalez had hoped that the US public would make a distinction between the govern ment and the Argentine people he was proven wrong The US media cam paign against Argentina as principal traitor of the Free World accelerated after the Rio Conference deliberately nourished by the abundant wartime propaganda myths against Argentina fabricated by US and British intelli gence which were accepted and broadcast at face value Prebisch therefore had good reason to be troubled at Rio a sudden and deep chill in USArgentine relations had destroyed his 194041 open ing to Washington The bilateral trade treaty so recently signed on 14 Oc tober and so much the result of his own work Ambassador Armour had noted to Hull that it was due in large measure to his cooperative work was dead13 The capi could not grow and prosper in an atmosphere of US public hostility toward Argentina The only intact remnant of his US tour was the Federal ReserveHarvardCentral Bank training and exchange program and that was also threatened 150 The Life and Times of Raúl Prebisch President Vargass announcement on 28 January that Brazil had broken relations with Nazi Germany and Japan also reversed the BrazilArgentine partnership that had emerged during 194041 terminating this brief pe riod of forward momentum toward a South America Common Market Such a vision ended with the Rio Conference and the renewal of bilateral rivalry in the context of open US support for Brazil implied the return to an ArgentineBrazilian arms race including a steppedup struggle for influ ence in the buffer states of Paraguay Bolivia and Uruguay Brazils tempta tion to challenge Argentina for leadership in the South Atlantic was too strong to be resisted particularly since Germanys defeat before Moscow in December and Japans relatively insignificant capabilities implied an Allied victory In August 1942 Brazil declared war and fought alongside the Allies with an infantry brigade in Italy cementing a postwar BrazilUS military and economic alliance that would underwrite an era of unprece dented expansion For its part the US would inherit Germanys prewar trade with Brazil while Argentina lost out everywhere Castillo and Ruiz Guiñazú possessed neither the internal political coalition nor Brazils longterm strategic vision to understand and adapt to the emerging inter national order Brazil therefore became the key US partner in South America leaving Argentina increasingly isolated For Washington Brazils geographic extension toward Africa was of strategic importance for war op erations in the Atlantic and North Africa theatre in South America Brazil provided a proAllied counterweight to Argentina Ironically Argentina got no credit for its cold shoulder to Nazi Germany and uninterrupted debt servicing during the 1930s while Brazil got privileged treatment after Rio despite defaulting and maintaining close commercial relations with Germany right up to Pearl Harbor Prebischs troubles however did not end here Beside the broader pros pect of diplomatic isolation lay a more immediate problem the Central Bank as the battleground of ArgentineUS relations Resolution V of the Rio Declaration referred to the curtailment of financial and commercial intercourse with the Axis powers and this meant that the Central Bank which regulated the activities of these sectors would become the focal point of US surveillance until such time as Argentina entered the war This crossfire became evident even before Prebisch left Rio in a highprofile dis pute over newsprint imports from the US The evening before departure he received a telephone call from Edmundo Gagneux that President Castillo had ordered the Central Bank to restore the paper shipments for El Cabildo and El Pampero which it had cut in 1941 The Bank had no op tion but to comply whereupon the US Embassy demanded that Prebisch refuse Castillos request on grounds of aiding enemy propaganda and The Pearl Harbor Squeeze 151 thereby contravening Resolution V of the Rio Declaration Raúl reminded Ambassador Armour that the US had earlier attacked the Central Bank when it ended paper imports for the profascist newspapers protesting of ficially against the barring of US products President Castillo had now used this US démarche as a rationale for demanding that the Central Bank re verse its decision Washingtons inconsistency had played directly into Castillos hands The newsprint problem was a very involved and difficult one an embarrassed embassy official acknowledged14 Embarrassment did not stop the US from demanding closer and closer scrutiny over Central Bank transactions as well as maintaining the privi leged nonofficial relationship with Prebisch that had developed with his secret visit to the US Embassy on 17 June 1940 after the fall of Paris But US intelligence never trusted Prebisch The first US efforts at spying before Pearl Harbor were sufficiently amateur to be laughed off by the US Em bassy in Buenos Aires as the excessive enthusiasm of fbi Director J Edgar Hoover On 8 October 1941 for example the US secretary of state quoted a confidential source of unknown reliability to the effect that Adelita Prebisch and Central Bank employee Francisco Coire had a con tact within the German Embassy and were both security risks although it was not clear whether Raúl Prebisch was part of this network or not15 Adelita had indeed worked for the wife of the German ambassador but that was in 1932 before her marriage and the Nazi takeover after which Herr Keller was dismissed While Francisco Coire indeed worked for the Central Bank he was busy studying public administration at the Littauer Centre at Harvard University But Pearl Harbor and the militarization of Washington elevated the credibility of US intelligence whatever its accuracy and this affected offi cial perceptions of Prebisch J Edgar Hoovers letter of 22 January 1942 to Adolf Berle copied to Naval Intelligence and the G2 War Department noted that Prebisch was antidemocratic and reactionary as well as vain and ambitious and completely dominated by his Nazi relations who have convinced him that Argentina must treat with the United States as one world power would treat with another16 Even Ambassador Armour wasnt completely convinced that Prebisch was what he seemed He gives the impression of talking frankly and sincerely and he gives every evidence of being a good friend of the United States the ambassador noted to Hull before the Rio Conference and he continued that Mrs Prebisch who is an unusually charming person gives every appearance like her husband of being friendly toward the United States17 But he wondered if this was too good to be true and whether J Edgar Hoover was right that Raúl and Adelita Prebisch were dissembling Dr Prebisch is probably extremely 152 The Life and Times of Raúl Prebisch shrewd and there are those who say that if he is now really friendly toward the United States it is because he considers that to be good policy There are those who say that he is at heart prototalitarian and that his wife and a brother of his wife have proNazi leanings but how true these charges are is not known18 Adelitas brother Alfredo Moll was called proNazi be cause he had worked in New York with IG Farben until the USGerman declaration of war and this was sufficient for Washington to add his name to the blacklist Added to this and repeated in Armours list of Raúls possible shortcomings was the feeling that he retained a proBritish trade bias and was responsible for the decline of US exports to Argentina in the 1930s By mid1943 this US ambivalence toward him had led to wire tapping his Central Bank office Unfortunately for Prebisch the US focus of attention on the Central Bank created a corresponding suspicion in Argentine government and military circles that he was unpatriotic or antipatria as El Pampero and El Cabildo regularly referred to him The image of the Central Bank as part of the fi nancial dictatorship as a foreigndominated institution grown too power ful and out of government control was already widespread before 1941 and provided the raw material for a new groundswell of hostility for its alleged links with the US Embassy Both Prebisch and President Dr Bosch were con cerned by the degree of public alienation but could not agree on counter measures Bosch refused Prebischs suggestion that they counterattack with articles in the mainstream press either La Prensa or La Nacion rebutting ac cusations against the Central Bank item by item he would not accept what he felt would be the politicization of the Central Bank or the admission that El Cabildo or El Pampero should be given the dignity of a response19 After Pearl Harbor foreign exchange and import controls took on a new significance as the war changed production and consumed materials previ ously available to Argentina The result was a further widening of Central Bank powers On 15 June a decree gave it new powers to control all opera tions including the movement of funds accounts and bonds between Argentina and European countries Japan and China It was therefore nat ural that the US would target it as its principal economic intelligence source in Buenos Aires The Central Bank and the Argentine Government had introduced rigorous controls over German activities the year before Prebisch had already rationed the German Embassy to an allowance of 200000 pesos per month which permitted only a skeletal operation The Central Bank had already closed the dollarcurrency market with the ex ception of sales up to 100 for travellers to the US and it had provided the US Embassy its data on Axis investments The latter figures showed virtu ally no German about 9 million investments and Japanese holdings of The Pearl Harbor Squeeze 153 less than 3000 and there was hardly any trade because of the deliberate Argentine policy since 1933 Where was the enemy This was frustrating for US intelligence and the Americans suspected a hidden network of remittances by Axiscontrolled firms and front organizations including the suspiciously large flight capital to Argentina which had increased from 13 million pesos in 1937 to 325 million in 1941 Since Argentina was both the largest economy in Latin America and the holdout at Rio it became a special concern for the US Board of Economic Warfare seeking to snare all vaguely suspicious companies on the blacklist called the Proclaimed List of Axis Companies20 On 5 August 1942 US officials met Prebisch to demand that the Bank provide them with information on foreignfunds control and related mat ters21 They had gone directly to private banks asking for information on their accounts with firms on the US Proclaimed List or companies that were suspected to have an Axis link but found them unwilling to comply United States policy refused such firms access to US credit such as from the ExportImport Bank and the embassy needed Central Bank help in providing this information on its shareholding banks Of course they also wanted detailed information on Argentine banks whether or not they were seeking US credits The US Government considered access to full details as a right justified by the Rio Agreement even though it saw no responsi bility to share its evidence for putting firms in Argentina on the blacklist in the first place Argentine banks viewed this US demand as both interfer ence and access to market opportunities for US companies positioning for the postwar period Prebisch said that the embassy was creating an unfa vourable impression The US officials were offended and resolved to get much tougher with the Central Bank Merwin Bohan the new US counsel lor for Economic Affairs in the embassy gloated that Argentina was going to reap the bitter fruit of its own restrictive trade practices of the 1930s and be shut out of US export permits Somewhat ironically for a country that has long clung to the policy of buy from those that buy from us he noted Argentina cannot obtain at any price many of the goods that it wishes to import from the United States and other countries22 Prebischs dilemma was what to do To a certain extent the US had a legitimate concern with security which he shared there were proNazi groups in Argentina The problem was the exuberant US exaggeration of the threat and their missionary fervour in getting their hands on German property in Latin America In markets investments defense in every thing Argentina needed the US more than ever and the Central Bank had to keep an open line to the embassy As a compromise the Central Bank agreed to provide banking information and to assign inspectors to 154 The Life and Times of Raúl Prebisch monitor firms like the two German banks on the Proclaimed List to en sure that no funds were applied to Axis uses23 But US demands grew expo nentially In March 1942 Prebisch had already suggested a new procedure to reduce bilateral venom with a system called Consignee Control in which a joint Central BankUS Embassy monitoring process would verify Argentinas compliance with Resolution V of the Rio Declaration Specifi cally the Central Bank would share information regarding all Argentine foreign remittances on a monthly basis with officials of the US Embassy and allow it to review the governmentapproved list of Certificates of Ne cessity for import licences before their recommendations were sent to the Board of Economic Warfare in Washington The government delegated this task to the Central Bank but critics howled that allowing the US a right of prior agreement on import licenses represented an intolerable in trusion into Argentinas internal affairs Prebisch argued that the system kept the Central Banks overall supervisory role intact while offering a transparent mechanism to reduce tension and deflect further US de mands The brute fact was that Argentina needed US goods because there was no alternative source Consignee Control was a rational but dangerous response to managing ArgentineUS economic relations First it needed priority attention from Washington with sufficient time and resources to work effectively and al though Prebischs friends such as Chris Ravndal understood and sup ported the system the war theatres in Europe and Asia were the top US priorities and attention to Latin America slipped Prebischs concept re quired a larger staff at the US Embassy in Buenos Aires and Washington stalled Ravndal wrote to Raúl on 31 August 1942 after returning from Buenos Aires where he had discussed the growing tension over export controls My dear Raúl he wrote the plans we worked out with you with respect to decentralization of export control are maturing much more slowly than I had anticipated There seems to be no question at all regard ing the principles involved and I believe I may say that the basic idea has been accepted by the government24 He thought that the Consignee Con trol system would probably not be in effect before the end of the year and in fact an agreement on procedures was only finalized with the Central Bank on 7 January 1943 By then however ArgentineUS relations had deteriorated seriously Castillo was anticommunist antiAmerican and proBritish seventyone years old and troubled by the results of the March 1942 elections which challenged the Concordancia with a RadicalSocialist majority in the Chamber of Deputies and total defeat in Buenos Aires The state of siege declared in December continued In foreign policy he was not about to The Pearl Harbor Squeeze 155 change Argentinas policy of neutrality25 Argentinas economic prospects had also dimmed before Pearl Harbor Argentinas 1941 recovery had prompted favourable predictions for 1942 but in April the Central Bank warned of trouble ahead and the US Embassy also reported impending difficulties In September Washington approved a new Economic Policy toward Argentina that outlined an Allied strategy including Canada Brit ain Brazil Uruguay and Mexico squeezing Argentina by denying it criti cal imports such as coal petroleum equipment and heavy weapons The US meanwhile staged provocative naval manoeuvres in the Plate River in view of Buenos Aires to rub in its wartime isolation and to impress on Argentinas military the contrast with Brazil which now enjoyed a privi leged access to modern arms courtesy of its Washington connection The arrogance of the US became insufferable Its embassy swelled in size with wartime operatives By early 1943 Bohan was proud of his eightytwoperson Economic Unit housed in the Boston Bank Building with another eighteen in commercial intelligence It was as he put it a unified and smoothly functioning economic agency26 Hoover and the other US intelligence services were busy locating Nazi plots in Buenos Aires and rooting out German economic influence and investments in the Americas in a sweeping effort to eliminate German communities as if ethnicity confirmed guilt and sanctioned blacklisting and expropriation The British Embassy noted the seemingly directionless dynamism of the swollen US diplomatic quasidiplomatic intelligence and military estab lishment in Buenos Aires27 Each Argentine compliance with increas ingly intrusive US requests would only result in new and more extreme demands always presented unilaterally as if Washington knew best and had unfettered rights of interference throughout Latin America US belligerence strengthened Castillos resistance to what he felt was a two faced US war effort and his determination to maintain an independent foreign policy against what he felt were Washingtons hegemonic preten sions in the Americas he criticized the unfairness of a US policy that could neither substantiate a German threat nor appreciate the value of Argentinas policy of neutrality in supporting the British war effort The Nazi Menace in Argentina was hugely exaggerated British Ambassador Sir David Kelly had already noted in 1941 that it was an embarrassment rather than a threat a year later he reported that it was not in the running any longer as an economic political or cultural competitor28 Washington acted as if Argentinas only duty was to obey orders and not ask questions Castillo and a powerful current in Buenos Aires recip rocated with a stubborn refusal to comply The bilateral temperature rose accordingly 156 The Life and Times of Raúl Prebisch Secretary of State Hull seemed to want revenge for imagined slights of the past becoming so paranoically hostile that Ambassador Armour tried to reason with him against undermining Prebisch and the Central Bank as friends of the Allied cause On 28 August 1942 Hull held Prebisch per sonally responsible for following orders from his own government and re jected his own embassys advice that Washington should strengthen Prebischs position and the Central Bank rather than undermine them You should inform Prebisch Hull wrote that the known pressure ex erted by the Foreign Office leaves the US Department with no alternative but to recognize that the Central Banks controls of necessity have to be relaxed frequently irrespective of what the independent desires of the Cen tral Bank may be Hull continued The Department must reject the view of the Central Bank that the latters approval of transactions which benefit the enemy insulates the commercial banks consummating those transac tions against the application of United States controls29 Prebisch gambled for time The challenge was to keep the lid on US Argentine relations until military realities changed perceptions on both sides and allowed the rebuilding of the amiable relationship that had blos somed in 194041 Once the war was over he reckoned bilateral relations would improve again and vindicate the Central Banks thankless task of administering the Consignee Control system As the fortunes of war defini tively turned in 194243 it appeared for a while that an end to the post Pearl Harbor nightmare in USArgentine relations was in sight In November 1942 Ambassador Armour reported a significant improvement while the Argentine Government strongly rejected a speech by Sumner Welles on 8 October alleging that Argentina was allowing its soil to be used by Nazi agents it nevertheless arrested twenty senior Germans The Nazi military defeats in North Africa and Italy and above all at Stalingrad in February 1943 as well as the earlier crushing Japanese naval defeat at Guadalcanal in 1942 threw Axis forces on the defensive and opened the final phase of the war There was no longer any conceivable military threat to the Ameri cas nor anything economically politically or arms shipments that Ger many could offer to its remaining supporters in Argentina or the Americas Nazi influence in Argentina would now atrophy Prebisch reckoned and US pressure on Argentina would begin to relax But he was wrong Instead of improving USArgentine relations deterio rated in 1943 and the Central Bank was caught in a situation made more difficult with each passing month after Consignee Control became fully operational on 7 January 1943 Meanwhile US relations with Brazil deep ened Presidents Vargas and Roosevelt met on board a US destroyer on 28 January after the Allies Casablanca meeting while US demands on The Pearl Harbor Squeeze 157 Argentina sharply intensified in an inverse relationship with the actual German security threat to the Western Hemisphere On 4 March the US State Department approved a policy memorandum that opened a new cam paign of economic warfare as Bohan called it determined to cut the last ties between Nazi Germany and Argentina30 Officially communicated to Prebisch and the Argentine foreign minister on 27 March by both the US and UK ambassadors the new approach simply built on the Consignee Control policy already in place but behind a strategy of punitive sanctions for any Argentine deviations from the Rio Declaration Bohan told Prebisch that absolutely no US export permit to Argentina would be allowed without a certificate of necessity approved by the Board of Economic Warfare bew Such approvals would only be allocated to the degree that the US Embassy and the bew considered Argentina a reliable partner The US using the Central Bank as its instrument tightened the noose which should within a period of months Bohan argued on 26 April 1943 begin to close industries and cause unemployment31 As the policy matured by May 50 percent to 60 percent of the Central Banks applica tions for import licences were being rejected including those for essential materials such as replacement parts for the oil and transportation sectors Bohan crowed that ruthlessness is as much a part of economic warfare as it is of physical warfare and if we are going to clean up the situation through Consignee Control bomb splinters will occasionally injure the in nocent in spite of every effort we may make to be fair to every Tom Dick and Harry claiming to be an importer He vowed to barricade the last remaining highway between the Axis and the Western Hemisphere Let Argentina read itself out of the community of Western nations32 In a childish display of pique Cordell Hull cut Prebisch out of the international preparations for the International Monetary Fund and the World Bank even refusing him a visa for attending the 1943 United Nations Interna tional Monetary and Food Conference in Washington Bohan reported that Prebisch was very upset but remarked that a bit of egoistic deflation will do no harm33 Prebisch challenged Bohan and the US Embassy to provide evidence for their charges against individuals and firms under surveillance by the army of US and British agents living it up in Buenos Aires Where was the Nazi threat Who were the confidential sources making allegations Malaccorto was blunt in his reports on Germanowned firms that were legally registered and were doing nothing illegal the Argentine Govern ment is not convinced that the operations of the totalitarian firms are in fact inimical to the security of the Western Hemisphere34 The Central Bank similarly rejected the US decision to treat Winterhilfe donations 158 The Life and Times of Raúl Prebisch and small family remittances to needy relatives in Germany as evidence of Nazi penetration of Argentina and a panAmerican security threat Prebisch wondered if Bohan expected the Argentine Central Bank to be come simply another US instrument in its campaign to supplant British and German interests He warned Bohan that US demands were be coming unreasonable and endangered the credibility of the Central Bank as the financial agent of the Argentine Government Was the US fighting Nazi Germany or Argentina Pressure by the US on the Central Bank had already turned to demands for petroleum concessions as a condition for import permits Bohan thought it only fair that Argentina should open the sector to Standard Oil companies as compensation for US wartime sacrifices in defense of the free world Prebisch meanwhile bent farther and farther to satisfy US demands Bohan insisted that he provide the US Embassy with monthly statements of Argentine remittances abroad He agreed Bohan demanded that the Cen tral Bank block a payment of 155 million pesos to the Siemens Group for local construction projects for no other reason than that Siemens was a Germancontrolled company on the US blacklist Prebisch again agreed reluctantly since Argentine neutrality gave him no legal basis for doing this Bohan pressed on the Central Bank should also block future remit tances to the Dresdener Bank Raúl saw no legal basis for such action but said he would ask Pinedos advice On Pinedos urging he again agreed With each concession to ward off US retaliation this dangerously intimate relationship with the embassy undermined the Central Banks official channels with the government A habit of nonprotocol contacts or confidential communications not sanctioned by or communicated to the Argentine Government had developed between Prebisch and the US Em bassy since 1940 strengthened by Raúls personal ties with Chris Ravndal and US bankers closely linked with the Central Bank and the embassy In August 1942 for example Ravndal requested from Washington that his letter to Raúl should be delivered at the discretion of the Embassy that is without routing it through foreign affairs in the normal diplomatic prac tice and the letter asked for sensitive data that only the Central Bank pos sessed If you could give us a better idea as to Argentinas flag shipping you will have at your disposal it would be a great help Ravndal noted35 Prebisch was being drafted into the role of agent to the US Embassy By mid1943 Bohan and US Embassy officials took for granted this direct ac cess to Prebisch as a channel for obtaining or giving confidential informa tion they wanted to conceal from the Foreign Ministry or the presidency The illfated Consignee Control system deepened the expectations of this special relationship and the line between compliance with Resolution V of The Pearl Harbor Squeeze 159 the Rio Declaration and providing intelligence for the US Board of Eco nomic Warfare became blurred By 1943 the US Embassy was demanding confidential copies of ship manifests from all Argentine ports the Cabinet or Foreign Minister RuizGuiñazú would never have authorized their dis closure to the Americans Relations with the US Embassy took another nosedive in 1943 when Bohans Consignee Control system broke down in the corridors of wartime Washington Lobbyists were active with Congress and officials and the quickest way to get action from the Board of Economic Warfare was to cut a special deal While Bohan and Prebisch prepared their lists in Buenos Aires and sent them to Washington Board officials disregarded them and approved export licences for Argentina on the lobbying of firms with suf ficient political influence to bypass the Consignee Control system alto gether The notions of overall war requirements and consistent policy simply had no effect In practice this could mean that Argentine businesses would get additional US imports but not necessarily the scarce goods re quired to fill the shortages threatening its wartime economy The essential goods priorities set by the Central Bank had to be respected if national production was to be maintained for example it was only the Herculean efforts by the engineers of the state oil company Yacimientos Petroliferos Fiscales that kept the company operating at all but its equipment short ages were becoming dramatic and would soon affect output if not met Prebisch was irritated He called Bohan on 24 May to tell him that he felt used The Central Bank he said cannot allow its prestige to be under mined by American inefficiency36 Bohan agreed that both of them had been disregarded in Washington but claimed he was helpless against the Washington lobbyists He complained to the State Department that the re sult in Buenos Aires was a complete loss of prestige both for the Bank and the Embassy and for that matter for the entire export control system Ironically and despite the US policy of economic warfare Bohans pre dictions of hunger and mass unemployment in the streets of Buenos Aires failed to materialize Instead the Argentine economy expanded during 1943 It turned out that Argentina retained significant international lever age despite US hostility its beef production was necessary for the Allied war effort and Cordell Hull had to ensure continued Argentine beef ex ports for Britain The US private sectors interest in Argentina similarly continued and the Export Promotion Corporation set up at 9 Rockefeller Square in New York survived and indeed planned branch offices in Chicago San Francisco and New Orleans Moreover Britain and the US also maintained their disagreement over wartime policy toward Argentina with London strongly favouring continuing neutrality to protect beef 160 The Life and Times of Raúl Prebisch shipments from German submarine attacks while the US pressed Buenos Aires to enter the Grand Alliance Resenting Washingtons aggressive inter vention in Argentina Britain undercut the US policy of economic warfare by brokering an Allied contract for the entire Argentine meat surplus until 30 September 1944 It is now difficult for opponents to argue that the re gime is isolated Bohan lamented37 Indeed Argentina remained a haven for so much European capital fleeing the war that Prebischs problem in the Central Bank was controlling inflation Industrial growth was stimu lated by the arrival of European entrepreneurs who were impressed by Argentinas inherent strengths spurring industrial investments such as the steel factory of Santa Rosa opened in 1943 by a French industrialist who had moved permanently to the New World Key Argentine industrialists like di Tella with factories throughout the Southern Cone were living ex amples of successful European immigrant entrepreneurship beyond the reach of Washington From inside the Central Bank Prebisch advocated postwar planning governments in the industrial countries were already hard at work and the Central Banks 1943 Annual Report repeated the urgency of beginning a serious national debate on what it termed inwarddirected growth or hacia adentro38 Support for industrialization was growing rapidly The Argentine military demanded more direct state support for the arms indus try Luis Colombo and the uia pleaded for an Industrial Credit Fund or Bank to do for industry what the bna had done for the ranchers and farm ers Advised by Alejandro Bunge Colombo feared a government retreat af ter the war from its current level of support for industry and he created a centre in mid1942 to drum up support for industrialization This new Institute for Research and Industrial Conferences invited Carlos Saavedra Lamas now rector of the University of Buenos Aires to be its president and he lost no time in recommending that a new national commission on social and economic reconstruction meet in August 1943 to begin work on postwar planning39 Most of Argentinas industries built since 1930 to replace imports were vulnerable industry had expanded by 22 percent during the war and now accounted for 50 percent of overall national pro duction transforming the traditional agricultural base and soaking up labour Industrial growth had also made the country less Buenos Aires centred with plants also spread around the towns and provinces of the in terior40 Labour had not only grown but also made up some lost ground between 1940 and 1943 and these numbers alone suggested that Argen tina was destined to become Latin Americas leading industrial nation even poised to take its place as a fully developed industrial power after the Second World War But there were also serious weaknesses in Argentine The Pearl Harbor Squeeze 161 industrialization inadequacies that had to be corrected if this promising seedling were not to wilt and die Most of the new war industries were low in productivity because they were sheltered in a domestic market cut off from the outside world by the war There were exceptions and Argentine exports had grown with Brazil and other Latin neighbours despite the de facto termination of the 14 November 1941 bilateral trade treaty after the two countries parted ways following the Rio Conference Typically the new plants were small and labourintensive serving local markets rather than competing abroad Argentina did not yet possess significant heavy indus trial sectors Once the war ended they risked being swept away by North American competition Prebisch felt that Argentina faced this threat with better tools than after the First World War given its much improved finan cial and credit situation The postwar reality would pose a major threat to the new industrial base and success required the right balance of state sup port for the private sector but Raúl expressed optimism that a solid base had been constructed His thinking on this problem was further reflected in a new decree on 20 April 1943 designed to channel the floating capital seeking a safe haven in Argentina into productive investment The article he wrote for La Nacion explaining the new regulations related it to the work of Keynes in trying to restore a stable international credit and pay ments system to expand trade and open markets for Argentine products41 Instead the immediate threat facing Argentina came from domestic po litical tensions that were sharpening in late 1942 as the end of the Castillo period loomed Elections were set for September 1943 but there was no obvious successor to shore up the Concordancia Increasingly leading per sonalities realized that Argentina had to prepare for the postwar era but the government was paralysed A political vacuum had emerged in the cap ital just when Argentina most needed toplevel leadership to deal with its diplomatic isolation and postwar reconstruction The Radical Party could still marshal Marcelo T Alvear even if he was old and exhausted There seemed to be no young blood in the Concordancia as a credible presiden tial successor to Castillo who could lead its party the Partido Democrata Nacional to victory Finally General Agustin P Justo decided to make a po litical comeback in a lastditch effort to head a coalition with broad public support and experience Justo remained the most powerful figure in the Concordancia and he had always rejected Castillos policy of neutrality Af ter Pearl Harbor he had advocated breaking relations with Germany and when Castillo took the other path volunteered to serve in the Brazilian Army From his earlier proBritish days he had shifted to a US orientation and by late 1942 was clearly concerned to reduce tension with Washington and restore a working relationship between their respective governments 162 The Life and Times of Raúl Prebisch and militaries42 Justo could count on the support of Saavedra Lamas Pinedo and Julio A Roca and he retained a wide appeal in both Socialist and Radical circles as well In December 1942 for example Pinedo paid special homage to President Roosevelt and the need for Argentina to sup port US leadership in the war effort43 Prebisch supported Justos candi dacy because the general was committed to restoring a consistent foreign policy to Argentina after the waffling of Castillo and he had sufficient pres tige to ensure a strong relationship with both the US and Britain Raúl be lieved that no other person on the political spectrum was more likely to succeed in leading Argentina in the postwar period given his record in ad justing to the Great Depression Prebisch had never campaigned actively before but he could not hold back when the country was in such danger and he therefore made contact with the expresident and offered his services as informal advisor He helped prepare Justos important address to the British Chamber of Com merce on 22 November which supported the victory of the Allies and ex plained his views about creating a just and equitable international order The speech stressed the need for close cooperation between the US and the UK in creating a stable trade and financial system and in a comment aimed to clarify his views on the national economy Justo underlined the need for a firm and sustained industrial development with the most open support of the state so long as it is not artificial or antieconomic44 This attempt of the Concordancia to put together a credible post Castillo leadership failed when General Justo died in January 1943 He was irreplaceable there was no comparable candidate on the political horizon and within months the options facing Argentina changed even more deci sively when other key figures passed away Roberto Ortiz and Marcelo T Alvear both died leaving the Radicals in disarray while Julio A Rocas sud den death at home in the family townhouse at 579 San Martin removed another credible senior figure who had been active since the Revolution of 6 September 1930 Nevertheless national elections were set for September 1943 and the Concordancia had to come up with a new leader After diffi cult negotiations the final result was a bleak compromise among the fac tions Robustiano Patron Costas the same Patron Costas whom Prebisch had detested from his youth in Tucumán President of the Senate and now acting vicepresident he still retained his vast sugar estates whose migrant workers still lived in conditions that earned him the national nickname of Indian Slave Driver His elevation to presidential candidate completed the political polarization of Argentina It was a bitter outcome for Raúl trapped into working with an impossible choice In April he attended an agonizing lunch with Patron Costas the British financier Evelyn Baring The Pearl Harbor Squeeze 163 and several Argentine counterparts in which they assessed his views on war diplomacy and the economy PatronCostas was hopeless The outgo ing Castillo had made many political enemies with his mistakes but the new leader of the Concordancia was disliked by all the Great Powers in cluding the US Britain and Germany as well as by virtually all Argentines from the unhappy working classes clamouring for attention to the increas ingly restive military45 Alejandro Bunges death on 24 May further complicated the future of the shaken Concordancia because he had become a critical interlocutor between the government and the business community For the Central Bank Bunge had offered a direct contact with the uia business lobby pro viding a welcome voice of moderation and common sense at a time of growing political turbulence At a personal level Prebisch sensed that a whole generation was leaving the scene before his eyes Bunge had been a mentor and a scholar ahead of his time in promoting industrialization and regional integration and in his last book published in 1940 with the title A New Argentina he had paid Raúl the compliment of endorsing the con cept of a technocratic elite to lead national development46 Raúl thought of his fathers funeral in Tucumán and all that had happened since Not many of the people he had worked for were around any more Augusto Bunge wouldnt speak to him and now he faced a certain confrontation with Patron Costas Ten days later on 4 June 1943 a military coup toppled Castillo and sent him into exile terminating the Concordancia and abruptly changing the terms of debate over Argentinas future Led by General Arturo Rawson the coup was launched to preempt the election of Robustiano Patron Costas but it altered the political landscape of Argentina as decisively as its Uriburuled predecessor had done on 6 September 1930 The coup was well planned and it proceeded efficiently and without significant oppo sition after troops occupied the Presidential Palace But no sooner was President Castillo deposed than the military leadership fell out among themselves over the succession and for two days it was not at all clear who would emerge as president The confusion was enormous with the govern ment of the republic virtually in limbo as Rawson tried to establish control Debate mounted on appointments for the chief portfolios particularly fi nance and foreign affairs at one point Malaccorto found himself in de facto control of the entire ministry Finally General Pedro Pablo Ramirez replaced Rawson and established authority with an announcement of se nior appointments that calmed the capital The Central Bank was left un disturbed and this decision calmed the markets Jorge Santamarina was appointed minister of finance on 7 June the only civilian minister in the 164 The Life and Times of Raúl Prebisch Cabinet and Malaccorto remained his deputy and chair of the Permanent InterMinisterial Committee on Economic Policy Santamarina was a for mer bna president and a charter member of the oligarchy his continued presence was reassuring to the elite but he was insecure in his tenure and worried about his isolation in the military government Foreign reaction was favourable The appointment of proAllied Admi ral Segundo V Storni as minister of foreign affairs was well received domes tically as well as in Washington and London The US Embassy had been unenthusiastic about the prospect of dealing with Patron Costas and re ported that the 4 June coup favoured US interests because Ramirez would prove to be more proAllied than President Castillo Argentine quotations rose in London as did the Stock Exchange in Buenos Aires Both the Brazilian and US press showered praise47 with the New York Times volun teering that Rawson and Ramirez inspired respect and confidence48 The mainline Buenos Aires newspapers also applauded the military coup and the final end of the power struggle evident since the illness and withdrawal of President Ortiz in 1940 Few tears were shed initially in Buenos Aires for the fall of the Concor dancia it had collapsed from within with only a final push from the bar racks and there was little surprise that Patron Costas had been denied power But the competition among military leaders puzzled observers as they tried to interpret the implications of the coup for domestic and for eign policy Initially they thought General Ramirez might contain the more extreme nationalist and proAxis agitation in Argentina and at first he ap peared to court the US colony in Buenos Aires with the same affection as Castillo had shown to the British Admiral Storni the new foreign minister was proUS and determined to reverse the poor bilateral relationship he attended the 4 July reception at the US Embassy and it was rumoured that the Cabinet had hovered four times on the brink of breaking relations with Nazi Germany In regional relations Storni revived integration efforts stalled since Pearl Harbor Argentina and Chile agreed in principle to es tablish a customs union and the formation of a joint commission was to be celebrated with a bilateral ceremony in Buenos Aires on 24 August Other signs pointed the other way and suggested that the impact of the 4 June Revolution would be more radical than it first appeared The mili tary coalition that overthrew Castillo had a hard core behind Rawson and Ramirez lay a more focused and coherent group led by Colonel Juan Domingo Perón leader or at least coleader of the gou with a corporat ist ideology and an affinity for the fascist experiments in Italy Germany and Spain Ramirez named him undersecretary of war after the coup and therefore placed him in a position to consolidate a power base Perón had The Pearl Harbor Squeeze 165 the will to power and a vision of Argentinas future which made him a for midable opponent but he remained in the background after 4 June and was not well known as yet outside military circles The clearest signal that the 4 June Revolution was a break with the past came with the appoint ment of Colonel Elbio Anaya as minister of education As a junior officer in the early 1920s Anaya had suppressed the peasant uprisings in Patagonia with exceptional brutality and he had approved a pedagogy which has its roots in the depths of national tradition and the sentiments of the Argen tine nation which has provided above and beyond all else a falange of proud citizens men of property Godfearing and lovers of the fatherland A new crackdown on civil society now followed which far exceeded the pe riodic crackdowns and inefficient censorship of the defunct Concordancia Augusto Bunge now president of the Democratic Commission for Aid to Countries Fighting Nazi Racism was arrested along with a thousand oth ers and his library was burnt by a gang from the Civic Legion The military government also appointed socalled interventors to take over the universi ties in Argentina thereby silencing opposition from this quarter Grants of citizenship were also suspended for the duration of the war The official rationale for this repression was that the prodemocratic groups provided a cover for communist activities Nobel Prize winner Saavedra Lamas re signed in protest but the loss of the most internationally respected person in the country seemed not to worry Ramirez and his colleagues In the midst of this political change sweeping Buenos Aires Raúls mother died in Tucumán on 23 June and although it was not unexpected the death of the old matriarch deeply affected him Adelita who had been adopted by Rosa Linares as a daughter spent the last weeks at her side as a growing circle of children relatives and friends gathered in Tucumán But the political crisis had kept Raúl in the capital and she was gone before he could bid a suitable farewell in person The immense funeral in Tucumán added to a depressing year already full of worries For despite the first reas suring reaction of the military government toward the Central Bank the revolution left it more exposed and vulnerable A decree permitting it to is sue bond certificates to the public as well as to the banks had completed its central agency architecture within the state allowing it the freedom it needed to balance fluctuations in the economy but such measures fuelled attacks on its vast powers as a corporatedominated state within a state For the Radical Party and the left the Central Bank embodied the financial oligarchy running the country Prebisch was criticized for his close rela tions with the US Embassy and the Naziinfluenced press never forgave him for his part in the expulsion of German Ambassador Von Thermann But there was also a groundswell of opposition from unusual quarters such 166 The Life and Times of Raúl Prebisch as the virulent crusade against the Central Bank in the slums of Buenos Aires led by a Catholic priest named Father Mendivel49 He had brought together all the charges against Prebisch and his Brains Trust tool of the oligarchy puppet of the US Federal Reserve sycophant of Harvard Univer sity under the war cry of antipatria in a powerful public mobilization of workingclass deprivation and democratic failure Shortly before the June coup Raúl invited Father Mendivel to the Central Bank to see for himself that nothing sinister was going on and explained the Central Banks na tional role and structure and the procedures that guaranteed accountabil ity Mendivel seemed perplexed and left stammering Prebisch also visited his parish to answer questions But the campaign against the Central Bank continued and Prebisch could only assume that it was being encouraged by factions within the 4 June revolution itself Then on 1 August Augusto Bunge died It seemed impossible that the grim succession of deaths in 1943 could continue and this one was even more painful because the two friends had been stubborn enough not to speak since their break in 1934 Both had assumed a long life in which the other would eventually yield but in this bitter year Augusto had followed his brother to a premature death at age sixtysix and the estranged friends could never make up for this time lost Yet for all these years and despite their rupture Bunge had left his will deposited with Raúl as a mark of the special affection and trust he continued to hold for him For Raúl Augusto Bunge represented a civility and quality of culture and citizenship without parallel in Buenos Aires he had taken Raúl in when he was fresh from the provinces and encouraged him at every stage of his rise to influence At the funeral Raúl gave the will to his godson Mario with a tenderness befitting their joint memory of so great a man as his father As he bade farewell he told Mario and only he would know that he was leaving that evening for Washington The purpose of this trip remains mysterious He did not inform Adelita of the visit and the US documents referring to his conversations are among the hundreds of pages blacked out by zealous US archivists guarding the intelligence records of the war years50 Raúl never spoke about this trip and only these US memoranda could have revealed whom he met and what they discussed Since there was no international conference to attend it can be assumed that he went for private consultations with US officials No copies of these conversations re main and US intelligence reports from Buenos Aires on 23 June 23 July and 2 August which probably dealt with this visit were also destroyed by US censors He probably argued the need for a new and less intervention ist US policy in Argentina which would strengthen domestic support for proAllied forces like the Central Bank rather than undermining them The Pearl Harbor Squeeze 167 by provoking resentment He almost certainly told the Americans that the Consignee Control system had to be scrapped Prebisch knew that his trip to Washington was risky but his conviction that the West must defeat Hitler as soon as possible was reinforced by fam ily developments Adelitas sister lived in Holland and they knew from her the realities of the Nazi occupation In addition Raúl had heard a first hand account of the Nazi death camps in mid1942 when Adelitas brother Carlos crossed the Atlantic from Europe to Buenos Aires to visit his es tranged wife and their two daughters whom he had not seen for a decade Carlos knew what was going on in Europe because he had joined the German underground movement and was ferrying Jews and other endan gered people across the border into Switzerland He had completed an ethical metamorphosis the fugitive who had excaped prison in Buenos Aires and fled to Spain under an assumed name had become a humanitar ian antiNazi who risked his life if caught by the Gestapo When Carlos re turned to Europe to continue the good fight Raúl realized that he himself had no moral alternative to promoting a proAllied policy during the war and all the evidence suggests that this motivation underlay his decision to go to Washington Prebisch undoubtedly took the same laborious route to Washington as in 1940 boarding a train to Mendoza and then taking the uncomfortable DC3 to Santiago Lima Panama Mexico City and Miami by midAugust the same itinerary had brought him back in Buenos Aires where he resumed his leadership of the Central Bank But the political pressures were growing In his commitment to his coun try and the Allied cause Prebisch found himself squeezed ever tighter be tween Washington and the Argentine military government 8 The Wilderness Adelita opened the morning edition of La Nacion on 19 October 1943 to a headline announcing the resignation of Raúl Prebisch as general manager of the Central Bank Breakfast was not yet ready and Raúl was shaving She ran upstairs immediately You didnt tell me that you had resigned1 Prebisch rarely discussed his work at home but this was a bit much Unfor tunately it was news to him as well the new government had fired him with out warning After eight years of power at the centre of the Argentine state Prebisch faced a sudden and unexpected assault on the institution that he had created and that dominated his life and work Prebisch forgot breakfast and drove immediately to the Central Bank where his confused and worried staff waited Colonel Enrique Gonzalez from the presidents Office was already in his office and handed him an envelope containing his letter of dismissal He didnt agree personally Gonzalez told Raúl but these were his orders and he departed immedi ately without further comment leaving Raúl in disbelief By law the Cen tral Bank general manager was accountable to the Bank president in this case Dr Bosch it was illegal for the political executive to fire him Prebisch hoped that the press had merely leaked a rumour a not abnormal feature of the poisonous political life of the nations capital but after Gonzalez visit he knew there was no way to avoid a crisis that could destroy both him and his lifes work the Central Bank itself Additional news arrived con firming the sacking of other senior members of the Prebisch team in cluding Malaccorto in finance in a sweeping move that removed several ministers deputy ministers deputies financial experts and university pro fessors By this time Alfredo Moll now living in Buenos Aires after return ing from New York had heard the news on the radio and rushed to see Adelita at 134 Rivera Indarte since he feared that Raúl would also be arrested by the police The Wilderness 169 Prebisch should have anticipated his dismissal He had felt a severe polit ical chill on his return from Washington in midJune and attacks on the dictator Prebisch and his brains trust had gathered strength in the gov ernmentsanctioned press ArgentineUS relations were again in decline as the US Embassy finally decided that the Ramirez Government was even more intractable and dictatorial than its predecessor Cordell Hull decided to escalate US pressure after Mussolini was overthrown and arrested in July 1943 in the belief that tougher action would strengthen the proAllied opposition Hull therefore rejected Foreign Minister Admiral Stornis re quest for US weapons on the grounds that Argentina had failed to live up to the Rio Declaration The strategy was misguided not only was Argentine society too controlled by the military to allow mass demonstration but the hardening of US policy only achieved the early departure of proAllied Storni from the Cabinet These developments removed all bilateral ambi guity and Washington now changed its policy from Consignee Control to putting intense pressure on Argentina to break relations with Germany and Japan Because the new US policy focused on Ramirez and the military rather than the Central Bank the Bank had seemed to gain elbow room so to speak after Prebischs return from the US The end of the Consignee Con trol system eased its isolation and allowed it to concentrate on running the economy and preparing for the postwar period Prebischs relationship with Minister of Finance Santamarina remained correct if not personally close they met each morning and Raúl was entrusted with writing the ministers speeches related to banking and international finance A new bond offering on 23 August yielded over 400 million pesos the most suc cessful in Argentine history2 The Ramirez Government supported industrialization more openly than Castillo In August it opened a direct line to the private sector by creating a special commission including Luis Colombo representing the beef industri alists of the uia and José Maria Bustillo president of the Sociedad Rural to advise the minister of finance signalling stronger governmentbusiness collaboration in future Moreover the arms industry now became an even higher national priority The military arms corporation FM Fabricaciónes Militares had been created on 9 October 1941 before Pearl Harbor and the subsequent US cutoff of arms to Argentina after the Rio Conference with the advent of the military government existing enterprises were con solidated and brought under the leadership of General Mario A Savio who was a firstclass organizer and military entrepreneur determined to mod ernize Argentinas weaponry and defense to compete with Brazil and Chile The FM was campaigning for a modern steel sector as well as 170 The Life and Times of Raúl Prebisch investments in other heavy industries such as chemicals vehicle produc tion optical equipment and machine tools and therefore added another strong voice for industrialization Ramirez also approved the creation of the Industrial Credit Fund to be administered by the Central Bank Raúl had unsuccessfully promoted this concept in the 1940 Pinedo Plan but it took the military government to see its merits and actually take this important decision Santamarinas announcement of the new policy to the uia on 1 September was so drowned by applause that he could barely complete his speech3 The text of Santamarinas address written by Prebisch struck a new note of opti mism regarding the prospect of Argentine exports The new Industrial Credit Fund finally gave Argentine companies access to a type of credit that its foreign rivals had long enjoyed there was now every prospect of their success in international trade The speech called for the systematic application of a coherent industrial development policy which required both industrialization and an international trade policy This country also needs a vigorous foreign trade he noted and as active as possible This goal does not contradict a vigorous industrial development policy It is evidently in our interest that our exports grow as rapidly as possible in order to maintain importing as many essential goods as we can4 How ever the military government also insisted that 60 percent of the Indus trial Credit Fund be reserved for the FM which embodied a stateled investment strategy with national security rather than commercial crite ria But the fact that the Ramirez Government agreed to place responsi bility for the Fund in the Central Bank was another signal of confidence and Prebisch could not be more open in his advocacy of Argentine indus trialization He had also been able to liquidate twothirds of Argentinas external debt with Britain buying it at favourable interest rates and har nessing the inflow of wartime capital thereby removing a longterm finan cial burden on the national economy and allowing the government to plan for the future with greater confidence5 Prebisch was confident that the Central Bank could ride out the storm of wartime politics and that Argentina would come into the postwar era with the advantage of a healthy and growing industrial economy During the Concordancia period hed had friends and allies in government who were able to support the Central Bank politically However after the death of Justo Prebisch had no links with the military establishment and after 4 June this problem became acute When it became clear that Perón was the key player behind the 4 June revolution Raúl asked Finance Minster Santamarina to arrange a closed meeting with him hoping that a frank exchange on the national economy and banking policy would dispel the The Wilderness 171 many negative rumours about the Central Bank Prebisch knew little about Perón except that he was a leader in the gou and close to Ramirez In fact the two men had certain things in common They were close in age Perón was six years older and both were protegés of General Agustín Justo supported industrialization through importsubstitution and en dorsed the creation of a regional market comprising the abc countries and the three smaller countries of Uruguay Paraguay and Bolivia Peróns spe cific ideas and policies regarding industrialization were not clear in early 1943 and Raúl at this point did not predict an irreconcilable divergence on this question indeed there were betterknown military protagonists of a national armaments industry such as General Savio of Fabricaciónes Militares Prebisch believed that if he and Perón could meet and talk pri vately he would be able to explain convincingly the role of the Central Bank in the national economy and its special importance in preparing for the postwar period6 But the encounter with Perón did not materialize even though Santamarina did arrange a private meeting between Perón and himself The minister failed to invite Raúl because he wanted to mo nopolize this contact with a rising personality in the country As late as midOctober during a major political shakeup in the capital Prebisch remained convinced that both he and the Central Bank were safe Even when Santamarina had been replaced by military loyalist Cesar Ameghino he insisted in a conversation with US officials on 15 October that he had no intention of leaving the Central Bank at a time when it needed calm and serenity7 Like many others in the capital he was taken aback by these appointments of the military government Colonel Anaya had been replaced in the Ministry of Education by Gustavo Martinez Zuveria the pulp novelist Hugo Wast who was a throwback to the Inquisition a Catholic fundamentalist who believed that the military as an institution brought the discipline and order required to complement the introduction of compulsory Catholic instruction in all Argentine universi ties This appointment in particular had Buenos Aires shaking its collective head at least Anaya had been a soldier from the ranks but why had Ramirez placed Hugo Wast in the Cabinet of Argentina Raúl recalled Augusto Bunges horror when he had bought Mario his novels it was incredible to think that this man now had power Prebisch did not realize that this Cabinet shift would also sweep him off the political stage On 15 October shortly after Raúls conversation with embassy officials La Nacion and La Prensa defied the government by pub lishing an open letter signed by 150 leading academics and personalities including Bernardo Houssay Argentinas first Nobel Prize winner for Science calling for the restoration of democracy and panAmericanism 172 The Life and Times of Raúl Prebisch Supported by Interior Minister General Luis Perlinger Gustavo Martinez fired many of them on 17 October Houssay was never reinstated The at tack on universities prompted the resignation of Alfredo Palacios now the president of unlp like the loss of Saavedra Lamas some months earlier it was a blow to the international reputation of Argentinas system of higher education The regimes campaign to eliminate potential opposition was only beginning and Prebisch had no suspicion that he himself was on the list until Adelita read about his resignation in the first edition of La Nacion on 19 October When Colonel Gonzalez left his office Prebisch ordered his staff back to their regular assignments until Bank President Bosch and his directors were informed and could meet to discuss the crisis Bosch was furious with the government when Raúl called him with the news and he refused to ac cept his resignation demanding instead an immediate interview with the president of the republic to denounce his illegal intervention in the inter nal affairs of the Bank But times had changed when the call was not returned it was evident that Bosch had little influence within the new re gime With this Prebisch decided to submit his own letter of resignation on 19 October For the next twentyfour hours President Ramirez ignored Bosch who finally was told that if he wanted to question the decision he should see Gonzalez But when Bosch repeated his demand that the order to fire Prebisch be rescinded and that in any case the matter only con cerned his board of directors he was acidly instructed to submit a letter to the new minister of finance outlining his concerns This was not prom ising nor did he receive a response to his letter Swallowing his pride on 21 October Bosch then met the minister of finance who informed him that nothing could be done although like Gonzalez he regretted the loss of so valuable a public servant as Raúl Prebisch The decision to fire him had been made at the presidential level and was final But the Central Bank Directors refused to accept Prebischs resignation by a margin of eleven to one Meeting the next day in an emergency session only Cosme Massini Escurra of the bna voted against him even Emelio F Cardenas President Ramirez personal representative on the board abstained noting that he agreed personally with the majority and would not join Massini Escurra against Raúl Thus fortified in their resolve Bosch and the board of directors were determined to confront the military government on its flagrant disregard for the law in Prebischs dismissal Prebisch was gratified by the support of his board and knew that he en joyed the unconditional loyalty of his Bank staff but he realized things were different in the capital The legacy of the Uriburu connection the RocaRunciman pact and the famous meat debate had come to fruition The Wilderness 173 He could read the nations newspapers the nationalist press widely sup ported the governments dismissal of him and the others exulting in the fall of the socalled antipatria8 The antipatria were disloyal traitors to their own country friends of the US Embassy British plutocrats bankers and Jews The inclusion among them of so many professionals with foreign sounding names starting with Raúl himself and including Max Alemann Malaccorto and Jacobo Weiner was hardly coincidental The suggestion was clear that this was a group influenced by Jews and that by decapitating its leaders the 4 June revolution had liberated Argentina from a conspiracy operating within the state That this nonsense should appear in the nation alist press particularly El Cabildo and El Pampero did not surprise Prebisch It was of much more concern that the mainstream press such as La Nacion and La Prensa failed to come to his defense The silence of La Nacion was a particularly severe blow since he had worked so closely with its editorial staff during the last decade In fact the newspaper had supported the 1943 military coup for bringing down the Concordancia and defended it for months before publishing its open letter on 15 October After the Central Bank Directorate refused to accept his resignation Prebisch spent two days in individual interviews with leaders in the busi ness and banking community By 22 October after having thoroughly as sessed his options he had made his decision He wrote again to Bosch insisting that for the sake of the Bank the board accept his resignation Three days later at a second extraordinary meeting the board saw no option and Prebischs departure was confirmed Prebisch could have en couraged the directors of the Central Bank in their refusal to accept his dismissal Flattering as their support was however he would require more broadbased backing if he was going to fight the government for his job And he didnt have it The Argentine public associated Prebisch with the discredited Concordancia the nationalist press called him the dictator His consultations with representatives of the big national conglomerates including the Shaw Tornquist and DeBary empires and forty other lead ing businessmen and bankers had shown him that he had no significant support in the domestic private sector He realized that the military govern ment had successfully coopted the leadership of the uia and other busi ness groups with its strong commitment to industrialization Not a single Argentine firm offered him a job the word was out to blackball him only the foreign banks and the US Embassy supported him but in the political climate of the day this support was counterproductive to say the least Prebisch was caught unawares He had come to believe that the he and his brains trust had become indispensable and that no rational govern ment military or civilian corrupt or honest would destroy such an asset or 174 The Life and Times of Raúl Prebisch even allow it to be weakened He had been lulled into a false sense of secu rity thinking that the Central Bank had sufficient international linkages and domestic support to remain immune from Argentinas political epi demics In the end Paretos model of a modernizing elite had exploded in his face Politics mattered democracy and the rule of law mattered Prebisch had sought to isolate the Central Bank from politics in Argentina leaving the political fray and the Jockey Club to his social betters but it hadnt worked in the end There was now the future to consider A forced resignation was painful but Prebisch thought it would be a pause rather than a permanent termina tion He still had the overwhelming support of the Central Banks board of directors Bosch was eighty years old and Prebisch was the obvious succes sor and he also retained strong support within state agencies and the Minis try of Finance In short his early reinstatement was quite possible once the government came to its senses or political circumstances changed Prebisch also reasoned that the orientation of the Central Bank not to mention the great bulk of his staff would more likely survive should he resign now with out forcing a major confrontation with the military government if his per sonal unpopularity had become a liability to the Bank his removal would make it less subject to political interference and criticism Rather than immediate policy differences the issue behind his dis missal from the Bank was Prebisch himself and the institutional power he represented With the collapse of political parties during the Concordan cia the military and the Central Bank formed the two institutional anchors of the state the military dominated the political scene and the Central Bank regulated the economy A logical and inevitable collision was build ing Prebisch in the view of the military had become too powerful and independent and too close to the US Embassy Since 1942 he had in creasingly exposed himself politically with his proAllied stance including his link with the US Embassy outside of official channels and his overt political support for Justo his August trip to Washington was the final evidence that he had become too powerful to be tolerated If the US Embassy was wiretapping the Central Bank it was unlikely that the military remained uninterested in Prebischs contacts with the Americans As the Central Bank accumulated international influence through its networks and emerged as a major power centre not directly controlled by the state the military government decided to remove a powerful opponent and strike a blow at the independence of the Bank itself The US Embassy closely watched these events unfold correctly seeing that a fundamental divide over the future of Argentina had opened with the forced departure of Prebisch from the Central Bank Ambassador The Wilderness 175 Armour and Bohan held an immediate fourhour emergency session at the embassy with Leo Welch and Lansing Silcox from the First National Bank of Boston and the group recommended a new era of uncompromising toughness escalating pressure and a general freezing out of Argentina No one doubts that the Government is aiming to obtain control of the Central Bank Armour explained to Cordell Hull and the general feeling is that it is only a question of time until this objective is achieved9 Prebischs departure from the Bank ended the embassys direct access to a key power centre in the state which could not easily be replaced We are fully cognizant of the responsibility we assume in recommending a vigor ous course of action Bohan noted and accentuated his overt hostility to the regime with an awkward misquotation of the familiar aphorism attrib uted to US Judge Hartz We assure you that we are not guided by Judge Beans philosophy of giving the culprit a fair trial and then hanging him but rather by the unknown jurist who observed that we may be in error but we are no longer in doubt10 ArgentineUS relationships now deterio rated definitively by January Time had categorized Argentina as fascist and an enemy11 Fullscale US sanctions to undermine its economy were being applied Bohans work was now finished and he left Buenos Aires for Washington And what of Prebisch Washington sensed its responsibility in his down fall with Assistant Secretary Adolph Berle recognizing his sterling cooper ation with the cause of the US and UN the Allies12 He suggested that Prebisch be invited to the US It occurs to me that it might be well to make some arrangement for Mr Prebisch to visit the US under Govern ment auspices or those of some organization such as the American Bankers Association That was it a visit as recompense for good deeds history had moved on and Prebisch was now in the superfluous rearguard of the Allied cause The moment he lost the protection of the Central Bank Raúl faced per sonal danger in Buenos Aires His house was under police surveillance Pinedo had already been arrested With Alfredo Molls assistance he left that evening for refuge with friends from the German community Oswaldo Altgelt and his wife who lived at an isolated location five kilometres from Mar del Plata In fact agents from Military Intelligence confronted Adelita the next morning and entered the house at 134 Rivera Indarte looking for Raúl they toured the house and left when Adelita refused to speak with them Only his chef de cabinet MA Martinez who continued to address him as gerente boss knew his whereabouts and arranged for the deliv ery of letters and personal articles to Mar del Plata but on 2 November Raúl telephoned Adelita to tell of her of his safe arrival 176 The Life and Times of Raúl Prebisch At first he was too restless for anything except pacing in the garden and for two weeks he still hoped that his absence was temporary and that he would soon be reinstalled On 2 November Adelita sent a message with re ports of a campaign within the Bank for his reinstatement and of rumours of an impending reversal of government policy Julio Gonzalez del Solar would be coming to the house that evening to report on the situation But hope faded during the next week and nothing came of these efforts By 14 November Adelita wrote again acknowledging the failure They now faced difficult times It was easier for her she noted because she and her family had already lost everything in the Great Depression What I want most of all she wrote is to be your true friend and to be helpful in these difficult days of your life Dont worry about me Everything will work out The sudden termination of his salary shook Prebisch from the lethargy of depression Decisions had to be taken Since the government stopped his salary precisely on 22 October providing no separation pay compensa tion or benefits and since no other public service options were available Raúl and Adelita had to sell their car with the proceeds from the Packard paying off the last instalment of their mortgage This left them with no debts but without income they could not afford to remain in their house and would have to rent it immediately Marcelo the son of Dean Eleodoro Lobos who had befriended Raúl on his arrival in Buenos Aires offered Adelita and her mother temporary quarters in their small garden house nestled among the hills and lemon groves 8 km from San Isidro Adelita ac cepted the offer and was left alone to find tenants and prepare 134 Rivera Indarte for lease while making the garden house with three small rooms and tiny kitchen habitable She also sold their halfshare of the vacation property to Gagneux and used this for furniture for the new quarters Friends pitched in helping to make curtains and fix the kitchen and bath room On 8 November Adelita gave a dinner party a farewell to the beau tiful house in which they had lived for less than three years and which she hoped to reoccupy soon and a celebration of the wedding anniversary of Julio and June Gonzalez del Solar By the end of the month when the new tenants arrived the Lobos garden house had been converted into a cozy little home for Adelita and her mother with a few inconveniences grocer ies for example were 8 km away and Adelita had to get them on a bicycle Raúl still lived with the Altgelts in Mar del Plata but fear of the police had dissipated For the regime Raúl Prebisch was only a threat as head of a powerful state agency he was not a challenge to them once removed from public office particularly if he remained far from the capital This new se curity eased life at Mar del Plata where family guests began to visit again his address and telephone number were freely circulated and he became a The Wilderness 177 more visible resident in the community But the prettiness and isolation of Mar del Plata with its long walks along the sea only underlined for Raúl the pain of his sudden rupture from power and the accompanying sense of loss in his life His first month away from the Central Bank with its deluge of letters of support appreciation outrage and condolence from the great banking houses around the world as well as from his former employees underscored his isolation from the worlds he knew and loved Now he had nothing Julio Silva who worked in the Bank and came from a wealthy family pleaded with Raúl and Adelita to live free in one of their houses for as long as they wished and to accept this offer from the heart not as an obligation to repay but rather as my debt of gratitude for your gift of confidence in allowing me to work at your side for seven years13 But he refused charity He similarly refused offers from foreign banks encour aging him to join the private sector abroad the national banks continued to shun him The change was too abrupt Raúl had always lived for his work and his life had contracted overnight from one of the busiest and most interesting in the capital to the nothingness of forced retirement Before 19 October his decisions shaped the economy and made daily news now he was a disgraced observer on the sidelines From the beauty and gardens of 134 Rivera Indarte he had landed in cramped quarters with leaf mould and couch grass A terrible driver Prebisch nevertheless coveted luxury cars now even his Packard was also gone His position in the Economics Faculty was also in doubt He did not know if he would be acceptable to the regime as a professor at the university he could only guess whether his dismissal from the Central Bank had made him persona non grata for other public positions in the capital The people he most admired such as Palacios and Saavedra Lamas had resigned in protest against the military government by crawling back in disgrace he would be giving a message of weakness In any case there would be no teaching until the spring se mester and the faculty was an intellectual backwater compared with the Central Bank He could not get up enough energy to contact the faculty What was he to do in the wilderness cultivate his garden Prebisch loved gardens and their design but his idea of gardening did not extend to weeding raised beds or planting begonias He designed Adelita worked Raúl had inherited a distaste for manual labour and was not inclined to sports apart from walking Adelita was more resourceful a stronger and more serene person than Raúl she simply accepted setbacks and got things done manual or not Coming from a genuinely titled family in Germany she was immune to snobbery14 In contrast Raúl was sensitive and easily wounded he would turn repeatedly to Adelita beginning with this 178 The Life and Times of Raúl Prebisch first major crisis in 1943 to help him through tough times He needed her unfailing common sense and good humour to stop his raging and regret ting and get back to work By the last week of November he had accepted the new reality and the need to begin a new life Prebisch decided to use his retreat to the country to write a book on his experiences as Central Bank general manager if he was no longer wel come inside the government and no one would offer him a job he could at least present his views to the public in a book For fifteen years since his entry into the bna and then in the Ministry of Finance and Central Bank he had been an insider in the economic management of the worlds leading emerging economy however small a consolation his forced resig nation certainly gave him the luxury of spare time for writing Since the outbreak of war in 1939 his schedule had been so overwhelmingly hectic that he could barely direct seminars in the faculty He had directed official publications such as the Central Bank Annual Reports and had ghostwritten La Nacion articles where he was identified as a senior government offi cial but he had been a practitioner rather than a scholar a technocrat in the governing establishment Now Prebisch finally had the time to think through the lessons of his experience since 1928 and also to write freely since he no longer had a stake in the current military regime Of course his motivation was practical as well as financial A book would keep him in the Buenos Aires loop and prepare for his return to public life once Ramirez and the generals were themselves history it never occurred to Prebisch that he might never regain a position of influence in his country Prebischs original idea was to write a largely descriptive personal mem oir to document and reflect on the lessons of the Central Bank years while they were still fresh in his memory No detailed publication existed on the origins and working of the Argentine Central Bank Raúl knew this story from the inside and better than anyone else Financial and monetary pol icy were of fundamental importance to Argentina the Central Bank had been created because the alternatives had failed and the role it had played since 1935 represented an important chapter in Argentine history Essen tially it meant integrating his personal experiences between 1928 and 1943 with his writings and lecture material in the faculty He had kept no journal but Adelita had preserved what she could over the years Most of his team remained in the Bank to assist with information Prebisch knew he could offer an unmatched assessment of Argentinas response to the Great Depression during the 1930s and it was best to write the story at once while his memory was fresh But he soon decided on a much more ambitious book To be credible in a period of unparalleled international and national turbulence it should The Wilderness 179 deal not only with the past it would also have to look to the future The challenges that faced Argentina in the Great Depression and the war would be followed by new and different problems after the peace and so lutions would prove just as difficult to achieve What lessons for future pol icy could and should be extracted from the Central Bank experience What monetary policy should Argentina adopt after the war More gener ally how could past experience best serve a successful Argentine transition to peace Prebisch therefore prepared a threepart book proposal the first section would deal with his theoretical approach the middle part would cover monetary and banking policy in the 1930s and a final part would as sess Argentine prospects and policy options after the Second World War The rather dry and technical title Money and the Rhythm of Economic Activity La moneda y el ritmo de la actividad economica was decep tive15 Instead of a narrow academic project with a conventional focus and structure Prebisch set out a bold framework that went far beyond mone tary policy Just as his decision to document his Central Bank experiences had led him to look at future policy options so the study of Argentinas prospects also forced him to interpret Argentinas place in the interna tional economic system The original project had therefore expanded into an undertaking that required him to clarify his own thinking on funda mental principles Writing with the confidence of a senior manager he left no doubt where Prebisch the economist stood on his theoretical assump tions in 1943 he offered a unique and prophetic blend of theoretical rad icalism and Keynesian state activism with a bankers concern for sound money and the private sector He challenged conventional Western liberal economists by reversing the assumptions of equilibrium and comparative advantage in the international economy and he proposed developing a theoretical approach more in line with intuition observation and his own experience In effect Money incorporated a set of five interrelated proposi tions regarding markets and the state Prebisch began with the fundamental question what were the national purposes of financial and monetary policy in Argentina He was unequivo cal that the proper functioning of the economy required an activist state to achieve three basic public policy goals avoiding a boomandbust cycle by controlling the violent ups and downs in agricultural prices and other foreign trade impacts on the economy strengthening development and maintaining full employment and stimulating the fastest possible rate of economic growth Only these goals would enable Argentina to fulfill its enormous potential and only an activist state building on the type of cal culated interventions devised by the Central Bank could shield Argentina from its permanent vulnerability relative to the industrial countries Just as 180 The Life and Times of Raúl Prebisch Argentina had been forced to abandon free trade and evolve tools like the Central Bank during the Great Depression it would also have to manage its way through postwar challenges or face marginalization National devel opment after the war would not happen automatically only an activist state could ensure that Argentina remained a full partner rather than a depen dency in the emerging global economy Prebischs second proposition concerned his concept of inward devel opment desarrollo hacia adentro Industrialization had come to play a cen tral role in Argentinas economic development and import substitution and other state policies were required to maintain its momentum He asked why must Argentina pursue industrialization Because it faced un equal relationships with its industrial trading partners neither the doc trine of comparative advantage nor the workings of the business cycle automatically benefited it Prebisch maintained that the terms of trade for agricultural commodity producers like Argentina were in historical decline and that a persistent fall in the international prices for exports could be expected in the future His position on declining terms of trade came from his experience since 1930 in different government positions and insights gained in Geneva if economists in developed countries still clung to the doctrine of comparative advantage in international trade Prebisch had learned differently He had watched Argentine farmers selling grain against rising costs long enough to convince him of this reality But Prebisch also located a deeper structural imbalance than declining terms of trade in the international system the functioning of the business cycle According to liberal Western economists the market mechanism benefited all countries the large industrialized or small agricultural econ omies alike and the business cycle regulated the periodic ebbs and flows in the international economy Prebisch disagreed He had already con cluded in his 1921 Notes that the business cycle in Argentina created an atypical boomandbust phenomenon because it lacked the selfcorrecting mechanisms characteristic of industrial economies Since then he had lived through the post1918 crash the boom of the 1920s the Great De pression the post1934 recovery and finally the Second World War He now concluded that the international economic system functioned with a permanent disequilibrium because the business cycle operated differently for industrial countries like Britain and agricultural countries like Argentina Without vigorous intervention to control cyclical fluctuations and to strengthen purchasing power and employment through industrialization Argentina would remain extremely vulnerable to external shocks To re sist subordination of the national economy to foreign movements and contingencies he wrote we must strengthen out internal structure The Wilderness 181 and achieve an autonomous functioning of our economy Argentina could not develop an autonomous economy while remaining primarily a producer of commodities Prebischs third proposition however set limits on the role of the state in promoting industrialization He demanded an intelligent regime or smart state in later economic parlance which implied the judicious management of state powers without stifling productive forces Excessive state intervention would be as damaging as a naive acceptance of the doc trine of comparative advantage While the state must support industrializa tion he argued the economy as a whole must remain led by the private sector Dont stifle the private sector Prebisch warned Monetary policy serves little or no use if it suffocates private initiative and the spirit of enter prise which absolutely requires the profit motive to promote an overall cli mate of confidence Argentina therefore required a privatepublicsector partnership to succeed Prebischs fourth proposition addressed the role of trade in develop ment At the international level he underlined the need to restore an open trading system He had witnessed the breakdown of global trade into blocs Prebisch referred to them as watertight compartments during the Great Depression and had lived with the damage it had created Restoring globalization after the war therefore with a soundly based multilateral trade and credit system was a precondition for Argentina and all other countries and few shared Argentinas high stakes It is essential to avoid what happened after the First World War Raúl noted Inward develop ment strategy did not imply withdrawal from the international economy or hostility to industrial powers The participation of our country in the international economy has to be as intensive as possible he stressed To the measure that imports grow particularly essential materials and durable and capital goods they will permit exports and permanent foreign invest ment this country must export and therefore has to import Export pro motion was essential and excessive protectionism had to be avoided Prebisch looked forward to a postwar period when policies such as buy from those who buy from us could be laid to rest and when import con trols could be simplified Harry Dexter White and John M Keynes were preparing a conference for July 1944 to devise a postwar plan to revive trade and stabilize the international economy and he hoped for US lead ership in ensuring their success In Prebischs view the imperative of postwar trade and industrialization policy required a judicious combination of import substitution and export promotion rather than blanket protectionism A policy of autarchy is as absurd as free trade Prebisch concluded with noxious consequences 182 The Life and Times of Raúl Prebisch This possibility of increasing imports under an intelligent regime and a policy of prudent monetary stimulation where indispensable will favour an intensive industrial development with the natural effect of attracting immi gration to other economic sectors as in earlier days of economic and de mographic growth Argentinas challenge was to develop a trade policy that reflected its own needs Fifth a competitive private sector after the war implied building on the viable industrial sectors created during the war while eliminating the ineffi cient and uncompetitive industries that had emerged during the enforced protectionism of World War II Prebischs same caution applied to state ex penditures that must remain prudent and noninflationary There must be a reasonable equilibrium between the role of the state and the play of individual interests in economic life He warned against the politics of ex tremes A balance had to be ensured between productivity and social policy to maintain growth rather than excessive public expenditure Prebisch was obsessed over inflation he was clearly worried about the military govern ment overspending on payouts and armaments The Argentine economy was already at full employment and in danger of overheating and the gov ernment should therefore resist political pressures for inflationary expen ditures Although Argentina had to improve conditions among the poor Prebisch appealed for a social policy coordinated with national economic productivity to prevent deficits and inflation One must bear in mind that the common denominator of social policy is the increase in production Without this a stable increase in the level of income for the masses cannot be sustained Argentina could only maintain its high ranking if the gov ernment adopted the correct policy mix domestic policy had to encourage sustained growth because Argentina depended as much on the state as on international trade to shape the conditions for prosperity Despite the many uncertainties Prebisch forecast a positive future for Argentina Obviously its prosperity was not automatically guaranteed by the relative success during the last decade But as a senior manager he felt that it had all the policy tools it needed to achieve stability and growth Argentinas success in managing the Great Depression and the war experience had given it new confidence and international ranking it had made great strides since 1930 and could look forward to the postwar era with confidence rather than fear as a powerful young actor on the international scene Prebischs Money raised many theoretical questions His views on the his torical decline in global terms of trade his hypothesis of structural disequi librium in the international economic system his call for industrialization and his concepts of inward development and smart state were of ex traordinary scholarly interest16 His approach could be called civilizing The Wilderness 183 globalization he saw no other choice for Argentina but to embrace glo balization strengthen trade links with its neighbors recognize the decline of Britain and accept that US leadership was inevitable in the emerging in ternational system He saw many problems ahead but he insisted that Argentina itself beginning with the state could not avoid responsibility for policy choices While he believed in the inequality of the existing interna tional system for commodity producers Prebisch was not a revolutionary critic of Western capitalism He expressed no anger or bitterness instead he was confident that Argentina could develop the tools it needed to meet the postwar uncertainties Nevertheless when taken together Prebischs propositions in 1943 pre sented a major theoretical challenge to traditional liberal orthodoxy For him the latter doctrine had too many gaps it simply couldnt explain Argentinas predicament My long involvement with the practice of mon etary policy over the last fifteen years has constantly persuaded me of the need to return to the theoretical foundations of the system to improve our understanding and management of concrete problems he wrote The operation of the international economy presents such distinct characteristics in our economic life that their explanation requires an alternative theoretical explanation than that appropriate for industrial countries This alternative explanation claimed an embedded disequi librium between industrial and agricultural countries within a unified global system There was no automatic harmony in the international eco nomic system and no magic of the marketplace instead there was an unequal power relationship that could only be remedied by deliberate state action Prebischs posing of this structural critique of liberal theory opened a new perspective in the study of international economics with serious consequences for development policy Prebisch completed his book proposal on 13 December but Argentine publishers showed no interest No one recognized its scholarly importance and innovation There was nothing of comparable interest in the econom ics literature and apart from its theoretical novelty the book would have provided a valuable study of an emerging economy from an insiders per spective Perhaps its title concealed the full range of his enquiry its pro posed threepart structure theory Central Bank experience and policy implications may have seemed too dry Perhaps the books attractiveness would have been increased by a Latin American rather than Argentine fo cus Perhaps Prebisch erred in presenting it without evocative imagery like core and periphery which he had used in 1921 Most probably the proposal was simply too far ahead of its time and was lost in the political tur moil of Buenos Aires during the Second World War One can only speculate 184 The Life and Times of Raúl Prebisch on the impact of this book had it been written and published in 1944 but in the end all that remained was the proposal itself an essential benchmark of his thinking at the immediate close of his Central Bank career The debacle of the book project plunged Raúl into depression Oscar Altgelt an avid flyer who owned a small Cessna tried unsuccessfully to di vert Raúl with plane rides around the countryside and up and down the coastline Raúl was determined to revive his theoretical work as soon as possible but without the Central Bank he was alone and without resources he no longer had a research team access to the Central Bank library or a vehicle for publishing his work Prebisch knew that his background and ca reer were atypical and dutifully acknowledged the limitations of his train ing compared with fulltime professional economists in North American or European universities But he felt he was on the right path because the pol icy tools he developed in the Central Bank had been effective in the real world he spoke of the Argentine reality because he lived it he criticized existing theory because he had wrestled with money and international fi nance since the Great Depression and he understood intuitively that the Argentine case was simply different from that of the US or the UK So strong was his need for an institutional base to regain his creative self that he decided to swallow his pride and revive negotiations with the Faculty of Economic Sciences presently in a state of chaos as the military government reorganized the university administration and the students and faculty remained out on strike But backwater or not the faculty was better than the boredom and futility of Mar del Plata or the garden house in San Isidro Julio Gonzalez del Solar did the advance work in a first meet ing with the Faculty of Economic Sciences on 27 December carrying a let ter from Raúl requesting his fulltime reinstatement The new dean was confident even excited by the prospect of Prebischs return recogniz ing him as a major addition to the faculty complement Moreover official hostility toward Prebisch had waned during the months since his dismissal He was flattered for example that Ministry of Finance officials were con tacting members of his old Central Bank team to find unobtrusive ways of seeking his advice He thereupon agreed to direct two seminars each year at the faculty beginning in April 1946 but he turned down all administra tive assignments to concentrate on research and teaching17 Although his isolation was ending and he yearned to return as soon as possible to Buenos Aires Raúl and Adelita became increasingly short of cash Their savings were running out and the failure of the book proposal meant the end of any dreams of an advance His university position in Argentina was largely honorific and the rent from 134 Rivera Indarte The Wilderness 185 barely covered essentials Neither he nor Adelita had private incomes and she was as unlikely as Raúl to be employed in Buenos Aires He badly needed a job On 22 December an unexpected letter arrived from the Mexican Em bassy that transformed his professional and financial prospects18 A month earlier the Bank of Mexico had sent an exploratory note to Prebisch in Mar del Plata via the Mexican Embassy in Buenos Aires sounding him out regarding a possible visit With nothing else on the horizon he had imme diately accepted the invitation in principle indicating that he would be prepared to consider a formal invitation But nothing happened and he stoically assumed that the issue had been dropped or that the Ramirez Government had vetoed it with a note of protest He had received a similar invitation from Uruguay shortly after his dismissal and that too had not materialized19 In any case he needed a job rather than a diversion On 19 December however Prebisch reminded the Mexican Ambassador in a note delivered by Alfredo Moll that he had not received a reply to his ear lier letter To his surprise the Embassy delivered a formal invitation from the Banks Deputy DirectorGeneral Rodrigo Gomez proposing a three month visit with extensive trips throughout Mexico to acquaint him with the country but centred on a series of seminars dealing with Prebischs experiences as general manager of the Argentine Central Bank The Bank of Mexico offered to cover all his expenses and asked him to fix a date and suggest an honorarium Clearly moved by this astonishing break in his for tunes he replied on Christmas Day that he would accept whatever they of fered as for a date he suggested 5 January to allow his return in early April to prepare his faculty seminar20 When the Mexicans offered an incredible US5000 Prebischs shortterm financial crisis was over He could now think of returning to the capital living again with his family in normal cir cumstances and even buying a small car Adelita immediately began a search for larger and more accessible quarters than the Lobos garden house in San Isidro eventually finding a modest house in Buenos Aires that would be available on Raúls return from Mexico City The Mexican invitation restored Prebischs confidence As much as he needed the money he needed to get back into circulation His greatest pain after being dismissed from the Bank was isolation the Bank of Mexico was fully in the network with Allied governments in reshaping in ternational monetary policy and he now had a means of access to a world denied him in Argentina Not only did he feel wanted again but Mexico City during the war had become an important capital and the Bank of Mexico was a leading financial institution in the Americas with even 186 The Life and Times of Raúl Prebisch closer links with the US Federal Reserve and international specialists Moreover the lectures in Mexico meant that he would have an early op portunity to present the experiences and lessons he had gained during his tenure in the Argentine Central Bank21 The period in the wilderness was over On 2 January 1944 for the first time since October Prebisch with a spring in his step returned to Buenos Aires and contacted his old friends in the banking and diplomatic communities for the most recent economic and political news These were not good He learned that his last two surviving initiatives from the 194041 visits to the US were being phased out The Central Bank Harvard University Federal Reserve program would be terminated because such cooperative projects with US institutions were increasingly considered to be disloyal and capi the Argentine Trade Pro motion Corporation set up with the private sector in 1941 was also being bypassed on its way to oblivion To prosper and as it turned out even to sur vive capi needed the leadership of the Central Bank but it was now out of favour and humbled by the 18 October crackdown Until then the New York office had held on despite the deepening USArgentine tension but now the Ramirez Government gave it the official cold shoulder Instead Luis Colombos uia sought to replace capi by building its own relationships with the US Embassy The Embassy wasnt interested Not only did the uia lack the resources and contacts for such an international role it lacked the capacity even to translate letters into English but this evident display of competition for access and power in the capital without a firm hand at the top doomed the capi experiment It disappeared without a trace The news of Prebischs trip to Mexico provoked commotion among friends and foes in the capital Malaccorto helped prepare his travel docu ments Raúl visited the faculty to renew acquaintances and make prepara tions for his spring seminar Opponents were not pleased that Mexico had recognized him as Latin Americas foremost economist and banking au thority in a series that included internationally known economists such as Joseph A Schumpeter the invitation so soon after his dismissal from the Central Bank reflected badly on a military government too ideologically driven to tolerate excellence and unreasonable enough to condemn him as a lackey of AngloAmerican imperialism For Prebischs supporters it was a welcome vindication of their friend and excolleague and Ernesto Bosch congratulated him in a personal letter during his final preparations for Mexico The saying that no one is a prophet in his own land does not necessarily hold he wrote If it is true that our government has failed to recognize your leadership role in the Central Bank public The Wilderness 187 opinion in our own country and abroad has indeed understood the mistake of our imprudent rulers I miss you very much although you left behind a strong element of your general staff its commitment and hard work are not sufficient to be able to forget the presence of their CommanderinChief always at the helm22 9 Discovery of Latin America Disgraced officially in Buenos Aires Prebisch was received as a visiting dignitary by Bank of Mexico DirectorGeneral Eduardo Villaseñor and his Deputy Rodrigo Gomez on his arrival in Mexico City on 5 January 1944 Apart from international conferences he had not previously met senior Mexican Government officials they also knew him only by reputation and the Annual Reports of the Argentine Central Bank They would also have in vited Adelita had they known Raúl was married He was taken aback by the warmth of their welcome even though he was not American or European they accepted him as a leading authority on money and banking Raúl would always refer to these three months as a unique period of discovery and cul tural learning during which his concept of Latin America began to form1 Prebisch had never visited Mexico he observed a magnificent city spread ing out from its imperial heart and stately avenues to Chapultepec Forest to ward the mountains ringing the old Aztec capital Zocalo the main plaza with the Presidential Palace and Cathedral dwarfed the Plaza de Mayo in grandeur housed in the nearby colonial Hotel de Cortes Prebisch could use his first morning walks to visit the main sites of a capital built on an imperial scale After a few days in the city Rodrigo Gomez took him into the Mexican interior his hosts had decided that one week per month of Prebischs stay should be devoted to travel inside the country so that he would see every region and they proceeded without haste to Guadalajara via Queretero and San Miguel de Allende The following month the trip contin ued to Morelia and Guanajuato to San Luis Potosí and then north toward Monterrey via the spectacular colonial silver town of Real de Catorce Prebisch soon loosened up and the relationship with Gomez and his col leagues became increasingly close as he explored the country Taken aback at first by his Buenos Aires mannerisms the Mexicans realized that under his formal surface lay a warm generous and humorous individual Discovery of Latin America 189 The discovery of a preEuropean and colonial heritage with a cultural leg acy he had never imagined and with a richness of a entirely different order than Salta and Jujuy transformed Prebischs appreciation of Mexico not just of its diversity culture wealth and beauty but also of its potential It was a different world than Argentina His own country was immeasurably more developed economically with the second highest per capita income in the world socially integrated with a large middle class and an improving but al ready high level of public education a little bit of Europe in the Southern Cone Argentine poverty even that of the sugar workers of Tucumán was not like in Mexico where social exclusion retained a medieval aftertaste where peasants had risen up in the 1910 Revolution to claim land on which many survived in subsistence Argentina was a huge economic success and Buenos Aires a New World treasure but Argentina was a settler country still in search of itself Mexico was a mass of contradictions whose wealth in colo nial days had towered over that of North America until precipitous decline had left it vulnerable to amputation and now its economy was only 2 per cent that of the US But Mexico was a civilization not merely a country and the Linares side of Raúls personality recognized a strength and perma nence in Mexico that did not exist in Argentina Here the indigenous cultures had not been exterminated although abused they retained a his torical bond with an ancient land transcending the ebb and flow of prosper ity His perspective on Latin America began to evolve from a geographic expression learned at school to a grouping of diverse states that could and should enrich each other with Mexico and Argentina at the far ends of the great Latin American family Mexico in 1944 was alive with intellectual ferment and optimism The Second World War was going well and rapid industrialization was taking place As an accepted destination for exiles from all continents its most re cent wave of migration from Spain following the 1939 victory of Franco had included a good percentage of the doomed Republics intellectual class in the new Colegio de México Other refugees had arrived from Europe after the outbreak of the larger war in September 1939 strength ening its cosmopolitan spirit and urban culture This attraction and its privileged geographic location in the Second World War had transformed Mexico City into a priority destination by 1944 For the first time it was linked in friendship and alliance with the United States War in Europe and Asia had led to a change in the traditionally poison ous USMexican relationship because it required Washington to promote a closer interAmerican cooperation than the vague partnership envisioned in President Franklin D Roosevelts Good Neighbor policy announced after his election in 1932 Already on 1 December 1940 Roosevelt had sent 190 The Life and Times of Raúl Prebisch Henry Wallace his vicepresident elect to Mexico to attend the inaugura tion of President Manuel Avila Camacho Bilateral disagreements over Mexicos nationalization of oil in 1938 were patched up and an agree ment on defense and economic cooperation was signed in early 1941 Mexico promptly broke off diplomatic relations with Japan Germany and Italy after Pearl Harbor and on 20 April 1943 the country was electrified by the historic visit of President Roosevelt himself A permanent change in relations with the northern giant appeared certain and this widespread be lief provoked a wave of prous sentiment throughout Mexico Nor was it all one way In Washington the Western Hemisphere Idea was rekindled in a wartime solidarity so noisy that it spread to US civil society Before Pearl Harbor Americas Day on 14 April had been among the least known dates on the American calendar but now it was dusted off and celebrated in a host of US cities with a weeklong buildup of festivities The US Marine Band was brought out speeches invoked the special intimacy presumed to exist within the family of American states In short the US and Mexico needed each other and by 1944 an entirely novel USMexican friendship and cooperation had been achieved More concretely for Mexico the shared effort against the Nazi enemy and the closure of most of Europe and Asia provided an opening for new directions in economic development and USLatin American relations Even Canada was included Trilateral negotiations for a USCanadaMexico North American freetrade agreement were initiated and Washington funded programs of technical assistance The US recognition of Mexico as an ally was such that its delegation to the 1944 Bretton Woods Conference creating the World Bank and International Monetary Fund cochaired the proceedings with the US and Britain Riding this wave of solidarity the Bank of Mexico saw itself as a key national institution with the US Federal Reserve as its model United States universities and businesses also sought out Mexican part ners for exchanges and investment with the Bank of Mexico program to which Prebisch had been invited that invitation serving as an example of this opening United States universities had professors eager to travel to Mexico if invited and their graduate schools were important for training Mexican economists No PhD programs in economics existed in Mexico and there were only a handful of economists in the entire country More over US universities had been strengthened by attracting economists from around the world offering an unrivalled quality of teaching research and experience Gottfried Haberler and Joseph Schumpeter were in this group as well as Henry Wallich and Jacob Viner These individuals were interested in Mexico and the Bank of Mexico which by 1944 had become recognized Discovery of Latin America 191 as not only an elite institution in economic management but also a forum for debating new ideas and approaches in postwar monetary policy Not only had it assembled a group of promising young Mexican economists in its Office of Economic Studies but its president and senior staff headed by Eduardo Villaseñor and Rodrigo Gomez were committed to innovation and international dialogue It had also attracted gifted young Mexican economists such as Victor L Urquidi a recent graduate of the London School of Economics Daniel Cosío Villegas the director of the Fondo de Cultura Económica Latin Americas largest publisher of scholarly texts was also a member of the Bank of Mexicos research team Outside the Bank a network of institutions including the new Colegio de México and the venerable unam National Autonomous University founded in 1551 amplified the circle of researchers The contrast with the growing political polarization and narrowing in tellectual life in Buenos Aires left Prebisch anxious for the future of his country Argentina was imposing religious instruction in universities cur tailing scholarly links firing its best professors and isolating itself from in ternational networks and ideas in Mexico there was no fear no backbiting and the quality of debate and atmosphere of scholarly freedom and com mitment to dialogue was infectious Mexicos overriding priority was na tional development universities business and government were absorbed with this challenge and a spirit of innovation was in the air Despite its wealth and advantages Argentina was closing to the world while Mexico with all its problems was opening to the future The two countries made for an interesting comparison Mexicos popu lation was somewhat larger at 20393 versus Argentinas 14169 million in the 1940 census both towered over Chile five million although together they still did not match Brazils expanding population of 41523 Mexico like Argentina had responded to the Great Depression by abandoning the gold standard and introducing a broad policy of state intervention and ex pansion but there were important differences Mexico had defaulted on its debt and introduced more radical measures including land reform the nationalization of the oil industry in 1938 under a monopoly of the state oil company pemex and the creation of other instruments such as a devel opment corporation Nacional Financiera and a sixyear plan2 Argentina was in the British trade orbit while Mexico was in the US zone For both countries the worst of the Depression was over by 1933 after which they again began to grow with roughly similar results until the outbreak of the European war in 1939 They differed most in the security and political ar eas Mexicos security focus remained the US border but this was no lon ger a military threat in fact the US had implemented a program to attract 192 The Life and Times of Raúl Prebisch migrant workers to cover a labour shortage during the war Argentina in contrast faced armed rivals in Brazil to the North and Chile to the West Both countries were governed by military men General Avila Camacho in Mexico and General Ramirez in Buenos Aires Indeed both countries were authoritarian in their own way But after the disasters of revolution and US aggression Mexico had constructed durable state institutions with Carde nas enjoying widespread popular support and allowing the more conserva tive Avila Camacho after 1940 to adjust to a cooperative relationship with Washington the old enemy In Argentina the US was rapidly becoming the new enemy perfectly out of sequence with Mexico while its political insti tutions were disintegrating In so stimulating a climate Prebisch worked hard preparing his semi nars held between 24 January and the end of March selecting as his main themes the background and creation of the Argentine Central Bank foreign exchange controls the Argentine experience the history of mon etary policy in Argentina its guiding principles and linkage with the inter national system the Central Bank as financial instrument of the national government and lastly the issue of the gold standard and the financial vulnerability of Latin American countries The atmosphere reminded Prebisch of the Argentine Central Bank before his dismissal except that as general manager he had had little time to read and keep up with scholarly journals The seminars were conducted in small groups twice a week nor mally with only Villaseñor Gomez and a halfdozen other officials in atten dance in a relaxed giveandtake on topics including Mexican monetary and trade policy its strategies in dealing with the US after the return of peace and broader issues such as the forthcoming international confer ence being prepared by Keynes and Harry Dexter White for July 1944 at Bretton Woods in New Hampshire on global monetary and financial policy In turn the Mexicans could learn from the Argentine experience Mexicos Central Bank was created in 1925 earlier than Argentinas be cause the private banking system had been nearly wiped out during the preceding years of revolution and civil war but only in 1941 was it given the wide powers comparable to Argentinas Central Bank for managing the money supply and regulating exchange rates This was true in theory in practice Mexico had nothing comparable to Argentinas highly developed financial market and credit standing and Villaseñor and Gomez were still feeling their way forward3 Prebisch opened his seminar with a comprehensive analysis of the Central Bank experience in Argentina providing a firsthand account of Central Bank operations during its first years and a forecast of the new challenges lying ahead for his country The lectures and discussion also Discovery of Latin America 193 drew attention to the need for countries like Mexico and Argentina to be more assertive in steering their economies Coming from the Southern Cone Prebischs experience had greater immediate relevance for his Mexican audience than that of US or European visiting scholars They were captivated by his invocation of the reality Argentina faced after the Great Depression and his efforts at the Central Bank to moderate the inter national business cycle in its interests Prebischs confidence that smaller countries such as their own had the ability to understand and shape their destinies responded to Mexicos ambitions Long extracts of his seminars were reprinted in the daily press The combination of content and person ality made these seminars significant events extending their reach beyond the normal seminars given by foreign experts Prebisch was evidently not just an academic but also a leading expert in his field in the Americas Bankers in the US were notified of his arrival and invited him to New York as an old friend4 Close friendships emerged from these weeks from the president and his senior staff to Daniel Cosío Villegas Victor Urquidi and US economist Robert Triffin Apart from his position as publisher Daniel Cosío was a leading Mexican thinker and intellectual and for Prebisch a bridge to un derstanding contemporary Mexican society and USMexican relations5 Prebisch recognized Urquidi as one of Mexicos foremost young econo mists and despite the age difference a friend who shared his interest in development theory The Triffin encounter was different although they were introduced in Mexico they had little time together Triffin was on leave from Harvard University working in the US Federal Reserve part of a generation of US economists committed to Latin American development and open to approaches beyond the prewar liberal orthodoxy He invited Prebisch to work with him in some of the Feds technical assistance proj ects on money and banking with Central Banks throughout Latin America and the Caribbean This was an almost perfect match of interests Few if any experts in either the US or Latin America possessed Prebischs combi nation of language practical expertise and reputation for him such con sultancies would solve his financial dilemma while allowing him to write the book he had had to abandon in Mar del Plata The word spread quickly Other Latin American governments begin ning with Venezuela and followed by the other Andean capitals invited Prebisch to visit them on his return trip to Buenos Aires as soon as he com pleted the seminars Mexico had also ignited his broader interest in under standing the other regions of Latin America and he tried to accommodate these requests within the deadline set by the opening of his faculty course in Buenos Aires while this meant declining an invitation from Venezuela 194 The Life and Times of Raúl Prebisch he was able to schedule short stops to the capital cities of Colombia Peru and Chile His return trip from Mexico therefore was a tenday procession of brief visits to Bogotá Lima and Santiago none of which he had seen before Everyone wanted to meet him and each visit was a surprise He had hardly thought previously about Colombia but it had almost twice Chiles population with a growing economy and a capital city already spilling out from its colonial core Lima was magnificent and even better preserved than Mexico City even if smaller and depressed it was a coastal museum piece set visually apart from the indigenous highlands Although Chile and Peru were similar in size Santiago was a competitor of Buenos Aires with a governing elite determined to make Chile a leading country in South America In every capital he met Latin Americans such as Carlos Lleras Restrepo in Colombia or Herman Max and Benjamin Cohen in Chile who shared his own determination to promote economic develop ment and who believed that Latin America had come out of the Great Depression with sufficient experience to succeed Prebisch returned home from his MexicanAndean tour on Monday 17 April with only one week to prepare for his seminar in the faculty Adelita met him at the airport to welcome him home after more than three months away the only time they had ever been apart The rented house was now fully furnished so that Raúl never had to spend one night in the Lobos garden house in San Isidro He could however buy a small Citroen so that Adelita would no longer have to rely solely on her bicycle Profes sionally he was satisfied to have completed one of the tasks he had set for himself in his postdismissal book project that had been rejected by pub lishers to record his personal history of the creation and management of the Argentine Central Bank His seminars in the Bank of Mexico had been recorded and transcribed by the Bank and would eventually be published as Conversaciones en el Banco de Mexico even though the sessions were off the record and too highly personalized for immediate release6 But his mem ory was there for posterity and he was satisfied that this part of his goal had been achieved Now he could move to the second challenge of articulating a new and coherent theory of development as posed in his illfated Money and the Rhythm of Economic Activity proposal but the immediate impact of Mexico left him feeling inadequate as a scholar He confided to Triffin I have re alized that I know far less than I thought7 Prebisch felt that his ad hoc introduction to economic theory left him at a disadvantage relative to Western scholars and in fact his Mexican lectures had been largely de scriptive with hypothesis presented as fact in his repeated insistence on the realities of the business cycle It was one thing to describe the Discovery of Latin America 195 disequilibrium faced by Argentina as an agricultural exporter far distant from the industrial centres the term periphery did not enter his corre spondence on a regular basis until 1945 it was quite another to challenge the prevailing worldwide economic establishment with a rival theoretical approach positing a permanent disequilibrium in the global system He felt that he had more than enough personal and professional experience with monetary policy and central banking but that his theoretical training was inadequate His seminars in Mexico had been successful but Prebisch knew that his persuasiveness was related more to the immediacy of his policy experience during the 1930s than to theoretical sophistication He therefore decided to deepen his research on business cycle theory by examining in detail the work of Keynes and probing its relevance for economic development in Argentina and Latin America Titled Money and Economic Cycles in Argentina the course therefore moved beyond his Mexican lectures The faculty to which he had returned provided few of the conditions re quired for serious work It is true that he had his followers he was awaited by his old staff and admirers such as Julio Gonzalez del Solar who attended the seminars and assisted with the publication of several of them in the faculty journal But unlike universities in most countries Buenos Aires pro vided neither a living salary with the support of graduate students and well equipped libraries nor access to the international research networks of economists working on monetary and trade policy Prebisch had no money for research assistants nor access to the specialized studies and statistics re quired for his work In Daniel Cosío Villegas he had a personal link to a prestigious publisher in the region and scholars like Victor Urquidi and Robert Triffin partially ended his intellectual isolation and provided a con tact with the US Federal Reserve But these contacts could not compensate for the fact that Argentina was visibly closing to the outside world econo mists abroad had access not only to each other but also to practitioners in the public and private banking systems while the Faculty of Economics was increasingly destabilized by growing political scrutiny There was little pos sibility of productive work or debate in these circumstances The political situation was more tense than before his departure for Mexico four months earlier and Prebischs return to teaching was de nounced by a hostile press as a covert attempt to undermine the govern ment8 The Ramirez Government was split when it broke diplomatic relations with Germany on 26 January 1944 leaving its future in doubt On 17 February a friend wrote to Prebisch from Buenos Aires that the situa tion in the country is very confusing after the latest developments The im pression here is that there are splits in the regime there is neither 196 The Life and Times of Raúl Prebisch confidence in the leaders nor in the system9 Week by week the political uncertainty deepened Supporters of Perón arrested the foreign minister on 26 February and the president was forced into the background A letter from one of Prebischs friends in the Argentine Embassy in Washington noted on 7 March that the political developments in our country discour age the most optimistic It seems that our people have started to use blink ers only seeing in one direction and then only at short distance10 By 10 March the political crisis finally came to a head with the formal resignation of Ramirez as president and his replacement by VicePresident Edelmiro Julian Farrell who promptly annulled the antiNazi measures of his prede cessor Juan Perón formerly undersecretary of war and minister of labour and welfare was promoted to minister of war From his position as labour minister he was reorganizing the cgt General Confederation of Workers into an instrument of power that incorporated the wave of poor migrants from the interior swelling the labour force in Buenos Aires On 7 July 1944 President Farrell appointed him vicepresident of the republic and a month later he became chair of the newly appointed National Council on PostWar Planning which assembled the leaders of business labour the military agricultural producers senior government officials and the finan cial community to prepare the economy for a return to peace Once again this new body included the private sector heavyweights of the country in cluding Luis Colombo and José Maria Bustillo who saw a convergence of interests with Perón President Farrell had still not lifted the state of siege and the entire Central Committee of the Communist Party remained imprisoned in Patagonia Internationally the Argentine reversal of policy on the German question further undermined relations with the US on 4 March the US suspended relations with Farrell and on 27 June Ambassa dor Norman Armour was recalled indefinitely to Washington Meanwhile final preparations were concluding for the Bretton Woods Conference which was to open on 1 July the Mount Washington Hotel in New Hampshire spruced up for the occasion after being closed for two years prepared to receive 730 delegates from fortyfour countries Shunned by the US Argentina was the only major Latin country absent from the gathering and Prebisch understood what this meant for its international standing International events were moving quickly By its close on 22 July the Bretton Woods Conference had agreed to create the imf Interna tional Monetary Fund and the World Bank International Bank for Recon struction and Development both to be set up in Washington Remaining outside these vital multilateral institutions meant that Argentina lost all in fluence while countries of similar economic size like Canada became re spected middle powers with a voice at the table Prebisch envied Victor Discovery of Latin America 197 Urquidi part of the Mexican delegation and the youngest representative at the Conference Instead of helping to shape the postwar system and meet ing Keynes and White Prebisch was completely shut out of official net works and marooned without a secure institutional base in a political crisis that seemed permanent Triffin and Chris Ravndal who had been posted to Sweden in October 1943 to monitor the war situation in Eastern Europe both urged Prebisch to leave Argentina and move to the US where research opportunities would be incomparably superior Prebisch had long been attracted to the idea of teaching at Harvard but his first priority remained Argentina while his interest in economic theory was serious he was committed to re turning to public life in his country He continued to believe that his dis missal was temporary and repeatedly referred to his new academic career as a pause an interlude which he would use for a book that would shake up the economics profession Despite the arguments of his US friends he therefore ruled out a move to the US which he knew would sever links with Buenos Aires Raúl and Adelita decided to buy a lot in San Isidro on a street numbered 563 Chile with a good view of the surrounding hills Alberto agreed to design another house for them not grand like 134 Rivera Indarte but a solid building that could tide them over until they reoccu pied their old home and serve as a stable investment in inflationary times Prebisch felt sidelined he was frustrated once again strapped for money and at loose ends when his seminar closed in July The war contin ued and USArgentine hostility intensified The successful Normandy landing of Allied troops in June 1944 did not imply the imminent collapse of German forces and an end to the Pacific conflict was even farther in the distance Prebisch therefore was open for a temporary change of climate When Robert Triffin arrived in Buenos Aires to visit Raúl in July he pro posed consultancy work in Paraguay in cooperation with the US Federal Reserve Triffin hoped that the mission would strengthen Prebischs re gional visibility and eventually draw him into a university appointment in the United States Paraguay whose population had finally reached one million in 1940 had returned to a measure of political stability that year when General Higinio Morinigo succeeded General José Felix Estigarribia The latter was a national hero whose unconventional tactics learned while fighting with the French in World War I had defeated Bolivia in the Chaco War but whose skills in managing the economy proved more limited After Estigarribias death in an airplane crash Morinigo effectively put a lid on four years of turmoil and provided an opening to economic modernization The US Federal Reserve had been requested to advise on the setting up of a central 198 The Life and Times of Raúl Prebisch bank and Presidential Decree 5130 on 8 September 1944 authorized its creation Triffin suggested that Prebisch spend several months in the capi tal Asunción helping implement the legislation to launch the institution11 He was offered 2000 per month plus expenses and agreed with two con ditions that Adelita accompany him and that he be paid by the Paraguay Government rather than the US Federal Reserve The strained wartime diplomacy between Argentina and the US together with the long history of close ArgentineParaguayan relations counselled a payment arrangement between Latin Americans excluding the evident hand of Washington to mollify public reaction in Buenos Aires On 17 September he received an official invitation from Carlos A Pedretti president of the Bank of the Republic of Paraguay for a contract that would run from January to April 1945 with a return visit for ten days in July Triffin later apologized to Prebisch for having pushed you into a job which certainly had many disadvantages but he had actually accepted the Paraguay assignment with a certain eagerness12 First it was close to Buenos Aires and while he wanted some respite from the political tension he also wanted to remain close to the capital to be able to return home quickly if necessary It was not like working in the US where he would have the dou ble disadvantage of being completely out of touch and also being accused of selling out to the Americans Second Paraguay was an important coun try for Argentina in its rivalry with Brazil for dominance in the Southern Cone almost like a province and playing the role of consultant with the Central Bank was not inconsistent with the Argentine national interest It had gained its independence from Spain in 1811 though clearly unwilling to accept annexation to Argentina like Uruguay and Bolivia it could not help remaining in its orbit In 1916 Paraguay and Argentina entered into a freetrade agreement and Argentina had brokered the end of the Chaco War Paraguay an official Argentine memorandum noted in October 1943 is not like any other country for us but rather organically complementary to us economically and geographically13 The outbreak of the Second World War however had threatened Argen tine interests in Paraguay In 1940 the US ExportImport Bank provided 3 million to General Morinigo to dilute Argentine influence In October of that year Argentina countered by successfully promoting a fourpower trade agreement in the Southern Cone but this was nullified by the Pacific War after 7 December 1941 After Pearl Harbor with Brazil part of the US alliance and Argentina neutral ArgentineBrazilUS competition for in fluence in Paraguay deepened with Argentina becoming increasingly worried by Brazils growing strength and military power When Argentina cancelled Paraguays outstanding debts as a goodwill gesture Brazil Discovery of Latin America 199 announced the same measure in May 1943 By 1944 Paraguay had the rare luxury of all three powers competing for its attention with commercial agree ments Although Prebisch went to Asunción as a consultant on money and banking he was also an Argentine patriot committed to strengthening bilat eral cooperation Prior to his dismissal he had supported the formation of a joint commission and a customs union with Paraguay before his departure he was briefed by the Central Bank on ongoing initiatives and assessments of Brazilian intentions and inroads in Paraguay a buffer state that Argentines of all factions agreed was of vital importance14 Beyond this strategic view of Paraguay as a pawn in the regional balance of power Prebisch knew little about the history of the country when he and Adelita boarded a Uruguayan riverboat at the port in Buenos Aires to begin the threeday voyage to Asunción Crossing the Plate River estuary they entered the shipping channel of the Parana River to sail high into Argentinas tropical province of Corrientes before crossing the border and entering Paraguay After dining with heavy silver under swaying chande liers they retired to equally wellappointed staterooms below and awoke the next morning to clouds of flamingos flying before the low steady beat of the boats diesel engines As they moved deeper into the interior of untouched forests bordering the river curious wildlife lined the shore to observe the intruders by noon the tropical sun had driven the passengers into their deckchairs under aw nings among hovering waiters circulating gintonics and canapés only at 1100 pm could dinner be served with a light breeze ventilating the dining room Upriver at the town of Corrientes the big craft slowed touched ground and then backed off finally moving forward again tentatively seeking a passage in the immense but shallow river for the final stage to Asunción After an hour the captain admitted defeat his two passengers for Asunción were notified and their trunks offloaded into a small and fast open boat Adelita and Raúl then clambered onto their trunks ex changing their riverboat luxury for a wild and wet ride to their destination in the geographic centre of South America Asunción came into view as a mirage in the great heat its tiny port inside a deep bay off the river giving way to a plateau behind it with the Presidential Palace and Congress framed against a languid blue sky15 For both Raúl and Adelita the months in Asunción proved involving and enriching Paraguay was as much a discovery as Mexico presenting an other face of Latin America with a challenge in a different order of magni tude They stayed at the Gran Hotel de Paraguay now owned by a sedate Germany family but made famous they learned by Madame Lynch an Irish courtesan in the midnineteenth century who had made the capital a 200 The Life and Times of Raúl Prebisch lively destination for the entire region They were warmly received socially in the hot and humid capital their host Carlos Pedretti and his colleagues were eager and attentive counterparts who were committed to building an autonomous Central Bank with an efficient exchange control division against the long odds of political interference and corruption Without air conditioning the work day of the city was organized around the climate Out of bed at 600 am for an early start at the Central Bank with Pedretti and his colleagues lunch would be served at 1100 am followed by siesta Another round of office work would begin at 500 pm and by the time a late dinner ended at midnight their hotel rooms would again be bearable for sleeping Asunción was clean and friendly the people were poor but proud and its tramways were efficient and punctual Adelita in particular got to know the city and travelled throughout a diverse and interesting country that in Buenos Aires Montevideo or Rio was routinely dismissed as a backward and semicivilized outpost The language of the people was Guarani as much as Spanish the culture was indigenous therefore and a dimension of Latin America that Raúl had ignored since Tucumán He and Adelita began to understand the War of the Triple Alliance as it was called in which the three European countries Argentina Uruguay and Brazil joined forces against this comparatively minuscule landlocked neighbour and fought until Paraguays population was reduced by twothirds from an estimated prewar total of 450000 with a catastrophic decimation of males only one alive for four or five women and the virtual disintegration of the state16 At last in the final stand at Cerro Cora only child soldiers and Paraguayan women were left fighting with sticks and rocks against the Latin regiments attacking with rifles and cannon The Archbishop of Asunción had given Adelita a tour of the Cathedral which had been stripped of its silver altar and valuables by Argentine troops In the peace treaty imposed on Paraguay Argentina demanded 10 billion pesos in repa rations as did Brazil in fact these were absurd debts cancelled by both powers in 1943 seventy years after the most catastrophic conflict in post independence Latin America The history books of Raúls boyhood educa tion in Tucumán blamed Paraguayan dictator Francisco Solano Lopez for foolishly declaring war on Brazil and Argentina and he had never thought twice about it since But from Asunción it had a different look Whatever the origins three powerful white neighbours Brazil maintained slavery until 1890 fought a war of extermination against a proud indigenous society fighting literally to the last man These troops had used the latest Gatling machine guns to wipe out whole units composed of young boys Yet Paraguay had rebuilt after the catastrophe Households of women with one Discovery of Latin America 201 man gradually rebuilt a male population while quarrels among the victors and the subsequent arbitration award of US President Hayes left Paraguay half its previous size but still with less territorial loss than expected by its brutal neighbours Normalcy gradually returned but when the population again reached the 1865 level the Great Depression plunged the country into economic crisis Then on 9 September 1932 Bolivia attacked from the east with a much larger and betterequipped army to detach the suppos edly oilrich Chaco region from Paraguay igniting the second bloodiest war in modern Latin American history Once again Paraguay was alone fighting for its life But this time it won against the invaders in a brilliant campaign The powdery dust of the semidesert bushlands jammed the weapons of the Bolivian troops while the heat drought and distances of the Chaco overwhelmed their supply lines Paraguayan irregulars com manded by General Estagarribia revived the fighting spirit of the 186570 war falling on isolated Bolivian units with machetes and eventually driving them out of one of the worlds most hostile regions Saavedra Lamas bro kered a peace agreement and the war ended on 12 June 1935 leaving Paraguay with borders that enclosed threequarters of the Chaco For this the country had suffered more than 35000 people killed and even more wounded or 10 percent of the population and in the end there were no petroleum reserves in the region after all Prebischs experience in Paraguay forced a rethinking of cultural stereo types widely shared in his own society in Argentina and the West in general How could the destruction of Paraguay between 186570 be understood except in racial terms that extended to the entire New World Even Augusto Bunge he realized an otherwise tireless critic of social injustice and a leader in the campaign against antisemitism had written a book El Culto de la Vida in 1915 that reflected prevailing assumptions regarding the racial inferiority of Indians and Blacks17 Raúl realized that Rocas mil itary campaigns against the Indians so proudly celebrated in Argentine school textbooks in the name of nationbuilding had in fact been a cam paign of extermination against the indigenous peoples within its own bor ders He himself had been proud to discover letters from his uncle General Teodoro to Roca from one of the campaigns The disgust sweeping the world over the Nazi Holocaust had to be viewed in a historical context that included the catastrophe inflicted on indigenous peoples by the European conquest the original sin of the Americas and Africa for which these set tler societies must ultimately accept responsibility Paraguay had a tragic history but its people were not defeated and the other submerged indige nous peoples of the Americas would also revive this was the lesson that Prebisch took from Paraguay 202 The Life and Times of Raúl Prebisch Prebischs advisory work in Paraguay was a departure from all his previous personal and professional experience This was a truly underdeveloped country unlike Argentina or Mexico and lacked the human resources and infrastructure for economic modernization including an adequate national statistical system Persistent rumours of military coups one was suppressed just before his arrival complicated any effort to strengthen the state and the country already faced an inflationary threat Prebisch had few expecta tions that the Central Bank legislation he drafted would be effective even if passed into law Nor did Pedretti not long after Prebischs departure he would also find himself on a boat down the Paraguay River Despite these problems Prebisch helped strengthen bank administration clean up the exchange control system and create a research division to house a team of specialists to advise the government on economic policy and monitor pub lic expenditures18 Prebisch had established a close rapport with his coun terparts in Asunción and three months of work had provided direction and strengthened the operations and morale of the Central Bank He could do no more the rest depended on political developments in Para guay Triffin was delighted with the results and wanted more of his time I have studied the project thoroughly he wrote as I have studied also the regulations both of exchange control and of the central bank I would like to have your permission to inspire myself from your work in any later mis sion that I may carry on19 Raúl and Adelitas return to Buenos Aires was a blend of happiness to be home with the sober expectation of more political difficulties to come The final stages of preparations for their new house at 563 Chile in San Isidro kept Adelita and her mother busy while Raúl tried to concentrate on his research Word came that Carlos Moll had not survived the war On 23 April he was executed by Hitlers Croatian Guards at Plötzensee Prison in Berlin after helping to plan the 1944 assassination attempt against Hitler At first his Argentine citizenship allowed him prison duties outside the cellblock but after helping forty prisoners escape when his jailors were drunk he was placed in solitary confinement and targeted for elimi nation On 22 April when the Soviet Army was only a few kilometres from Plötzensee Carlito advised a Dutch priest among the prisoners to give all remaining men the last rites and the next evening they were taken out with the promise of release but instead were machinegunned Severely wounded the priest was the sole survivor of the massacre eventually recov ering from his wounds in a Soviet field hospital to relate the story of Carlos Moll His daughters in Buenos Aires were left with a Rolex watch nineteen thousand Swiss francs and the memory of a true Argentine hero whose vi sion had embraced all humanity20 Discovery of Latin America 203 The political turbulence in Buenos Aires was as distracting as ever for Prebisch The war was no longer a factor as Germanys defeat loomed even the Farrell Government had declared war on 27 March 1945 to align itself with the victorious Allies and share in the victory and property of German and Japanese nationals in Argentina which it chose to confiscate Convenient for all parties the decision immediately improved relations with the US Nelson Rockefeller was pleased Argentina was invited to join the UN and sign the Treaty of Chapultepec Washington restored relations and sent a new ambassador Sproule Braden previously US envoy to Cuba to succeed Armour Large ruddyfaced and determined to bring Argen tina back into the interAmerican fold Braden was welcomed by the entire democratic opposition from oligarchs to socialists Buenos Aires faced serious antigovernment protests as Allied victory neared in 1945 Political repression deepened the university was in even greater turmoil Demands for elections and an end to military rule were growing now that the war was no longer an excuse A rift appeared in rela tions between the military regime and big business unsettling political re lations even more Although Luis Colombo of the Argentine Industrial Union had originally welcomed Peróns postwar plans for industrialization he now broke with him and so did the sra when they realized that his political and economic plans undercut their power and interests They now feared Peróns growing support in the working class and other ex cluded groups in both the capital and the interior his surging popularity in the labour movement gave him a power base that could shut down the countrys economy with strikes and that was demanding costly social re forms for its continued support A populist revolt from below was brewing Triffin had revived his efforts to bring Prebisch to Harvard University and the US State Department encouraged this move In a letter on 20 March 1945 Triffin had again raised the prospect of a visiting professorship to as sist Prebischs book in preparation and a week later he wrote a longer letter outlining the practical alternatives for a US visit after Raúl finished teaching in 194521 The Guggenheim Foundation was prepared to fund his visit he reported but there was a timing problem with Harvard It was anxious to have him as was Wassily Leontief who had submitted a warm letter of invitation on his behalf for a visiting lectureship to both the Rockefeller and Guggenheim Foundations However Harvard had already filled its position for 1945 and this would mean waiting for the next year Instead Triffin advised Prebisch simply to come with a Guggenheim Award and gradually establish himself in the US research community Not only would the Harvard position then be open but he noted Once you are in the country there is no question that other arrangements can be made very 204 The Life and Times of Raúl Prebisch easily There are many organizations and universities which would be inter ested in obtaining your services for public lectures here in Washington in New York and certainly at Harvard Personal relations between the two men had strengthened during early 1945 with Triffin and his wife visiting Buenos Aires by far the happiest part of our whole trip South he noted He sent Raúl a copy of his proposals for new monetary and ex change control legislation in Costa Rica viewing their combined work as a model for the Latin American region as a whole I have some hope he confided to Prebisch that the type of exchange controls proposed in Costa Rica and Paraguay may be of interest to the imf and provide some sort of pattern for the future policy of the Fund22 Triffin also tried to enlist Prebisch for further advisory work with the US Federal Reserve in Latin America I would feel inordinately proud to asso ciate you with this work he wrote on 23 August23 Triffin was particularly enthusiastic about Prebisch working in Guatemala although the options of the Dominican Republic and perhaps Cuba were also available The Do minican Republic was interesting but laboured under the longstanding dictatorship of Generalissimo Rafael Leonidas Trujillo In contrast de mocracy had just been restored in Guatemala under President Juan José Arevalo who assumed office on 15 March in a government committed to what Triffin called pathbreaking reform The new government he felt was one of the most exciting developments in the Americas and Washing ton was committed to its success Its members are all very young and inex perienced but on the whole able and wellmeaning he reported Not only were Guatemalas economic prospects excellent but there was a regional dimension as well since the new government in Guatemala was committed to exploring the possibility of federation with El Salvador if ac cepted this development would change the political outlook beyond Cen tral America In effect the country stood at the opening of a new era but it needed an effective Central Bank The new minister of economy and labour Manuel Noriega Morales had the full confidence of his president and rep resented the new generation of Latin financial leaders emerging in the re gion Triffin and Morales had been fellow students at Harvard and Morales knew and respected Prebischs work Arevalo had spent years in Argentina at the La Plata University they all wanted Raúl to lead the team Although Prebisch had earlier supported Triffins efforts to open links for him with Harvard and the US foundations he now declined both a trip to the US and consultancies that would take him out of Argentina I be lieve it better to abandon any idea of an early trip to the States he replied I do appreciate your interest and time He was once again giving his sem inar at the faculty focusing seriously on Keyness work The truth is that Discovery of Latin America 205 I am quite happy with my current situation forced on me by circum stances Prebisch wrote to Triffin I missed study reading and thinking Once again he underlined his sense of theoretical inadequacy Before I pretend to teach anyone else I had better stay home until I catch up with the literature24 Prebisch noted a surprising similarity between his find ings on the business cycle and those in US Professor Machlups most re cent publication underlining the work under way on monetary policy at both the national and international level Claphams new book on the Bank of England showed how idiosyncratic Britains experience had been compared with the US for example Such variations in country experi ences with a confrontation between theory and fact had persuaded him that a historical perspective was essential for developing postwar policies and institutions But research was not his main reason for staying home Instead his decision reflected a new opportunity to reenter public life in Argentina Prebisch had his eye on the presidency of the Central Bank Bosch at eightytwo was ill and nearing the end of his mandate and he wanted Prebisch to return to the Central Bank unlike the position of general manager the presidency came with a guaranteed sevenyear tenure and Dr Bosch had not been touched by Ramirez or Farrell Prebisch was there fore not going to leave Argentina for any reason until the appointment had been decided Tension began to build in late April when Bosch of fered Raúl his former job as general manager in the belief that the regime understood its mistake in October 1943 Prebisch turned down this offer however after his experience in October 1943 he would not give the re gime the satisfaction of seeing him return to a job that had no constitution ally defined tenure Edmundo Gagneux was available and qualified and in fact was named general manager on 22 May after Prebisch declined He wrote Triffin with his reason for declining the offer You know that I am against the current regime in the country I therefore think that I should remain outside it using my time well for reading and research25 Prebischs reluctance changed abruptly when Dr Bosch announced on 24 July that he was stepping down along with VicePresident Evaristo Uriburu The Farrell Government immediately sent a list of official candi dates to the Central Bank Board of Directors from which they were to choose a successor After some hesitation the directors rejected all the offi cial candidates as unqualified and announced an independent search for a shortlist on the basis of merit and experience Prebisch was approached and agreed to let his name stand for the position on condition that none of the other candidates be selected from the governments official list Bosch agreed The result was his selection by unanimous consent of the directors 206 The Life and Times of Raúl Prebisch including the bna representative who had opposed him in 1943 According to Prebisch It was seen as a personal vindication with all the greater moral significance because it was absolutely spontaneous26 President Farrell in turn refused to accept Prebisch as Central Bank president a prolonged standoff between the government and the board of directors ensued Neither side was willing to capitulate with the Cen tral Bank counting on enough support within the business community to stare down President Farrell and with the military regime preferring in definite stalemate to accepting a candidate it disliked The issue was criti cal and perceived as such by both sides Either the Central Bank remained independent in which case Prebisch was symbol and guarantor of its orig inal mission or it would be transformed into a docile instrument of gov ernment policy with a president chosen by the government Prebisch tried again to meet Perón Prebisch believed as in 1943 that Peróns advisors were not telling him the truth about the Central Bank and that he would understand and support its role if the two could have a facetoface discus sion This second attempt was no more successful than the first Mean while press attacks against Prebisch and the restoration of the brains trust intensified27 In the end political violence decided the impasse Buenos Aires was wracked by demonstrations José Maria Bustillo the president of the sra Argentine Rural Society who represented the big agricultural interests on the National Council for Postwar Planning publicly criticized Perón at the annual sra fair in Palermo Park and was promptly arrested to the shock of the elite in Buenos Aires who now realized that they had a very determined and tough opponent on their hands If someone like Bustillo could be jailed with impunity for saying the wrong things everyone was in danger Then police stood by as a mob attacked the offices of Critica on 15 August leaving four dead and over a hundred wounded ArgentineUS relations hit another low point with Sproule Braden openly attacking the Farrell regime two weeks later on his departure for Washington to replace Nelson Rockefeller as assistant secretary of state for Latin America and thereby provoking a wave of antius protest By 21 September the Central Banks board of directors had had enough and backed down with an acceptance of the governments list28 That evening Prebisch wrote to Triffin with apologies for his long si lence describing what had happened over the summer he now accepted a oneyear consultancy abroad29 He had changed his mind about a long stay outside Argentina he told his friend because there was no longer any rea son to stay in Buenos Aires His last hopes at the Central Bank had evapo rated he was locked out for good Moreover conditions in the university Discovery of Latin America 207 were now so turbulent that regular classes could not be scheduled In his earlier correspondence Triffin had suggested payment of 2000 per month with living expenses Prebisch agreed on condition that Adelita could be with him As for preferred country Guatemala and the Dominican Repub lic were each interesting in different ways but he thought that Cuba of fered greater scope for Central Bank innovation given its more advanced economy and educational development Before Triffin could respond Prebischs plans changed again he re versed his decision to leave Argentina because a political crisis struck the capital unexpectedly and opened the prospect of political change the fu ture of the military regime was in question It began unexpectedly after Farrell finally raised the state of siege on 4 August 1945 nearly four years after it had come into force and thereby opened the prospect of demo cratic elections Exiles streamed back political prisoners were released and political parties began to hold rallies On 18 September Perón pub licly complained on radio about this combination of foreign elements re actionary spirits hopeless politicians and selfish plutocrats30 The next day these parties held a march of constitution and liberty that turned into a demonstration estimated at onehalf million people from across the polit ical spectrum the largest ever held in Argentina ExPresident Rawson staged an abortive coup on 24 September but Farrell and Perón struck back by arresting Luis Colombo other leaders of the demonstration and most senior journalists in the city which in turn provoked a fourday battle at the university between armed police and students barricaded in the main buildings On 5 October the students were defeated with 1629 ar rested and the police occupied the buildings But fortunes were changing daily On 9 October Perón was forced to resign the vicepresidency and all other positions after violent public demonstrations strengthened his oppo nents within the military and civilian groups increasingly alarmed by the radicalism of his movement It appeared that Perón had overplayed his hand at last imprisoned on the island of Martín García in the Plata River he seemed to be finally out of the political game In fact he was far from defeated and the military allowed him an emotional public farewell on 10 October to fifteen thousand workers in front of his office which was also broadcast on radio Announcing that he had just signed into law a sal ary raise and a minimum wage he ended with a challenge to the regime I ask you to respect public order so that we may follow our triumphant march but if one day it becomes necessary I will ask you to fight31 Labour leaders mobilized to demand his return with the cgt calling a general strike for 16 October Perón had been transferred to a military hospital in Buenos Aires after four days on Martín García and the day after 208 The Life and Times of Raúl Prebisch the strike a working class mob heard he was at the hospital and crossed the Riachuela Bridge to liberate their hero By noon a crowd began to gather for him in the Plaza de Mayo the underclass of the city numbering in the hundreds of thousands by the time he appeared at the balcony of the Casa Rosada Flaming torches lit the dark mass Where were you the crowd roared over and over They sang the national anthem When Perón reached out with Workers They responded Yes the people are here we are the people The dialogue begun that night with Argentinas popular classes would last until his death Many workers had waited since noon for him in the sticky heat and had taken off their shirts the shirtless or descamisa dos instantly becoming part of Perónist lore After 17 October the balance of power had shifted Perón was the central personality of Argentine politi cal life much stronger than before his arrest When national elections were set for 24 February 1946 to determine finally the political and economic fu ture of the country the political polarization was complete Prebisch could not leave Argentina at a dramatic time like this and he finally ventured into the political world of rallies and meetings because the future seemed at stake He apologized to Triffin for reversing his decision again but underlined the depth of the political crisis and his need as a citi zen to see it through personally in Buenos Aires My dear friendhe wrote the current moment in which we are living in Argentina is very somber Violence is in the air and we have serious doubts that the electoral process will unfold correctly In any event the next months will have pro found significance for the future of our country Let us hope that the times return in which we can work together32 Peróns movement confronted the opposition Union Democratica which grouped together an uneasy al liance of Radicals Socialists Communists Conservatives Progressive Dem ocrats and the vast majority of students Teaching had been cancelled the entire university including Prebischs faculty was now closed indefinitely after the 15 October battle between students and police Morales wrote from Guatemala on 16 November pleading with Prebisch to come and work in any capacity he wished including Central Bank general manager if he wished but he replied that unavoidable commitments prevented me leaving the capital The present moment in which the country finds itself counsels staying here until the political horizon clears with the triumph of the democratic forces during the present hard fight33 He hoped against hope that the Democratic Union would prevail after all But to Prebischs frustration he was ineffectual because he remained identified with the old regime of the Concordancia without credibility in opposing Perón The infamous decade was now gone for good and uni versally criticized Although his name remained a symbol of rectitude in Discovery of Latin America 209 the financial and banking communities he had absolutely no political al lies Instead the left caricatured him as a creature of the Concordancia while nationalists of all stamps dismissed him as a coauthor of the Roca Runciman pact He could only counter that he had simply been a techno crat in the service of the state and that the Prebisch team had performed an essential service in the interest of all Argentines He could also argue that without his leadership in the Central Bank things would have been worse His only recourse was to oppose Peróns economic plans warning against inflation At the opening session of his lectures on 24 April he had answered the rhetorical question How do you control inflation with the terse response Prevention On 8 August the Economic Research Divi sion of the Central Bank published a report that he helped prepare it sharply criticized government policy protecting inefficient war industries Similarly he supported the Alejandro E Bunge Institutes work which con demned the regimes economic policies such as the doubling of govern ment spending and the number of public employees since 1943 with a military establishment that had doubled in size with a budget share that had risen from 278 percent to 507 percent in these three years But such dry condemnations of inflation could not stem the political tide none of it counted in the political climate of the day Each side leased a train for the campaign with the Perónists naming theirs the NoShirt El Descamisado versus Victory for the Democratic Union One novelty of the campaign was that Eva Maria Duarte Peróns partner since January 1944 and wife from 22 October 1945 accom panied him on his tours of the country the first time a spouse had campaigned openly with her husband From the beginning the political initiative lay with Peróns movement rather than the Democratic Union be cause he succeeded in uniting a large coalition of diverse elements the Churchs revolt against liberalism the neglected farm workers and urban masses sections of the military nationalists worried about foreign control of the economy and people with negative memories of the Concordancia Spruille Braden in Washington and the US Embassy in Buenos Aires also assisted Perón by their open and clumsy intervention their attempt to un dermine him with a socalled Blue Book alleging Peróns role as a Nazi agent during the war created instead a national backlash in his favour AntiUS flyers blanketed the city Cowboy Braden Tamer of South Ameri can Governments and Unite Against Wall Street Imperialism34 The outcome of the February elections could not have been more de pressing for Prebisch He had seen the approaching defeat and realized that he had not grasped the raw power swelling up from below The energy in the streets favoured Juan and Eva Perón rather than the democratic 210 The Life and Times of Raúl Prebisch parties which seemed middleaged middle class and very much whiter Alfredo Palacioss invocation of solidarity with the working class recalled an earlier generation when threequarters of the citys labourers were first generation Europeans with his neatly trimmed moustache and finely crafted speeches he seemed a cultural world away from the new underclass born in the interior The wellknown women leaders of the Socialist Party such as Alicia Moreau de Justo had fought for decades for womens rights from the safety of Buenos Aires society Perónist slogans such as work boots yes books no were literally from a different social world but Perón was mobilizing the proletariat in an effectively organized and vis ceral mass politics not seen before in Argentina On 24 February his movement won an absolute majority with 56 percent of the popular vote although there were irregularities the election had been free and fair enough to reflect the will of Argentina Although to external observers the margin of victory appeared low he had swept the country winning majori ties in both houses of Congress and taking all but one of the provincial leg islatures It was clear beyond all question that Perón had won a mandate and that there was now nothing standing in his way to implementing the revolution he planned for Argentina Peróns first decision as presidentelect even before his inauguration on 4 June 1946 was to nationalize the Central Bank On 28 March outgoing President Farrell yielded to the electoral results and cooperated with Perón in preparing the necessary legislation and formal decrees of 24 May Notwithstanding Prebischs dismissal in 1943 the authority of Bosch and the reputation of the Bank had allowed it to maintain its original mandate of anchor of the financial system protecting the state internationally by shielding it from the business cycle and guarding it nationally through its autonomy from governments As the most modern and developed of the Latin American central banks it was also a touchstone of Argentine credi bility within the international banking community Perón was determined to recast the bank from guardian to servant of the state It would be de mocratized rather than dismantled it would support his program or else It would print money A magnificent system Prebisch wrote to a Mexican friend has been dismantled overnight35 The dream was over Members of Prebischs old team now looked else where for employment and his halfbrother Gonzalo decided to accept a position with the US Federal Reserve Raúl struggled to accept that his life work in Argentina was going to be destroyed 10 Solitary Scholar Prebisch felt even more isolated after Peróns election but just as deter mined to remain in Argentina Friends abroad worried about his future and offered jobs Robert Triffin had urged him to work in Guatemala where pathbreaking reform was possible after which the political situa tion in Cuba might be stable enough to allow them to visit Havana1 Leo Welch had now returned to New York I have thought of you often in the changing panorama of Argentina these recent months he wrote espe cially as I read the developments in connection with the Banco Central a great institution fashioned under your hand As we used to say in those chats in the quiet of your office overlooking the patio how much better things could be done if they would let you and me do them and that goes for the international scene in many phases It is so regrettable that the larger the task nowadays the smaller seems to be the stature of the man appointed to handle it2 As in the autumn of 1943 Mexico too responded like a true friend with Eduardo Villaseñor offering him a fulltime appoint ment in the Bank of Mexico if you do not encounter a solution to your life in your own country3 In his reply Raúl thanked him admitting that these months were indeed problematic and would soon reveal the reality of the new regime But while he noted that work in Mexico would offer a so lution to a difficult personal problem he concluded that he had decided not to leave Argentina I still have the hope of continuing to work in my country which would be very painful for me to leave4 He would contact Villasenor if it didnt work out he said The Government of Venezuela also contacted him offering him the presidency of either the Central Bank or its new Development Corporation whichever he preferred But Prebisch declined the Venezuela offer as well he had decided to remain in his home base in Buenos Aires and concentrate on writing and research Four centuries of Argentine blood flows in my veins he remarked If 212 The Life and Times of Raúl Prebisch before the Perónist victory he had remained to fight and try to regain of fice he was even more determined now to show both friends and enemies that he would ride out this mad period as an engaged and loyal citizen that he would not cut and run after defeat and give the regime the satisfaction of cheering his exile Despite his gloom following the nationalization of the Central Bank he wanted to retain his credibility in the capital He also had a strong following among his students wonderful students like Aldo Ferrer Norberto Gonzalez and Manuel Balboa who were com mitted to the seminar he had developed since resuming teaching in 19445 These young men and women represented the next generation of public servants in Argentina and galvanized Prebischs longstanding commit ment to professionalizing the training of economics in his country Espe cially now after the triumph of Perón when the government would likely isolate the Faculty of Economic Sciences while privileging the natural and physical sciences it seemed all the more important for him to remain teaching and strengthen scholarly linkages with universities abroad Raúl therefore took refuge in his research and teaching To make ends meet he agreed to a fourday per month consultancy with Enrique Fran kel a wealthy GermanArgentine wool merchant who sought an unobtru sive way to support Prebischs scholarship Raúl noted to Villaseñor that although I have avoided until recently entering into private activities I have had to accept certain advisory jobs in industry which leave me with sufficient time to continue the theoretical work which captivated me after my first trip to Mexico6 In fact he had little to do Frankel was Prebischs private sector patron making the only offer he ever received in Argentina after 1943 and the modest financial security allowed him to concentrate on his research Meanwhile Adelita lowered their house hold bills by growing vegetables and cutting expenditures For news of US developments he could now count on Gonzalito his stepbrother Julio Gonzalez del Solar the orphaned nephew of his mother adopted into the Prebisch household as a child who was installed at the Federal Reserve Board in Washington and Gonzalos wife June Eckard Gonzalo worked with Triffin who headed the Latin America section of the Boards International Affairs Division and who was also in touch with Harvard Professors Williams and Hansen In this way Raúl had a conduit for discussing work in progress and obtaining recent publications in the field unavailable in Buenos Aires The early death of Keynes on Easter Sunday 1946 immediately after the inaugural meeting of the imf Board of Governors in March lent an additional somber note to Raúls mood as the Perónist period opened now he would never meet the economist he had so admired Solitary Scholar 213 Ironically the long interlude between the election and Peróns inaugura tion on 4 June witnessed a return to civil peace providing a coolingoff period in which the country put aside political warfare and awaited the Revolution The very decisiveness of Peróns victory stunned industrialists journalists professors and other potential opponents into coming to terms with the new regime Students now regretted their wholesale com mitment to the Democratic Union university strikes ended buildings were repaired and classes were rescheduled to resume on 16 May The press re mained as free as during the election Jews were relieved when it became clear that the US Embassy had misread the movement Perón had no in tention of touching them For business it was clear that he had control over both houses of Congress and could implement farreaching reforms re gardless of the attitudes of the uia or Sociedad Rural the private sector decided to accentuate the positive Raúl and Adelita like everyone else in Buenos Aires watched with fasci nation as Juan Perón prepared to take office and move with Eva into the Incue Palace Every president since Uriburu had lived within the gold and ivory walls of its 283 rooms but none compared with this couple who had emerged from the people Perón was named general to mark his inaugura tion and Eva or Evita projected an indefinable charisma inside a daring silver gown that stunned high society She was twentysix half his age and together they were a force The new government promised a fiveyear plan by November leaving some additional months of uncertainty regarding the future of Argentina Perón had indeed inherited a prize because Argentina in 1946 had one of the strongest economies in the world and was ideally placed to prosper during postwar reconstruction Gold and for eignexchange reserves totalled 1688 million pesos and the foreigntrade surplus was larger than the entire import bill of 3555 billion pesos Perón was himself surprised by the wealth at his disposal We have the Central Bank full of gold he said and we dont know where to put any more The passages are full of piles of gold7 While Prebisch and others had complained about misuse of funds after 4 June 1943 Argentina was flush with income in a postwar economy that needed its products and for which it could charge premium prices In this political hiatus Prebischs seminar from 16 May to 7 July was his most successful since leaving the Bank Devoted to Keyness General Theory of Employment Interest and Money it offered students an introduction and guide to the work of Keynes without attempting an alternative model for understanding development problems in Latin America Prebischs re search had progressed far enough for him to appreciate the importance of Keyness theoretical framework but he was not convinced that it was 214 The Life and Times of Raúl Prebisch adequate for what he had begun to call the periphery a term that had entered his correspondence with colleagues during 1945 These ten lec tures however were more sought after than he had supposed because Latin American students everywhere in the region still lacked a Spanish language introduction to the work of this British scholar who had domi nated the intellectual economic landscape for the past decade The Central Bank of Venezuela had been pursuing Prebisch since early 1944 repeatedly suggesting some form of collaboration When he could not accept its invitation for a consultancy in mid1946 the Venezuelans offered to publish his Keynes material in successive issues of the Central Bank Bulletin beginning in January 1947 for a lumpsum payment of 1500 pesos Daniel Cosío Villegas in Mexico who was informed of this of fer invited Prebisch to prepare a revised manuscript for wider publication as Introduction to Keynes8 The Keynes book would strengthen Prebischs academic recognition be yond Argentina and he agreed to a contract with the Fondo de Cultura Economica but it was an additional obligation which meant postponing the theoretical work he had set for himself in the Money and the Rhythm of Economic Activity proposal he had drafted more than two years earlier Triffin was already asking in January 1946 when this book would be ready But his research was proceeding well with Gonzalo keeping him up to date on developments in Washington and with a regular correspondence with colleagues such as Triffin and Victor Urquidi counteracting somewhat his isolation in Buenos Aires A steady stream of research material reached him from journals and other sources unavailable in Argentina and Prebisch became dependent on this interchange of ideas with his letters occasion ally reaching article length Would you like to chat about liquidity prefer ences he would begin for example with Urquidi9 Progress in his work made him reluctant to undertake external consul tancies but there was one trip that he could not turn down during summer 1946 The Bank of Mexico invited him to participate in an important event the first Central Bank Conference of the Americas a meeting of experts from most countries in the Western Hemisphere to deepen the wartime collaboration promoted since 1941 by the US Federal Reserve and the Bank of Mexico among others Mexico viewed itself as the interlocutor state between Latin America and the US Urquidi was secretary of the con ference with a particular responsibility for editing the proceedings and guiding the work of a proposed Permanent Committee to ensure that Latin American and US central bankers remained active together despite the return of peace Held from 15 to 30 August the event featured key economists and experts in the field from the Americas and was therefore Solitary Scholar 215 an opportunity for Prebisch to meet friends after a long period in the dis tant Southern Cone In Buenos Aires La Nacion twitted the regime by not ing Mexicos invitation to Prebisch and calling him the most authoritative expert in issues of banking and finance in the American continent10 The Mexico Conference was a success in convening for the first time a group of interAmerican experts including Canadians on a technical sub ject of major importance Prebischs address at the meeting Panorama General de los Problemas de Regulación Monetaria y Crediticia en el Con tinente Americano dealt with managing development and financial sta bility in the postwar business cycle and offered an opportunity to employ the terms periphery for Latin America and centro ciclico for the US11 Apart from seeing his Mexican friends he met key Latin American econo mists from other countries including José Antonio Mayobre and Manuel Perez Guerrero of Venezuela Felipe Pazos of Cuba and Jorge del Canto of Chile they in turn recognized Prebischs leadership abilities But while interesting papers were presented within an agreeable networking envi ronment the Permanent Committee formed at the close of the meeting to develop permanent connections and regular events proved stillborn By August 1946 interAmerican cooperation which had evolved during the Second World War fell victim to the Cold War The attention of the US was monopolized by the evident breakdown of relations with Moscow in Europe Not only did Washington now focus its primary attention on Europe and Asia rather than strategically safe Latin America but also whatever US in terest did remain after the war was being recast along orthodox economic and security lines Latin American hopes for regional multilateralism and cooperative development proved premature One casualty in Washington was Americas Day that celebration abruptly disappeared after 1945 In ef fect the US and Canada withdrew into the northern clubs of nato and then gatt leaving USLatin American relations to develop in traditional bilateral businessasusual terms The duration of the Mexican trip expanded as requests for side visits ac cumulated before his departure En route to Mexico City he met Manuel Noriega Morales for thirty minutes in the Guatemala City airport and was persuaded to return immediately after the conference for ten days He was also urged by the US Federal Reserve representatives Woodlief Thomas and Henry Wallich attended in the absence of Triffin who was on mission in Western Europe to advise the Dominican banking authorities for several weeks beginning 13 September While in Santo Domingo he de voted equal energy to the related goal of designing the new Faculty of Economics at the national university to train Dominican students to the MA level and link these young professionals with other Latin American 216 The Life and Times of Raúl Prebisch colleagues When he arrived there was not a single postsecondary institu tion for training economists in the entire country Prebischs plan sought to correct the inadequacies of his own faculty in Buenos Aires such as its lack of mental discipline and doctrinaire routines with poorly paid and motivated professors regurgitating foreign texts That the Dominican Republic does not have an existing institution for Economic Studies rep resents a certain advantage he noted It permits learning from the ex perience of other Latin American countries which have confronted this problem for a long time The experience has been poor as in Argentina where despite a quarter century of a Faculty of Economics it has not made a serious contribution to economic theory Moreover it has not even achieved what one might have expected in laying the basis for knowledge a systematic empirical description of the data and existing economic con ditions in each country12 Between visiting Guatemala and the Dominican Republic Raúl and Adelita had two days in Havana where they relaxed at the magnificent Hotel Nacional on the Malécon seawall Raúl and Adelita arrived home in Buenos Aires on 15 October Since their departure the initial glow marking Peróns inauguration had given way to polarization and Prebisch faced a hostile political climate as the resumption of his seminar approached Before he left the press still was independent by now government controls had tightened Already on 8 November he wrote to Urquidi I began my classes in the Faculty and had to stop after a few days They are probably the last I guess that the ultimate purpose of the Perónist reforms is to get rid of all professors who do not agree with the re gime I believe that I will have to resign if the Government is successful in in troducing its project On 26 November Perón invited the workers of the city to the Colon Theatre where he presented his fiveyear plan wearing an un dershirt He was he declared their first worker and the new economy would be theirs Prebisch knew and loathed the author of the plan José M Figuerola a Spanish exile who had arrived in 1930 after the fall of the corpo ratist dictatorship of General Miguel Primo de Rivera Prebisch thought the man was a blithering idiot My dear friend Raúl confided to Daniel Cosío Villegas after he had read the plan I have nothing good to say about my country Both the political orientation and Five Year Plan worry me and without any positive sign on the horizon13 But Peróns political power con tinued to grow On 27 January Evita announced on national radio that a law giving women the vote would soon be passed earlier in September 1946 she had installed herself in Peróns old office in the Ministry of Labour Prebisch observed ruefully that the regime had succeeded in capturing im portant causes long neglected by the Concordancia to solidify its political base Perón had also promised full employment at any cost He would be hard to displace Solitary Scholar 217 The 1946 fiveyear plan was Prebischs nightmare The Central Bank was now in the hands of Miguel Miranda also head of the Industrial Credit Fund and appointed as Peróns chair of the Economic Council and presi dent of the new iapi Institute for Production and Trade which bore no relation to the capi the export promotion body that Prebisch created in 1941 The son of a poor Spanish immigrant family who had made a fortune by supplying tinplate to the burgeoning foodprocessing industry protected during the war in Prebischs view he would be a disaster as Peróns new eco nomic czar using the Central Bank as an instrument of industrialization without checks and balances Henceforth no private banks could provide credit without Central Bank approval while it undertook the financing of Peróns fiveyear plan In effect it became Peróns vehicle for transforming the economy with easy credit to industry behind a labourintensive low technology industrial strategy to promote full employment High protective tariffs inherited from the war years were maintained to preserve internation ally uncompetitive sectors since any firm could now draw easy credit bank ruptcies plunged Although politically popular on the short term this policy rewarded inefficient firms and spelled longterm trouble Signs of trouble were already apparent in 1946 Money supply had dou bled between 1943 and 1946 the military portion of the budget rose to 507 percent in 1946 from 278 percent four years earlier Government spending and the number of public servants doubled This was not in ward development as Prebisch had envisaged it in his 1943 Money and the Rhythm of Economic Activity He had endorsed liberal capitalism within a mixed economy private sector leadership and a balance between import protection and export promotion Caution and prudent state management would be required to curb inflation and postwar instability ensure the imports of essential goods weed out inefficient war industries and strengthen exports beginning with neighbouring countries As Perón consolidated his power it became clear that the points of com monality with Prebisch were superficial both were nationalists but they were radically different in style and ideology Both supported import sub stitution but for Prebisch balance and caution ruled while Perón was extreme Peróns idea of allout stateled industrialization consisting of protective tariffs subsidies and lowinterest loans through printing money guaranteed a bloated public sector heavy military spending and an infla tionary spiral Prebisch endorsed an activist state using the full range of tariffs and other tools used by other trading countries but only within a global and competitive liberal framework Peróns model led to a corporat ist and nationalist state with a command economy supported by the indus trial masses and uncompetitive small industries created in the thousands throughout the country since the Great Depression Prebischs vision was 218 The Life and Times of Raúl Prebisch of Argentina as a full participant in the international economy including the imf and he thrived on international linkages with foreign banks and admired the US Federal Reserve Perón boycotted the Bretton Woods Con ference denounced AngloAmerican imperialism and suppressed dissent For Prebisch an armslength autonomous Central Bank was crucial be cause its mixed privatepublic structure gave it a source of power outside the control of the political executive Peróns vision could not tolerate such a source of countervailing power and therefore required full control of the Argentine Central Bank As he watched the dynamic of Perónism Prebisch realized that his nightmare of Argentina becoming a watertight compartment in isolation from the international community was becom ing a reality Prebischs worries prompted him to let down his guard with his Mexican publisher Daniel Cosío Villegas a rare event that revealed the strength of their friendship He was concerned about depression There are times when adversity finally gets the better of one he confided You help me to fight against this tendency14 He was starved intellectually in Buenos Aires as Perónism undermined the rich cultural life of the city although he re mained active on the editorial board of a new publication Realidad Julio Gonzalez del Solar and his wife June were leaving Washington to work in Guatemala for a year with Manuel Noriega Morales as part of an ongoing technical assistance project with the US Federal Reserve The prospect of publishing his Introduction to Keynes and preparing the final revisions of the manuscripts kept Raúl active and engaged despite the tense circumstances in Buenos Aires Victor Urquidi helped also with a generous dedication of time to a correspondence without which Prebisch would have been even more isolated His letters at the opening of 1947 underlined his optimism that his research on money and the business cycle from the perspective of countries in the economic periphery as Argentina and the circulation of income between them and the cyclical centres was progressing well He commented in January for example that I hope to finish the fundamen tal part of my research during the present year Prebisch felt increasingly confident that he was on the right track in pressing beyond Keynes15 While he applauded Keynes for turning the freemarket chain of causa tion on its head in his attack on the guardians of orthodoxy Prebisch felt that Keynes had gone only half the distance in explaining the dilemma of countries outside the core economies In fact Keynes was not nearly as radical a thinker as many thought If Keynesian economics does not ex plain the reality of cycles how does one explain the reality16 Prebisch thought that Keynes despite his elegance did not break sufficiently from the premises of neoclassical work In a sense he respected him more as a Solitary Scholar 219 policymaker than an economist from the perspective of developing coun tries Keyness contribution was important but not a qualitative step be yond the Teutonic stubbornness of mainstream US economists such as Gottfried von Haberler whose fixation with equilibrium theory could not be dented Victor Urquidi who was in an argument with Haberler over a paper coauthored with one of his friends who was currently his student at Harvard agreed sympathetically For developing countries there was al ways disequilibrium he noted17 The focus of research by economists in the periphery therefore should not be on the problems facing developed economies like the US but rather on the nature and causes of the differ ential impact of business cycles on the centre and periphery Urquidi was now the editor of Mexicos prestigious Trimestre Economica published by the Fondo de Cultura Económica and he detected a growing interest in Prebischs area of study Rutledge Vinings new article in Econometrica on the region as a concept in business cycle theory contained the seeds of a centreperiphery approach Charles Kindleberger had written another sug gestive article Planning for Foreign Investment in the American Economic Review which proposed that agricultural exporters were at a disadvantage compared with industrial exporters in international trade The news of this new work both stimulated and worried Prebisch who was concerned about falling behind competitors in the isolation of Buenos Aires and being pre empted in his work18 For this reason Prebisch perplexed his friends by his continuing refusal on principle to visit US universities they were dumbfounded by his argu ment that such a visit would show weakness and undermine his credibility in Buenos Aires Peróns relations with Washington were strained to be sure but Prebischs prospects were sufficiently minimal that it seemed quixotic to mount a grand gesture of national loyalty at such high personal cost Thus he declined an invitation from Princetons Institute for Ad vanced Study to participate in a seminar on central banking built around the leading academic authorities in the field as well as the Federal Reserve and Wall Street such as Ragnar Nurske Jacob Viner Oscar Morgenstern Friedrich Lutz WoodliefThomas and experts of similar quality Princeton issued the invitation on the recommendation of the Americans who had at tended the Bank of Mexico Conference in August noting its disappoint ment that Prebischs anticipated trip two years before had fallen through and the hope of making up lost ground this time by making us your head quarters in the US Because of your outstanding position you could visit the country it seems to me either as scholar central banker or man of affairs19 Prebisch was clearly tempted He badly needed support and therefore replied that he would very much enjoy the intellectual climate of 220 The Life and Times of Raúl Prebisch Princeton compared with Buenos Aires Here the possibilities are rather narrow as very few people devote themselves to study and research But he added this is not the proper time20 In retrospect a research trip to Princeton was precisely what Prebisch needed because he soon fell into a debilitating depression that lasted throughout most of the year Everything seemed to go wrong although at first the outlook appeared positive On 12 February he had described his upcoming lectures as bringing together the results of his patient theoreti cal work for the first time21 A week later he was even more optimistic in a letter written from Mar del Plata to his employer Frankel My theoretical work should now continue without interruption since I am persuaded that my conclusions differ substantially from conventional approaches to eco nomic theory he noted My work therefore has a certain significance and should progress rapidly without further delays22 He even bought land in Mar del Plata a large lot at the end of a deadend street which compensated somewhat for the loss of his garden at 134 Rivera Indarte Time was short the next months would be decisive and he absolutely had to finish his writing project But his academic position became increasingly fragile and pressures multiplied He no longer published articles in the faculty journal and fi nally resigned on 26 June 1947 ostensibly for health reasons Despite the friendly attitude of the government watchdogs Pedro José Arrighi and Dean Eugenio Blanco the university had included his name on a list of Perónist supporters and he resigned when it refused to remove it The Faculty of Economic Sciences had been his last remaining institutional base and he now faced a future in the capital as nothing more than a soli tary scholar Prebisch also became physically ill unable to work for weeks as the depression deepened He spent more time at Mar del Plata his re search lagged and he felt old Raúls friends saw it simply as exhaustion as the inevitable aftermath of his disappointment over the Central Bank and the intense period of writing and work on Keynes after his busy 1946 trip to Mexico Central America and the Caribbean The news from Urquidi in Mexico was also deflating On 2 March 1947 he wrote Raúl that he would be out of Mexico for some time on a World Bank mission In fact he was leaving the Bank of Mexico for a permanent job with this new and expanding international organization because work conditions in Mexico had deteriorated A new president had been installed by the pri with Miguel Aleman Valdes replacing General Manuel Avila Camacho and he had immediately replaced Eduardo Villaseñor with a party hack determined to curb the autonomy of the Central Bank Urquidi was already well known despite his youth and it was not surprising that the Solitary Scholar 221 new World Bank would try to lure him to Washington Urquidi had long resisted the temptation to move to the US capital as he put it he agreed with Prebisch on the need for Latin Americans to remain in their countries and develop strong and independent research centres without which Latin American priorities would not be addressed The two had exchanged plans of study for such centres when Raúl was putting together his final recom mendations for the design of the School of Economic Research in the Do minican Republic23 Urquidi for his part was active with unam National Autonomous University in modernizing its curriculum But now Urquidi was gone another loss to Latin America as the UN World Bank and imf extracted the best talent from the region The attrac tions were obvious as Urquidi noted It will be a valuable experience and a new stage of my education plus an opportunity to realize in real life things which in Mexico we only discuss in theory For Raúl his departure was a per sonal blow because he felt Latin America was being denuded of the talent required to balance the power of industrial countries Moreover Urquidis move to Washington was seductive pulling at him also I do not lose the hope Victor had written that before long you will join us here there is a place for you here I have heard great praise of you in this bank from peo ple including those who do not know you personally who would not hesi tate to invite you if you would agree to come and he reeled off the names of friends already in Washington Felipe Pazos Cuba Javier Marquez Mexico Triffin Grove and Wallich Jorge del Canto and others24 In 1947 however there were fewer requests and international invita tions and for the first time a fear of permanent marginalization took hold of Prebisch Triffin had been assigned to European affairs and now Prebi schs happy correspondence with Urquidi was likely to end He was in the cursed position of being a solitary scholar on the shelf while younger col leagues were moving ahead quickly and doing interesting things Urquidis account of his fantastic trip around the world on a World Bank consulta tive mission left Raúl envious bearing in mind that Victor lamented his absence in Singapore when his wife Marjorie bore their first child But even in that department Prebisch was falling back not a single baby had materialized in the fifteen years of his marriage with Adelita During this dead and lonely period of 1947 Prebischs only new pro fessional direction was provided by the Brazilian economist Eugenio Gudin a former minister of finance and directorgeneral of the Getulio Vargas Foundation in Rio de Janeiro They met when Gudin visited Buenos Aires in May and felt an immediate mutual respect thereby establishing for Prebisch a personal link with the emerging regional powerhouse that had overtaken Argentina as the economic leader of South America after the 222 The Life and Times of Raúl Prebisch Second World War President Vargas had resigned on 29 October 1945 af ter fifteen years in power the same year as Argentinas military govern ment But what a different legacy Vargas had left Brazil compared with the Concordancia in Argentina In comparing notes on the fortunes of their countries and particularly the growing problem of inflation in Argentina Prebisch commented that his government was elaborating new themes which so far I cannot fathom but to judge by their results which we are experiencing it is highly improbable that the genial Miranda will achieve the stature in Argentine economic history which he has already claimed25 Cultured and humorous Gudin was equally irreverent Brazil had an equally poor minister he said but inflation was coming under control through the intervention of the Blessed Virgin Mary or rather two Marys Our Lady of low Imports with the help of Our Lady of tight Credit26 Each spoke his own language while listening to the others Spanish or Portuguese they got along famously Despite the backdrop of longstanding ArgentineBrazil rivalry Prebisch was remembered favourably in Rio from his Central Bank days both Gudin and Brazils other leading economist Otavio Gouvea de Bulhões an other selftaught economist and the powerful director of the Division of Economic and Financial Studies in the Ministry of Finance solicited his advice as Brazil moved toward the creation of a central bank Bulhões had already written Prebisch some months earlier for his comments on a provi sional concept paper on this project Prebisch had responded with the ad vice one could expect of a veteran banker I believe that the success of a Central Bank lies in great measure in knowing when it is prudent to take preventive measures to control the improper expansion of credit27 But while he gave Bulhões credit for clear precise and logical work he also questioned his extreme orthodoxy an excessively doctrinaire neoclassical orientation toward any interventionist policies such as import controls He asked Bulhões why he ruled them out for Brazil on a priori grounds while admitting that they had worked in Argentina during the 1930s Gudin in contrast was a typical representative of the old Brazilian governing class with a strong dose of classical education and healthy pragmatism within an essentially conservative mindset not dissimilar from Prebischs Both men were stern but they shared a willingness to listen only later did their un derlying differences come to the fore After meeting Prebisch in Buenos Aires Gudin wrote on 2 July inviting him to spend two months at the Getulio Vargas Foundation as a guest par ticipant in a seminar on banking and monetary policy The seminar would analyse the governments proposal for its new Central Bank to ensure the most suitable legislation in the hope of submitting it to Congress at the Solitary Scholar 223 end of the calendar year Harvards Gottfried von Haberler had also been invited and already confirmed his attendance at the seminar Gudin men tioned that Haberler already knew of Gudins invitation to Prebisch and that he was very keen to meet Raúl In the interests of ArgentineUS equity both foreign economists would be asked to complete a paper during the stay in Rio for publication in the Foundations new Brazilian Journal of Eco nomics Both were invited to bring their spouses both would receive the same honorarium and both would have suitable quarters at the gracious Gloria Hotel If only for the sake of meeting Haberler Prebisch should have leapt at the invitation Haberler had worked with the League of Nations in Geneva between 1934 and 1936 as an expert in its Financial Section then he joined Harvards Economics Department and was appointed an expert to the board of governors of the Federal Reserve System during 194344 Altogether he was considered one of the most formidable authorities on international trade theory and the business cycle particularly for his refor mulation of the basic theory of comparative cost in terms of modern gen eral equilibrium theory Two months with Haberler would have afforded an ideal opportunity for Prebisch to debate headon with one of the fore most scholars in the field and therefore to test and strengthen his emerg ing structuralist critique of equilibrium theory Altogether it would have been an unusual confrontation between rivals with completely different background strengths professional economist vs recognized practitioner theoretical vs applied deductive vs intuitive industrialized vs developing country experience refereed journals vs central bank reports and prestige US universities vs Buenos Aires But again as with Princeton Prebisch declined the invitation He ac knowledged the unusual intellectual opportunity to work with Haberler Bulhões and Gudin moreover Rio was close a relatively easy flight and a most agreeable city But his health would not permit travel of any sort he claimed28 Although he offered the prospect of coming for one month rather than two to which Gudin responded favourably he continued to postpone There is the risk of a relapse to stage one if I return prema turely to active work he would explain while complaining of lost time I have been afflicted unfortunately when I am in full theoretical flight29 Despite a lengthy correspondence Prebisch never did visit Rio during the next two years nor did Gudin despite repeated attempts succeed in in cluding any work from Prebisch in the Brazilian Journal of Economics The nature of Prebischs illness during 1947 remained obscure al though it was certainly debilitating and forced him on a strict regime of ex ercise and diet His general pessimism was reinforced by the early death of 224 The Life and Times of Raúl Prebisch his longtime friend Klein while many others were now leaving Argentina It is possible that he still felt too uncertain theoretically to test his findings against the certain attacks of Haberler and Bulhões His judgement wa vered In a letter to his Venezuelan friend Xavier Lope Bello he criticized Keyness work with the fantastic prediction that I believe that his contribu tion to economic theory will not be noteworthy on the longterm30 But what is certain is that he struggled with his health and work until Novem ber when the University of Buenos Aires pleaded for his return and the minister of education asked him to head and edit a new Journal of Economic Theory for the newly created Academy of Economic Sciences The minister the prominent surgeon Dr Oscar Ivanisevich wanted Prebisch back and re fused to accept his resignation I want you to stay he said This govern ment will not retaliate against any professors who do not share its views unless they make politics in their classes31 Political repression was grow ing in Argentina and Prebisch had been forced to cancel a public lecture a month earlier in October but he accepted the academic opening imme diately and got to work on the new journal with a call for papers His myste rious illness vanished with the prospect of regaining a community of scholars I am returning after a long absence he noted to his students on 16 March 1948 having experienced what the Faculty means for my study and research32 Indeed he even toyed briefly with the idea of seeking the deanship of the faculty to introduce a series of reforms that in any case he had decided to discuss during his first lecture Prebischs energy flooded back and he now complained to Gudin about overwork rather than enforced idleness but in a new tone of optimism and mounting excitement On 10 February 1948 he underlined the critical challenge that he now faced in bringing out the Journal of Economic Theory completing an article on what he called a dynamic theory of the econ omy on which I have been working diligently during the last years It was far from complete he told Gudin I am therefore fully preoccupied with the task of synthesis and this requires an effort of analysis and clarity which is more timeconsuming than simply writing Despite my eight hours of work a day I am not even close to finishing33 While Prebisch struggled Gudin was successful in launching his journal in Rio the first issue was de livered from the Brazilian Embassy by courier on 5 November and he del uged Prebisch with requests to write a piece for the second Although Prebisch continued to line up authors during the January February 1948 summer holidays and prepared his lectures for his return seminar in the faculty both tasks took time away from his research at a mo ment when he felt close to a breakthrough I am now very advanced in my work on the economic cycle and dynamic theory of the economy I have Solitary Scholar 225 dedicated almost all my time in the hope of soon initiating some prelimi nary publications he wrote on 23 February in turning down a lecture tour in El Salvador The interruption of this work therefore is extremely con cerning34 He also responded negatively to a request from Princeton ask ing for copies of his Bank of Mexico papers and recent seminar notes at the faculty He wanted to avoid their circulation he said The reason is simple he explained In large part they represent initial points of view regarding money and the business cycle in countries like our own This work has taken place over some four years During this period I have con tinued my research in these areas and my views have evolved considerably and for this reason I decided some time ago to bury these preliminary ob servations which no longer accurately reflect my thinking35 In fact this correspondence with Princeton only reminded him of how little progress he had made over the past year when he had assured his US colleagues there that I hope to finish the fundamental part of my work during the present year The anticipated breakthrough however did not occur dur ing 1948 either as the rollercoaster ride of Peróns Argentina continued Prebisch quickly found that his return to the university was shortlived as ministers changed and the political climate again deteriorated Without Dr Ivanisevich in the Cabinet the universities were vulnerable and a pre dictable economic downturn sharpened political tension in the capital By the end of 1948 the shortlived Perónist prosperity was over inflation exceeded 50 percent the trade balance had become negative and foreign exchange was running low Argentinas huge wartime foreign exchange re serves were also gone sunk into the purchase of many worthless foreign companies such as the deficitridden and wornout Britishowned railways and trolley lines Widening corruption including kickbacks to Miguel Miranda himself contributed to dissent and polarization So visible a fig ure as Prebisch was not likely to survive the accompanying crackdown as Perón moved to contain the opposition and prolong his regime by amend ing the Constitution and although Raúl completed his seminar during the fall semester without incident increasing Perónist intervention in univer sity life augured poorly for his future Arrighi demanded that he include the virtues of the fiveyear plan in his lectures Prebisch flatly refused The proposed new Journal of Economic Theory collapsed the exile of Argentine professionals intensified This situation in Buenos Aires was a factor along with financial need that prompted Prebisch to accept the longstanding invitation of the Venezuelan Central Bank to visit Caracas and draft a report on banking policy36 It took him out of Buenos Aires during July 1948 giving him a rest from the grow ing worry over its economic decline and a fabulous 4000 honorarium 226 The Life and Times of Raúl Prebisch provided a welcome cushion in inflationary and uncertain times The trip also meant the companionship of his Venezuelan friends Manuel Perez Guerrero and José Antonio Mayobre both of whom enjoyed the luxury of working in democratic Venezuela which had become a destination for Argentines no longer able to work freely at home En route Prebisch stopped off in Trinidad and Tobago his first visit to the Anglophone Caribbean Completing his work in Caracas on 28 July he returned to Buenos Aires to continue his research and prepare for the spring seminar By October the situation in the University was so fragile that only the continuing pres ence of Arrighi stood between him and dismissal But then Arrighi was re placed On 15 November his successor advised Prebisch that on Peróns personal orders he had the choice of resigning or being fired the next morning he submitted a letter of resignation ending twenty years of in volvement with the University of Buenos Aires This new disaster coincided with genuine advance in his research and therefore could not have oc curred at a worse time Prebischs Venezuelan consultancy had already been costly in breaking the tempo of his work and now he faced a more serious interruption in his career since he saw no early return to democ racy in Argentina He was extremely reluctant to leave Buenos Aires which was not just his home but also a city with an incomparable urban culture Adelita was recovering from surgery He was also on the wrong side of fortyfive and though he was not immediately threatened personally by Perónism that could not be ruled out in the future However meagre his fourday per month consultancy with Frankel remained as a first step in re building a secure income Eventually Perónism would end when it col lapsed he wanted to be available for the rebuilding of the Argentine state But at the same time there was no place for him in public life under Perónism and his research depended on some sort of audience and insti tutional base Never again do I want to find myself in the miserable posi tion of the solitary scholar he remarked four days after his resignation37 It therefore seemed inevitable that Prebisch would have to accept some sort of work outside Argentina He mused at the good fortune of US academics who were able to work in predictable circumstances without the constant financial political and security worries that cannibalized time for research and writing Neverthe less unlike a year earlier Prebisch was sufficiently confident of his work that he had faith in its eventual success On 20 December he wrote to Gudin confident that he was close to completion and gave a brief synthesis of his approach and findings I believe that the cycle is the typical form of growth in the capitalist economy and that it is subject to certain laws of movement quite different than the laws of equilibrium In these laws of Solitary Scholar 227 movement the disparity between the timing of the productive process on the one hand and the resulting circulation of money on the other plays a fundamental role This had long been his central argument but he had lacked a methodological approach powerful enough to critique general equilibrium theory Now he felt on surer ground I have therefore tried to introduce systematically the concepts of time and space in economic theory It is precisely the concept of space which has allowed me to study the movement in the centre and periphery not in the spirit of introducing formal deductions but to signal functional differences of transcendental importance Still he provided no details and Gudin was understandably perplexed While he accepted Prebisch as a gifted colleague Raúl had given few clues so far regarding his muchproclaimed challenge to conven tional economic theories A certain credibility gap was appearing Prebisch had not published in any major economic journal on this topic and his book on Keynes did not lead far in this direction either Would Prebisch limit his argument to business cycle theory or would he include other areas such as the terms of trade between the industrial centres and primary resource exporters Gudin didnt know He did not have a copy of Prebischs 1948 draft seminar texts and pleaded for his paper by 15 March 1949 to include in his journal In practice Prebisch found that there was little time for anything other than coping with daytoday uncertainties in Buenos Aires and Gudin once again was ignored But Mexico was as loyal as ever The National School of Economics at unam had developed an international seminar series featur ing senior personalities including Haberler Schumpeter Hansen and Ludwig Von Mises and had invited Prebisch on 6 May for a possible July visit He had not accepted given his Venezuela commitment but when unam heard of his resignation it renewed the invitation and this time Prebisch was delighted He agreed to a series of lectures over a tenday pe riod beginning 16 February 1949 viewing the trip as an opportunity to concentrate fully on his research and finally deliver the elusive synthesis on the business cycle from the perspective of the Latin America periphery I am very pleased to have the opportunity of presenting my ideas in your country he wrote to Jesus Silva Herzog In truth I carry an old and deep affection for Mexico strengthened further now by your again extending a welcoming hand at a time of serious worry just as you did several years back38 Of course success in Mexico would also complete his commitment to Gudin and yield a chapter for a festschrift in honour of John H Williams being put together by the James Williams School of Economics at the University of Virginia and featuring an eclectic but stellar group of con tributors ranging from Paul Baran Robert Triffin and Henry Wallich to 228 The Life and Times of Raúl Prebisch Paul Samuelson Richard Musgrave and Charles Kindleberger Prebisch was the only economist approached from a developing country and his proposed title Monetary Problems of the Peripheral Countries obvi ously coincided with his forthcoming Mexican work39 While the Mexican visit did not solve Prebischs longterm problem it ad mirably met his immediate research needs After that well see he noted on 13 December when the details had been finalized with unam40 Cer tain US friends also rallied The US State Department invited him for a threemonth lecture tour of business administration schools presumably with the idea that the tour would yield a university appointment This was arranged through the intercession of Chris Ravndal who had now re turned to Washington as directorgeneral of the US Foreign Service Its the least we can do for him he noted internally41 However the invitation carried a per diem of only 10 and with no itinerary arranged in advance Prebisch saw little real potential in joining a growing group of Latin Amer icans wandering like a mendicants from one US university to the next taking whatever they could get Within Latin America his options for per manent employment had also narrowed Although in 1946 the Mexican Central Bank had made him a standing offer to join them any time he wished this open invitation vanished with the advent that autumn of the Aleman presidency More recently Venezuela had reiterated its offer for Prebisch to work in the institution of his choice either the Central Bank or the Development Corporation But that was with the democratic govern ment of President Romulo Gallegas and he was overthrown in a military coup on 24 November sending Raúls trusted friends Mayobre and Perez Guerrero fleeing Caracas in search of international jobs Paraguay was also in flames and Pedretti had been driven out of the country it was as if ev erything Prebisch tried in Latin America was fated to fail For the first time he resigned himself to working outside Argentina Fortunately he had two offers First the United Nations had been almost annoying in its attempts to enlist him in 1948 Already in February Ralph Bunche had surprised Prebisch by his invitation to join the threeperson Preparatory Economic Group proposed by the UN Palestine Commission Although flattered that anyone remembered him from his old League of Na tions days he had no interest in the position and turned it down Later that year with the creation of ecla Economic Commission for Latin America or cepal Comisión económica para América Latina on 15 February 1948 he was again approached by the UN to head the agency as its found ing Executive Secretary42 Assistant SecretaryGeneral for Economic Affairs David Owen and Assistant Secretary for Public Affairs Benjamin Cohen whom Prebisch had met during their student years considered Prebisch Solitary Scholar 229 the logical candidate for executive secretary and they persuaded UN SecretaryGeneral Trygve Lie to approach him In July shortly before Raúls trip to Venezuela Trygvie Lie sent Cohen to Buenos Aires with a formal of fer while Owen spoke with him extensively on the telephone A member of the French UN delegation approached him seeking his consent for France to nominate him for the position The tiny secretariat of ecla in Santiago Chile was enthusiastic at the prospect Acting Executive Secretary Eugenio Castillo was an Edward G Robinson figure from Cuba complete with wife Patricia Willis from the US South and widely believed in Latin America to have links with the US intelligence community and he travelled to Buenos Aires in August urging Prebisch to accept Even Perón agreed no doubt hoping that he would soon be rid of a troublesome foe But Prebisch had read about the creation of ecla in the newspapers with indifference He was not interested he remembered the old blundering League of Nations from his Geneva days and the marginal role that developing countries such as Argentina had played in its deliberations The title Executive Secretary also suggested a weak role in a subordinate agency far from power in New York with merely administrative responsibilities he thought that ecla would have neither power nor influence in an orbit dominated by Washing ton I am very disappointed Castillo confided to UN headquarters in New York43 But he did not give up As if to demonstrate its vulnerability ecla still had not rented a building or space of its own its provisional quarters re mained the fifteenth floor of the Hotel Carrera in downtown Santiago and the new organization faced a vacuum of leadership It was therefore not sur prising that Castillo was soon knocking again on Prebischs door Raúl and Adelita found themselves entertaining Eugenio Castillo on 19 November in the midst of turmoil in the faculty pleading with him to work with ecla if he couldnt come to Santiago on a permanent basis could he at least give them some months of his time Pestered interminably by Castillo he agreed in late November to a fourmonth consultancy but on two conditions that ecla would fly him home to Buenos Aires four times and that even this agreement was dependent on the outcome of his ongoing negotiations with the imf44 For Prebisch was very interested in a job offer from the International Monetary Fund The imf had far greater clout and prestige than ecla and he was intrigued by the prospect of working in Washington Compared with the imf ecla was in the minor leagues the imf was a future global powerhouse of vital importance to Latin America and the global economy He recalled Urquidis letter in May 1947 urging him to strengthen the Latin American presence in Washington45 Moreover the imf clearly wanted him After Prebisch responded favourably to initial informal soundings by 230 The Life and Times of Raúl Prebisch Javier Marquez he received a visit at his home on 25 November from the imf Managing Director Camille Gutt accompanied by his deputy Edward M Bernstein They offered him a permanent appointment as advisor to the managing director without executive responsibilities at a salary of 14000 His telegram on 17 December accepting the offer welcomed the position as offering sufficient time for essential theoretical work and his followup letter to Bernstein noted You really tempted me in displaying the wide opportunities which the Fund provides for theoretical reflection and policy research Since your departure I have reviewed your arguments again and have come to the conclusion that you are right I am quite will ing to join the Fund on the basis proposed by you through Mr Gutt46 The news spread You cannot believe how happy I am to get the news Urquidi wrote on 3 December The Ravndals repeated their welcome and offered lodging in their home until a house in Washington could be lo cated Adelita began preparations for their departure from Buenos Aires47 Only one month after the loss of his university appointment Prebisch had resolved his career dilemma with a prestigious appointment on his own terms with his forthcoming lectures in Mexico serving as an interesting interlude before beginning his imf work in Washington Castillo and the new ecla in Santiago were forgotten 11 Triumph in Havana The managing director of the imf had offered and Prebisch had accepted a senior position in Washington But an actual contract had not been signed pending approval by the banks executive board Camille Gutt had dismissed this as a formality but a disturbing silence from Washington after his visit suggested that Prebisch was being set up for a major humiliation A first sign of internal opposition appeared early on 23 December when Gutt cabled with an announcement that the terms of his appointment would have to be changed I have reviewed our recent talks with depart ment heads They feel that an advisor outside departmental lines is not feasi ble Prepared to recommend appointment in Operations Department at proposed salary1 But Prebisch was reassured that the change was simply to avoid setting a precedent within the Fund and that the offer would soon be confirmed ML Parsons of the Operations Department told him that the delay in approval was merely technical the January flu in Washington had hollowed out the executive board he expected a meeting before the end of January We are looking forward to having you here and taking advantage of your great experience particularly in our dealings with Latin America2 So strongly reassured Raúl and Adelita Prebisch continued prepara tions for their departure with Urquidi and other friends combing the realestate market in and around the US capital Farewells were held and Raúl prepared his lectures for Mexico to begin on 16 February Martinez Cabañas and Castillo continued to press him to arrange a special deal with the imf whereby Raúl would complete his four months with ecla before starting fulltime in Washington Just before his departure Raúl received good news from the imf Parsons suggested that they meet in Mexico dur ing his unam seminar to discuss a work plan Executiveboard approval was now imminent he said It was a busy month that augured well for the fu ture despite the emotional letdown of leaving Buenos Aires However 232 The Life and Times of Raúl Prebisch Adelita was confined to bed in Mar del Plata and unable to accompany him to Mexico when he left on 15 February on his arrival at the Hotel Reforma he cabled his affection to her But when Prebisch opened his seminar on 16 February it became clear that the holdup of his muchdiscussed appointment at the imf had little to do with illness on the executive board Parsons failed to arrive he heard nothing from Washington To his mortification rumours of US Treasury opposition to his appointment became corridor gossip in Mexico After the Mexican seminar ended Prebisch decided to force the imf issue with a cable to Gutt on 6 March demanding a definitive response The managing director first procrastinated with a message asking for more time but then confirmed that the executive board had indeed rejected his appointment Parsons wrote a personal letter of apology We have behaved intolerably I am not sure which is worse to feel ashamed of oneself or to feel ashamed of the organization for which one works We shall pay heavily for our folly in losing your services and the prestige which you would have brought to the Fund in its relations with Latin America I dont ask you to be tolerant with us because I think we have behaved intolerably but I do ask that you pity us that we should add this kind of folly to what is already a heavy enough burden Whom the gods wish to destroy they first make mad He signed it with Keenest regrets3 Raúl shared his disappoint ment by telephone with Adelita who was now recovering Adelita said that she was happy not to go to Washington and have to deal with such dishon ourable people Some day she predicted the tables would be turned4 Robert Triffin and other friends in Washington provided the inside story of his rejection by the imf relayed by June Eckard to Prebisch in a long personal letter5 The issue had developed into an internal cause célèbre be cause the US had reversed its position and now opposed his candidacy even though the Treasury originally supported Prebisch It was embarrass ing and unpleasant the Fund had sought him out rather than the other way around and so firm a commitment would never have been given had the US not been on board Moreover Prebisch was Latin Americas best known economist and central banker there was no way the sudden rejec tion could be explained by questioning his competence The fight over Prebisch in the Fund therefore was lengthy and bitter A complex set of factors lay behind Washingtons refusal to accept Prebischs appointment in early 1949 and it had nothing to do with a ru mour that old Washington hands remembered his toughness during the 1930s in bilateral negotiations with the US and were getting back at him now for favouring Britain after the RocaRunciman Treaty Instead the US decision reflected the new opening in USArgentine diplomatic relations Triumph in Havana 233 Brazilian opposition to Prebischs appointment and the changing political climate in Washington Perón vigorously opposed Prebisch for any influen tial position in the imf even though Argentina was not a member of the Fund while he had agreed six months earlier to support him for ecla presumably to ease him out of Buenos Aires into a marginal position in Santiago the Argentine president did not want a domestic opponent in a key position in Washington Considering the deepfreeze in USArgentine relations since Pearl Harbor however such expected opposition should not have concerned Washington quite the reverse In 1946 the US Em bassy had campaigned openly against Perón who later had denounced the Marshall Plan as a scourge and disaster for Argentina6 However on 19 Jan uary 1949 Perón fired the economic team led by Miguel Miranda and Washington saw an opening to improve bilateral relations A bilateral joint committee was established to review economic issues including the poten tial opening of US petroleum investment Washington sought to restore its prewar position in Argentina then the most important market in Latin America and now threatened by European expansion of bilateral trade and the dollar shortage7 The Prebisch appointment was thus caught up in a bilateral diplomatic reorientation with the State Department arguing that US support for Prebisch in the imf could preempt this promising development with Perón Thrown out of the Central Bank by the Perón backed military government in 1943 against US protest a man who had risked and lost his career for the Allied cause and who had continued to work closely with the Federal Reserve after 1945 Prebisch was sacrificed six years later on the altar of US rapprochement with Perón There was another less tangible factor at play in the US rejection of Prebisch He not only lacked the support of his country but he was also vulnerable in Washingtons changing political climate now unrecogniz ably different from the circumstances surrounding his exit from the Cen tral Bank in 1943 He had worked with the US Federal Reserve throughout Latin America and still knew some of its officials such as David Grove chief of its Latin American Section in the Research Department In those years he could also have picked his job among US banks the Chase Manhattan Bank referred to him as almost a member of the family Joseph C Rovensky commented in his retirement letter to Raúl in 1945 that you are so at home in the Chase that you will not miss me much8 But times had changed Prebisch was no longer very well known in Washington and the friends who still regarded him highly such as Triffin and Wallich were increasingly out of step with the gathering Cold War ide ology in the Beltway They represented the wartime generosity and innova tion of US Latin American policy a new and tougher approach rendered 234 The Life and Times of Raúl Prebisch Prebisch an outsider in Trumans Washington The Berlin blockade con tinued the division of Europe had crossed a point of no return the communist victory in China was imminent While not yet hysteria a groundswell of anticommunism in the US capital demanded the greatest care in choosing senior people for the imf and World Bank while no one could possibly argue that Prebisch was procommunist he was a Latin American who used terms such as core and periphery and was there fore not automatically safe This new caution seeping into the imf selec tion process was transmitted directly from the US Treasury but also internally by US officials who followed the flag EM Bernstein for exam ple who had made the approach to Prebisch in Buenos Aires and whose support might have made the difference in his approval remained silent during the affair Even Ravndal who might also have influenced the State Department chose to stand aside In the end the imf was an intergovern mental organization led by the Great Powers and its politics could not es cape the changing ideological alignment of the Washington foreignpolicy community Prebisch had been used by Washington while he was powerful and to their advantage now that he was weak he could be discarded and made a laughingstock from one end of the Americas to the other Recently hired Latins in the Fund such as Felipe Pazos could do nothing but watch the spectacle in frustration and anger Finally Brazilian opposition to Prebisch fortified Washingtons determi nation to press its veto on his appointment and the diplomatic weight of Brazil in South America also made this a factor of considerable importance in the region In this case however the issue was not so much politics as envy Although on 5 February Otávio Bulhões had sent Prebisch a congrat ulatory letter from the Ministry of Finance on his imf appointment he also convinced the minister to veto it within the Funds executive board9 Gudin who genuinely respected and supported the Prebisch appointment was away from Rio undergoing surgery in the United States and was there fore not in a position to prevent a betrayal that left a guilty feeling toward Prebisch for years in the Brazilian capital Confronted by the US and Brazil other members of the imf executive board eventually fell into line As his alarm at losing everything grew in the last week of February Prebisch finally accepted the longstanding ecla offer for a fourmonth fixedterm appointment in Santiago to begin 10 March 1949 Martinez Cabañas was enthusiastic hailing Prebischs decision as a victory for Latin America and a coup for ecla Castillo was his usual overflowing self ca bling a message of welcome and sending a firstclass air ticket Raúl cabled Adelita to tell he what had happened and that he would be going to Chile in March You have to know best she replied wondering why the Fund Triumph in Havana 235 was postponing a decision Arriving in Santiago on Sunday 13 March Raúl stayed a few nights in the Hotel Crillon before renting a small furnished apartment on Los Urbinos in Providencia near the ecla offices Adelita had to arrange renting out the house at 563 Chile but finally she flew in from Buenos Aires on the first Sunday of April To Raúls relief her health was almost completely restored and they could be together as he concen trated on the challenge ahead Disappointments followed him as well The Fondo de Cultura Económica in Mexico decided not to publish his lectures and in a nasty letter from his own faculty the dean refused to pay Prebisch for his 1948 lectures since he had not officially received his letter of resignation Raúl and Adelita cele brated his birthday on 17 April quietly at home with a telegram of congratu lations from Enrique Frankel and a long letter from Alfredo Moll detailing the latest political events in Argentina More than ever persona non grata in Buenos Aires he was cautioned by Eleodoro Lobos not to try to return They are seriously pursuing you he warned on 20 March10 His Venezue lan friend Manuel PerezGuerrero in exile in the UN Division of Coordina tion and Liaison in New York also noted that both of them were being watched by their respective dictators with their mail intercepted where possible His sister Maria Luisa wrote to him that she would be retiring on 31 May The stakes now were now very high Since the beginning of his wander ings in 1943 Prebischs options had progressively narrowed In the first years after 1943 the best US universities had courted him openly but this interest had dried up as well Prebisch had met Henry Wallich during his Mexican seminar in February and had asked him about US university openings Wallich was not optimistic The US academic scene was chang ing as rapidly as Washington became increasingly preoccupied with the Cold War New Deal economists were out of favour Asia was also replac ing Latin America as a priority region Columbia University for example had changed its plans to establish a research centre on Latin America in favour of the Institute for Asian Studies reflecting the broader post1945 shift in overall US foreign policy as the Cold War spread to AsiaPacific from Europe11 Having refused all opportunities to travel or teach in the US since 1943 or publish in the established refereed journals Prebisch was now not at all well known in mainstream economic circles with the exception of his old associates in the very narrow field of applied Latin American banking policy He had lost every battle recently and now he had only a fourmonth research consultancy without any other future plans or offers Prebisch was not sure how but he was determined to regain the initiative with an anger channelled and controlled by the need 236 The Life and Times of Raúl Prebisch to confront the most difficult situation he had ever encountered But he was down to the final card in Santiago The same atmosphere of apprehension pervaded ecla in Santiago and UN officialdom in New York because eclas future was as much on the line as Prebischs When he arrived at the office on 14 March 1949 the new orga nization was still only partially formed its role and functions remaining in doubt and nearly paralyzed with fear in the knowledge that Washington and some other governments preferred its early demise The problem of eclas survival stemmed from its contested birth on 15 February 1947 What happened was that in 1946 the US had proposed the creation of two re gional commissions within the United Nations Economic and Social Council ecosoc the Economic Commission for Europe ece with a secretariat in Geneva and the Economic Commission for Asia and the Far East ecafe to be located in Bangkok Washingtons objective was to enlist the UN in the reconstruction of these wardamaged regions and both ece and ecafe were unanimously approved by ecosoc Latin Americans were not happy with the regional favouritism and the Government of Chile with the support of the other developing and Latin members of ecosoc Cuba Peru and Venezuela introduced a resolution that the UN also create the Economic Commission for Latin America ecla to match those in Geneva and Bangkok12 Hernan Santa Cruz chief of the Chilean delegation main tained that Latin American governments had both earned and needed a comparable vehicle within the UN to support accelerated growth Not only was their principal goal economic development but their region was also ex hausted after the World War even if the actual fighting had taken place in Europe and Asia Like these regions Latin America required economic sta bility and reconstruction and he argued the PanAmerican Union was a political rather than an economic body Implicitly it was understood that eclas future secretariat if approved would be based in Chile rather than Washington Chile was also making a bid for regional leadership since Argentina had voluntarily vacated this role after 1941 The US Britain Canada and other industrialized countries as well as the ussr balked arguing that a UN regional organ was unnecessary be cause the PanAmerican Union already existed with its own Economic and Social Council iaecosoc Why US delegate William Thorpe asked should the US which was already the UNs principal paymaster fund another new regional commission when one already existed to fulfill Latin Americas postwar needs In 1945 the PanAmerican Confer ence at Chapultepec had agreed that the iaecosoc should coordinate all official interAmerican economic and social activities Canada maintained that creating ecla would promote nationalism and antimultilateralism Triumph in Havana 237 The Soviets were more concerned that they would be frozen out while the US already a member of the ece and ecafe would be included as full member The United Nations ecosoc debated whether or not to accept the Chilean Resolution but was so split on NorthSouth lines that a special committee was struck to study the merits of the case When its eventual re port supported the creation of ecla citing wartime overuse of capital equipment the regions need for external assistance to strengthen devel opment and the high cost of repairing the economic losses incurred during World War II Washington relented ecosoc therefore began assembling a staff in Santiago searching for an executive director and es tablishing June 1948 for eclas first session at which the member govern ments would approve a work program the membership including besides Latin America the US and the three remaining colonial powers in Europe France Britain and Holland Despite the logic of geography Canada chose to remain aloof But it was a narrow grudging and ambiguous vic tory The US only agreed to ecla on a threeyear trial basis after which its final status would be decided Meanwhile the new body would report to Harold Caustin in the UNs Division of Economic Stability and Develop ment in New York as well as to Wladek R Malinowski in the Department of Social and Economic Affairs desa which housed the small Regional Commissions secretariat The shallowness of US support for ecla quickly became evident and Washington did not try to disguise its robust diplomatic campaign for its termination after the threeyear probationary period Even before eclas founding session scheduled for 725 June 1948 in Santiago the US used the Ninth InterAmerican Conference in Bogotá in April 1948 to recast the old PanAmerican Union as the new Organization of American States oas and issue a direct challenge by increasing the iaecosoc budget from 40000 to 500000 or equivalent to eclas entire projected budget for 1949 Beyond official opposition us academics also criticized the formation of ecla Simon G Hanson editor of a new journal Inter American Economic Affairs launched his first attack even before the new re gional organ was established13 Life will be complicated David Owen complained by the existence of two parallel economic commissions for Latin America with virtually identical terms of reference and equal bud gets He wondered if they should consider moving eclas headquarters from Santiago closer to Washington and New York it was going to be diffi cult recruiting staff to a location so far from anywhere14 Meanwhile ecla existed mainly on paper The first session of the Com mission was held while the new secretariat remained in temporary quarters 238 The Life and Times of Raúl Prebisch on the fifteenth floor of the Hotel Carrera in downtown Santiago The meeting proceeded smoothly because little could be expected of a brand new organization but the main resolution of the Santiago session left the secretariat saddled with a huge problem by directing it to prepare a docu ment called Economic Survey of Latin America for its second session sched uled for Havana from 26 May to 14 June 1950 At first glance this seemed straightforward requesting a study of the movements of import and ex port prices the determining factors of such movements and the conse quences thereof on the balance of payments But nothing like this had been prepared previously for Latin America and it was evident that it would exceed the capacity of the new secretariat in Santiago Because eclas overall mandate was so general to initiate and participate in mea sures for raising the level of economic activity in Latin America and strengthening the economic relations of Latin American countries both among themselves and with other countries of the world the Economic Survey was also expected to provide a framework and direction for the new organization We are in agreement that to a very large extent eclas fu ture is dependent upon the Economic Survey Wladek Malinowski wrote to Harold Caustin I am not only concerned with the high standard of the publication from a purely academic or professional respect but I also think that as a result of the Economic Survey we should be able to formulate the tasks policy and organizational structure of ecla15 By the time Prebisch arrived in Santiago the atmosphere was tense There was at least an executive secretary Gustavo MartinezCabañas a thirtynineyearold Mexican economist whom Raúl had met during his trips in 1944 and 1946 But it was evident that he was a compromise choice with little experience international recognition or force of personality After Prebisch declined David Owen had tried Daniel Cosío Villegas with out success and Victor Urquidi also disqualified himself as still too junior for the position The secretarygeneral therefore accepted Owens recom mendation to hire MartinezCabañas effective 1 January 1949 but he did so reluctantly and refused the additional money requested by Martinez Cabañas which would have recognized him at the same level as Gunnar Myrdal the famous Swedish economist who headed the ece in Geneva Unfortunately the new leadership lacked the credibility and management skills required for putting together the Economic Survey of Latin America in acceptable shape for the forthcoming Havana Conference It would have been no easy task in the best of circumstances and ecla was also a new or ganization that lacked political recognition in the region by 28 December not a single Latin American government had responded to a request for information sent out four months earlier Yet regional data had to be Triumph in Havana 239 pulled together quickly or eclas reputation would collapse Castillo and MartinezCabañas alternated between exuberance and gloom but were in creasingly resigned to appeasing their critics and preventing overt failure The tiny staff of UN professionals already hired in Santiago included indi viduals of quality but they seemed uncertain of mandate and without lead ership Malinowski had already realized this in November before the new executive director had been appointed complaining that ecla lacked what he called a central master brain16 MartinezCabañas however could not provide it either In practice Castillos main achievement in 1948 had been locating a pleasant twostorey house in Los Leones Providencia Pio Decimo 2475 away from the city centre with sixteen rooms and good central heating It was a warm and comfortable place but pleasant surroundings could not compensate for a vacuum in leadership In New York the UN Department of Economic and Social Affairs was increasingly anxious about the future of ecla realizing that a failure in Havana would severely damage headquarters and ecosoc as well desa had only three people in its Latin American Unit in 1948 with Argentin ian Adolfo Dorfman the most senior but he had other tasks besides assist ing with the economic survey Dorfman a year earlier had tried to assemble reliable economic series for Latin America but found such data elusive since as he put it every country has a different system and none of them is very thorough17 Owen therefore hired Francisco Croire another for mer Prebisch employee in the Argentine Central Bank who had been sent to Harvard for graduate training to provide a New York anchor for the economic survey Arriving in December 1948 he found that little had been done during the preceding six months and that the two staff mem bers he inherited were of doubtful quality and overly acculturated to paid holidays UN morale and staff competence in New York contrasted badly with the old Central Bank in Buenos Aires Croire sniffed18 The UN had to compete with the new big rivals the imf and World Bank in Washing ton and it was coming up short Croire poured out his concern to Prebisch in long personal letters19 He discovered that the Economic Survey had taken on a heavy symbolic value for Latin Americas within the UN system There was he reported a growing schadenfreude among the skeptics in New York who doubted that Latin economists were competent enough to deliver good work unless super vised by US and European superiors Since the Economic Survey was the sin gle most important work of ecosoc relating to Latin America it therefore had become a test of Latin American economists themselves The Economic Survey was unique in that Latin Americans themselves were in charge it was the first major international report on the region to be directed and 240 The Life and Times of Raúl Prebisch written by Latin Americans rather than foreign consultants in the imf or World Bank Latin Americans were members of teams led by senior North American or European economists Coire and other Latin Americans like himself in New York therefore felt on trial failure in Havana would con firm a New York perception that they were secondraters This situation made Prebischs role doubly important New York would mobilize all avail able resources to pull together the individual components for an accept able document including sending headquarters staff to Santiago on short assignments A great deal of data was being collected a more realistic work plan and Economic Survey outline were now accepted in Santiago Other agencies such as the fao and the imf were being helpful and the World Bank had just completed a study The Pattern of Latin American Trade Pay ments with erp Europe and the US which was useful for eclas own report entitled Prospects for Trade Expansion being prepared for Havana Dorfman and Alfonso Santa Cruz were working overtime on it Louis Shapiro from New York headquarters arrived in Santiago on 17 December to work with Cuban economist Regino Boti on regional foreign trade statistics The problem however was overall leadership although the Economic Survey had to be a team effort one person finally had to draft a framework document laying out its theoretical approach and rationale Croire was relieved by Prebischs acceptance of this role had he not agreed to write the report the UN would have gone outside Latin America probably to Swedens Gunnar Myrdal thereby demonstrating to the world the bank ruptcy of Latin economists and spelling the certain demise of ecla20 Even more Havana was unexpectedly emerging as an important meeting in USLatin American relations In part this reflected the old theme of dashed expectations in US recognition and postwar cooperation By 1949 and the beginning of Trumans second administration a sense of injustice was boiling up again as Washingtons priorities focused on Europe and Asia During the Second World War Latin countries had sold their commodities to the US at prices fixed by the Office of Price Administration and were un able to convert their dollar earnings into goods with consequent inflation only to find that when the time came that US goods were available for pur chase there were no price controls on these industrial exports while the prices for their primary and agricultural products declined With the end of the war single commodity countries such as Venezuela Cuba Chile and Bolivia faced an inevitable downturn in trade and were on the verge of seri ous economic crisis Yet the Truman Administration had vetoed every Latin attempt to implement its promises of economic partnership made during the war Washington now opposed the creation of an interAmerican devel opment bank continued to postpone the muchheralded InterAmerican Triumph in Havana 241 Economic Conference and rejected multilateral efforts to stabilize com modity prices Worst of all congressional opposition was building against US ratification of the ito International Trade Organization which had been proposed in 1948 at a major international meeting also in Havana and this placed an additional strain on USLatin American relations Conceived dur ing the Second World War the ito had been seen by Keynes as the trade counterpart to the imf and World Bank its failure left Latin Americans dis appointed and frustrated The sequence of Great Depression war and the postwar challenge of adjustment to Pax Americana had created an incipient regionalism in Latin America a consciousness of shared experiences and even greater needs carried by a new generation of bettertrained and trav elled professionals Young Latins ached for recognition leadership and def inition all in one there was an opening for new ideas and change Does Latin America exist Mexican author Luis Alberto Sanchez had asked a few years earlier in the 1940s Latin America was a region ready to be created and this idea and opportunity built on perceived grievances to give the 1949 ecla Conference in Havana a symbolic significance out of all proportion to the actual agenda of the meeting The evident ecla UN and Latin American anxiety and expectations added to Prebischs agony as he began his work in an upstairs office at the end of the corridor somewhat apart from the rest of the ecla staff paus ing only for his daily lunch with Adelita in Providencia He needed a break through but he felt flat as flat as his 1948 lectures or his Mexico seminar He now understood fully the cost of his years in the wilderness when he left the Central Bank in 1943 and drafted his outline for Money and the Rhythm of Economic Activity he had been well ahead of the pack in his theo retical development His central concept of a structural rift in the interna tional economy between industrial and agricultural countries in which market forces tended to accentuate inequalities had been novel and excit ing But that was more than five years ago He had seemed on the verge of major innovation but he had not been able to deliver The manuscript he had promised Triffin in 1945 still remained incomplete The truth was that he had largely stagnated Why Making a living con stant travel personal and professional disappointments the depression of daily life in Perónist Argentina watching its growing isolations and cultural decline the lack of resources for research and above all the problem of working in isolation without a team of associates all these factors had slowed down his work He had certainly made progress since 1945 he had grafted the centreperiphery terminology into his analysis to accentuate the dualism present in the international economy and this was now a per manent fixture in his writing His work on the business cycle had also 242 The Life and Times of Raúl Prebisch advanced significantly But the discipline was not standing still either and younger economists were moving into development economics the argu ment for example that agricultural exporters were at a disadvantage com pared with industrialized exporters in international trade was appearing in the literature21 While no other scholar had yet presented an answer to Prebischs hypothesis set out in his Rhythm of Economic Activity in 1943 it was only a matter of time before he would lose this race as well to scholars in Europe and North America Prebisch felt close to a new synthesis but days went by in Santiago and his frustration grew as the Havana deadline approached In early April he circulated some draft text to ecla colleagues for comments Celso Furtado a young Brazilian economist who had recently arrived in Santiago to work in ecla read the manuscript and was disappointed The style was aca demic and defensive dealing with familiar topics the declining US im port coefficient capital controls foreign trade savings and inflation and the importance of industrialization The paper seemed more a digest of his lectures in the faculty and Mexico than a policy document and while it was enlivened by his centreperiphery terminology his explanation for this lopsided capitalism was not complete and unlike his 1943 Rhythm of Eco nomic Activity it did not refer to declining terms of trade Prebisch was clearly struggling as he faced the approaching deadline aware that his work fell short of what he knew he could achieve What happened next has been masterfully related by Furtado in his au tobiography A Fantasia Organizada22 While Prebisch struggled in Santi ago Croire in New York received a copy of a draft report Hans Singer had written for the UN SubCommission on Economic Development titled Postwar Price Relations Between Underdeveloped and Industrialized Countries23 Incredibly Castillo had received an advance copy of Singers document on 17 December when UN statistician Louis Shapiro arrived from New York but he had not shared it with Prebisch24 Croire noted a reluctance by senior staff for its circulation because Singers report challenged conven tional wisdom and would therefore likely be rejected by the UN Sub Commission but he sent it immediately to Raúl along with another imf paper on foreign trade Prebisch had never met Singer a Germanborn scholar who had left Germany in 1933 and taken a PhD from Cambridge University Recruited by David Owen to work at the UN he arrived in New York in April 1947 on a twoyear leave of absence from the University of Glasgow Here he began his work in the trade section of desa with an in teresting group of economists who drew his attention to the terms of trade issue25 Singer argued that historical statistics demonstrated a decline in the terms of trade of developing countries From the latter part of the Triumph in Havana 243 nineteenth century to the eve of the Second World War a period of over half a century there was a secular downward trend in the prices of primary goods relative to the prices of manufactured goods26 Such a decline pro vided an added incentive toward industrialization in developing coun tries since they would otherwise lose resources for development relative to their industrialized counterparts27 The Singer piece also raised the issue of global equity since if his data was correct the dynamic of international trade created a divide between rich and poor Singers paper was the stimulus Prebisch needed to escape his mounting frustration and fear of failure In his 1943 Rhythm of Economic Activity Raúl had already assumed a secular decline in international terms of trade for agricultural countries and both Kindleberger and Samuelson had written articles based on this hypothesis28 But Singer not only demonstrated it sta tistically within a rigorous historical study he also articulated the ethical implications of declining terms of trade in the global economy Prebisch therefore recognized a kindred spirit in the British economist Singers work both corroborated his assumptions on trade and gave him the confi dence to recast his work with a new structure and style Raúls energy re turned and he began writing from scratch ensuring that all copies of his earlier text were discarded Then in three days and nights he wrote The Eco nomic Development of Latin America and Its Principal Problems which came to be referred to as the Manifesto or the Havana Manifesto in which the la boured prose of his earlier work disappeared in an essay that recalled the power and simplicity of Keynes The fiftypage document may not have been scholarly as defined by refereed journals nor was it replete with mathematical formulas explicit hypotheses or reams of footnotes None of the individual components of his main argument was entirely novel it is correct for example to identify the terms of trade breakthrough as the PrebischSinger Theory but Prebischs Manifesto served to mold these disparate components into a unique and compelling synthesis29 It suc ceeded in reexamining the determinants of economic activity in develop ing countries and represents a key event that changed the vocabulary of international development and marked a new period in Latin America The 1949 Manifesto began by paraphrasing Aristotles dictum The facts have not yet been sufficiently established If ever they are the credit must be given to observation rather than to theories and to theories only in so far as they are confirmed by the observed facts Latin Americans he argued must have the courage to confront their own reality to find solutions and this meant subjecting inherited wisdom to the ultimate questions Does it work Who gains and loses To understand is to be free and able to take control of ones destiny the Manifesto implied and Prebisch 244 The Life and Times of Raúl Prebisch articulated an unforgettable if deceptively simple framework to explain why the system was not working in the mutual interests of rich and poor na tions why the industrial countries reaped the major gains and what had to be done to restore equality for Latin America in the international econ omy 1949s The Economic Development of Latin America and Its Principal Prob lems owes much to his 1943 Rhythm of Economic Activity There is the same confident tone the same stepping back from his data to highlight the key points and the same assurance that the dilemma facing developing coun tries could be successfully overcome But the Manifesto was also different in its regional vision and call to ac tion The centreperiphery conception of the world economy was much more explicitly focused on the dynamics and structure of global inequality It began with the claim of a unified world economy in which all states industrial and developing were linked in a single system of exchange and affected by a common business cycle Within this system however he coun terposed the quite different roles of the rich industrial versus developing agricultural countries the latter produced primary products for industrial countries in return for manufactured goods while the business cycle be gan in the core countries and spread to the periphery Prebisch then ar gued that the distribution of benefits was unequal because the dynamics of foreign trade and the business cycle favoured the industrial countries This was not illwill of governments but rather the inherent functioning of the system that gains in productivity were greater in industrial than in primary goods could be documented by the declining terms of trade that he had assumed in 1943 and that Singer had now documented This factor in turn was aggravated by an international trade cycle in which the agricultural countries were more vulnerable than the core economies during reces sions because organized labour in Europe or North America was suffi ciently strong to prevent an equivalent collapse of prices The result of both factors a secular decline in terms of trade and business cycle vulner ability explained the fundamental flaw of neoclassical trade theory which assumed equal benefits for industrial and agricultural exporters and which was assumed to have the same validity in Latin America as in the US or Britain There was in short an inherent asymmetry in the system the un derstanding of which was a necessary step toward understanding Latin Americas insertion in the international system and thereby designing a new approach appropriate for its needs in the future30 The attraction of the Manifesto lay in its dual thrust not only did it offer a powerful diagnosis but it also contained a vision that promised agri cultural countries a way out of their dilemma To be peripheral was not necessarily to be dependent as in his 1943 Rhythm of Economic Activity he Triumph in Havana 245 proposed that industrialization with due care to avoid inflation and dis tortions offered Latin America the prospect of reversing the dynamic of unequal exchange that otherwise doomed it to constantly diminishing benefits in the global economy Here was a nonrevolutionary non communist prescription for change that all governments in the region re gardless of ideological orientation could applaud It was a call to action that Prebisch based directly on his experience in Argentina where import substitution had already advanced considerably before 1914 and where the Central Bank had pursued precisely this role to the point where industrial production equalled that of agriculture in the national economy by 1943 From a regional perspective where most economies were less developed than Argentina it was a bold departure Moreover once out of the bottle his challenge to peripheral economies to move from commodity produc tion to a more diversified industrial economy proved irresistible and dura ble so that today it is so taken for granted that the originality of the Prebisch Manifesto has been obscured by its success Under its extraordinarily elegant and flowing prose and for all its appeal to reason and measured argument there was an almost imperceptible but unmistakable undertone of indignation even suppressed anger in the Man ifesto Development economics he implied meant taking a stand The treat ment he had just received in Washington may explain part of this edge as well as the trade pessimism of 1949 in which the outlook for increasing Latin exports was gloomy Formerly prior to the Great Depression he ar gued the Latin American countries developed outwardly stimulated by the constant increase in exports There is no reason to suppose at least at pres ent that this will occur again to the same extent except in very particular cases31 Given this grim prospect the international economic system was even less likely to stimulate development and technical progress in Latin America and it was therefore urgent to get moving without delay On finishing the Manifesto Prebisch was more confident than at any time since 1943 and he was eager to leave for Havana He recognized that the re port would be controversial In a copy that he sent to Ravndal timed to coin cide with his presentation in Havana Prebisch indicated that the ideas contained in the report do not follow conventional lines With your wide knowledge of our reality you will be able to evaluate their true reach32 MartinezCabañas also did not circulate it to ecla staff before the Havana Conference only Furtado was given a copy to translate into Portuguese since he would not be attending the Havana meeting For all the others as well as the delegates it was to be a complete surprise Prebisch telephoned Adelita from Havana after he arrived and she cabled a note of good luck in return I have no doubt that it will receive the success it deserves33 246 The Life and Times of Raúl Prebisch The conference opened on 29 May with fanfare in the Capitolio Nacio nal It was eclas first big international test and the national and regional press were mobilized to report the newest bureaucratic addition to the Americas but the turnout of diplomats was uneven beginning with the Americans who sent a message to ecla by sending their lowranking US ambassador to El Salvador as head of mission Argentina matched Washington by sending its ambassador in Honduras to Havana The Chil eans as ever led by Hernan Santa Cruz were out in force HM Phillips at tended for Britain diplomats Robert Buron and Philippe de Seynes for France As if to compensate for the thin audience the welcoming com mittee was most distinguished UN SecretaryGeneral Trygve Lie Cuban President Carlos Prio Soccaras and Chilean Minister of Economy and Commerce Alberto Baltra who was chair of the session President Prio delared that eclas mission was driving the shadow of hunger from the American scene and that you are gentlemen the hope of the world34 Baltra added some realism noting that Latin America was weak depen dent and unstable and remained unable to surmount its semicolonial structures The secretarygeneral was the most modest of all duly noting the commissions dual role as a regional instrument within a body having global responsibilities but finding little else of a concrete nature to add ex cept that the Economic Survey was eclas first great project35 The Economic Survey was hardly the great project announced by the UN secretarygeneral although it could be defended as the best possible document under the circumstances It offered a regional panorama in 245 pages addressing the Trends in Production in industry and agricul ture over a tenyear period since 1937 part A with a part B summarizing Other Economic Aspects including population transportation foreign trade inflation balance of payments and prospects for European recov ery The report offered considerable information otherwise not available starting with basic population data Ecuador had never had a census Bolivia had last attempted one in 1900 Uruguay in 1910 By suggesting a total population of 146 million with a 18 percent annual growth rate the Economic Survey laid the basis for essential statistical data collection in the region and it offered many other useful findings It concluded that man ufacturing in 1947 had grown 21 percent above the 1937 level but that the per capita increase remained lower than the world average In foreign trade Latin America remained extremely sensitive to fluctuations in inter national markets Exports of agricultural goods and livestock remained the same over the decade 52 percent with a promising trend toward more processed raw materials balanced by a 45 percent increase in imports of foodstuffs Nevertheless the regions share of global exports had expanded Triumph in Havana 247 to 13 percent in 1946 from 9 percent in 1937 with the US having replaced Europe as its chief market Latin Americas challenge was to overcome the major obstacles to development which the survey identified as low labour productivity in agriculture and industry the shortage of savings for produc tive investment a persistent housing crisis and stagnation in the mining sector The problem with the Economic Survey in Havana was its overly gen eral and descriptive content While the delegates saw enough value in it to recommend that ecla build on its work and prepare another annual sur vey of the economic situation in Latin America for its next meeting in 1950 it lacked a framework and an action plan This is what Croire had feared and why he had welcomed Prebischs shortterm contract Lacking a distinctive approach to development the Economic Survey presented in Havana had too little bite to interest governments in eclas mission They were bored there was nothing here that other agencies like the World Bank or the imf or even the oas could not do just as well Prebischs report filled this void That his presentation in the lush Cuban capital electrified his audience understates the impact of his report A bit of a mystery figure he created an almost unbearable tension after rising to the podium in the hotel ballroom and extending a silence into anxiety before beginning his address in hushed tone and deep voice Dressed in a blue pinstriped suit he spoke without prepared text or notes and seemed to bond instantly with the delegates who were caught up in an unexpected and mesmerizing collective experience International trade was no longer the mere exchange of logs and rocks Prebisch took them into his confi dence discussing complex economic concepts without a retreat into jar gon carrying the crowd along as the argument for regional selfreliance built By the time he closed the delegates had no doubt that Latin Ameri cans had to act immediately to share the benefits of economic progress with the industrial countries and also that they would be successful in changing their destiny among the world powers No one was unmoved it was a great show with a memorable response The Manifesto created a sensation in the media throughout Latin Amer ica while creating consternation among senior UN and US officials in New York and Washington who understood its power Prebischs framework of structuralism offered a new approach to international development he had declared for an activist state and industrialization in a new language that challenged the old doctrine of comparative advantage The notion that agricultural countries in Latin America could thrive in the future by remaining commodity producers was undermined and all development experts whether from the industrial or developing countries knew that a new debate had been launched 248 The Life and Times of Raúl Prebisch The immediate and harsh reaction of mainstream economists includ ing Gottfried von Haberler Gerald Baldwin Charles Kindleberger and Gerald Meier to The Economic Development of Latin America and Its Principal Problems underlined the seriousness of Prebischs challenge to traditional economic theory36 Jacob Viner of Princeton University set the tone by dismissing the Manifesto as a set of malignant fantasies distorted histori cal conjecture and simplistic hypotheses37 During a series of lectures in Brazil at the National University during July and August 1950 Viners ar rogance astonished his audience as much as his advice stay with free trade dont be wooed away from neoclassic verities by sirens promoting economic diversification dedicate yourselves to agriculture and birth control Prebisch was a heretic even a grand heretic38 to be avoided at all costs Other US economists were less ideological with criticisms ranging from the empirical data underpinning the PrebischSinger terms of trade theory to the impact of technological innovation But Prebischs critics missed the point The Manifesto never claimed to offer a fully devel oped theory of economic development its text repeatedly appealed for more research It was not antitrade The more active Latin Americas foreign trade the greater the possibilities of increasing productivity by means of intensive capital formation It was not antiagriculture The industrialization of Latin America is not incompatible with the efficient development of primary production Nor was it blindly proindustrializa tion chapter 6 of the report was titled The Limits of Industrialization Industrialization is not an end in itself but is the only means at their dis posal of obtaining a share of the benefits of technical progress and of pro gressively raising the standard of living of the masses39 Viner who called himself an oldfashioned free trader could only fall back on the old ne oliberal rules of thumb such as strengthening the investment climate or pulling in ones belt Prebisch also believed in the market and sound investment climates but demanded answers to another set of questions What else is required for development he asked What about asymme try in the system He challenged the market itself as the great equalizer and called for purposeful state action so that weaker countries could share the benefits of the international economy This was the cognitive leap that identified Prebisch as the father of de velopment he had presented a new vision of underdevelopment in a fundamentally novel framework that challenged existing theories with an alternative approach including both industrial and peripheral countries Indeed the most serious and resented of Prebischs criticisms of neo classical economists in American and European universities was their pre sumption of wisdom One of the conspicuous deficiencies of general Triumph in Havana 249 economic theory from the point of view of the periphery is its false sense of universality40 Instead the Manifesto demanded the end of the prevail ing absolutism in economic theory and pointed to the need to see develop ment as a more complex process of change that depended as much on regional structures and characteristics as on neoliberal verities The partic ular vulnerabilities of Latin America which he had first articulated in his Notes on the Money Supply in 1921 had to be addressed if the region were to succeed and contribute fully to global prosperity and since this part of the development equation depended on understanding the Latin American reality economists from the region should concentrate on this task as much as on copying models from developed countries Raúls personal metamorphosis after his triumph in Havana rivalled his professional breakthrough Having stunned his audience he abruptly left the conference and disappeared from the Hotel Nacional remaining out of communication with everyone including Adelita This had never happened before She didnt hear from him for days and read about the speech in the newspapers and cabled to him evidently annoyed This was the first sign of life about you in the last three weeks she wrote on 10 June Evidently the strain and tensions of the past six years capped by the imf rebuff and now his sensational public success had unleashed an unbridled sexuality heretofore contained by a life of disciplined work and family Like his fathers Raúls personality had harboured another side that broke free in lush Havana Like his father he would keep this side of him completely isolated from his professional life Another Raúl had made its unwanted appearance alongside his banker suits and the irreversible character change was bewildering and saddening for Adelita and his friends who remained loyal to the essential Prebisch When he resurfaced from the Havana underground Prebisch returned to the third session No one could doubt that he had been the centrepiece of the Havana meeting the big victor Everyone including he himself real ized that the Manifesto had launched him as a regional personality and a formal resolution of appreciation was approved on 14 June at the close of the meeting One year after his humiliating rejection by the imf he had re versed his fortunes in dramatic fashion and emerged as a vip He was no longer Dr Prebisch he was don Raúl 12 Claiming ECLA Before Havana Prebisch had viewed ecla as a secondary player in the interAmerican game and he went to Havana as a shortterm consultant with one idea only to present a report that would vindicate the years he had spent elaborating a new approach to Latin American economic devel opment after which his contract would expire on 31 July Having experienced Havana however he was now convinced that under his leadership ecla could be transformed into a powerful instrument for channelling the regionalism that his report had provoked Santiagos ap parent disadvantage of location could be transformed into advantage the greater the distance from Washington and UN headquarters in New York the greater its defense against their orthodoxy and pressure to conform ecla could prosper as a uniquely Latin American research centre outside the rigidities of the Atlantic Alliance Since 1945 qualified Latin American economists had had few options other than the international organizations based in the US or Europe ecla could become an alternative location and intellectual counterweight to this bleeding of talent offering an au tonomous centre of ideas where indigenous approaches to development could be explored Santiago could become a regional laboratory for link ing theory with practice in the urgent and practical tasks of development An ecla with this purpose and energized by his own leadership could stem the exodus of talent from the region to Washington and New York keeping young economists like Celso Furtado and Victor Urquidi in the re gion enriching Santiago by bringing Latins from all the subregions to gether profiting by their different experiences and in general promoting the development of Latin American economists and research institutions rather than big international organizations such as the imf and World Bank Such an ecla could be a magnet for economists in North America and Europe who were committed to development but sought insights and Claiming ecla 251 experience beyond the mainstream transatlantic alternatives In short Prebisch realized that with proper leadership ecla could become a power ful centre of ideas and action rather than merely another small UN agency at the end of the world David Owen and other UN officials immediately understood Prebischs value to the world body They had heard him speak and saw what he could do with crowds Here was a real leader and the UN needed charisma to project internationalism Prebisch was also from the South rather than Eu rope or North America and he was an original thinker as well as a charis matic personality Owen knew that the United Nations should attract him into its ranks There was of course the delicate issue of The Economic Devel opment of Latin America and Its Principal Problems the Prebisch Manifesto It was obviously impossible for the UN to include it with the officially ap proved documents at Havana because the US and other Western missions disagreed with its central thesis Hans Singer had experienced the same re sistance earlier that year and Prebisch had placed industrial countries even more on the defensive1 If the international economy represented a single interdependent global system and if its dynamics favoured only one set of countries then the responsibility for correcting the imbalance fell on both the vulnerable agricultural and the privileged industrial alike only their combined action could create the right conditions for development MartinezCabañas agreed with Owen on dissociating ecla from Prebischs Manifesto and in the end Trygve Lie signed a preface stating that the views expressed in this report are entirely those of the author and that it was being published only because the subject is of vital importance to the United Nations Although contrary to UN policy and a unique ex ception senior UN officials considered this route very desirable2 This UN decision to insist that he take credit and responsibility for his report boosted Prebischs visibility in New York and Latin America and gave him much greater recognition than if the Manifesto had been buried in the Havana documents Prebischs future career plans were even more critical for ecla the principal beneficiary of his role in Havana MartinezCabañas had a good instinct for survival and realized that Prebisch was vital to eclas contin ued success Without him the Havana meeting might have failed and the challenge of survival was not over by any means ecla had only two years left to prove itself Prebischs prestige and talents were necessary to main tain the momentum MartinezCabañass fears were realized in July when ecosoc reviewed eclas performance it was far from enthusiastic warning against bureaucratization for example by creating the per manent Trade Committee much desired by the executive secretary3 252 The Life and Times of Raúl Prebisch The implication of this lukewarm response was that nobody in Santiago or New York could relax MartinezCabañas therefore sought out Prebisch before the two men left Havana but in these negotiations the beleaguered executive secretary must have felt distinctly like Dr Frankenstein he had needed Prebisch even before Havana and now had to pitch the offer much higher At the same time he realized full well that since Raúl was more powerful than him in every way he risked creating a potential monster likely to escape his control Some early incidents had already lowered Prebischs regard for his boss such as his request that Raúl help him negotiate a better deal for him on a diningroom set purchased in Buenos Aires and destined for his Santiago residence this in the midst of eclas struggle for survival and Raúls own dismissal from the university But a deal was struck and on 16 June Prebisch agreed to a ninemonth extension of his contract to 30 April 1950 The negotiations over Prebischs new terms of reference revealed how quickly the flow of power was ebbing away from Martinez Cabañas Prebisch agreed to stay on in Santiago but only if he could create an autonomous research centre with himself as director in effect taking full control of eclas entire research program including the preparation of the Economic Survey and limiting the scope of the executive secretary to operational and policy activities The agreement split the secretariat into two separate components Prebisch would have full authority over person nel assigned to the Centre control his own budget and be solely respon sible for all studies and reports Permanent staff appointed to the new Centre would be made upon proposals by the Director The executive secretary would be kept informed to enable him to express his views but Prebisch himself would handle communications with outside persons and institutions Since research comprised eclas primary mission this division of labour was in effect a coup détat by a person who remained technically a consultant and who was not as yet a fulltime UN civil servant Prebisch further insisted on an additional clause stating that should Mr Prebisch become a member of the permanent staff of the UN he will have the same rank as the topranking Director MartinezCabañas retained the title of executive secretary but Prebisch would become eclas most visible personality in both Santiago and the region New York agreed to this arrangement On 5 July 1949 Prebisch took his UN oath it was the symbolic beginning of his new career He cabled Adelita that the next step in our lives has been definitively decided In another letter he described the new arrange ment in glowing terms he finally had the research centre that he had been seeking for so long and under perfect conditions True it was not Claiming ecla 253 Argentina but a regional Latin American focus expanded the vision and the challenge They would be moving to Santiago Because Adelita was to join him in Mexico on 15 July she had little time to rent their house in San Isidro and prepare for the move This time she arranged the shipment of all their furniture from 563 Chile except the old Citroen which re mained in the garage for the new tenants French banker friends of René Berger who accepted a oneyear lease at 1700 pesos a month Raúl took delivery of a big Chevrolet which arrived in Santiago from New York on 9 October On her last night at 563 Chile Adelita described her mixed feelings on leaving the country It was she said a nightmare to give up our little home in which I have lived so happily as your little secretary4 She sensed that they might never return to Buenos Aires Before returning to Santiago from Havana Prebisch decided to shore up eclas diplomatic defenses in New York Washington and Mexico City be cause the second session and the reaction to his report demonstrated that he would need far greater support in these capitals for survival He therefore spent most of the summer in Washington and New York returning to Santiago via Mexico City on 21 October In New York Prebisch acquainted himself with the UN power structure meeting SecretaryGeneral Trygve Lie personally for the first time and visiting David Owen H Caustin and Wladek Malinowski in the Departments of Economic and Social Affairs to be merged into a unified desa in 1954 to discuss the future of ecla and expand its scope of action within the system Like Owen Malinowski had at tended the Havana Conference and he and Prebisch immediately recog nized each other as allies Malinowskis father was one of the founders of the Polish Socialist Party and he himself had been active in its Students Inde pendent Union before the Communist takeover and his expulsion from Poland Aware that this background gave him no influence whatsoever in Washington or Western capitals he became an adept UN insider with a fin ger on the pulse of the organization and a valuable ally in finding secret routes through the bureaucratic maze The Latin American Unit under Caustin and Alfonso Santa Cruz was still understaffed Croires departure he had returned to Argentina made things even more difficult But all agreed to avoid repeating the chaotic months before Havana and promised to improve liaison between desa and Santiago in the preparation of eclas second Economic Survey which would be presented at its third session 521 June 1950 in Montevideo Uruguay Prebisch was now responsible for this task and he was determined to avoid the confusion and nearfailure of the first Economic Survey Much of the data information and facilities for studying the Latin American economies were located in New York and Wash ington and accessing these sources was essential in carrying out eclas work 254 The Life and Times of Raúl Prebisch Washington presented a more difficult dilemma The Truman Adminis tration had abstained in the 1948 UN vote creating ecla and the US had already decided that it should be terminated when its threeyear grace period ended in 1951 A month before Havana the oas InterAmerican ecosoc had met in plenary session and recommended discussions with the UN to take over eclas budget while keeping some of the more com petent members of the ecla Secretariat and the State Department main tained its view after the meeting that ecla and the oas InterAmerican ecosoc should merge5 This meant absorption David Owen acidly noted that he would accept the US plan so long as the new merged orga nization reported to him in New York rather than to the oas in Washing ton A resolution at Havana requiring that ecla improve its coordination with the oas was universally seen as a procedural standoff while the future of ecla was coming to a head Prebisch therefore decided that the UN had to be proactive rather than passive in changing attitudes in Washington and he recommended a small office as an essential window and listening post in the US capital Several purposes would be served it would preempt US criticism by promoting regular dialogue with US Government agencies the ExportImport Bank and the oas it would place ecla in the inter American diplomatic network of the Beltway and it would also benefit Santiago directly by building a network of professional contacts in US agencies and major international organizations like the oas and World Bank Two Americans Sidney Merlin from the World Bank and George Kalmanoff from the US Commerce Department were chosen to head the office Prebisch even proposed that it be located in the oas building but the InterAmerican ecosoc was unwilling to share space with its new Santiago competitor Prebisch also decided to set up a small liaison office in Mexico as a visi ble toehold in the northern region of Latin America and a key country to have onside in the escalating struggle unfolding over eclas future The Mexican Government was not considered an ecla supporter but it was also not likely to take any positive action in eliminating the organization because MartinezCabañas was a Mexican citizen The tiny office Prebisch placed it in the Mexican Central Bank with the support of Rodrigo Gomez with only one junior official to save costs would serve as a signal from Santiago that it intended to regionalize eclas work and thereby offer the northern countries a more direct role in its operations than did the oas Its first task was to ensure that data and reports from the Mexican Caribbean Basin region were available for the Second Survey In Santiago Prebisch was restored physically and mentally by the new challenge regaining the energy of his Central Bank days and looking Claiming ecla 255 younger than before Havana He returned to a daily eighteenhour work regime organizing the work of the Research Centre selecting its staff and seeking out new talent The economists already in Santiago formed an eclectic but interesting group Besides MartinezCabañas who was con stantly travelling Eugenio Castillo and Louis Speck Swenson comprised the Office of the Executive Secretary in overall charge of the Secretariat Swenson was the rare American both trusted by Latin Americans and also able to communicate effectively with UN and State Department officials indispensable for ecla and vice versa We like Santiago he wrote to a friend in New York after his arrival the Chileans are cordial and friendly6 Milic Kybal halfMexican although a citizen of both the US and Czechoslovakia was another interesting international expert at ecla Originally hired in August 1948 on a sixmonth contract and rapidly pro moted to head of research before the Havana meeting Kybal was a capable industry expert but more of a follower than leader His constant reminis cences of unforgettable years at the Federal Reserve both irritated col leagues and called his commitment into question Celso Furtado stood out as an outstanding economist and intellectual He had fought with the Brazilian Brigade in Italy and remained in Europe for graduate work at the Sorbonne Gudin and Bulhões recognized him as one of the leading minds in the country and encouraged him to try ecla Their interest as well as the preference of his Argentine partner for a Spanish language milieu had brought him to Santiago Most of the other economists had been educated in the US or Britain Regino Boti a trade specialist was alternately brilliant funny and maddening in the Cuban way a selfdeclared socialist obsessed with the US who had attended Harvard and boasted that he had never read a page of Marx and hired on the recommendations of senior UN headquarters staff for his statistical skills Others stood out less promi nently Chilean Bruno Leuschener a mining engineer was the brother inlaw of founder Benjamin Cohen the two Argentines Alizon Garcia and Raúl Rey Alvarez were exofficials of the Central Bank in Prebischs era Bolivian Jorge Alcázar and Central American Francisco Aquino both agri culture specialists provided regional balance Jorge Ahumada a Chilean specialist in international trade research joined the team soon after the Havana Conference7 The appointment of Prebisch to head the new Research Centre marked the real birth of ecla Morale in Santiago improved staff discovered a di rector who could actually draft his own texts and was a leader in ideas as well as management His presence was commanding and he was a stickler for literate prose Some staff members had met Prebisch in December 1948 when Castillo had invited him to Santiago as part of the campaign to 256 The Life and Times of Raúl Prebisch enlist him for the Economic Survey the encounter had not been very suc cessful Meticulously dressed in a grey wool suit with accompanying distin guished greying temples he seemed aloof and from a different generation Alizon Garcia and Rey Alvarez had prepared the staff for his visit with anec dotes describing his iron control over all aspects of the Argentine Central Bank before 1943 including his insistence on special crockery for direc tors But they found that he was not entirely humourless after all even if demanding and ruthless when crossed He himself set the standard of com mitment and excellence and he expected no less from his staff Principally he was a listener subjecting staff members to a barrage of questions that eventually left them drained and exhausted but also exhilarated by en gagement in the ecla cause Prebisch not only commanded the spotlight but also seemed to empower those around him His leadership created a new enthusiasm within ecla in Santiago and it entered a period of in tense activity and expectation It was as if the continuing threat to its exis tence created a special bond within the small ecla team Visiting Santiago in 1950 Hans Singer was struck by an atmosphere of innovation and com mitment so intense and rare that it recalled Cambridge in the 1930s8 Between 1928 and 1943 Prebisch had supervised teams of researchers and after his dismissal from the Central Bank he had felt isolated and be reft now finally he had a team again with a budget and the capacity to support the largescale economic research required in the region Latin Americas needs were enormous from reliable baseline data and policy de velopment to human resource strengthening at all levels An entire re gional infrastructure had to be created In November Prebisch was back in North America to recruit senior Latin Americans who were already em ployed in other agencies such as Javier Marquez in the imf Bernstein agreed to release Marquez for work on the Second Survey and Prebisch strengthened his ties with younger economists such as Victor Urquidi eclas immediate challenge was to prepare for its third session in Montevideo where success was essential for survival and would be mea sured by the quality of the second Economic Survey it had to be demonstra bly superior to Havana Everyone from Prebisch to the secretaries was focused on a single date 5 June 1950 By 27 February Raúl had sent a provisional agenda to headquarters encompassing longterm trends of eco nomic development the problem of productivity in industry financing economic development the role of trade in promoting economic develop ment and technical assistance for economic development Latin govern ments were demanding an economic survey that would be sufficiently practical and policyrelevant to be interesting they had used up their gold and foreignexchange reserves accumulated during World War II and were Claiming ecla 257 experiencing economic difficulties The report would therefore have to interpret the current situation with detailed sectoral analyses but also pres ent case studies on individual regional economies in sufficient depth to show that ecla could deliver useful research Prebisch selected four coun tries for detailed study Mexico Brazil Chile and Argentina but the preparation of such an ambitious economic survey threatened to over whelm the Research Centre even with staff working flatout and Raúls mobilization of additional resources in New York He approached David Grove chief of the Latin American Section in the US Federal Reserve Research Department hoping that he could be seconded for special re search assignments But there was still a lack of staff strength and Prebisch therefore went directly to Latin governments requesting that their best Central Bank economists work with ecla on shortterm assignments a concept with the double advantage of directly involving competent country specialists in the Survey while also giving these economists the experience of working with other Latin Americans Besides leading and co ordinating his expanded research team Prebisch prepared a theoretical paper Growth Disequilibrium and Disparities as an introduction to the Economic Survey to elaborate and deepen the theoretical framework of his Havana Manifesto9 As Montevideo approached it became evident that ecla had fallen be hind in its work program and would not be able to circulate the Economic Survey and other important documents before the meeting UN headquar ters was unhappy as were governments In fact both New York and even more the staff in Santiago had been frustrated with the leadership skills of MartinezCabañas since his arrival Although the Research Centre was gen erating draft research reports on schedule the Executive Office was not supporting its work in the editing production printing and circulation phase As well as travelling too much and having little managerial experi ence MartinezCabañas was not able to delegate effectively and when he realized that ecla would fail to circulate materials he tried to placate the US State Department by sending a copy of the still confidential agenda well in advance of the Montevideo meeting All the Latin American capitals were watching Washington The Truman Administration was still reviewing US policy toward the Americas after his re election in autumn 1949 like virtually all US presidents before and since Truman had opened his new administration by promising to revitalize rela tions with Latin America From early 1949 Secretary of State Acheson talked up the priority of interAmerican relations insisting that US neglect since 1945 and the onset of the Cold War would be reversed In a speech to the PanAmerican Society on 19 September 1949 he announced a package of 258 The Life and Times of Raúl Prebisch new initiatives that was widely praised in Latin capitals The US Bureau of InterAmerican Affairs was reorganized and strengthened around a mission promoting security democracy and economic development and a fulltime ambassador was assigned to the InterAmerican ecosoc to beef up regional multilateralism President Truman reaffirmed Achesons message in a recep tion on 12 October Assistant Secretary of State Miller followed up with such flowery speeches invoking wartime solidarity that one of his ambassadors feared the consequences of overselling the new resolve in Washington He grotesquely misquoted Miltons Paradise Lost With rain upon rain rout on rout confusion worse compounded for the truth was that the Truman Administration still had made no decision on Latin American policy as inter nal disagreements continued over the final wording of ObjectivesPolicies of the US regarding Latin America10 Atlanticists like George Kennan downplayed the importance of a re gional approach to Latin America arguing that Washington should select a few significant allies like Brazil and Mexico rather that promote a geopo litical fiction like the Western Hemisphere Nelson Rockefeller in con trast underlined the need for longterm US economic engagement in Latin America John C Dreier argued that it was a mistake to give Latin Americans the impression that they had a right to be consulted before the US took important steps in the world Louis B Halle Jr championed soli darity favouring consultation as the British did with their Common wealth acknowledging that certain Latin American grievances against the US were justified but nevertheless regretting the persistence of old con cepts such as the US exercises leadership in world affairs on behalf of the community of American states Miller warned against an excessive ten dency to put on the hair shirt Acheson tended toward the flowery At a meeting of Latin American leaders he insisted we are a part inescapably of the partnership of the free world not he said an alliance like those which crisscrossed Europe in the last century not as a sphere of influ ence arrangement or a satellite system but as a spiritual confederation of peoples as well as nations that are bound together by their concern for freedom11 But all these officials agreed that the Americas was a US zone and therefore that the oas represented the US reserve security system Halle confided that the twenty other Republics are largely by force of circum stances our clients That is the basis of our leadership12 The oas served as the only exclusive USLatin American link and therefore was a worth while investment The US paid most of the budget its headquarters were in Washington the US had control over appointments and programs and not least InterAmerican ecosoc Executive Secretary Amos E Taylor was Claiming ecla 259 an American It followed that the oas should remain as the unchallenged forum for USLatin American relations rather than having ecla funded by the United Nations share this interAmerican turf and duplicate re sponsibilities The Truman Administration had already been stung by at tacks earlier that year gaining momentum after 9 February by Joseph McCarthy Republican Senator from Wisconsin that the US State Depart ment had been infiltrated by communists who were duping Truman into a policy of appeasement The Presidents approval rating was eroding sharply McCarthys anticommunist crusade retrenched US foreign and domestic policy sharply toward the right and injected a harsher ideological orthodoxy into USLatin American relations Some experts on the UN pay roll had been or were still leftists or communists an ideological witch hunt within US agencies would certainly spread to the international civil service whether in New York or Santiago Since Latin governments were themselves more anticommunist than the US only in Guatemala were there rumblings against the United Fruit Company the Truman Adminis tration realized that the region was politically safe But was it completely loyal Whereas the oas was safely headquartered in Washington ecla was potentially unpredictable in its hiring and activities It was tiny now but what if it hired leftists or even communists What if it turned USLatin American irritants into major confrontations such as for example the creation of an InterAmerican development bank which Washington had just vetoed in Bogotá From its very inception tiny ecla was a wild card and irritant in USLatin American relations not for what it was in 194849 but for what it might become in the future Implicitly at least it challenged the interAmerican system represented by the oas and the 1947 Rio Treaty of Reciprocal Assistance outside the ideological confor mity of Cold War anticommunism Unlike the oas ecla was not predict able or fully controllable and there was no way to prevent the emergence of radical views on markets and the state or priorities different from those of Washington regarding the communist threat security and develop ment Latin Americans supported economic development with the Cold War a secondary concern in Washington it was the other way around In this equation ecla was clearly identified with development and its survival had symbolic overtones in interAmerican relations By early 1950 the Truman Administration was confident that the oas would prevail over ecla At two interAmerican meetings in April the ter mination of ecla was openly supported by Mexico Argentina Colombia El Salvador and Panama as well as the US Chile Brazil Uruguay Guate mala and Cuba continued to back ecla while Peru objected to the pres ence of European governments in the Commission and neither Venezuela 260 The Life and Times of Raúl Prebisch nor Ecuador had strong opinions one way or the other With this support Washington pressed its agenda forward On 5 May the oas delivered a formal note to Trygve Lie announcing that it had created the Program of Technical Cooperation in direct competition with the UN13 Latin govern ments such as Chile which supported ecla were frustrated by Washingtons overt favouritism A month before the Montevideo meeting Hernan Santa Cruz the Chilean UN permanent representative who had taken a lead role in eclas creation two years earlier literally collared his US counterpart according to a State Department account of the incident to complain against this effort to liquidate ecla The US replied that there was no jus tification to talk about a US Plan but that there were a number of Latin American Republics which with us felt that the present duplication was paralyzing constructive action both in ecla and InterAmerican ecosoc and which considered that the present situation was untenable Santa Cruz grew most plaintive over our attempt to scuttle ecla He consid ered the InterAmerican ecosoc useless how can you have duplication between something and nothing while ecla was the only effective mul tilateral mechanism to deal with Latin Americas economic problems14 ecla had only one more year to run before its threeyear trial period was up and it had to build support and momentum at Montevideo for its coming test US strategy at the third session was the reverse to undermine eclas credibility by a campaign of quiet diplomacy letting Argentina and Colombia take the lead by promoting its merger with the oas among hold out governments in the region while preempting any resolution that called for its continuation beyond 1951 But while the US delegation would play a largely passive role hoping that eclas managerial disorder in preparing the Montevideo meeting would speak for itself it would hold a series of dinners for each Latin delegation at its embassy to convince them that ecla should be merged with the oas InterAmerican Economic and Social Council This strategy collided with loyalties from the past Chris Ravndal had been appointed as US Ambassador in Montevideo and in that position was named the Acting United States Representative for eclas third session The Cold War had not been kind to his career senior appointments in Washington and abroad had yielded only a modest diplomatic posting to close out his long service in the State Department But at least Ravndal was back in the Southern Cone his preferred part of the world and could again work with Prebisch He reported to Washington on 9 June I have known Dr Prebisch well since 1935 and I saw much of him both officially and privately during my six years assignment in Buenos Aires I have no hesitation in stating that to my knowledge Dr Prebisch not only is a Claiming ecla 261 gentleman of excellent character but also one of the most competent and revered economists in Latin America Also in my experience he is a highly congenial person to work with Alas Ravndals diplomatic task was to un dermine both ecla and his friend Prebisch The Montevideo meeting got off to a slow start as delegates gradually as sembled from European and Western Hemisphere capitals eclas prepa rations for the conference had been inadequate and confused and since documents were not circulated to capitals before the meetings govern ments were not able to give instruction to their delegations some materials were not circulated until well into the event The organization of the meet ing fell apart altogether it took ten days before the principal Committee on Economic Development began its detailed work with the result that the other related agendas were lumped together In the end four extra days had to be added to conclude the business But there were other problems standard procedures were not enforced by the chairs so that new propos als would suddenly appear without notice and it was never clear whether delegates were speaking in a personal capacity or as representatives of their governments More worrisome for MartinezCabañas was the distinctly lower level diplomatic representation in Montevideo compared with Havana a year earlier The UN secretarygeneral did not come this time sending David Owen who only stayed for a few days In Havana the Latin American dele gations were not topdrawer but at least they came this time as if eclas glamour had already diminished in the region important countries such as Peru Venezuela and Costa Rica chose to remain absent altogether Among the others Argentina Colombia Bolivia Ecuador the Dominican Republic El Salvador Honduras Paraguay Nicaragua Panama and Haiti were virtually invisible Mexico took a lowkey approach with a largely technical mission and Brazil was represented by General Gomes well liked because of his amiable personality and friendly attitude but not an appointment that signalled much interest in ecla This left four small countries Chile Cuba Uruguay and Guatemala as the most vocal dele gations at the conference While representatives from the imf ilo iro unesco and the fao showed up in Montevideo the World Bank decided not to participate The main interest of the three European members was in resettling refugees from Central Europe Aide Suisse à lEurope alone had plans to move 100000 Europeans to Latin America and therefore they requested that ecla set up the Economic Development and Immi gration Committee to work with the iro the International Relief Organi zation which was renamed the Office of the UN High Commissioner for Refugees a year later The British delegation led by HM Phillips de ferred to Washington or drank in the bar 262 The Life and Times of Raúl Prebisch Despite all these problems eclas Montevideo session was surprisingly successful US attempts to manage the eclaoas issue almost succeeded until General Gomes declared that Brazil greatly admired the work of ecla and that the InterAmerican ecosoc served no useful purpose The Cuban delegation agreed observing that Certain Latin American countries feel that Latin American organizations are dominated by the US Guatemala denounced the proposed merger in the most antiAmerican tones of all the delegations Soon the unruly Latin family was on display Chile in its role of apostle for the underdeveloped countries the divided Cuban delegation introducing totally contradictory resolutions on its trade with the US although united in praise for Prebisch and hostility to MartinezCabañas and Marco Antonio Ramirez the lone Guatemalan del egate who was the problemchild of the meeting according to the US delegation in his relentless criticisms levelled against the United Fruit Company15 Amos E Taylor attended along with Jorge Mejia Palacio the Colombian representative on the InterAmerican Council with the latter reading a bewilderingly disastrous speech described by Hernan Santa Cruz as the best argument he had yet heard for ecla Overall the Santiago research team embarrassed its moribund oas counterpart but the reality on the oasecla standoff was continuing stalemate since it was evident that while the US was committed to getting rid of ecla a good number of Latin American governments had dug in their heels to support it Ravndal reported this impasse to Washington noting that a merger might be acceptable in Latin America providing it retained a single strong and independent Secretariat In the same line he linked this con dition with Raúl Prebisch remaining in ecla Dr Prebisch is obviously held in the highest esteem by the Latin American governments and consti tutes an unusually able champion of their economic views16 As in Havana Prebisch was eclas central figure at Montevideo His pre sentation of the Economic Survey in the Economic Development Committee dominated the entire meeting here was the same personality and cha risma as at Havana the same leadership in substance and the same ability to communicate Ravndal once again observed Raúl in action seeing again the energy of the Argentine years and in his confidential report of the Montevideo meeting he explained to Washington that Prebischs new vo cabulary of development had seeped into the meeting like osmosis chang ing its dynamic subtly and profoundly It was interesting he observed to note the manner in which many of the Latin American delegates by the end of the session had adopted as their own much of the thinking and even the technical phrases used by Dr Prebisch in his central thesis on Latin American economic development17 Prebisch was the magnet of Claiming ecla 263 attention this was the undeniable reality as the second Economic Survey was received with enthusiasm and reported favourably throughout the re gion Work of this quality and depth on Latin America did not exist the 650page document and country studies represented frontier work Prebisch gave voice to the overwhelming official and public interest in economic de velopment in the region spending days at the podium fielding both policy and theoretical questions on the four country studies produced for the meeting as well as global challenges confronting Latin America in the in ternational economy If Havana gave Prebisch visibility Montevideo added credibility The research work produced under his direction reported Ravndal is welcomed and endorsed by many who might be suspicious of facts and conclusions presented by economists in Washington The only resolution of substance presented at Montevideo with the bibli cal sounding title of Economic Decalogue comprised a set of principles to guide economic development in Latin America It was drawn up by a work ing group in which US representatives had been absent In essence the ten point Economic Decalogue asserted that Latin American governments should adopt specific development goals with an order of priorities for their real ization and that they should identify specific policies to intensify their growth rate and overcome obstacles18 It was evident that the resolution was linked with Prebischs central thesis on development outlined in the Eco nomic Survey that Latin America had to overcome its external vulnerability and break a vicious cycle of low productivity low income and low savings by restructuring domestic production and imports ie promote industrializa tion The US delegation objected to being caught completely unawares and threatened to block the Decalogue prompting the threat of a serious US Latin American rift and even the failure of the entire conference This crisis was overcome through the efforts of Pierre MendèsFrance who led the French delegation and was also the UN rapporteur with the task of reporting its results to the ecosoc meeting on 7 July in Geneva Along with Prebisch he was the most visible participant at Montevideo and the two became inseparable after meeting Not only were they the only two persons at the meeting who had read every page of the vast documenta tion but they were both dominant intellectuals who enjoyed each others company and shared a common vision of the UN If MendèsFrance admired Prebischs capacity and his fluent French Raúl felt privileged to meet one of Frances leading personalities Both were prodigies and shared trajectories MendèsFrance had been elected as a Radical Socialist Deputy in 1932 and like Raúl was named undersecretary to the Treasury when he was twentynine years old Both were outsiders with Mendès France born to Sephardic Jewish immigrants from Tunisia Both were short 264 The Life and Times of Raúl Prebisch and stocky both were outstandingly endowed intellectually But while Prebisch had been rejected by his country MendèsFrance was accepted and had become a key political figure with General de Gaulle during the war and then in Paris after 1945 He had led the French delegation to the Bretton Woods Conference served on the World Bank board of governors and with the imf and had decided to serve on ecosoc for the threeyear period from 1947 to 1950 His arrival in Montevideo signalled definitive and full support for ecla after Frances initial reservations and no person was better placed to broker agreements between the Latins and Americans According to Ravndal Because of his remarkable intellect his personal prestige and his skill in negotiation and debate he had an unusual influ ence over the Latin American Delegations19 In return MendèsFrance urged his American colleagues not to oppose the Decalogue given its over whelming endorsement within Latin America and the general nature of the wording which avoided specific commitments from the US or other in dustrial countries In the end the US accepted his advice with the insertion of pending further study and the meeting finally terminated with the adoption of the Decalogue But the US remained unhappy When Mendès France presented his Rapporteur document to ecosoc on 7 August in Geneva its representative Dr Walter M Kotschnig maintained that some of its conclusions were debatable and the Council merely noted eclas statement rather than noted with approval Even then the US ab stained from the otherwise 130 vote of appreciation for ecla which also set the date for its fourth session to open on 29 May 1951 in Mexico20 Prebisch left for New York on 20 June immediately after the meeting to settle the question of his future with the UN for his success at Montevideo forced the question of ecla leadership into the open During the meeting there had been a rumour that he would be leaving Santiago after the ex piry of his oneyear contract with ecla to become deputy director of the newly created Technical Assistance Administration in New York a power ful new UN instrument grouping technical assistance and training public sector management scholarships and fellowships and advisory social wel fare services Its directorgeneral Hugh L Keenleyside formerly deputy minister in Canadas Department of Resources and Development had invited him to join and Castillo also wanted to come as Raúls assistant Prebisch had himself confided his impending departure to Ravndal who in turn reported it to Washington over a note hoping that Raúl could con tinue his work in the region rather than leave Latin America This news enlivened the meeting with a sense of drama Prebisch preferred the lead ership of ecla to moving to New York but MartinezCabañas had only be gun his term and showed no signs of leaving Moreover Mexico supported Claiming ecla 265 MartinezCabañas as a native son while Prebisch again was bedevilled by the absence of home government support In New York he met with David Owen Keenleyside Malinowski and SecretaryGeneral Trygve Lie he also met with the Latin and US delega tions to the United Nations announcing that he had accepted the job of deputy to Keenleyside and would be leaving Santiago When the Latin gov ernments particularly Chile heard this news they confronted UN head quarters and demanded that Prebisch be appointed executive secretary of ecla instead Trygve Lie faced a quandary but after Montevideo he had little option The other two regional commissions were struggling the ece under Gunnar Myrdal had started off well as had the ecafe but the ece confronted Cold War polarization while the Economic Commission for Asia and the Far East in Bangkok lacked identity and China He needed at least one healthy commission but Owen and the secretarygeneral knew that while MartinezCabañas was not a leader removing him could be messy Prebisch was the one person who could pull ecla together and give it a regional profile Trygve Lie checked with Washington and got a favourable US response Acheson saw the State Department report on 26 June and scribbled on the margin Thanks for your note re Dr Prebisch I have heard good things about him With this Trygve Lie appointed Prebisch executive secretary at the price of promoting MartinezCabañas to the position Keenleyside had offered to Raúl Leaving Santiago per manently on 26 July without having received his furniture shipped from Buenos Aires MartinezCabañas encountered Raúl returning from New York They had little to say to one another21 After Montevideo Prebischs confidence and energy enveloped the orga nization He redoubled efforts to keep his best staff and hire others but the market for Latin American economists was extremely tight Already in January 1950 he had approached the World Bank and International Mone tary Fund for two American economists noting the shortage of qualified Latin Americans and eclas determination not to poach I would not have dared to write to you as I know the scarcity in this field he noted only to have the problem confirmed by Leonard Rist at the Bank that with our growing activity in Latin America we are in fact in the same pre dicament as you and we are competing for the same kind of training and abilities a scarcity which will only grow worse or better for the econo mists22 The cost of living in Santiago went up 24 percent during 1950 while the value of the US dollar dropped 30 percent Moreover the fact that eclas existence was at stake in the forthcoming Mexico fourth ses sion also set a practical limit on eclas resources the UN would not in crease its budget until its future was secure Prebisch needed people who 266 The Life and Times of Raúl Prebisch were prepared to commit fully and permanently and he therefore insisted with New York that ecla increase salary levels to keep the best of his staff who were being offered betterpaid jobs elsewhere Swenson stayed on as executive assistant from now on Prebischs key righthand man and Castillo decided to stay in Santiago Prebisch also convinced Javier Marquez to leave the imf to become his successor as head of the Research Centre but Marquez soon left Santiago to become Mexicos alternate executive direc tor at the imf Furtado had two offers at higher salary levels from Brazil So did Boti from the Cuban Central Bank Prebisch hunted for other econo mists from Argentina Brazil Peru and Colombia as well as Central Amer ica where he confided to First Secretary H Gerald Smith from the US Embassy he had great difficulty in locating Central American economists who have not become tinged with the Marxist thinking of a considerable portion of Mexican economists23 He also fended off offers to extract Jorge Ahumada from ecla educated at Harvard in the same class as Manuel Noriega Morales of Guatemala and Regino Boti of Cuba before beginning a series of jobs in Puerto Rico and the imf where he worked with Javier Marquez the Guatemala Central Bank and Chile Ahumadas leadership potential made him a Prebisch favourite within the secretariat In spite of difficulties the ecla team held and grew while Prebisch could not match outside salaries he offered two elements that other agencies could not and that proved irresistible for the best young Latin Americans First they shared an awareness of participating in a unique ex perience in the creation of Latin America Economists from all parts of this region were working together and sharing experiences in the common overriding tasks understanding Latin Americas place in the international economic system and solving its economic developmental and technologi cal problems They were beginning with their own experiences not those of the industrial countries in formulating theories of development The very fact that ecla might not survive heightened the awareness of personal risk and potential sacrifice instead of the security of other less challenging jobs they had chosen the solidarity accompanying life on the edge Prebisch also captured the loyalty of ecla staff by liberating them from the usual procedure at UN headquarters where personnel files were automatically cleared with the US mission before approval With this achievement unique in the UN system all staff including Americans became real col leagues rather than mere coworkers none of the other regional commis sions won this privilege and as the McCarthy period deepened and its pressure on the UN grew ecla became an oasis of ideological calm rela tive to Washington Alexander Ganz for example who had worked in Operation Bootstrap in Puerto Rico and had flirted with the US Communist Claiming ecla 267 Party in the 1930s was hired for his professional abilities by Prebisch in 1951 after a favourable recommendation by his conservative boss Harvey Perloff Adolfo Dorfman was a leftist from Argentina he also would be hounded from New York but could find shelter in Santiago so long as his work remained satisfactory But eclas main attraction was Prebischs ac complishment in creating a work environment without parallel which both challenged his best staff and rewarded ideological pluralism In the reorganization of the Secretariat for example Furtado became director of development his team which included Boti and Ganz was known as the Red Division but Prebisch chose Ahumada a conservative Chilean Christian Democrat to head the Training Program Encouraging but also balancing these divergent views strengthened debate within the or ganization with Prebisch retaining control over policy and publications24 Prebisch also launched a diplomatic campaign to establish ecla as a fait accompli in Washington and among international organizations The US capital was in political flux not so much after the outbreak of the Korean War on 25 June 1950 but rather after 26 November when China sent US forces reeling in a ground attack that neutralized General McArthurs ear lier military successes Mobilization for a major Asian conflict deepened the latent conflict of priorities between the US and Latin America and the combined impact of the Korean War and the irreversible division of Europe also strengthened Senator McCarthy Prebisch opted for transpar ency in his relations with the US Embassy on the correct assumption that the cia was tracking him in any case But he was firm When he briefed embassy officials in Santiago after Montevideo on his plans for the reorga nization of ecla he told them that he did not anticipate a oneyear job There is apparently no doubt in Dr Prebischs mind they confirmed that the ecla including the secretariat will be continued beyond 195125 Also ecla had to be effective within the cumbersome UN system which alone could shelter Santiago from the storms in Washington but which also fed on its living parts Leaving Swenson and Castillo in charge in Santiago Prebisch attended the ecosoc meetings in Geneva from 29 July to 1 Sep tember to make sure that ecla was visible and represented Mendès France was magnificent praising ecla as the most efficient and least expensive of the regional commissions making an outstanding contribu tion to the understanding the region in the fields of economic develop ment domestic stability foreign trade and balance of payments He also lavished recognition on Prebisch for the brilliant report of the Research Centre and reassured his Western colleagues that ecla was nothing if not moderate in its approach to economic development Not only had it warned against inflation but also it had unanimously condemned autarky 268 The Life and Times of Raúl Prebisch on the grounds that economic development required not selfsufficiency but a greater volume of foreign trade Canada found the Economic Survey very useful Denmark was greatly impressed and even the US delegate conceded bearing in mind US reservations about the central thesis that it was a firstclass study and a valuable contribution Only Peróns dele gate from Argentina condemned the lack of balance in the secretariat Prebisch also found probably to his surprise that the Economic Decalogue was not only praised by many members of ecosoc but had also put ecla on the development map globally Sir A Ramaswami Mudaliar India was impressed by the moderate and constructive tone of the resolution and by the similarities he saw in the problems and difficulties facing Latin Ameri can and Asian countries Walker Australia acknowledged the parallels be tween Australian and Latin American experience particularly regarding the linkage between industrialization and development Taking the side of ecla he contradicted the British ecosoc representative who warned Latin Americans against attaching too much importance to industrializa tion and advised a wise middle course to avoid the dangers of imposing high tariff barriers In this way he argued Latin America would follow the experience of Canada and Australia whose economic development had been natural and had not been forced by undue industrialization and which now enjoyed living standards among the highest in the world No Walker boomed The British had it all wrong So far from having followed a socalled natural or laissezfaire path Australia like Canada had attempted on several occasions to force the pace of its own economic de velopment with a considerable measure of success Its steel industry non existent before 1914 had been developed with state support during the interwar period with the result that by the time of the Second World War it had been possible to develop a large number of secondary industries on that basis Mudaliar thereupon demanded greater understanding from the Western industrial countries of the aspirations of developing countries and their need to escape a reliance on commodity production A richer de veloping world would also benefit them he argued and in any case they retained the upper hand by controlling foreign investment26 But despite eclas expanding support within the UN its survival at the fourth session could still not be taken in Mexico City for granted this would depend partly on deepening its support within Latin America but mainly on the flow of USLatin American relations during the Korean War As in the Second World War the US needed Latin America or at least its strategic minerals for the war effort and therefore courted governments in the region For their part Latin leaders became more assertive about linking the sudden wartime commodities boom with their longerterm Claiming ecla 269 economic development needs while it provided a shortterm economic stimulus they feared the hidden costs such as a shortage of industrial im ports during the war and the certain collapse of prices when it ended At a special foreign ministers meeting called by the US to discuss the crisis Latin American representatives vowed not to repeat the negative experi ence of World War II This time they argued a boomandbust cycle had to be avoided and Latin strategic commodities should get a fair market price rather than subsidize the US war effort Washington countered by invoking interAmerican solidarity and burdensharing in the face of a global threat to the West the US was vocal at the level of principle but silent in practice careful to avoid specific commitments The result was an undercurrent of discontent in Latin America where standing up to the Americans was tempting and when the Truman Administration continued its campaign to merge ecla with InterAmerican ecosoc Santiagos survival became a symbol of maintaining Latin autonomy Not surprisingly the US failed to win an endorsement of its plan by the Latin American foreign ministers before the Mexico meeting opened on 28 May27 The US therefore arrived in Mexico City with fewer Latin or European allies than at Montevideo and this time there were no organizational foul ups nothing at eclas fourth session was left to chance Prebisch had nar rowed the agenda and streamlined the structure with four committees to guide the work of the conference compressing the economic topics into Economic Development Trade Coordination and General Questions and the Functions of ecla This time all the documents were circulated to gov ernments well before the meeting and correctly labelled He carefully se lected the seven ecla staff members who would accompany him sent Castillo to Mexico months in advance and arrived a week early himself to supervise the final preparations and liaise with the delegations He also came armed with an expanded Economic Survey which contained ten coun try studies Argentina Brazil Chile Colombia Cuba Venezuela Mexico Guatemala El Salvador and Uruguay as well as special reports on the regional economic impact of the Korean War and trade between Latin America and Europe To complement these immediate themes he also produced Theoretical and Practical Problems of Economic Growth the final instalment of the theoretical essays initiated in Havana and continued in Montevideo which together comprised the ecla Thesis When Mexican Secretary of Economy Antonio Martinez Baez opened the third session the delegations encountered a professional operation organized to the last detail and with clear future objectives beginning with the eclaoas issue Prebischs strategy was to force a decision on eclas status at the outset of the meeting gambling that an ecla victory would produce sufficient 270 The Life and Times of Raúl Prebisch momentum to deepen its hold in the region and expand Santiagos man date and budget but this meant confronting the Americans on an issue ev eryone knew to be hazardous To Prebischs amazement another American ghost from the past ap peared in Mexico Merwin Bohan had been named acting US representative for the fourth session The old warhorse from Buenos Aires days who had played such an important role in Prebischs downfall in 1943 had earlier been appointed the US permanent representative to the oas to strengthen it in its rivalry with ecla Like Chris Ravndal at Montevideo Bohan was also struck by the irony of his newest confrontation with Prebisch he was generally wellliked in Latin America and knew very well that this issue had become hot in USLatin American relations He realized for example that a blunt resolution to merge the two organizations would fail and that Washington therefore had to come up with a more subtle option Most im portant the Americans were suspect and had to stay in the background meanwhile a solid Latin partner Mexico could take the lead role in luring other countries into acceptance Bohan came up with the idea of proposing that ecla continue for another two years conditional on coor dinating its activities with the oas and hold its meetings concurrently with InterAmerican ecosoc and for a while the outlook appeared promising the US convinced Mexico to play the role of stalkinghorse while the US delegation flooded the meeting with materials condemning the evils of du plication But the plan had to be abandoned in the face of overwhelming Latin American opposition to yet another US manoeuvre to abolish ecla The French delegation also came to eclas defense Philippe de Seynes a protégé of Pierre MendèsFrance and no less attracted to Prebisch told the meeting that while France did not want to intervene in so sensitive an issue he nevertheless felt compelled to stress that ecla was the only spe cialized UN organization which worked without ideological quarrels and the tiresome division into ideological blocs which affected its other agen cies This oblique criticism of McCarthyism in Washington left the Latins howling Bohan groaned but was stumped Even Mexicos head of delega tion Carillo Flores broke with his government by openly backing ecla28 Debate in plenary and all committees has demonstrated unanimous support for continuance and independence of ecla Bohan cabled to Washington The Americans then worked for three days to find a face saving formula that would at least leave the issue open for future decisions they finally came up with a new approach that attracted quite broad Latin particularly Mexican support In this plan the Commission would accept the permanence of ecla but agree to a permanent eclaoas Working Group to be established in Washington Prebisch was concerned that this Claiming ecla 271 compromise was dangerous for Santiago because decisionmaking would inevitably drift north toward the power concentrated in the US capital but he agreed to work with Bohan on a wording that would limit the damage to ecla By 10 June Bohan thought he had achieved consensus but Miguel Osorio de Almeida the Brazilian delegate suddenly threw his carefully laid plans into disarray by communicating his governments objection to any resolution that undermined eclas future independence Bohans compromise was irrelevant he argued because there was no problem of duplication with the oas Bohan complained that Miguel Osorio had ex ceeded his instructions and that he had not in fact received personal instructions from President Vargas to block the US initiative But Brazil wouldnt budge and the US was stuck Brazil was the bright spot in Latin America for Washington and it was unwilling to create further divisions over an already controversial issue In Latin American eyes the whole history of ecla is one of US noncooperation Bohan reported after the debacle Washington had consistently misjudged the regional mood and Bohan requested authority to capitulate to align the US with the Latin Americans and Europeans in endorsing a permanent secretariat in Santiago usdel believes ecla question must be decided on policy and not posi tion basis he concluded Acheson agreed29 Bohan immediately changed course and trumpeted that the US Government is profoundly impressed by the high quality of work being performed by ecla and wishes to see the work continued and will give it wholehearted support Prebisch sent a telegram to his staff celebrating the good news We would like to share our sense of profound satisfaction with all our comrades in work in Santiago It was Auld Lang Syne all around Raúl responded warmly to Bohan praising our work together in earlier times and thanked him for his support in Mexico The Mexican Government lavished praise on ecla oas and ecla delegates embraced and heaped superlatives on each other Americans applauded the farewell message that the time has come for Latin America to find its own path and Bohan became Prebischs main ally in Washington until the Truman Administration tottered to a close the next year30 The oas victory was only the beginning of Prebischs success at Mexico City everything fell into place as the session evolved ecla was not only confirmed as a permanent UN regional commission but it was expanded and strengthened Instead of merely producing research reports it moved to practical activities and concrete policy work with the addition of two functions to the secretariats terms of reference First Ahumadas new Training Centre for Latin economists was officially approved to begin 272 The Life and Times of Raúl Prebisch operations in 1952 converting ecla into an important regional educa tional instrument and second eclas operational capacity and advisory services in the region were strengthened by a new technical assistance mandate and budgetary resources from New York Santiago would now be more visible and assertive in its development role The Mexico Office was upgraded from liaison to branch office responsible for activities in Mexico Central America and the Caribbean ecla was also requested to lead a novel project to support Central American economic integration to be overseen by a committee of economic cooperation comprised of the eco nomic ministers from the five countries involved To assert its importance ecla would direct it from the Mexican Office Castillo moved up from Santiago to become its director while Prebisch was finally successful in at tracting Victor Urquidi as Castillos research director to take charge of the new Central American initiative This vote of confidence in Santiago was symbolized by a resolution that further ecla sessions be held every two years rather than annually with the much smaller Committee of the Whole between meetings This gave Prebisch the necessary breathing space to complete eclas expanded work program and he could now fo cus its strategy for the fifth session scheduled for Rio in April 1953 with due calm and deliberation Prebisch and ecla shifted into high gear 13 The Creation of Latin America Happy the person who has a second chance in life and eclas Mexico con ference had delivered it to Raúl The Central Bank the concept creation team and accomplishment had been a historic moment for Prebisch Everything had fit he was at the centre of the Argentine state leading an administrative elite that provided a firm anchor for the national economy in the turbulent years after the Great Depression Prebischs team of Central Bank professionals was a modernizing elite united behind a coher ent vision of national development in which competence was the sole crite rion for advancement The bank was not just another bureaucracy he had created instead an island of rationality that maintained the economy de spite political chaos In 1943 he had suddenly lost everything his job his influence and eventually his country Cast into the wilderness he could only watch as his beloved Central Bank was destroyed and his team dis persed while Argentina floundered economically Unexpectedly the United Nations beginning with eclas Havana Con ference opened a second coming Raúls years in the wilderness had this benefit he could now view the scene from a regional perspective having visited every part of Latin America and changed his understanding of de velopment Before 1943 his teaching and thinking had focused on Argen tina six years later his Havana Manifesto The Development of Latin America and Its Principal Problems represented a breakthrough that justified the struggles after his dismissal while ecla provided the vehicle to recreate his earlier Central Bank synthesis of theory institutions and policy The doctrine was the ecla Thesis developed between 1949 and 1951 the ecla office in Santiago was his institutional base for animating regional development and his team formed another modernizing elite under his guidance to provide an autonomous development policy for Latin America Prebisch had created structuralism and by the 1951 Mexico 274 The Life and Times of Raúl Prebisch City Conference he had brought together a formidable group of young economists Every member of this small band felt privileged to work within ecla its fierce and reciprocal loyalty was reminiscent of the mood at the Central Bank under Prebisch Santiago became a movement almost a church under the firm guidance of the great heretic Where would all this lead At Mexico City no one could possibly know As head of the Argentine Central Bank Prebisch had wielded real power he now depended on cumbersome UN agencies and these in turn were controlled by governments Would either the Latin Americans or Washing ton retain faith in ecla The outlook in Washington was unpromising McCarthyism had paralyzed the Truman Administration since 1950 and Trumans defeat in the forthcoming 1952 presidential elections looked certain A Republican victory would sweep away the last of eclas support ers in the capital As for the big international financial institutions such as the imf and World Bank they could be expected to align themselves with US policy whatever its stamp Where would Prebisch find new allies if he became persona non grata in Washington The future of ecla it appeared lay with Latin America itself While the prevailing instability of the region ruled out the certainty of durable gov ernmental allies a new and educated generation across the region yearned to give substance to the concept of Latin America The challenge was to tap this latent energy becoming both symbol and instrument of self reliance Prebischs visits to Cuba Brazil and Central America after the Mexico City Conference were astounding successes even national events The gospel was there to be spread the hearers were there to be reached And what of Raúl himself Personally the new Prebisch bore little resem blance to the Buenos Aires central banker Then he was socially invisible a workaholic who spent the few hours away from work with family and friends In the UN he was a striking public personality elegantly clothed and coiffed polished and pressed charismatic Now he was at the centre of crowds quick and devastating in debate and utterly commanding with large audiences which he steered with effortless skill writing his own speeches with care memorizing them until he spoke without notes and using all his energy to connect with the cheering crowds before him Prebisch was an international celebrity sweeping in with his entourage of ecla acolytes like an archbishop with his priests projecting the arrogance of brilliance He pressed life hard and people flocked to him Completing the aura was his reputation as a rake discussed within his entourage in embarrassed undertones But beneath this urbane dynamic exterior lay the old selfdeprecating reserved devoted and ethically driven Prebisch of Tucumán ready to emerge in the company of Adelita and close friends in El Maqui their cliffside retreat outside Santiago overlooking the Maipo River The Creation of Latin America 275 Raúls dream of returning to Argentina also simmered ecla was excit ing and Santiago was pleasant but Buenos Aires retained its allure Raúl and Adelita still owned two houses in Buenos Aires including the mansion in San Isidro and country house in Mar del Plata and Raúl kept abreast of political developments in Perónist Argentina through regular correspon dence with Alfredo Moll and other friends in the capital Reports con firmed a growing political opposition which Raúl might have taken some satisfaction for predicting but which also confirmed his fears for the future of Argentina Alfredo Moll wrote that Perón had realized his mistake in ex cluding Raúl from public life and that members of his inner circle wanted him back He had made a decision not to return as long as Perón was in power but would he go back after the dictatorship fell All this lay in the future Raúls first life was over the ecla adventure of building Latin America was about to begin There was no time to lose Prebisch left Mexico for Cuba to a glittering reception on 3 July 1951 Presi dent Carlos Prio Socarras insisted on long private discussions the national press followed every word printing the texts of his many speeches and press interviews and he was overwhelmed with dinners and receptions and late nights at the Tropicana Havana was in high excitement over a Latin Ameri can who had become an international celebrity Raúls earlier trips to the is land were lovingly recalled and he was again installed in the Hotel Nacional on the Malecón Only two years had passed since he had presented his Man ifesto Cuba had loyally supported ecla from the beginning through its most difficult years and it was now rewarded with the first Prebisch visit to a Latin capital after beating back the US challenge in Mexico Technically he had been invited by Cubas Agricultural and Industrial Development Bank banfaic but Prebisch was received with protocol and honours associated with heads of state Filipe Pazos formerly at the imf had returned to create the Cuban Central Bank Banco Nacional and was now its president Eugenio Castillo despite his known dislike of President Prio and friendship with Fulgencia Batista accompanied Prebisch everywhere in Havana with his wife Patricia Willis President Prio sought a loosening of the US embrace and eclas mes sage of transformation through trade and industrial diversification was un derstandably compelling in all Latin America Cuba was the most firmly integrated within the US economy a virtual satellite and extension of southern Florida and Texas Trade unions and students at the University of Havana yearned for change but the audience that came out to hear Prebisch also included businessmen and bankers He had been after all a I 276 The Life and Times of Raúl Prebisch highly respected central banker himself and in his impeccable blue pin stripe suits and with his confident presence he looked the part Prebischs central message was change Latin America had to think in new ways he began The forced march of the first countries in the Indus trial Revolution has created an economic firmament with a sun composed of the developed economies at the centre he noted around which the peripheral countries rotate in their disorganized orbits1 Now Latin Amer ican countries needed the will to transform this relationship between cen tre and periphery Latin Americans were caught up in a new global human drama a historic struggle which they could either win or lose Would they rise to the occasion he asked his hosts If they lost faith they were doomed because the fundamental requirement for success was moral the desire for development Cuba he noted required a radical change in its economy away from de pendence on the sugar sector And Cuba he insisted could succeed It pos sessed the resources and human talent for the transition and President Prios government had demonstrated its commitment to the new path advo cated by ecla by introducing protective tariffs to develop its infant textile industry Cuba now had tools for protecting its economy such as a profes sionally led Central Bank and banfaic to finance economic development and substantially refashion the Cuban economy The word industrializa tion was everywhere A country can only advance by industrial transforma tion blared the typical headline during Prebischs Havana visit The Cubans were spellbound by his rhetoric and most saw only this side of his carefully crafted performances But beneath the show there was an other Prebisch evident to those who listened closely While his broad mes sage of regional revival appealed to Latin American pride and nationalism Raúl was typically cautious when it came to specific measures for the pro motion of economic development While the overall regional goal must be the economic transformation of Latin America he cautioned that the pro cess would be lengthy and complex requiring planning accelerated indus trialization taxation and agrarian reform technical cooperation foreign investment and the growth of trade Cuba he argued should not fall into the trap of such extreme measures as abandoning the sugar sector instead the Prio Government should strengthen it as a source of foreign exchange While he strongly supported import substitution he counselled against in flation and approved of Pazoss careful handling of monetary policy in the Central Bank Repeatedly pressed by Cuban journalists he offered few spe cific ideas about industrialization Kenaf he thought offered a good op portunity for diversification as did textiles but of course the Cubans had already thought of that themselves He emphasized the need for a strong The Creation of Latin America 277 private sector and the need for government flexibility A subsidy is simply a prescription for the retraining of workers he noted a transitional mea sure in the process of industrialization2 This other Prebisch the techno crat appeared to stress the limits of industrialization as much as his commitment to it as a central tool for development And he was careful not to raise expectations about material help from ecla It would take several years to develop its full capacity a training program was being set up but miracles should not be expected The two Prebischs the inspirational and the pragmatic were as differ ent in tone as they were in message As a preacher his eloquence accentu ated the message of hope and promise pressing the mundane caution of Prebisch the policy advisor into the background His Cuban hosts journal ists workers and students heard only the inspirational Prebisch Only once did the magic fail A journalist asked a direct question did Prebisch think that Washington had cut Cubas sugar quota as a reprisal for tariffs on US textile imports If so how could Cuba ever hope to change its satellite status visàvis the US There was a sharp intake of breath and a pause before Raúl responded sharply firmly rejecting such a linkage and wondering how anyone could possibly think along these lines The Truman Administration he noted was supportive of industrialization in Latin America Brazil continued to import US goods even though it was now practically selfsufficient in a textile industry built behind protective tariffs The Americans he insisted finally understood the new reality of mutual benefits expanding markets and Latin American development benefited both sides3 Prebisch even worried aloud in a hurt tone of voice that such negative thinking might weaken the commitment to economic develop ment in Latin America For a moment the reality of US power cast a cloud over the gathering Everyone in Havana knew that Cuba faced only the illusion of choice that it was the heart of the US empire Many suspected that Prebischs deputy Castillo was helping Batista prepare the military coup that would remove the overly independent President Prio from office in March 1952 But the stab of truth passed as the Prebisch charm revived the glow and he left the island after a visit that from arrival to departure had been a complete success Returning to Santiago Prebisch enjoyed a month of pure joy and not all work On an excursion twentyfive kilometres out of the city to the Maipo River he and Adelita came across a modest cottage hidden on a cliff I 278 The Life and Times of Raúl Prebisch overlooking the river with the Andean cordillera framed in the back ground They purchased it at once as a weekend retreat El Maqui the hideaway they called it and it became a special destination when they were together in Santiago While Adelita began fixing the house Raúl planned a garden on the hectaresized sliver of land that perched precariously over the Maipo Internationally there was again reason for optimism an unexpected turn of events in the Korean War had raised the prospect of peace in the Far East All parties seemed fed up with a costly war that was stalemated at the thirtyeighth parallel and a ceasefire was announced on 27 July with apparent Soviet support The timing of the news seemed almost miracu lous the Cold War fever in Washington might subside Senator McCarthys bubble would burst and balance would return to US foreign policy Peace would finally bring the longawaited return of US attention to the develop ment problems of Latin America and ecla would gain more breathing space in Washington This was the view of Merwin Bohan now converted by eclas Mexico City meeting into a Prebisch ally ecla still had friends in Washington he argued and he campaigned within the Truman Admin istration after his return from Brazil for greater financial support in the UN budget It is hard for me to oppose any reasonable increase in the ecla budget for two reasons he argued in an internal State Department Mem orandum a the fact that the other regional organizations get much more than ecla and b my feeling that ecla is doing a job that is by and large in the interests of the United States4 When Prebisch returned to ecla headquarters after his long absence in Mexico and Cuba he was greeted as a hero His staff knew that only Raúl could have stared down Washington in Mexico and saved ecla But he was in no mood for selfcongratulation he assured his team that their work was only beginning and that the work plan adopted in Mexico would require even greater effort than before His immediate task was reorganizing and expanding ecla Since the future of the organization had remained un certain for its first three years until the Mexico meeting the UN had con fined it to a temporary status now that it was finally permanent Prebisch had to reshape the secretariat adding staff and refining its structure He therefore recast ecla on the model of the German Army after World War I creating a skeletal organization of small units headed by existing officers which could be expanded rapidly with new recruits as new opportunities and resources were secured In this way an office with fewer than fifty full time professionals would eventually form the nucleus of the powerful re search organization Prebisch had in mind The Creation of Latin America 279 At the top he set up an executive group of four economists and five sec retaries headed by his deputy Louis Swenson to maintain overall policy di rection within ecla his general staff so to speak Lucho as Swenson was called affectionately by his Latin colleagues was a skillful interlocutor between ecla Washington and the UN deceptively mild with a thin gangster moustache that gave his face instead a teddybear quality he spoke rarely but forcefully and with authority Five divisions along with a statistical unit reported through Swenson to Prebisch Development Training Economic Survey Agriculture and Industry and Mining In Mexico eclas northern outpost was housed in the Social Security Build ing paid for by the Bank of Mexico as a sign of its continuing support for Prebisch but with the mission of leading the Central America integration project rather than doing work on Mexico itself The Washington Office with its four officers completed the team Prebisch personally supervised and approved ecla publications and all appointments and he managed external relations with the Secretariat in New York governments and in ternational agencies The Mexico and Washington offices were kept on a short leash neither had separate budgets or hiring privileges The most powerful of the ecla units were the Development Division headed by Celso Furtado and the Training Division directed by Jorge Ahumada Furtado had a nineperson staff including Regino Boti and Mexican Juan Noyola who was recruited after the 1951 ecla conference His division was the centre of thinking on development theory and plan ning in the organization One specific goal was the preparation of country studies but the broader focus was to take up the challenge that ecla ex plored between 1949 and 1951 culminating in its Theoretical and Practical Problems of Economic Growth presented at Mexico City how could Latin America develop a planning model of its own examining the three exist ing systems that had emerged after the Second World War US liberal capi talism Soviet communism and the hybrid FrenchEuropean approach5 Ahumada had nearly left ecla after initial disagreements with Martinez Cabañas but Prebisch convinced him to stay and lead a unique centre for professional training in Latin America Promising young economists from governments throughout the region would come for twentyfour weeks of basic training in economic analysis social accounting sociology economic development theory and project planning Sixteen additional weeks of work in small groups followed focusing on special topics such as public sector management budgetary planning and human resource develop ment Along with this annual basic course Ahumadas division provided intensive courses and special seminars throughout the region at the petition 280 The Life and Times of Raúl Prebisch of governments and in collaboration with universities and institutes Inter national scholars were invited to teach in Santiago6 Ahumada and Furtado were de facto rivals one communicated new ideas while the other created them But they were also ideologically distinct Furtados group was known as the Red Division Chilean Ahumada was a Christian Democrat closely involved in local politics in Chile They balanced each other and Prebisch was careful to maintain this ideological pluralism in the secretariat At the head was the perfectly dressed Prebisch listener and leader allo cating work and worrying about the immediate future He had solved the problem of survival in Mexico City but now ecla faced the challenge of meeting expectations Prebisch felt trapped Unless he doubled or tripled his staff he would not be able to prepare for the next ecla Commission meeting set for Brazil in May 1953 unless he deepened his support in the region he could not hope to win the budgetary wars in New York required for expanding his staff In practice this meant as a first priority consolidat ing and broadening Brazils backing for ecla While the other countries were also important Chile could always be counted on Colombia re mained indifferent but could eventually be brought on board Brazil was indispensable and had to be Prebischs key ally Its economy was now larger than Argentinas starting from a much poorer base and still far poorer in per capita terms Brazil had grown rapidly while Peróns economy was inflationary and stagnant Prebisch set off on a twoweek trip to Rio de Janeiro and São Paulo on 19 August accompanied by Celso Furtado to explain ecla to business government the media and academics and students It was an unusual trip for Prebisch The stakes were high he was from Argentina the tradi tional competitor he had little personal knowledge of Brazil and did not speak Portuguese Still he felt a kinship with Brazil after the negotiation of the shortlived if visionary bilateral trade agreement with Argentina in October 1940 But that was a long time ago and he had not been back since the Rio Conference of January 1942 Apart from Furtado he person ally knew few Brazilian economists the exceptions being Eugenio Gudin and Otavio Bulhões with whom he had corresponded since 1947 and the young Alexandre Kafka working in the imf who returned to Brazil for Raúls visit Gudin had also invited Prebisch three years earlier to lecture at the Getulio Vargas Foundation but this had not worked out and Bulhõess betrayal of Prebisch in the imf affair a year later had left a sour taste On the other hand the Havana Manifesto was available in Portuguese and well known in Brazil so that the announcement of Raúls visit had aroused widespread curiosity But ecla as an organization was hardly known in Brazil beginning with President Vargas himself He had supported its The Creation of Latin America 281 continuation in Mexico primarily to confound the Americans when Prebisch met him on 27 August he found that Vargas had only the vaguest ideas about ecla and little memory of Brazils decisive intervention in 1951 When he began the interview by explaining eclas objectives Vargas interrupted to ask if this indeed was the international organization he had decided to support in Mexico City When assured on this point the presi dent wanted to know the composition of the Commission its headquar ters and its cost to the countries of the region7 The knowledge gap elsewhere in Brazil about ecla was huge since Portuguese was not yet an official language in ecla unlike Spanish English and even French its documents were circulated in Spanish Prebisch had only two weeks to establish its credibility and prestige Prebischs visit to Brazil was therefore entirely different from the trip to Cuba earlier that year The two societies shared educated cosmopolitan elites and acute inequality in income distribution but while Cuba was an extreme case of a depressed monoculture economy absorbed into the United States Brazil was a country of optimism and energy Its rapid growth was most evident in the industrialization of São Paulo sprawling and dynamic it was the new powerhouse of South America Cubas rela tionship with the US was obsessive and conflicted In contrast Brazils war effort with the Allies against Nazi Germany had created a strong friendship with the US and it was the only country in South America to have a perma nent military agreement with the US putting it in the company of Mexico and Canada A BrazilUnited States Joint Economic Commission was help ing Brazil lay the foundations of a modern industrial state Cuba was small and dependent Brazils culture size and resources gave it a confidence lacking in Hispanic America Prebisch had had an easy task in Havana with few qualified critics in his audiences and he could get away with pro claiming the inspirational side of the ecla gospel In Rio and São Paulo he faced informed and engaged officials industrialists and experts who had observed twenty years of industrial change since the Great Depression and had tough questions about the relevance of the ecla doctrine for Brazil and he was as in Cuba careful to avoid raising expectations ecla was an institution strictly economic in nature with UN social affairs in another de partment it did not pay special attention to problems of social legislation although there were obvious points of intersection8 Interest in the Prebisch visit in all sectors grew as it got under way in Rio and continued in São Paulo He had interviews with the ministers of for eign affairs Itamaraty finance and agriculture the president and offi cials of the Bank of Brazil and virtually every senior minister and official involved in monetary and economic policymaking Sessions were set up 282 The Life and Times of Raúl Prebisch with Brazils National Economic Council the Brazilian Technical Assis tance Commission and privatesector leaders such as the head of the National Iron and Steel Company and the president of the National Feder ation of Industries who arranged site visits to industrial plants the stock market and the Institute of Technical Studies Sure enough there was Bohan again Called in only a few days earlier as US director of the new BrazilUS Joint Economic Commission when Truslow Adams Trumans choice for the position died en route to Rio Bohan wanted to cooperate with Prebisch after we made peace with ecla9 Virtually every economist of standing came to the meetings in Rio or São Paulo At the Getulio Vargas Foundation where Gudin organized four roundtables with thirty of Brazils most prominent economists five to six times more visitors at tended Prebischs events than those of any previous guest including the celebrated Jacob Viner lectures the year before Prebischs roundtables in 1951 became in effect a counterpoint to Viners advice that Brazil follow classical theory and observe the laws of comparative advantage in trade policy Prebisch met practically the entire next generation of Brazils leaders Cleante de Paiva Leite personal advisor to Vargas Alexandre Kafka from the imf and Roberto de Oliveira Campos from the Bank of Brazil Kafka was the presidents choice for director of the new bnde Brazilian Devel opment Bank and Campos was a Gudin protegé who caught Prebischs eye as a person marked for swift advancement Born in 1917 three years older than Furtado Campos had spent eleven years studying for the priesthood before leaving the seminary and joining Itamaraty His first appointment was in the commercial section of the Brazilian Embassy in Washington where he arrived in 1942 with a reputation as a radical In 1944 Gudin invited him to join the Brazilian delegation to the Bretton Woods Conference after which he enrolled in the Graduate Program in Economics at George Washington University and then returned to work in the Bank of Brazil Certainly no Marxist in 1951 his political orientation remained uncertain but in his manner Campos stood out as a natural competitor of Celso Furtado Prebisch found him interesting and began a friendship with him to ensure that he always had two views of Brazil dur ing Camposs visit to Santiago a year later they formed a joint eclabnde program in Rio to which Furtado was seconded as director10 Prebisch began with his trademark war of ideas theme that new countries like Brazil must regain their intellectual autonomy and shake off the dead hand of US and European theorists like Viner Their version of the international division of labour and the laws of comparative ad vantage condemned Brazil and Latin America to remain suppliers of The Creation of Latin America 283 commodities under declining terms of trade11 Ideas mattered Econo mists like Viner created a psychological environment that limited the will to industrialize and change commercial relationships between the old industrial powers and Latin America ecla offered instead he argued an indigenous theory of development based in the actual conditions and his tory of the region which challenged orthodox liberal theory Viner had missed the point Brazil could not return to its agricultural roots avoid in dustrialization and solve its employment problem with birth control12 And since there was no going back the economic modernization of Brazil was already firmly established and industrialization was already a fact the issue was not whether it should industrialize but rather how Prebisch congratulated Brazil for its successes in building heavy industries such as the Volta Redondo steel complex but São Paulo was nevertheless an object lesson in the need to soak up surplus labour pouring in from the countryside with accelerated industrialization There were dissenters Gudin criticized Prebisch for abandoning old the ory to construct entirely new theories of purely indigenous origin without having even one Indian grandfather among its authors13 Why couldnt he stay with the established and proven laws of classical economics As he put it eclas myth of planning was incompatible with private sector initiative and free markets and once intervention began it would lead irresistibly to state control The essential role for the state should be limited to building in frastructure and above all to controlling inflation with a strict monetary pol icy the combination of a minimalist state and privatesector initiative would be sufficient for industrialization and growth14 Prebisch agreed about infla tion but insisted on a more activist state to accelerate industrialization Pro gramming or planning as understood by ecla he told the Federation of Industries of São Paulo on 31 August did not mean a Sovietstyle takeover of the private sector It is not a complete intervention in business or produc tion he said but instead it assists with specific instruments to ensure that they achieve specific objectives and volumes Business decisions should be taken by the private sector and he underlined that the private sector needed to be strengthened in Brazil and Latin America There was absolutely no in compatibility between state planning and a strong private sector eclas doc trine merely sought to raise the volume of investment to accelerate growth and to avoid the all too visible disequilibrium in Latin American economic development In short the public sector was merely playing its primordial role of promoting public welfare As for import substitution international trade under the gatt could be reconciled with protectionism since industri alization changed the commercial relations between developed and devel oping countries but did not prejudice the growth of trade itself15 284 The Life and Times of Raúl Prebisch In the end most Brazilians who came to hear Prebisch were interested in specific development issues What should Brazil do to strengthen industri alization President Vargas was creating the Brazilian Development Bank in 1952 was this a sound approach and what should be its role Prebisch saw it as an essential step forward but warned against Peróns excesses in promoting inefficient industries What were the special roles of monetary and exchange policy at this stage of development How far should import substitution go What was the correct level of government intervention in the market How could Santiago assist Brazil in dealing with all its prob lems at this stage of industrialization Prebisch cited cases and examples eclas creation of regional industrial associations for one the forthcom ing First Meeting of Experts on the Iron and Steel Industry in November the major study on the Brazilian economy being done under the direction of Furtado Ahumadas forthcoming training program and above all eclas pioneering work in economic programming techniques Here is where ecla came in Prebisch pointed out It was the only truly independent economic research centre run by Latin Americans it was a vi tal thinktank for new initiatives to build a new Latin America A hundred businessmen cheered him at the Federation of Industries in a standing ovation the media and academics applauded The establishment newspa per O Estado do São Paulo called him a living symbol of Latin American industrialization16 President Vargas himself and officials in his adminis tration were enthusiastic about Prebischs vision of an activist state Gudin and Roberto Campos still disagreed their liberalism reflecting one side of a widening fault line in Brazilian society But as long as Vargas was in power Prebisch could count on his government and Santiago now had many powerful and wellconnected supporters in Brazil He made sure that Portuguese became an official language of ecla the next year The success of Prebischs Brazil visit shored up his position in Latin Amer ica but relations with the US remained difficult Hope for peace in the Korean War had evaporated and the conflict dragged on The deepen ing of the Cold War in Asia and Europe concentrated US political and economic attention on these regions to the neglect of Latin America Containment in Asia required massive US economic aid to friendly govern ments as a bulwark against communism Latin America within the US de fense perimeter was safe and forgettable and its share of development aid from Washington had fallen to 1 percent Within the Truman Administra tion there was diminishing support for Latin America which translated into less energy for improving relations I The Creation of Latin America 285 The prestige accumulated by the United States in Latin America under the Good Neighbor policy dissipated during 1952 as the Truman Adminis tration battled political criticism at home and abroad Its recognition of Cuban dictator Fulgencia Batista who took power in a coup in March was not popular in Latin America The US appeared to be falling behind in the promotion of human rights as racial segregation in the US became an in ternational issue and US civilian saturation bombing of North Korea reached irrational levels On 23 June 1952 five hundred US bombers de stroyed the Suiko hydroelectric and irrigation dams on the Yalu River the largest in Asia and fourth largest in the world supplying water for 75 per cent of North Koreas food production It was an undefended civilian in stallation like the dikes of Holland The next morning another five hundred bombed the remains and a US Air Force officer noted that the collapse of the one hundredmetre dam unleashed a flood that scooped clean 27 miles of the valley below and the plunging flood wiped out rice paddies railroad lines bridges and highways It was a greater catastrophe than the Nazi destruction of Hollands dikes which the US then had de clared a war crime The Westerner can little conceive the awesome mean ing which the loss of rice has for the Asian starvation and slow death said the US Air Force spokesman17 The United States seemed to have narrowed in spirit Prebisch found that the US media had regressed since the war years in attitudes and knowl edge of USLatin American relations In June 1952 a US journalist asked Prebisch at a press conference why Latins supported industrialization he explained that it was necessary to find jobs for the rural migrants to cities being displaced by advances in agriculture similar to those in the US Isnt that a little unhealthy to start an industry just to keep people fed if there is no absolutely moral reason to do it Why couldnt Latin America instead relocate peasants to unused land in the tropical regions Why were they so selfish Prebischs patient explanation that Latin America had to develop balanced economies like Asia Europe or North America was met by Cold War taunts did Latin Americans prefer communist or freemarket economies18 Curiously the Cold War revived old stereotypes of Latin America while Asia and Europe were assumed to be normal advancing and industrializing regions in the international economy Prebisch hoped that the 1952 presidential elections would clear the air When the Republican Party recruited General Eisenhower as its candidate its choice was widely admired throughout Latin America and the prospect of a change of administration in Washington revived expectations Eisenhower made the deterioration in USLatin American relations a ma jor election issue In a speech on 3 October he promised a new approach after Trumans stopandgo zig and zag policy The Good Neighbor 286 The Life and Times of Raúl Prebisch policy had failed he claimed because the US had been inconsistent and unable to deliver on its promises of support to Latin America In a clear reference to Trumans failure to hold a promised USLatin American Eco nomic Conference he said With the coming of the war we frantically wooed Latin America Then came the end of the war and the Administra tion proceeded to forget these countries just as fast Terrible disillusion ment set in throughout Latin America There was no mutual working out of longterm economic problems This good neighbor policy has become by drift and neglect a poorneighbor policy19 Eisenhower called instead for a Good Partner approach to USLatin American relations less inti mate than Good Neighbor but based in solid performance rather than rhetoric What this meant in practice was unclear Eisenhower won easily and in Santiago ecla awaited news of his Cabinet choices with apprehension On 23 November Raúls brother Julio who had had a promising career as a surgeon died the first of his siblings to pass away a victim of depression and drug abuse It was a melancholy family funeral in Tucumán Alberto now a society star in Buenos Aires was on vacation in Europe and could not be located The moment was gloomy Adelitas mother who lived with them in Santiago was also declining rapidly Raúl needed some good news The future directions of the Eisenhower Administration toward Latin America were not at first un promising Career officials like Bohan remained and Dr Milton Eisenhower president of Princeton University and brother of the US president who was known for his commitment to Latin America was asked to travel to the region and report the outlines of a new policy by 20 November 1953 President Eisenhowers choice for secretary of state John Foster Dulles was an enigmatic figure at best The first assistant secretary of state for Latin America John Moors Cabot was sympathetic to Latin American con cerns20 but he was soon replaced by Henry Holland a former US ambassa dor to Venezuela who shared Dulless narrower geopolitical and orthodox liberal approach to Latin America State Department officials preparing the new policy suggested that it should be based on maturity selfreliance and selfrespect Latin Americans must face up realistically to their own problems and the US should make them feel that they are our partners but avoid actions and statements which emphasize their inferior eco nomic and social status21 Holland extolled the virtues of private invest ment as the motor of growth and ignored appeals from US businessmen such as Peter Grace to promote economic development In fact Treasury Secretary George Humphrey rather than Holland in the State Depart ment ran USLatin American relations dominating this issue from the outset of the Eisenhower Administration Even the president admitted that When George speaks we all listen22 The Creation of Latin America 287 Senator Wayne Morse accused the president of putting reactionaries in complete control when he heard of Humphreys appointment23 The benchmark for US policy in the region became an almost religious com mitment to the sanctity of private enterprise as the essential foundation stone of a free and democratic society Humphrey championed free market orthodoxy tax cuts and private investment as the motor of growth insisting that all the conditions for global development were already in place and warning Latin Americans against socialistic practices such as planning They already had access to the World Bank the imf and com mercial banks they certainly did not need foreign aid at the expense of US taxpayers Humphrey decided to curtail ExportImport Bank operations in 1953 leaving the financing for Latin American development entirely in the hands of the World Bank and private capital Brazil was informed through a press conference that the popular US Ambassador Hershel Johnson had been fired and Washington confirmed on 2 June that it would dissolve the BrazilUS Joint Economic Commission set up only two years earlier Bohan chose to leave the scene The Secretary of State he noted had no interest in Latin America and policy in the economic area was dominated by Secretary of the Treasury Humphrey who thought only in terms of big business and that may sound socialistic but it happens to be the absolute truth24 InterAmerican relations worsened on 26 May 1953 when the Eisenhower Administration set up the International Organizations Employees Loyalty Board to weed out officials considered undesirable by Senator Joseph McCarthy A fifth column of Americans and other noncommunist coun tries existed within the UN and some specialized agencies the Senate Inter nal Security subcommittee reported25 Not only US nationals but also Latin Americans and other foreigners within the UN were suspect and the admin istration agreed to press for a thorough review of the entire UN personnel from noncommunist countries Even 1950 Nobel Prize winner Ralph Bunche had to appear as did 1700 others by mid1954 Many were hounded and driven out If the UN was under close scrutiny so was ecla which the fbi and cia considered subversive As the McCarthy campaign deepened in Washington so did fbi surveillance of its Santiago and Washington offices Ten years ear lier J Edgar Hoover listed Prebisch as a dangerous Nazi supporter now he had apparently switched to the communists While Hoovers agents intimi dated the Washington office with unannounced visits Prebisch simply as sumed that his offices in Santiago were wired and therefore had Swenson brief the US Embassy regularly to ensure that it got the story right Prebisch alone among heads of UN agencies succeeded in protecting ecla from the McCarthy threat Despite pressure and warnings he hired 288 The Life and Times of Raúl Prebisch economists of his choice on the criteria of merit and need rather than ide ology Adolfo Dorfman an Argentine expert in industrial development was driven from the UN Secretariat in New York because of his previous membership in the Argentine Communist Party Prebisch asked him to come instead to Santiago hiring him in ecla for his acknowledged profes sional qualifications Alex Ganz was similarly politically unacceptable in the US or at the UN for having flirted with the US Communist Party as a stu dent even though his work with the US Department of Commerce from 194650 in its National Economic Analysis Division was successful enough to earn him a tenuretrack appointment at the University of Chicago Ganzs training and experience in national accounts and projection tech niques were needed in Santiago particularly by Furtado in his Develop ment Division When UN Headquarters refused to approve a permanent contract Prebisch hired him on a renewable shortterm contract that did not need approval from New York Raúl was revered for standing firm in defense of his team confounding the fears of some like Noyola who pre dicted that he would be fired The intellectual and moral desert left be hind by Senator McCarthy magnified Santiagos attractions ecla shone all the brighter as a centre of new ideas and its magnetic pull brought scholars from around the world to work or teach Academic pilgrims con verged on Santiago because it was an island of ideological pluralism where new approaches to the region could be debated without fear where a new language of development could be constructed Women were hired and ac cepted as equals in 1951 ecla unilaterally lifted UN restrictions on their promotion to directors If Prebisch was the great heretic his disciples were proud to share the heresy daring to be different and innovative With freedom to hire came independence of thought and Santiago maintained complete intellectual autonomy within the UN system Equally important Prebisch won budgetary battles that allowed him to hire quali fied economists at a rate to maintain a heavy work program and produce consistently excellent work By October 1953 he had 130 fulltime staff augmented by joint projects with other UN agencies to widen eclas oper ational reach So long as it remained independent and produced high quality and relevant materials Prebisch could count on official support from Latin American governments The oas did not have autonomy or comparable staff and it therefore lacked respect Even friendly observers joked about its meetings in Washington where the Latins sat like poor nephews at their rich uncles table whining for special deals Bohan agreed that it just never seemed to get any place26 Although eclas direct bargaining strength in New York was small rela tive to larger agencies Prebisch had certain advantages in the peculiar The Creation of Latin America 289 world of UN diplomacy First it was a rare UN success story and the Secre tariat up to the secretarygeneral himself needed it The other two re gional commissions set up after 1945 were trapped by Cold War pressures In Europe the eec European Economic Commission could survive the Cold War and Stalinism only as an empty shell with Gunnar Myrdal soon departing in frustration and disappointment The Asian Commission ecafe Economic Commission for Asia and the Far East faced similar obstacles as the Cold War spread to Asia In contrast ecla had a clear para digm an agenda and programs with its global recognition extending to the General Assembly Prebisch in short had carved out a place as a key Third World figure with strong internal and external allies ecla had a visibility out of proportion to its size and sufficient respect to safeguard its independence In addition Latin America formed the single largest bloc of members in the UN Africa and the Caribbean still being under colonial rule Washing ton was of course the global centre of power and the US Treasury was not coincidentally near the imf and World Bank But Latin America remained a key economic area for the US with investment twice that in Asia and larger than in Western Europe or Canada and a significant trading rela tionship27 US sentiment against the UN and ecla was hardening but there were also limits to US influence at the UN The UN Economic and Social Council ecosoc to which Prebisch reported through desa UN Department of Economic Affairs was a consistent source of support Un like the Security Council ecosoc did not have permanent members with veto power and its meetings were rarely at the ministerial level Neverthe less it had sufficient legitimacy to provide countervailing opinions that mattered and Prebisch never missed its meetings in Geneva and New York ecosocs membership comprised both industrial and developing coun tries and its resolutions always endorsed eclas work with France and India as particularly valuable supporters India provided the perspective of a developing country of giant size France was a valuable ally because it nominated the assistant secretarygeneral in charge of desa because it was a member government of ecla and because John Foster Dulless closest personal friend on either side of the Atlantic was Jean Monnet whom he had met during the 1919 Paris Peace Treaty negotiations Finally the very complexity and arcane politics of the UN provided unex pected opportunities for locating partners and widening Prebischs scope of action desa eclas New York interlocutor was huge but amorphous with an unclear balance of forces operating within it Guillaume Georges Picot from France was its formal director but Jacob Mosak his number two was the US enforcer with close links to Washington and the US 290 The Life and Times of Raúl Prebisch Mission to the UN As secretary for the regional commissions Wladek Malinowski had been a valued friend and supporter since 1949 skilled in identifying potential allies and adversaries a window into New Yorks Whos Who of agencies and secretariats Many officials within desa re spected Prebisch and carried weight in decisionmaking because of their professional expertise Within the UN Secretariat as a whole Prebisch had a network of contacts throughout the organization extending to the office of SecretaryGeneral Dag Hammarskjöld and Andrew Cordier his US exec utive assistant His strength lay in using interdepartmental diplomacy to forge these contacts into unusual coalitions to build a flow of energy and idealism behind the ecla vision The EisenhowerDulles stalemate in USLatin American relations broke with the Guatemala crisis in June 1954 when a cialed insurgency over threw the government of President Jacobo Arbenz Guzman Arbenz was a modernizer who made the mistake of introducing land reform Dulles saw him as an entry point for Soviet influence For ten days after the US pro tested the arrival of an alleged shipment of arms from Poland on 17 May the fate of Arbenz was uncertain then a clandestine force put together by the cia and headed by Colonel Carlos Castillo Armas entered Guatemala from Honduras Arbenz hung on until 27 June when he resigned Castillo Armas replaced him formally as president on 8 July with a purge that drove one thousand refugees into Latin American embassies five hundred alone in the Mexican compound where Arbenz himself sought safety The inter vention introduced one of the bloodiest dictatorships in Latin America and destroyed democracy in the country for generations Prebisch was in New York when the Guatemala crisis broke receiving an honorary doctorate from Columbia University on 1 June along with John Foster Dulles Dulles did not refer to the coup and Prebisch did not raise it with him Nor did Guatemala come up during their elegant lunch celebrat ing the bicentennial of the universitys founding But it was big news all around them Not only was this the first direct US intervention since the Second World War but it also signalled a new era in US foreign policy of using cialed proxy forces US recognition of Batista in 1952 had annoyed Latin Americans but it was oldfashioned Guatemala announced a form of US penetration that could destabilize any country in the region Against international protests the United States UN mission warned Security Council members off the Guatemala issue and began lining up endorse ments from friendly countries in the region But not all Latins were pliant Mexico and Venezuela openly refused and most countries scorned it in private Even the oas failed to deliver for Washington Its first and respected secretarygeneral Alberto Lleras Camargo resigned with a The Creation of Latin America 291 muchapplauded farewell speech of restrained betrayal leaving Washington in the company of the worst little Latin despots the Batistas Trujillos Somozas and Stroessners28 So unexpected a display of Latin assertiveness put Washington on the defensive regarding a special oas meeting of ministers of finance or economy scheduled for 22 November in Quintandinha Brazil on the invitation of President Getulio Vargas29 Dulles had reluctantly accepted the proposal in March before the Guatemalan crisis broke as a way to deflect persistent Latin pressure to hold the socalled InterAmerican Economic Conference promised by Truman in 1949 The Eisenhower Ad ministration was even less willing than Truman to budge on familiar Latin grievances agreeing to the Quintandinha meeting was a facesaving con cession to let them blow off steam and get a few more years of peace and quiet But the impact of the coup in Guatemala was to reopen the peren nial wounds of USLatin American relations and stiffen the backs of the Latin delegates in demanding action from the Americans While Dulles came to see the importance of improving relations with Latin America Treasury and State ruled out a change in policy the outlook for the con ference was uncertain and unpredictable30 The oas had to turn to ecla to help prepare the Quintandinha meet ing because of its staff inadequacies Prebisch agreed and the govern ments of the commission the US included agreed that Santiago staff should set aside their regular work and prepare a background document titled International Cooperation for a Latin American Development Policy31 It was unclear however what it would include or recommend Since taking over ecla in 1950 Prebisch had been invariably cautious in dealing with his sponsoring governments always working to build consen sus rather than provoking confrontation He personally reviewed all re ports prior to publication he would warn Furtado not to be impetuous and he was scrupulous in trying to be objective and neutral with govern ments even to the point of opposing general recommendations in ecla reports32 Unlike some of his younger colleagues in Santiago he was not antiAmerican Britain and the insufferable Pickwick Club in Buenos Aires festooned with Oxbridge college crests had been the imperial bores in his experience after which Americans like Triffin and Williams and the US Federal Reserve had been a welcome change Prebisch knew the US better than his Santiago team and he had experienced a benign phase of US Latin American relations that suggested the pendulum would eventually swing back to restore ideological balance in Washington The Guatemala coup was so outrageous however with a generation of reformers and friends now dead jailed or in exile that Prebisch decided 292 The Life and Times of Raúl Prebisch to abandon his customary caution Normally a conference document like International Cooperation for a Latin American Development Policy would be de veloped in consultation with Washington but Prebisch decided to con front the Americans with a completely unexpected fait accompli in effect setting up the US for a certain diplomatic embarrassment This alone went well beyond accepted diplomatic norms in the UN Beyond his exceeding the normal procedural rules of the game however Prebisch decided as well to propose an agenda for development that he knew the Americans would reject but that they would have to reject publicly without retreating into patronizing pleasantries He knew that such a humiliation would pro voke anger or even possibly retaliation in Washington but it was worth the risk Quintandinha was a unique opportunity to propose a new agenda that could break through the established clichés surrounding development Everyone the US Europeans Soviets supported development in prin ciple In the abstract it had become a consensus term and universally accepted goal But if everyone could agree on the word the actual dynam ics of development provoked discord and were normally ignored33 At Quintandinha Prebisch decided to accept this common discourse of devel opment as a point of departure and focused mainly on the international as well as national conditions for its success In so doing he made the struc tures of interdependence and governance the primary focus of analysis forcing the debate away from meaningless generalities and to the recipro cal responsibilities of industrial as well as developing countries projecting an action plan and policy framework for such a common agenda This was new and subversive ground In a sense Prebischs International Cooperation for a Latin American Development Strategy became the operational counter point to the Havana Manifesto To give his initiative maximum legitimacy he created a support group of six internationally distinguished Latin Americans Eduardo Frei of Chile Carlos Lleras Restrepo of Colombia Evaristo Araiza from the Bank of Mexico President Rodrigo Facio of the National University of Costa Rica Director Cleante de Paiva Leite of the Brazilian National Development Bank and Francisco Garcia Olano from Argentina The six represented all the subregions of Latin America and their involvement widened eclas support base Frei and Lleras Restrepo were future presidents Moreover Prebisch ensured that governments and UN headquarters received their copies of International Cooperation in a Latin American Development Policy just four days before the opening of the conference too late to allow a veto Dag Hammarskjöld the new secretarygeneral held conservative views on international development and might also have intervened to block the re port The US State Department immediately aware of the significance of The Creation of Latin America 293 the document was taken aback and enraged by the surprise Holland dis missed it as antiUS34 State sent the Quintandinha package over to the Treasury Department with a warning message This document has at tracted an unusual amount of interest and will undoubtedly provide the theme for much of the argumentation which will be used by Latin delega tions in pressing their views on the economic problems in their areas35 But the delegations were already arriving in Quintandinha and there was nothing to be done about it Quintandinha lived up to its billing for liveliness Short of Dag Hammar skjöld who could not attend and asked Prebisch to represent him the at tendance was bluechip including the World Bank and imf teams The Latin American media covered it in detail Most delegates had been here the year before enjoying the luxurious old hotel with its oversized castiron bathtubs on bronzed lion paws but this time they anticipated a grand con frontation between Raúl Prebisch and George Humphrey The mood in Brazil contributed to the sense of drama surrounding the conference President Vargas had committed suicide on 24 August and his emotional suicide message had unleashed a wave of sympathy across the country his selfidentification as defender of ordinary Brazilians and their national patrimony against big interests and foreign companies provoked anti American demonstrations in the period after his death Prebisch introduced his International Cooperation in a Latin American De velopment Policy on 24 November with a challenge to the assembled govern ments to vindicate the promise of liberal capitalism The validity of the private enterprise system in countries such as ours with strong develop ment possibilities he said primarily depends on its dynamic capacity on its capacity to ensure a high rate of growth Washington could hardly disagree Prebisch had simply paraphrased a memo by industrialist Peter Grace a month earlier to John Foster Dulles36 Prebisch noted that growth was stalling and social unrest growing He welcomed the present occasion when for the first time the basic development problems of the Latin American countries are to be discussed in their entirety and at high level of responsibility But he then presented the joint responsibilities stemming from interdependence stating very clearly that while the report was di rected primarily to Latin America itself and domestic obstacles to devel opment Latin American statesmen should not be criticized for measures which are only feasible with the support of international credit The im provement in investment levels cannot be achieved by domestic resources alone without international financial collaboration not only to meet the pressing demands of external disequilibrium but also to aid a rapid in crease in production and to guide it toward exports and the substitution of 294 The Life and Times of Raúl Prebisch imports to prevent future disequilibrium There was of course no simple answer The Latin American entrepreneur had to be strengthened with technical assistance and government action as well as finance This was not Canada where its private sector could develop side by side with the United States without the disparities in techniques and capital density so familiar in Latin America International Cooperation for a Latin American Development Policy therefore proposed a combination of national and international measures to be applied simultaneously and on a coordinated basis to open a new era of USLatin American cooperation These included the creation of a regional development bank the strengthening of economic planning to avoid turbulence stability for commodity exports technical cooperation and training taxation and agrarian reform financing for development with a minimum target of one billion dollars a year in devel opment assistance to accelerate industrialization and the holding of the longpromised InterAmerican Economic Conference in 1956 Individually all these items had been raised before but the process of cooperation he suggested would be radically different Prebisch proposed that such a new vision of USLatin American relations also required a new mechanism evaluation groups composed of distinguished experts to evaluate the development plans of Latin governments and thereby ensure a suitable framework to permit economic growth The concept in short suggested a new approach to governance and regionbuilding based on cooperation and longterm mutual interest Humphrey rejected all the key recommendations An interAmerican de velopment bank was unnecessary he argued because Latin America al ready had more than adequate access to capital a 1 billion target for development financing was unacceptable to the US as were ideas put for ward for commodity stabilization The result was a familiar polarization in which Cuba Batista Dominican Republic Trujillo Guatemala Castillo Armas and Venezuela Jimenez supported the US Ortiz Mena Mexicos finance minister humiliated himself by thanking Humphrey for US gener osity toward Latin America The US delegation was sufficiently angry to raise anew the threat to incorporate ecla within the oas but Brazil in the spirit of the newly deceased Vargas squashed this outburst The State De partment resented Prebischs tactics in parceling out his recommendations to supporting governments so that Chile for example proposed the cre ation of the regional development bank Mainly it disliked being put on the spot to the point where even US legislators attending the conference jeered at Humphreys empty briefcase Few interAmerican conferences were such obvious failures but it had succeeded in projecting a durable re gional agenda particularly the future regional development bank which The Creation of Latin America 295 was the mostdiscussed item at Quintandinha Nevertheless when the dele gates left Brazil on 2 December USLatin American relations were in worse shape than ever On the other hand eclas prestige in the region reached new levels after Quintandinha and its next session in Bogotá from 29 August to 17 Sep tember 1955 was a celebration of its success since 1948 Relations with UN headquarters in New York had never been better Not only had ecla easily weathered yet another UN internal performance review but Philippe de Seynes replaced Guillaume GeorgesPicot as UN undersecretary in charge of desa on 1 January 1955 This position was particularly sensitive for ecla and now Prebisch had a key ally in the New York office De Seynes was a skillful bureaucratic infighter committed to international develop ment but also to building coalitions that diluted US negativism In his let ter of congratulation appreciatively written in French Raúl remembered de Seyness participation in earlier ecla sessions and the consistent sup port of France37 His arrival meant that New York would now be an even friendlier city augmenting the existing network of allies such as Malinowski Hans Singer and others who included favourable comments about eclas work in their internal memos38 Colombia had been one of the last Latin countries to line up behind ecla and its invitation to host the sixth session was itself a breakthrough for Prebisch a recognition of its work in the country since 1953 supported by his good friend Carlos Lleras Restrepo The only disappointment at Bogotá was the recent military coup led by Gustavo Rojas Pinilla When delegates to the sixth session arrived at the Hotel Tequendama in down town Bogotá the capital city was in a state of siege Pinilla had outlawed all communist activities on 4 March with fiveyear jail sentences for offend ers Both leading newspapers in the city El Tiempo and El Espectador were closed and on 31 August Time Vision a US publication was also banned As armed police and troops roamed Bogotá and press riots and arrests multiplied Prebisch learned that Raúl Mendes a Colombian economist who had been a consultant with ecla was in jail he intervened directly with President Pinilla for his immediate release successfully to the aston ishment of Mendes who was out of prison before the day was over Confined to the Hotel Tequendama for the duration of their sixth ses sion ecla delegates had little option but work and Prebisch felt a surge of success and new possibility as events conspired in his direction At its close Prebisch cabled a long message to de Seynes claiming it to be most I 296 The Life and Times of Raúl Prebisch successfully completed And given the achievements Raúl had a certain right to crow full Latin American support for its country studies of Brazil and Colombia with requests for more country studies given their evident usefulness for governments a consensus on the need for economic pro gramming reflected in the growing number of National Planning Offices throughout the region and support for further technical work on the en ergy and agricultural sectors Prebisch could also report another important accomplishment the decision to create a Trade Committee to help remove obstacles to interAmerican trade This meant that ecla was being invited into the most important policy area facing governments and it foreshad owed a changing emphasis in its work he noted to de Seynes that Latin American governments wanted action as well as studies feeling that Sec retariat studies had reached the stage where practical steps forward were necessary39 All the decisions had been unanimous it was evident that the Quintandinha consensus had unified the major Latin American govern ments behind an agenda of international economic cooperation which Washington would sooner or later welcome rather than reject The Bogotá meeting reviewed the progress of regional producer associations and the steady advance of more autonomous economies as they matured An evi dent sense of regional identity seemed to be advancing A Mexican journal ist provoked a commotion in the US State Department by arguing that Latin America needed a common policy and common front to offset the USs penetrating and sweeping influence and that this could only be achieved by combining industrialization and regional integration These were small but telling signs Prebisch had done it ecla was an astonishing achievement a perma nent and valued regional voice calling a region into being Of course it was a collective achievement in which ecla both led and responded to ideas or concepts of others But it was more than anyone could have ex pected and undeniably it was his creation forged by tenacity and diplo macy in the tough world of the UN system and Latin American politics It was a moment of deep satisfaction and Raúl should have had time to relax and enjoy But after sending his telegram to de Seynes on 16 Septem ber he was informed that General Lonardi had risen against Juan Perón in Argentina and that the dictator had fallen Should he return He felt dizzy before a fatal attraction against which he seemed defenseless drawn ir resistibly to a crossroads that might lead equally to spectacular victory or disastrous defeat 14 Paradise Lost Of course Prebisch should not have gone back to Argentina Malaccorto had lived through the Perón years in Buenos Aires and pleaded with him the Argentina he had left in 1948 was now in 1955 a changed country he would hardly recognize and in which he would not be effective Croire tried to explain the wild ride of the Perón Revolution which had swept away the old regime including the Central Bank without creating a politi cal centre on which to build in the future Frankel documented the demor alization of the Argentine private sector and this was in manufacturing not to speak of the neglected agricultural sector What did Prebisch hope to gain Malaccorto asked Who would listen to him after all these years In Santiago he had the best job in Latin America Why not keep it and put the Argentine dream to one side He would never be accepted in Buenos Aires and returning would be the most serious mistake of his life Prebisch should not let excitement and emotion overcome his trademark qualities of intellect and rationalism he had to remember that his name was identi fied with the oligarchy and that this public stigma was entrenched and could not be erased by years of service abroad with the United Nations Yet in retrospect Prebischs disastrous return to Buenos Aires had an irresistible momentum from the moment he received the news in Bogotá The siren call of his years of achievement called him back to his greatest defeat For more than a week a moody and anxious Prebisch had remained in Colombia weighing the news coming out of Buenos Aires unable to be lieve that the Perónist era was over For many months there had been vio lence on the streets of Buenos Aires along with rumours of military plots nothing had come of them and Perón had crushed a serious military upris ing on 12 June Raúl remembered his previous false hopes then and re mained cautious Contradictory claims of victory and defeat were reported 298 The Life and Times of Raúl Prebisch in the Bogotá press as the ecla conference dispersed but it was impos sible to verify their accuracy until 19 September when Perón resigned and boarded the SS Paraguay a Paraguayan gunboat docked for repairs in Buenos Aires harbour bound for Asunción where he had chosen exile Lonardi was sworn in as provisional president on 23 September to a crowd of half a million the largest ever reported in the Plaza de Mayo Even so pockets of resistance remained as late as 26 September the situation in Buenos Aires remained unclear but Lonardis press conference the next day restored political calm and governments around the world recognized the new regime the Revolución Libertadora Liberating Revolution was indeed a reality General Lonardi called would Prebisch return to serve his country in this time of need More urgently could he come immediately to consult with the new government Without consulting the UN Prebisch agreed to arrive in Buenos Aires on 1 October for exploratory talks with the presi dent and to undertake a oneweek mission to lead an intensive interdepart mental review of Argentinas economic prospects How could he refuse In his years of exile after 1948 Prebisch had never abandoned his dream of returning to Argentina Raúl and Adelita had kept their big house in San Isidro and from Santiago he had followed events in Buenos Aires more closely than he was prepared to admit with reg ular personal visits calls and letters from Alfredo Moll and the Prebisch band in and outside government agencies although he had rebuffed at least one emissary from Perón who had approached him in Santiago for a rapprochement Nevertheless Prebisch had maintained a studiously cor rect approach to the Perón Government which was also of course a member of ecla Not only had he never used his position to isolate Argen tina he had also ensured that key ecla meetings were held in Buenos Aires But in mid1955 there had been a thaw in Peróns relations with the UN and on 8 August the Government of Argentina had submitted a for mal request to New York for technical assistance to help resolve the im passe of Argentine economic stagnation Prebisch had openly refused to return as long as Perón was president and his fall removed the dilemma of responding to Argentinas request It was now an altogether new game because General Lonardi was a new species of military leader not a typical powerhungry Latin dictator but rather a loyal officer committed to constitutional government who would re store democracy as soon as the electoral rolls could be put in order For Prebisch who had always insisted in Santiago that he would never again serve a military government the Revolución Libertadora was a special case in which the military were acting as a constitutional bulwark for the Argentine Paradise Lost 299 people In his first and hugely successful press conference on 27 September Lonardi vowed to govern by the principles of liberty rule of law justice and full employment he was no more than a servant of the people of Argentina a soldier a Catholic democrat and a friend of social justice in service to his country There would be national reconciliation instead of revenge he promised and the former supporters of Perón were reassured that they were also welcomed for the task of reconstruction The deposed dictator unquestionably had at one time a great part of the Argentine people on his side he stated It is not possible to apply the epithets unpatriotic and partisans of tyranny to all who supported the dictator disinterestedly or in good faith The great majority of the Argentine people should be allowed to participate in the countrys civil life unrestricted even though some often against their will supported the deposed regime1 Just as Lonardi had earned his credibility by breaking with Perón in 1951 and refusing a military command under his leadership so his appointment of the similarly incor ruptible lawyer Eduardo Busso as his new minister of the interior reassured Argentines of all backgrounds And if Lonardi felt compelled to dismiss both Perónistdominated houses of Congress until new and free elections could be called he filled the political vacuum with a new national advisory group of political leaders from all parties except the Perónists and Commu nists It would be a true Liberating Revolution rather than a typical seizure of power for political ends Even Lonardis title of Provisional President underlined that he had no interest in overstaying a strictly transitional role Adelita was in Holland visiting her sister during the military coup against Perón and Prebisch asked Carlos Echegoyen an Argentine economist who had worked with him in Santiago since 1950 to get in touch with her and keep her informed on events unfolding in Buenos Aires2 Adelitas sister did not have telephone service and it took several days to reach her by ca ble but her response was immediate and unequivocal not only did she want to return to the city of her family friends and memories she also de cided to fly directly to Buenos Aires from Europe to see for herself what was going on in the capital and at their house in San Isidro and to arrange temporary accommodations in the event of their early return In this she was unsuccessful her flight from Holland was routed away from Buenos Aires to Santiago and she stayed there until prospects were clearer In the end Raúl and Adelita arrived in Buenos Aires together in the afternoon of 1 October to flowers and a crowd of dignitaries Prebischs first week in Buenos Aires was magical He was welcomed home as a hero and the university immediately restored his professorship His first meeting with President Lonardi confirmed his belief in the seri ousness of the Revolución Libertadora and he spent the next day with 300 The Life and Times of Raúl Prebisch Cabinet ministers discussing the general economic and political situation in the country The press which had generally been hostile to him in his earlier career was now enthusiastic even referring to him as a symbol since it was almost exactly twelve years since he had been forced from the Central Bank initiating the decline of this great institution and with it the national economy3 With a full amnesty declared and the state of internal war in place since 1951 annulled Buenos Aires basked in the pleasure of freedom restored Statuary of Juan and Eva Perón in the capital was pulled down to delirious cheering ships provinces and streets bearing signs of the now unpopular couple were renamed The traditional national oath Before God the country and the Holy Gospels reappeared for the swearing in of the new Cabinet And just as Prebisch arrived in Buenos Aires the SS Paraguay finally completed its repairs and crept out of the harbour with Perón aboard to close out his era for better times Prebisch began work early on 3 October with an inaugural meeting of the undersecretaries of all the national economy and industry portfolios as well as external experts and consultants during which working groups were set up followed by a working lunch well into the afternoon4 They contin ued around the clock with Raúl directing the working groups and drafting the outlines of the preliminary assessment he had promised Lonardi The atmosphere and loyalty of the staff many from the old days like Roberto Verrier reminded him of his Central Bank days Prebischs large office in the Ministry of Commerce hummed with activity the media extolled his loyalty efficiency and patriotism5 Spring was beautiful in the capital and the grace and civility of Buenos Aires captivating Raúl and Adelita went out to inspect their stillleased but wellmaintained old house in San Isidro and longed for it all the more particularly its garden now over grown and needing care but altogether wonderful in its colours and trees It was easy to forget that twelve years had passed and he fell immediately into a familiar routine of work little different from earlier days By 7 Octo ber he was able to present his findings to the new government assembled in the presidents office at 500 in the afternoon and gave a press confer ence himself the next day where he discussed the preliminary report at considerable length concluding that the situation of the country is not a question of optimism or pessimism it is simply a question of beginning the work6 He was cautious The situation is serious but not critical He was also careful to avoid controversy given his dual role of national advisor and head of ecla but he did indicate that he would be requesting a leave of absence from the UN to continue his work in Argentina7 But his voice be trayed him when he spoke of this second career which circumstances oblige me to undertake in which I can serve the grand interests of the Paradise Lost 301 community In the press conference Prebisch almost choked when he spoke of Argentinas underlying potential He was hooked8 ecla and the UN and seemed far away So complete was this sense of return that his pre liminary report and press conference of 8 October began where he had left off in 1943 he made no references to ecla or the UN Malinowski who had been with Prebisch in Bogotá and was his closest friend in the UN learned that he was in Buenos Aires from a New York Times article reporting on his first press conference on 2 October person ally hurt that Raúl had not even bothered to inform them much less to request permission from de Seynes and Hammarskjöld his note of 3 Oc tober enclosed the Times article and cautioned Prebisch not to strain the UN link gratuitously Although we are fully reassured regarding your in tentions he wrote we would like to obtain as soon as practicable an indi cation from you regarding your possible mission9 In fact Prebisch was struggling with the dilemma of leaving the security of Santiago and the UN for the turbulence of Buenos Aires Adelita understood that Raúl was preparing the groundwork for a permanent return to public service in Argentina but Malaccortos warnings were so dire that he held back from a full commitment to the Lonardi Government In his 2 October press con ference he explained that he remained a UN civil servant and would have to return to Santiago on ecla business after his assessment had been com pleted and the subsequent announcement on 8 October that he would be seeking a longer leave of absence rather than resigning from the UN un derlined his continuing indecision Lonardi was not happy He had offered to create a superministry for Prebisch to guide the recovery program so that he could enter the govern ment as a full minister Since Perón had effectively destroyed the Central Bank a Cabinet position was now the place to be for moving along a re form agenda with real political power It would also be the simplest and cleanest solution allowing Raúl to take direct responsibility for economic leadership but it also meant resigning from ecla and committing himself fully to a future within Argentina Malaccorto objected to Prebisch return ing in any capacity but insisted that if he persisted in such a rash and likely disastrous course of action he should at least keep a fallback position by negotiating a leave of absence rather than leaving the UN Prebisch there upon convinced Lonardi to appoint him as special economic advisor to the president rather than minister on threemonth leave from the UN and without salary from the government since he had ample accumulated holi day pay to cover this period This less risky alternative had the advantage of allowing him to postpone a final decision to move to Buenos Aires until he had a better sense of his prospects in the capital If things went sour he 302 The Life and Times of Raúl Prebisch would have an exit The danger in returning to volatile Buenos Aires in the safe role of UN advisor however was being seen as unpatriotic unwilling to take the full plunge in a moment of national need and therefore endan gering his credibility from the outset There was no good option Malaccorto grumbled Raúl should have stayed out of Buenos Aires altogether Prebisch argued that he would have significant power with the position of advisor since a resignation threat from so senior an international figure would carry a special weight in the circumstances Argentina needed inter national support particularly in New York and Washington and the new government would be unwilling to compromise Prebischs connections in these circles Second he argued Lonardi would realize that Argentinas international standing and leverage would be enhanced by Prebisch main taining his UN position and travelling to New York and Washington as a special type of emissary for his country Argentina would certainly need a major UNled technical assistance program in which ecla would play a lead role even Perón had realized this when he had contacted New York on 8 August Prebisch would be better able to do this from within the UN system Finally by not accepting a salary for his work in Buenos Aires he thought he would definitively preempt any charge of enriching himself at public expense10 Supported by Malinowski and de Seynes Hammarskjöld approved a threemonth leave of absence with the understanding that as part of his advisory work Prebisch would prepare a longterm UN technical assistance program for Argentina Returning briefly to Santiago for household items he met with his ecla staff to announce his decision and appoint Swenson as acting executive secretary in his absence Raúl and Adelita then de parted for Buenos Aires in expectation of reoccupying their house in San Isidro after the tenants departed Meanwhile they would stay with Alfredo Moll Although the formal decree setting out the terms of Prebischs ap pointment as special economic advisor to the president responsible for the formulation of a program of economic recovery as well as the mea sures necessary for its achievement was not signed until 25 October he plunged immediately into the next stage of his work preparing a national recovery plan With Lonardi under public pressure to announce the national recovery plan Argentines from every sector feared for the future and foreign inves tors worried about their prospects a special presidential address to the nation was set for the evening of 25 October leaving Prebisch only two I Paradise Lost 303 weeks to draft a report Minister of Trade Cesar Bunge assisted him where possible and set up a special working group for this purpose but it was a tough challenge Prebisch had been out of the country for most of the Perón period national statistics were unreliable Unlike Brazil Argentina did not have a comprehensive country analysis by ecla to help define pri orities He therefore relied heavily on interviews with some one hundred major figures in the public and private sectors as well as the cooperation of former colleagues from the Central Bank days such as Roberto Verrier now the deputy minister of finance and former students Aldo Ferrer Norberto Gonzalez and Ricardo Cibotti now recognized as young and promising economists of the new generation Notwithstanding the work Prebisch had initiated during his first week in Buenos Aires the most that could be expected for 25 October was a report certainly nothing like a finished plan The result was a decision to split the work into three parts A first document labelled the Plan Prebisch due to its enormous public and media exposure formed the basis for Lonardis Address to the Nation on 25 October containing the diagnosis and immediate emergency measures However two additional reports dealing with longerterm policy were to follow in early January 1956 Sound Money or Uncontrolled Inflation and the Plan for Economic Restoration The first report was rushed out so quickly that it risked miscalculation To dramatize the national crisis Prebisch deliberately focused on domestic failures downplaying trademark ecla themes such as declining terms of trade which addressed the international economic con text nor did he evaluate the economic impact of natural disasters flooding and earthquakes which had afflicted Argentina since 1951 Argentina is in the worst economic crisis of its history the Plan Prebisch began worse than the 1890s the civil wars of the nineteenth century or the Great Depression because in those times the country retained its pro ductive forces intact11 In fact the crisis after Perón was even worse than Germanys in 1945 because the damage to Argentina was invisible while Germany amidst the ruins retained the dynamism to rebuild Ten years of irresponsibility and corruption had left the nations infrastructure run down its private sector decapitalized and its economy indebted and in an inflationary spiral In Germany only cities and factories were destroyed but the industrial spirit of the country was intact and lacked only resources to restore growth Argentina Prebisch noted faced a worse threat which he called a crisis of production Exports had collapsed industrial productiv ity had fallen inflation was entrenched the agricultural sector was mired in decline external liabilities totaled 757 million and petroleum imports gobbled up scarce foreign exchange despite Argentinas rich energy re sources In ten years the economy had grown by 4 percent compared with 304 The Life and Times of Raúl Prebisch 40 percent in Brazil and Mexico Even Colombia not to mention Chile Brazil and Mexico had steel industries but Argentina once the leader in South America had failed to invest in heavy industry The remedy was to construct a sound basis for restoring growth and prosperity through struc tural adjustment to reduce the deficit and inflation reduction and devalu ation price increases tax increases export promotion and joining the imf to attract foreign credits Agricultural production must become a pri ority for expanding exports and earning foreign exchange Pipelines and infrastructure were critical bottlenecks but Prebisch advised the Lonardi Government to reverse Peróns late conversion to Standard Oil before his fall instead of opening the sector to US investment Argentina should maintain national control since the country had ample expertise on its own He exhorted all Argentines particularly the wealthy to sacrifice for the common good and promised that such pulling together would be re warded with a rapid economic recovery Whether they liked it or not Argentines had to take action and income tax reform for social equity was necessary in the forthcoming period of austerity Lonardi promptly de creed a series of measures recommended in the Plan Prebisch beginning with a devaluation which made imports more expensive and complicated middleclass travel plans exchangerate reform measures to stimulate ex ports and a national reconstruction fund The Plan Prebisch was welcomed in the foreign press The outlook has changed from nightmare to morning Norman Crump of the Sunday Times reported from Argentina I am confident that London and New York will regard a Government advised by Dr Prebisch as credit worthy and I am equally confident that a Government advised by him will justify this view12 Disastrously the Sociedad Rural complimented Prebisch reviving memories of his presumed links with the oligarchy and the ultraconservative English language Review of the River Plate similarly called it a masterly analysis13 But Prebischs bleak diagnosis also met with widespread public skepticism The cafés of Buenos Aires flourished as usual Argentinas per capita wealth was higher than that of Brazil Mexico or Chile or for that matter of Japan France or Italy Argentines consumed more beef per capita than Ameri cans its restaurants served the thickest steaks in the world The accumu lated wealth of Argentina remained intact its growing isolation from world markets and international networks or the collapse of standards in eco nomic faculties or public administration had been so gradual as to be im perceptible The public read instead of continuing progress that Latin Americas first modern automobile assembly plant producing 150000 cars a year was opening in Cordoba for example or that their science engineer ing and medical schools continued to attract students from all over Latin Paradise Lost 305 America Few Argentines could believe Prebischs characterization of the postPerónist situation as the worst crisis in history serious as it was or the melodramatic comparison of proud Buenos Aires with the wasteland of bombedout Berlin The Sunday Times of London agreed noting that Argen tinas debt problems were only 757 million over four years low in com parison with her potentialities once her economic affairs have been restored to an even keel14 The US Embassy suggested that he had deliberately exag gerated Argentinas current problems to discredit Perónism and had gone too far in dramatizing the severity of the economic crisis15 Prebischs report unleashed the first wave of media attacks on his motives and credibility Politica y Politicos resurrected all the old themes Prebisch as past and present servant of the oligarchy during the decada infama Prebisch as general manager of a central bank dictated to by Britain Prebisch as behindthescenes éminence grise insinuating his team of followers into leading positions in the Revolución Libertadora Prebisch as disloyal German from Tucumán Prebisch as an opportunist with no formal position in the new government16 El Clarin immediately took up these themes17 Old enemies in Buenos Aires revived allegations against the pre1943 Prebisch brains trust which had sold out the country and Lisandro de la Torres taunt about his claiming to have a doctorate when in fact he was only a public accountant Questions were raised about his current loyalty to Argentina Was he not after all a for eigner and the agent of outside interests the Americans the British and now the imf Stunned though he was by the violence of the media assault Prebisch himself had no doubts about his grim diagnosis of the Argentine economic crisis and he was not alone José Ortega y Gasset Spanish philosopher and author of Revolt of the Masses who had found refuge in Buenos Aires after the Spanish Civil War also wrote of the deep malaise afflicting this other wise favoured country and his pessimistic diagnosis was reprinted after his death a week before the release of the Plan Prebisch18 So far from joining Australia Canada and the Scandinavian countries as developed countries Argentina was sinking into underdevelopment compared even with south ern Brazil Something vital had been lost according to Ortega y Gasset a sullen mediocrity pervaded public life individually accomplished in every pursuit Argentines seemed incapable of the collective purpose required for a modern economy They consumed but production was stagnant No traditional theories such as liberalism Marxism or corporatism seemed to fit this unique case the old political class had disintegrated as Perónism swept the country and now with its demise all the contending political forces were fragmented but highly mobilized trapped so to speak in a 306 The Life and Times of Raúl Prebisch frenetic and destructive equilibrium But unlike the deceased Spanish writer Prebisch was in Buenos Aires and part of this struggle The immediate assault disappointed Prebisch but so long as he had the full support of Lonardi his position was unassailable Many critics could be dismissed as predictable old enemies from the 1930s of little consequence La Nacion and the quality press in Buenos Aires supported his emergency measures as did the leader of the Radical Party Ricardo Balbin a key ally with a majority in the National Advisory Group and widely expected to be come president when the Revolución Libertadora held national elections In fact the overall political outlook remained generally optimistic Most of the key public figures in Argentine political life had rallied to Lonardis call for a new era including many of Peróns supporters particularly the core of his party the sixmillion strong cgt General Confederation of Workers which had accepted the provisional presidents conciliatory ap proach with little protest the union leadership had asked their members to continue working rather than strike in exchange for a promise that their social rights and collective bargaining agreements would be respected Perón was in exile and marginalized stripped of his uniform forever by a military tribunal and discredited by the revelation of a tawdry hoard of love letters money and jewellery to Nelida Rivas a fourteenyearold mis tress The cgt did not call for work action when Péron broadcast a speech from Asunción blaming the economic crisis and ensuing military coup on the parasitic class with the oligarchy contributing their money and the clergy their sermons against the will of the producing class19 Buoyed by the calm returning to Buenos Aires Prebisch accepted an in vitation to visit Montevideo was warmly received on 11 November by his many friends in Uruguay and was swept up in a round of meetings press conferences receptions and official dinners Repeating the diagnosis he had presented in the Plan Prebisch he explained that his worst nightmares were realized when he returned to his home country I thought it was bad but the reality was worse than the most pessimistic conjecture Only aus terity and sacrifice can save Argentina20 But as Prebisch enjoyed the tranquility of Montevideo the Lonardi re gime was under mortal attack in Buenos Aires Within weeks of the his overthrow of Perón he had already antagonized supporters antiPerónists within the military and the Radical Party criticized him for his leniency to ward supporters of the dictator others worried about the growing influ ence of ultraCatholic nationalists in the new government When Lonardi dismissed Eduardo Busso as interior minister the National Advisory Board and all five newly appointed Supreme Court justices resigned triggering a successful palace coup on the night of 1213 November led by Pedro Paradise Lost 307 Eugenio Aramburu chief of the General Staff Aramburu immediately restored Busso and regained the confidence of the National Advisory Board and justices of the Supreme Court and to this extent the coup was a bloodless change of leadership within the Revolución Libertadora But the advent of Aramburu marked the end of Lonardis policy of national recon ciliation which had appealed to Peróns followers In its place was war against the cgt Aramburu sent marines to occupy its offices and dissolved the Perónist Party with a campaign of repression against both party and union members The cgt retaliated by calling a general strike to which Aramburu responded that he would in no way tolerate certain sectors us ing workers to achieve political ends Predictably labour strife exploded working days lost rose from 114000 in 1955 to 52 million in 195621 If before 12 November Lonardis policy of national reconciliation offered some hope of recasting Argentine politics along new lines Aramburus at tempted repression of six million workers in effect disenfranchising a ma jority of Argentine voters condemned the country to renewed political polarization After just two months the Revolución Libertadora had en tered a new and uncertain phase Appalled at the Aramburu coup and its dangers for political stability Prebisch cabled his resignation as advisor from the Montevideo airport to Buenos Aires only to be informed that the new provisional president re fused to accept it and insisted on seeing him immediately after his return Malaccorto advised him to stay clear of the Casa Rosada and to leave the government while he could still depart with dignity the coup had termi nated the idealistic phase of the Revolución Libertadora and Aramburus repression of Perónism and the cgt would reopen wounds and condemn Argentina to continuing turmoil But again Prebisch chose to ignore his friends advice a journalist saw him in the palace and learned that he had agreed to rescind his resignation Too much was at stake to leave now he felt As an incentive for him to stay Aramburu made two appointments that reinforced Prebischs support in the Cabinet Alizon Garcia was named minister of finance and Eugenio Blanco minister of economics Blanco was a key figure in the Radical Party close to party leader Ricardo Balbin and therefore a bridge to the person most likely to emerge as fu ture president In a personal letter to General Lonardi Prebisch under lined his sorrow at the turn of events and his fears for the future of a divided nation Lonardi replied in kind thanking Raúl for his service and for staying with the Revolución Libertadora despite the Aramburu coup Argentina he said needed him more than ever Aramburus arrival and Prebischs decision to remain further embold ened the critics After a particularly venomous piece in Noticias Graficas on 308 The Life and Times of Raúl Prebisch 15 November imputing that he was more influenced by British than Argentine interests Prebisch called a press conference without consulting the presidents office or members of his Cabinet I have decided to end this once and for all he stated I am more than tired to hear them he said particularly when they were raised only in my own country and al ways vague and nebulous His record of public service was available everything about me is on file in the Central Bank archives Even Perón had not been able to discredit him during his years in power all journalists had to do was verify the facts because these records were now accessible It was nonsense to claim that he had been a tool of British interests or that he had opposed industrialization Find one scrap of evidence for corruption he challenged his tormentors The worst was the attack on his patriotism he was proud of his old Spanish blood and good German blood22 He Prebisch rather than Perón stood for national interests such as keeping national control of the petroleum sector As for the socalled Plan Prebisch of 24 October it was just a structural report there is no plan All it contained were simply facts of life any government would have to imple ment an austerity program a loan to help stabilize the economy was not selling Argentina out to imperialism Joining the imf was essential because whether we like it or not we must have external credit He pleaded for re straint We must all collaborate to overcome our difficulties supporting all unavoidable burdens I believe in the capacity of the people the under standing of all our citizens and the spirit of solidarity of the country in this difficult hour Moreover I have confidence in the potentialities of the country and its enormous sources of production I am confident that all difficulties will be overcome in the near future23 A Chilean journalist at the press conference was amazed at the antiPrebisch campaign he saw in the press In the US and Latin America he was considered a dangerous leftist How could it be that you are criti cized here for your alleged support for special interests against the Argen tine people when our criticism in Chile is precisely the reverse Prebisch answered with a comment that further complicated his relations with the Argentine press The entire United Nations think one way Argentina in another Here there reigns a towering superficiality Journalists do not ana lyze or consult rather they offer their personal opinions In all other Latin American countries I have serious interviews or conferences with journal ists who wish to clarify their doubts regarding various problems But in our country it is different they start with their own interpretation which they insist be accepted regardless of evidence As Hitler said if you repeat a lie of ten enough it becomes the truth and we simply must change this absurd system if we are to achieve any approximation of the truth in Argentina24 Paradise Lost 309 Such bluntness only deepened the hostility already the next day he felt it necessary to call another meeting with journalists to answer his critics lead ing to almost daily press events raising the same doubts about his integrity which he would patiently clarify over and over again pleading with journal ists to read the record for themselves He went to the offices of La Nacion himself to help get the message across but the campaign against him was too deeply ingrained for any tactic to be effective Even Pinedo mocked him in the press for bragging about his Central Bank heyday so long past At this stage Prebisch decided to ignore the media and retreat into work on the three big issues confronting Argentine recovery The first was the policy framework that Prebisch and his staff were busy completing in the two final reports Sound Money or Uncontrolled Inflation and the Plan for Economic Restoration The second task was repairing the Argentine state to implement the new reform package The best minds were eliminated he observed to a journalist and no others were trained to replace them25 Prebisch therefore was preparing the largest UN technical assistance pro gram in Latin America to enable international experts to train some 150 Ar gentine economists and officials to upgrade financial management and public administration in Buenos Aires The third challenge was preparing for the upcoming visit of a US delegation headed by Henry Holland and Samuel Waugh president of the ExportImport Bank The US alone had the means for the national recovery plan to succeed industrial credit foreign investment and speeding up Argentine entry into the imf Prebisch hoped to replicate his experience of 1940 when his special intervention with the US Embassy had prepared the groundwork for success in Washington Swenson visited Prebisch in late November and reported to de Seynes that Raúl remained deeply commited to his proposed measures as neces sary and correct I found him relaxed and calm in mind and spirit in fact I have seldom seen him so tranquil He is completely oblivious to any pres sure and is clear in his mind that the present government must take un popular measures involving sacrifices and the elimination of special privilege26 The last two reports were near completion the ecla team headed by Adolfo Dorfman and Alex Ganz was finalizing the UN technical assistance submission for the government shuttling back and forth be tween Santiago and Buenos Aires and would finish its work by January The November HollandWaugh visit had been cordial while they had not agreed to speed up negotiations by sending a special technical mission to Buenos Aires in advance of Prebischs planned trip to Washington in Janu ary the positive atmosphere had established a solid working relationship December therefore was a month of preparation Prebisch put the fin ishing touches on the final reports and gave a private briefing to the senior 310 The Life and Times of Raúl Prebisch officers of the armed forces on 21 December just as government offices closed for the holiday Raúl and Adelita were still living with Alfredo Moll and went to Mar del Plata after Christmas for a few days of sun On 4 Janu ary he submitted Sound Money or Uncontrolled Inflation and the Plan for Eco nomic Restoration to President Aramburu at the Casa Rosada Aramburu responded the next day by creating a special Honorary Eco nomic and Financial Commission to work with Prebisch This was a good sign The group had a broader political and social base than the National Advisory Group of political party representatives drawing its larger mem bership from delegates selected from all the main economic sectors includ ing labour as well as business and with an energetic competent secretary in Adelberto Krieger Vasena The president also hosted a special lunch for Prebisch on 6 January The money markets watched anxiously and there was a sense of expectation in the capital But it became apparent that Aramburu had not yet decided what to do with the final reports Prebisch was scheduled to leave Buenos Aires on 8 January for two weeks in New York meeting with UN and US officials on future plans for Argen tina he could hardly hold these talks without the release of his reports and an official letter from the Argentine Government formally requesting UN technical assistance Complicating matters further was a scheduled trip to Bangkok Prebischs first to Asia to meet with the other heads of the UN re gional commissions which extended his absence from Buenos Aires at this critical moment By late afternoon on 7 January he could wait no longer Prebisch called a press conference and outlined his main conclusions in effect forcing Aramburu to release his reports which were published on 12 and 13 January when Prebisch was in New York The president also made good on his promise to send an official request for the UN mission The last two reports were softer in tone than the October Plan Prebisch They supported a wage increase of 10 percent but consistent with the ear lier report proposed an austerity program with liberal reforms cutting staff and budgets privatizing inefficient state companies like Aerolineas Argentinas reducing public expenditures reducing the deficit removing price controls devaluing and freeing the exchange rate to weed out inef ficient firms reforming taxation to increase revenues and prevent eva sion lowering inflation promoting agricultural production and exports including the establishment of the National Institute of Agrarian Technol ogy investing immediately in the petroleum sector particularly pipelines and heavy industry such as steel attracting foreign capital except in the strategic oil sector and joining the imf27 While Prebisch called for sacri fices across classes with the wealthy leading the way his Economic Recovery Plan boiled down to an orthodox imf structural adjustment package to Paradise Lost 311 move Argentina away from Peróns version of state capitalism which had been biased against capital formation and competitive industries and had resulted in a bloated state inefficient private sector acute inflation and overconsumption28 Questioned in New York about Argentina Prebisch used a medical meta phor Argentina has a strong body in basically good health but it has been abused Get rid of the poison and its health will be restored29 After a week of heavy negotiation Prebisch realized that arriving at a formal agreement on the UN mission in Argentina would require additional time an announcement could not be expected before 21 March with a startup date of 4 May 1956 Even then Prebisch would have to return to Washington and New York to ensure its launch Since his threemonth UN leave of ab sence was expiring journalists asked him to clarify his intentions Raúl re plied that he expected to continue his advisory work in some form hoping to incorporate an ecla advisory team within his group in Buenos Aires This may have been a slip of the tongue but it underlined his con tinuing dilemma he wanted to head the proposed UN mission while also directing the Economic Recovery Plan out of Aramburus Office On 18 Janu ary en route from New York to Bangkok Prebisch announced that the UN had agreed to these terms he would be returning to ecla in Santiago but would also continue his work in Argentina30 And in his brief visit in Bangkok he exuded confidence about Argentinas recovery while again dramatizing the challenge with comparisons between Berlin after 1945 and Buenos Aires after Perón31 Returning to Buenos Aires on 23 January Raúl realized that his Plan for Economic Restoration had unleashed an evergreater wave of national fury and that the government had still not fully endorsed it The Argentine peso had lost 10 percent of its value during the week of 913 January when the Prebisch reports were released one of the sharpest declines since 1950 Consumed by highlevel bargaining at Cabinet level Prebisch had grown ac customed to press attacks dismissing them as the sour grapes of disap pointed Perónists on a par with the familiar antipatria diatribes in the gutter press which he now simply ignored But this new wave united both right and left against him Established writers and critics in Buenos Aires condemned Prebischs Reports as both factually wrong and damaging to the Argentine economy It was one thing for the Trotskyist Lucha Obrero to pro claim Down with the Plan Prebisch the Oligarchy and Imperialism Will Not Win the Final Battle it was quite different when a national figure such as Raúl Scalabrini Ortiz published The Imaginary Crisis of Dr Raúl Prebisch32 Scalabrini alleged that Prebisch had distorted statistics and fab ricated government obligations it was a false report and written with an 312 The Life and Times of Raúl Prebisch absolute lack of sincerity and seriousness to slander Peróns policy of in dustrialization and minimize the damage and costs of the floods and earth quakes of 1952 Argentina did not owe anyone one cent Prebischs allegation of a 757 million external debt was rubbish the main culprit was the worsening terms of trade during the past year which magnified the trade deficit The economy was actually improving In short the Plan Prebisch was capricious and confused worse than irrelevant the only explanation for such distortion was his selling out to foreign investors opposing indus trialization and returning Argentina to the agrarian days of the oligarchy which Perón had tried to break The Plan Prebisch derided as the Flan Prebi sch was wrongheaded and reactionary its welcoming of foreign investment a return to colonialism Behind the Economic Advisor is the Very Same John Bull Scalabrini insisted33 A swelling national chorus of opposition demanded its rejection by the government and the Aramburu regime was clearly split Open revolt had flared within the new Honorary Commission when Radical Oscar Alende broke with the Plan Sound money yes he complained on 18 January but sound money must not become the final objective achieved at the ex pense of the suffering misery and toil of the lower income groups34 But Prebisch still had sufficient momentum to press forward After a difficult week of negotiations Alicia Moreau de Justo the symbol of socialism in Argentina agreed to support the Plan with qualifications regarding social issues and price increases At this Oscar Alende relented and the Plan for Economic Restoration finally gained Cabinet approval on 28 January It seemed like a major victory Raúls Personal Advisors Office in the presi dency would continue its work and it formally replaced Peróns old Office of Economic Affairs35 Institutionally Prebischs position had apparently been strengthened in Argentina and the president circulated a twenty page synthesis of his January reports noting that their implementation re quired without exception patriotism honor and hard work36 With this Raúl and Adelita could finally leave for Santiago but with a no ticeably lowerkey sendoff only Alfredo Moll and Malaccorto than their triumphant public welcome to Buenos Aires on 1 October Pedro Orradre had accompanied Raúl to Buenos Aires as personal secretary for Argentine Affairs and neither he nor Adelita thought that their dream of returning to Argentina was over However when Raúl returned to Buenos Aires two weeks later the political scene was even more uncertain the polarization around his plan had continued to mount and Aramburus Cabinet was not prepared to follow through on his recommendations The economic situa tion had also deteriorated Inflation fuelled public anger and wage de mands of 30 percent Prebisch insisted that the president hold firm but Paradise Lost 313 Aramburus announcement on 17 February that wage increases would have to be linked to productivity provoked a new round of labour discontent and strikes Perónists were no longer cowed the military could lock up trade union leaders but Perón in exile had recovered his leadership power base and eventual hope of return More the Radical Party was ever more split be tween on the one hand Balbin and his supporters and on the other a dissident wing led by Arturo Frondizi who was reaching out to disaffected Perónists to build a winning coalition for the next national elections Frondizi rather than Balbin was the coming power in Argentina deter mined and skillful he had established his reputation by denouncing Peróns decision to open the petroleum sector to Standard Oil Though his views on foreign investment in oil matched Prebischs Frondizi broke completely with the Plan Prebisch using it as a whipping boy for discrediting Aramburus government and courting a broad coalition of Radicals Perónists and nationalists of all kinds in his bid for the presidency37 Prebischs position in the country was now increasingly fragile On 20 February he suffered a major setback when his Personal Advisors Of fice in the Presidents Office was terminated and merged in the newly created Economic and Social Cabinet with a membership restricted to min isters and their officials He was now shut out of direct access to Aramburu and the Cabinet with the last two supporting ministers Alizon Garcia and Eugenio Blanco finally turning against him as well suspicious that Prebisch was interfering in their areas of competence and resenting his impromptu press conferences to influence public opinion over their heads to compen sate for his lack of support within the regime Prebischs old Central Bank team had lost its edge and Verrier was gone It was a difficult moment Vulnerable from every side he could only hope that his countrymen and women would eventually understand the gravity of the crisis he decided to plead his case again at a special confer ence organized by the University of Cordoba on 27 February Cordoba had grown into a big industrial city a symbol of Argentinas industrialization and a Perónist stronghold and the conference offered a national forum for denouncing the Plan Prebisch Raúl himself was unaware of the trap laid for him until he arrived with his entourage of Giner de los Rios Oscar Bardeci Julio Silva and Benjamin Cornejo to an angry mob of demonstra tors prepared with antiPrebisch posters before a fully mobilized national press What did you do with the money from the Central Bank the stu dents shouted What did you do with our British pound sterling It was evident that the event had been set up to destroy him The jammed lecture hall was hot and unruly the taunting crowd nearly out of control before he spoke Facing this mob Raúl realized that he would be shouted down and 314 The Life and Times of Raúl Prebisch humiliated if he stuck to his dry and narrow ecla text instead he sur prised the audience by advocating land reform controlling US investment in the oil sector and deepening industrialization with a national strategy for heavy industry The crowd wavered When interrupted by Rudolfo Irazusta president of the Union Republica Prebisch suggested to the chair that he come to the podium and present his question Why Irazusta asked did Prebisch recommend new international loans when Argentina had a fortune of pounds sterling 900 million to be exact deposited in England Since Britain owed at least 800 million dollars Argentina could resolve its problems without an austerity program by simply demanding prompt repayment Prebisch asked him where he had obtained these statistics Irazusta ex plained that they had calculated export and import data demonstrating that Argentina had a favourable trade balance with Britain in this amount Has this figure included everything Prebisch continued all Argentine exports and imports When Irazusta answered yes Prebisch wondered aloud to him how Argentina paid for its petroleum and other imports Did he know No he didnt know With pounds sterling sir Prebisch barked Do you really think that we would advocate loans if we had 900 million in Britain It is inconceivable that in these moments of national calamity there are irresponsible people who produce information of this kind Dont use statistics from irresponsible types use instead those from young unsullied people like yourself since I associate you as a young person with purity of soul and dont put yourself in the hands of sons of bitches38 With this Prebisch swept out of the hall to his car bound for Ezeiza airport in Buenos Aires where he changed planes for Venezuela But the audience inside the lecture hall cheered Prebisch expecting a reactionary they were won over with his impromptu speech and dramatic humiliation of an evidently ignorant and abusive opponent It was a minor victory but not enough to make a difference I understood finally the political atmosphere in Argentina and used the tone and content which I should have used in my Report if I had properly perceived the Argentine reality Prebisch later concluded Arriving in Caracas Prebisch learned on 2 March that his Argentine troubles had followed him to Venezuela that Irazusta had challenged him to a duel by pistols to reclaim his honour offended in Cordoba The absurd had become bizarre and Raúl was happy to be out of the country But he had to respond or be vilified as a coward and the national press duly noted that he had selected Julio Silva and Estaquio A Mendez Delfino chair of the Honorary Economic and Financial Commission as his seconds to ne gotiate the terms of the challenge Adelita was amazed when contacted Paradise Lost 315 and UN headquarters had never seen anything like it Friends feared for Prebischs life given his acute lack of physical coordination he might even shoot himself Julio Silva decided to try a peaceful settlement with the help of the authoritative Spanish Royal Academy dictionary he per suaded Irazustas seconds that the word irresponsible used by Prebisch in Cordoba was purely descriptive and should in no way be construed as a personal insult Irazusta agreed and decided on 6 March that Prebisch had not trampled on his honour and that trial by duel was unnecessary By this time Prebisch was assailed from another quarter his own staff who were appalled by his visit to the Perez Jimenez dictatorship in Venezuela Even though Venezuela was a member of ecla Raúl had resisted all previ ous overtures to avoid shoring up the legitimacy of this regime now de spite his vow never again to support generals here he was as head of the organization side by side with General Jimenez praising his achievements even the socalled freedom of the press in Venezuela For his ecla col leagues the Caracas trip was a bit much quite different from Raúls argu ment that the Argentine Revolución Libertadora was a necessary and special case justifying his return to work with General Aramburu Actually the Plan Prebisch itself had left Furtado perplexed and disappointed its imf orthodoxy fitting badly with the Prebisch he had known in the brilliant years Furtado temporarily posted in Mexico was following events in Ar gentina closely his wife was Argentine and had expected a more nuanced approach from Prebisch including lessons to be drawn for example from more relevant comparisons such as postwar France which had suc cessfully restored its economy after years of political demoralization and economic decline One explanation could be that Prebisch was in Caracas to fund the new ecla building planned in Santiago flush with oil wealth Perez Jimenez was the only president in the region with lots of cash Hounded everywhere by critics Prebisch flew to what he thought would be the relative sanity and warmth of UN headquarters in New York and Washington for followup talks with Henry Holland Samuel Waugh and other officials in the imf and World Bank But Washington had turned cold in a reaction that had been building gradually since the Plan Prebisch in October 1955 John Foster Dulles particularly disliked the recommenda tion to block foreign investment in the oil sector after Perón had finally granted concessions to Standard Oil Dulles frankly distrusted Prebisch While careful not to oppose the proposed UN technical assistance mission for Argentina on principle he viewed Prebischs dual position as presiden tial advisor in Argentina while remaining executive secretary of ecla as strange He and Holland objected strongly to the participation of Adolfo Dorfman and Alex Ganz who were both high on the US hit list of 316 The Life and Times of Raúl Prebisch suspected communists Dorfman and Ganz will occupy a particularly stra tegic position and such persons with an economic ideology at odds with that of this government would create a particularly serious problem in US Argentine relations39 Dulles agreed The petroleum sector was particu larly sensitive the UN mission might even lead to Soviet consultants or equipment Dulles instructed Lodge in New York to make sure that compe tent and recognized economists would be hired to balance Prebischs so cialistic advice on restricting investment by US oil majors40 But the underlying dislike of Prebisch in Washington shared by Dulles and his officials like Henry Holland was fuelled by their sense that he had outwitted them again Quintandinha had left a permanent bad taste in their mouths Prebisch had constructed a diplomatic trap behind Washing tons back exposing them to ridicule and forcing them to endure a public loss of face while he expanded his role at their expense Now he was doing it again The huge UN mission to Argentina was a Prebisch initiative right left and centre announced as a fait accompli that Washington could hardly oppose Once again the US was stuck in an embarrassing situation this time having to endorse a UN program with a team including Dorfman and Ganz not to mention Prebisch himself who had just scuttled Standard Oils expansion into Argentina Washington was not willing to compromise relations with the Revolución Libertadora by blocking it altogether since it also desired a stable postPerón Argentina Worse this UN mission went way beyond eclas mandate having expanded from its limited research and thinktank role into becoming a major provider of technical advisory services Prebisch was trying another end run and his empire building had to be stopped41 From Dulles on down the State Department was deter mined henceforth to police eclas work program holding Prebisch to the letter of government agreements at the commission meetings and prevent ing another case of missioncreep on the pattern of Quintandinha and Argentina Never again would they get taken to the cleaners The result was a rough reception for Prebisch in Washington he was forced to bargain from a position of weakness and confronted a US de mand that he load up the Argentine mission with reliable Americans Since he desires US economic aid for Argentina Holland crowed it is likely that he will be responsive to Departments desires42 US leverage was pervasive not just in Washington but also in New York headquarters where US Ambassador Lodge had the UN bigwigs leaping to attention In the end Dulles got his US petroleum experts as well as an acceptable Argentine team of exgovernment officials and technocrats many trained in US universities and generally such as Raúls brother Alberto staunch members of the elite However Prebisch held firm and eventually pre vailed on keeping Dorfman and Ganz Paradise Lost 317 Prebisch called a press conference on his return to Buenos Aires on 11 March to state that the UN Mission would be announced by UN boss Hugh Keenleyside in Buenos Aires on 21 March and that it would open officially on 4 May under Prebischs direction He had made up his mind about the future almost shouting I however will not remain perma nently in my country The dream of returning home was over for the foreseeable future Santiago not Buenos Aires would be his home base Prebisch really had no choice the thinly attended press conference told the sad story his own influence in Argentina had evaporated He had an gered everyone it seemed and was left with no allies Support for devalu ation and linking wages to productivity offended the working class his promotion of agriculture was seen as a sellout to the oligarchy joining the imf was a sellout to imperialism Meanwhile Argentine financial in terests resisted tax reform the agriculturalists vetoed land reform and the private sector wanted less government but more protection Neither the military nor the Radical Party would accept the political costs of structural adjustment Nobody wanted taxes Increasingly he became a scapegoat for all aggrieved parties and malcontents Hostility to him the imf foreign investment the Plan Prebisch had become religious43 Argentines did not want a saviour because they did not believe that they had to be saved But Prebisch was still too committed to free himself of his Argentine fix ation He again travelled to Washington on 21 April to negotiate credits and Argentinas entry into the imf defending entry as essential and with absolutely no impact on sovereignty while in Buenos Aires it was so widely condemned as a national betrayal that Aramburu himself barely confirmed the decision A week later he sent a stern report to the government as ex advisor to hold firm on its antiinflation line expressing alarm over the public resistance to price stabilization He told a Brazilian journalist that he was not advocating tightening the belt so much as just not to open it too wide44 Instead Prebischs 10 percent wage increase became 30 per cent price controls were intensified Aerolineas Argentinas was not priva tized taxation reform was postponed and Aramburu was unable to reform the state which consumed 42 percent of gdp The UN mission or Prebisch Commission as it came to be known began its work on 4 May as planned just as the downward spiral of the Revolución Libertadora was gathering momentum45 The many experts arrived teams were duly formed and studies commissioned the statistics gathered and research conducted were impressive But it was entirely aca demic overwhelmed by the political dynamic sweeping the country The dozens of UN experts with their Argentine colleagues operated in the deep shadows waiting for the return of political will none came their 318 The Life and Times of Raúl Prebisch way They were an army of economists a visiting Brazilian noted but an army fighting a hopeless war46 Prebisch instead devoted May to writing an analysis of the Argentine cri sis his way of coping with the shock of a defeat that sharply affected his thinking as well as his personality and that threatened to become a perma nent fixation At ecla for example he could talk of nothing else During its plenary meeting in Santiago on 15 April he projected this preoccu pation with Buenos Aires as if the experience had become the new benchmark for its work Whatever the sacrifice monetary stability had to be maintained in the region Chile is fighting inflation with great decision and firmness he approved governments must stand firm against wage de mands He had been concerned about the danger that Latin American protectionism could become excessive in the past but his experience of failed import substitution under Perón turned him into an active propo nent of exportcapable economies The necessity of Latin America adopt ing a vigorous policy of export promotion is becoming more obvious by the day he noted in his plenary address Without it we cannot intensify the industrialization process47 But to free himself from Argentina Prebisch had to revisit the experience the occasion of a ceremony inducting him as honorary member of the Faculty of Economic Sciences at the University of Chile on 8 June provided the opportunity to reflect on this chapter of his life in his personal capacity rather than as UN functionary The paper was a bitter denunciation of import substitution gone wrong Peróns objective of industrialization was correct but his strategy was wrong Without industrialization Latin America could not absorb the masses and increase its standard of living but Perón had used protectionism to stifle productivity All countries used some form of protectionism in the early stages of industrialization the US Europe Canada Asia and so forth and Argentinas needs were no different But importsubstitution industrializa tion could be purposefully or disastrously applied The right way depended on domestic political choices regarding the respective roles of the state and market in successful countries the state pursued a limited and intelligent interventionist policy that supported rather than stifled the private sector instead Perón had sapped the lifeblood of the productive sector in a popu list cult of mediocrity in playing to the mob leading the revolt of the masses with a bloated state instead of leading a healthy and disciplined po litical economy Instead of aligning industrial and agricultural growth and using import substitution to build a sound economy the regime had deliber ately fostered inflation to conceal imbalances and growing disorder48 Argentines should not blame external strangulation outside powers and events terms of trade national disasters or imperialism for the Paradise Lost 319 failures of the Perónist model Of course Argentina now needed assis tance from the imf Washington and the UN as well as private invest ment to regain stability and relaunch the economy but the main problems were homegrown and the hard decisions that now could not be avoided were Argentinas own responsibility and therefore had to be taken in Buenos Aires Leaders had to begin by being honest by con vincing the public that the country truly faced a longterm crisis and that the future could only be secured through sacrifice and deep political changes A national psychology of complaining had to be replaced by re joining the world opening local monopolies to competition beginning serious land reform and fundamentally shaking up the tax system Disas ter could still be prevented but only Argentines could reverse a momen tum taking the country in a wrong direction The day following Prebischs Santiago address Aramburu crushed a re bellion provoked by a particularly outlandish antiPerónist government decree declared a state of siege and summarily executed twentyseven men with hundreds others wounded and imprisoned49 If political reconciliation had ever been possible in post1955 Argentina the 9 June massacre terminated this potential opening The dynamic of the Revolu ción Libertadora changed for good the mobilization of disenfranchised Perónists against the regime was now complete with personal vengeance sworn against Aramburu when his turn came The Plan Prebisch was now history an epitaph to a moment passed as contending forces struggled for power Superseded as policy it entered Argentinas lore of political devilmyths along with the RocaRunciman Pact or Lisandro de la Torres Great Beef Debate from the 1930s Symbolic of national betrayal it be came a catchword for politicians and after the 9 June massacre Arturo Frondizi was the most skillful in condemning it to his advantage His over ture to Perón supporters capped with a formal agreement with Perón himself produced an unstoppable momentum for electoral victory on 23 February 1958 when he captured the presidency by easily defeating Ricardo Balbins wing of the nowbifurcated Radical Party As for Prebisch now the most hated man in Argentina he was haunted by a searing sense of failure He lost interest in the Prebisch Commission leaving Dorfman and Ganz in charge and rarely visited Buenos Aires when he did come he slipped in and out of the capital like a refugee avoiding the press In December 1956 he unwisely agreed to a ghastly press conference beside Federico Pinedo and Ernesto Hueyo recognized stal warts of the ancien régime Even the normally enterprising Alfredo Moll who could run businesses and make money without apparent effort had sunk into alcoholic stupor It was a metaphor for the times 320 The Life and Times of Raúl Prebisch He felt truly alone the only person in Argentina who had ever succeeded in mobilizing both right and left against himself He had antagonized Washington which would now watch him even more closely he had disap pointed his UN colleagues and he had thrown ecla into confusion after a glorious fiveyear run Adelita and Raúl put their house at 134 Rivera In darte up for sale and Raúl signed a new fiveyear contract as eclas execu tive secretary to take him to the retirement age of 60 in 1961 Francisco Bustelo a wine merchant in Mendoza sent him six cases of Pere Grau sherry in recognition for all you have done for our country It seemed pre cious little reward for a year so totally lost50 15 Return to Santiago His exile from Argentina reconfirmed Prebisch settled into Santiago for the long haul The big house at 134 Rivera Indarte in Buenos Aires was sold El Maqui their little weekend dwelling on the Maipo cliff thirty miles outside Santiago was now refurbished into a yearround residence a ram bling hidden house that preserved a cottagelike intimacy From a centre hall the left wing of the lowceilinged cottage housed the bedrooms and his small study in the drawing room to the right his uncles panelled desk comprised an entire wall facing which deep French windows framed the Maipo Canyon The family portrait of his greatgrandfather given by his mother hung over the fireplace mantle A music room off the drawing room also overlooking the Maipo held Adelitas Bechstein with a pair of wing chairs for listeners beside the grand piano The dining room followed seating ten around a mahogany table and sideboard Outside Prebisch built a terraced garden radiating bursts of colour against the bright Andean peaks while Adelita worked with the local settlement of Los Vertientes to build a first community public school El Maqui was a secluded world of understated elegance an island of warmth and peace and here he could relax And there was now ecla for another five years Since the fall of Perón Prebisch had been consumed by the Revolución Libertadora he had barely been in Santiago Swenson had been in charge and the organiza tion needed attention As he resumed chairing the weekly administrative meetings he saw signs of flabbiness throughout the organization from se nior researchers to janitors Economists were showing up late for work or not at all unheardof in earlier days when they willingly worked late into the night Membership on the Car Committee had become a valued prize Raúl learned that ecla staff senior as well as junior were importing dutyfree vehicles to be resold for profit in the local market and their 322 The Life and Times of Raúl Prebisch parking lot was a classy affair compared with the first years when no one had talked about money or cars or mailorder catalogues This Prebisch could never accept and a reign of terror promptly restored discipline But discipline could not restore mood Their leader seemed not himself different after the Argentine fiasco he had changed and the question was where he would lead the organization In fact even before Prebischs departure for Argentina a debate over future directions had started a sign of intellectual dynamism in which areas of disagreement had been evident Furtado and Noyola diagnosed Latin American infla tion as a symptom of institutional and political backwardness with every country quite different and requiring more complex solutions than sim ple monetarist stabilization1 Prebisch had a narrower focus I am so con vinced of the considerable harm that inflation is doing to Latin American countries he wrote to New York in April 1954 that as a matter of principle I am little inclined to discuss measures for correcting certain consequences of the inflationary process I would prefer to devote all our attention to the elaboration of a policy for curbing inflation and for stabi lizing economies without injury to incentives for economic growth2 Younger staff saw the 1955 Plan Prebisch as overly beholden to the old in corrigible pre1943 elite that had recently triumphed over Perón and lacking an understanding of the social forces on which the success of any recovery depended They saw him acting too much like General Ibanez in Chile who had brought in a US consulting firm in 1954 to lead a similarly simplistic antiinflation package3 Everyone from Prebisch down was frus trated by eclas crushing workload of projects and reports which pre vented scholarly research while economists in North America and Europe behind their endowed university walls were steadily advancing in develop ment studies They all wanted to publish Furtado actually printed his Economy of Brazil with his own money to the annoyance of UN Headquar ters and a stern letter from Santiago laying out the conditions for ecla staff to publish under their own names For Prebisch the appearance of Sir Arthur Lewiss immediately famous article Development with Unlim ited Supplies of Labour was particularly frustrating since it effectively scooped his own research simply because he had never had time after his Havana Manifesto in 1949 to rework his material for academic jour nals He thereupon vowed to take a book leave and finally complete his magnum opus on centreperiphery relations But then Perón had fallen and he had been drawn back to Buenos Aires And when Raúl returned to Santiago he was too crushed in spirit to undertake the book project Memory of the Argentine disappointment was not easily dispelled even as the Plan Prebisch fiasco faded withdrawn and newly intolerant Prebisch Return to Santiago 323 was ever more reckless in his personal life including unconcealed flings with his own secretaries Occasionally he would leave for Buenos Aires with Jacobo Timerman editor of Primera Plana describing his fleeting visits like a foreigner in his own country In Santiago he hunkered down with the Argentine economists recently hired from that city Staff tiptoed around the corridors missing Furtado who could always reason with their boss he had left Santiago in fall 1955 while Prebisch was in Argentina to undertake a major country study of Mexico4 Finally in June after Aramburus massacre of workers had terminated his engagement with Argentina Prebisch roused himself to look to the fu ture a new burst of leadership at the head of a new ecla mission was ur gently required to reverse a diminishing enthusiasm among his followers and to revive his own spirits They waited for new directions where they wondered would Raúl take them The deadline for recasting the organiza tion was the next commission meeting set for May 1957 in La Paz Bolivia leaving less than a year really little more than summer and fall for fash ioning a new ecla mission and staff were relieved when Prebischs sullen depression of earlier months gave way to preparing what he called a new stage in eclas productive existence5 The first period which had begun in 1950 Raúl argued was over These years had been successful in creating a framework for action the common denominator uniting the diverse ecla team from the orthodox Ahumada to the Marxist Noyola had been creating Latin America exploring the concept of Latin America in its many dimensions the internal and exter nal features that gave this region its identity among the powers and consol idating eclas Santiago secretariat as the unique regional centre for this intellectual work We have completed our theoretical analysis he con cluded and are now ready to devote ourselves fully to the practical mea sures for resolving our problems New thinking would be replaced by concrete action It would be nice to do both things at the same time he stressed but this was impossible Choices had to be made ecla had to fo cus on solutions rather than problems daytoday challenges facing gov ernments had to replace theorybuilding and grand designs6 Prebisch complained that ecla staff forgot that the secretariat was not a university but rather part of a UN commission accountable to govern ments ecla had to keep the lines open to governments who were tiring of studies that had been compelling in 1949 still interesting in 1951 but dis missed as academic in 1956 They were impatient with the interminable in ternal debate about inflation for example and whether it was structural or not Prebisch sensed a growing problem of legitimacy that Latin Ameri can countries were not supporting ecla as they had in the past and that 324 The Life and Times of Raúl Prebisch they were preoccupied by a slowdown in economic growth as the post Korean War boom ended Under Prebischs leadership ecla had won and maintained a unique level of intellectual autonomy but it could not ignore its governing body at a time when governments in the region faced grow ing challenges Even at the height of its popularity in 1955 eclas work was more highly praised abroad than by Latin governments in ecosoc GeorgesPicot who had represented France at eclas sixth meeting in Bogotá journeyed to Geneva from Paris for the December 1955 meetings specifically to pay tribute to Dr Prebischs leadership of the secretariat and to the able assistance given by his staff Pakistan saw it as a model for its own region the Yugoslav representative thought the quality of eclas Brazil and Colombia studies transcended in usefulness the countries con cerned Even the US representative Dr Kotschnig expressed satisfaction De Seynes concluded that comments by all speakers at the session were in variably couched in laudatory terms stressing the importance of ecla studies for the Latin American region as well as for other parts of the world their quality and the methodological approach adopted in pursu ing the work program But delegates from the Latin American countries were silent or noncommittal More important and despite all the praise in ecosoc Prebisch was not able to persuade the UN to increase eclas bud get a sign that Latin governments were not supporting him strongly enough in New York Brazil after Vargas was cooler to ecla Mexico was typically distant Prebisch saw a warning sign ecla had to adopt a more practical agenda to regain the Latin American governments interest and this meant attacking immediate economic problems7 Regional integration towered above all other immediate economic problems facing Latin governments in 1956 and Prebisch seized it as the defining activity for his second term The issue had already been iden tified as a priority in eclas early years and indeed formed part of the 1950 Decalogue adopted in Montevideo But then the timing had been wrong Countries were only beginning industrialization whereas now Brazil for example had a substantial economic base poised for even more rapid ex pansion Fifty years in five blared President J Kubitschek Vargass suc cessor not to mention his epic project of building a new capital in the wild middle of nowhere The European Common Market now taking shape across the Atlantic was a galvanizing interest for a region so closely tied culturally and historically to the Old World While ecla had pioneered Central American integration in 1951 the European Coal and Steel Com munity had been set up the same year to replace Europes rigid national boundaries in the warmaking industries The experiment had prospered amid doubts and in Messina in June 1955 the six member states endorsed Return to Santiago 325 the creation of the eec European Economic Community with a common market common institutions and a progressive fusion of national econo mies to be enshrined in the Treaty of Rome in 1957 Such success in West ern Europe called attention to Latin America where industrialization was being pursued in twenty small and isolated national markets watertight compartments in Prebischs words No great genius was required to understand the significance for Latin America If the industrial states of Western Europe a pillar of the global economy felt it necessary to pool their strengths to compete internationally how much more so the incipi ent economies of the Latin periphery which were only beginning to indus trialize Compared with Europe Latin America was only beginning its industrialization it had to plan for the future The creation of eclas new Trade Committee in September 1955 at Bogotá was a first indication of the regions growing interest in interna tional trade but its terms of reference had not included regional integra tion at all The Santiago secretariat was simply requested to prepare a document called Preliminary Study of InterAmerican Trade which would help resolve practical problems which limit or undermine the growth of intra regional trade8 But events built rapidly in support of regional integra tion and in July 1956 Prebisch sent Ivovich Eusebio Campos José Garrido Torres and Santiago Macario to canvass government opinion throughout the region They found more support than expected The key supporters included all the Southern Cone countries Brazil Argentina Chile Uruguay and Paraguay and in fact the overall degree of commitment was startling While acknowledging the many challenges confronting regional integration and that only gradual solutions were possible since countries faced balance of payments and credit difficulties Latin governments unanimously supported an exploratory trade conference in Santiago 1929 November 1956 to exchange views and assess the feasibility of a major eclaled initiative The Meeting of Experts on Iron and Steel in São Paulo 1518 October cosponsored by ecla drummed up additional interest for the new trade initiative The Brazilian private sector registered in force the first time it had rallied so evidently behind ecla provoking a congratulatory message from New York and São Paulos new smokestacks advertised the citys in dustrial dynamism Its new Technology Research Centre and Aeronautical Research Institute were engaged in advanced sectors of metalworking en gineering and automobile and aircraft production a sense of opportunity pervaded the meeting and attendance was strong European delegates set the tone by underlining the advantages of a single market There are no longer borders in this sector they said Europe is on the march dont 326 The Life and Times of Raúl Prebisch you forget it and they urged Latin Americans to persevere toward full industrial integration rather than settle for wellmeaning promises of re gional cooperation The lesson of Europe in the iron and steel industries was that small national markets were passé if Latin America failed to match the Europeans or the US with its continental market or the giants of the developing world like India and China it would lose out Latin America had to take the leap or be left behind9 By the opening of eclas Trade Conference in Santiago on 19 Novem ber 1956 most Latin American governments had identified regional inte gration as their number one priority and with 120 delegates it became as large a gathering as a regular Commission meeting Apart from the twenty four member governments Japan Italy Poland Canada Russia Czechoslo vakia Rumania and Yugoslavia sent observers along with representatives from the gatt the imf and other international organizations It was the first major international conference since the twin disasters of autumn 1956 the Middle East War launched by AngloFrenchIsraeli forces on 29 October followed by their subsequent humiliation by President Eisenhower who denounced the invasion and demanded their withdrawal and the subsequent Soviet intervention in Hungary on 3 November to crush a popular revolution Even the weather at the trade meeting the glorious spring in Santiago compared with the bleak November fog in London and Paris underscored the contrast between the violent Old and the genial New World Latin America had supported the UN against both the EnglandFrance alliance and the ussr Far away from Hungary and the Middle East and after some initial glaring the various delegations from Europe the East Bloc and the US decided to put aside their awk wardness in a productive session marked by the complete absence of rheto ric Arturo Maschke conference chair and president of Chiles Central Bank underlined the need to put aside the frustrated dreams and rhetoric of Bolivar in favour of dealing frankly with the practical domestic and ex ternal barriers to a regional market Prebisch also urged realism consider ing the diversity of economic structures within the region the lack of infrastructure the fact that interregional trade was virtually nonexistent mainly agricultural products worth only 350 million comprising a mere 7 percent of total trade Precisely these obstacles demanded action now In a careful speech Prebisch outlined the vision as well as the implica tions of regional integration for Latin America In Europe the common fear bringing the six nations together in the eec had been security against the Soviet threat and the resurgence of a united Germany Since a return to prosperity in Western Europe both depended on and enhanced security integration across borders in a common market had a strategic logic to Return to Santiago 327 overcome inevitable local special interests and ensure US support Such was the happy coincidence of the approaching Treaty of Rome Latin America was an entirely different case the Soviets were not about to in vade and there was no threat like Germany Instead Latin America was a periphery caught in the backwaters of time Twenty economies had emerged as a series of appendages of the colonial powers and twenty iso lated economies they remained still selling traditional commodities beef wheat coffee bananas and sugar to the same industrial countries as if it were still the nineteenth century when they had gained formal polit ical independence Ports roads railways the entire infrastructure of Latin America had been built around these markets reinforcing the twenty watertight compartments it was an anachronism something from the nineteenth century surviving into the twentieth Industrialization since 1945 had not broken this pattern of segmenta tion in Latin America Prebisch said because the first and easy stage of im portsubstitution industrialization in consumer goods such as textiles and shoes had merely replaced imports for the local market This phase was nearly complete Latin America was now entering the second and more complex stage involving dynamic sectors durable goods steel heavy engi neering mass automobile assembly engines chemical plants and so forth new and dynamic industries requiring the economies of scale of a re gional market for attracting investment new technology and high produc tivity to soak up an expanding labour force Brazil Mexico and Argentina were beginning limited production of jeeps and tractors for example and were now poised for automobiles now was the time to make the leap from small national markets toward the region as in Europe with preferences that would lower and finally abolish trade duties The first task Prebisch maintained was to develop new forms of reciprocal trade and above all in industrial products that practically didnt exist before10 Industries al ready established would require a more gradual approach to expand the range of competitive industries and sectors and force businesses to look be yond their borders Without the common market Prebisch maintained there will be a tendency by each country to try to produce everything say from autos to machinery under the sheltering wing of high protection which means splitting the industrializing process without the benefit of specialization and economies of scale As in Argentina under Perón the cost of such a choice would be uncompetitive industries limited participation in inter national trade and the relative decline of Latin America in the global economy Separate truncated markets were no longer adequate for com petitive exportcapable production the common market was a step on 328 The Life and Times of Raúl Prebisch the road to international export growth In fact Latin Americas pattern of import substitution in watertight compartments since the Great Depres sion had led to a new form of vulnerability rather than giving it greater au tonomy it had not broken free from the nineteenthcentury trade pattern of exchanging commodities for manufactured products from the same in dustrial countries with high tariffs and restrictions toward the rest of the world as well as within the region Now Latin America needed costly capital goods for the new industries of the second phase of industrialization 90 percent of which had to be imported and paid for with the same low value exports forecast to grow by only 1 percent per year to the US during the 1960s The result was a permanent trade deficit that threatened the supply of essential imports and therefore the means for further industrial growth The solution was regional specialization to overcome this trade squeeze to create Latin Americas own competitive capital goods indus tries to break with this anachronistic pattern by the gradual and progres sive creation of a common market and the consequent diversification of imports and exports11 What does the common market concept imply for trade with the rest of the world he asked his audience in Santiago That we are going to ex change the 20 autarchic markets of Latin America with one large autarchic zone visàvis the rest of the world Such an idea would be an error of incal culable dimensions Latin America has to export more and more there is a perfect compatibility between the idea of a progressive integration of our economies and the equally meritorious idea of the most intense export thrust The private sector in Western Europe proved the point it sup ported integration with domestic and foreign companies strengthening their operations by regionwide investments and thereby realizing the vi sion of regional growth with greater productivity conceived by early Euro pean visionaries like Monnet12 In a letter to de Seynes Prebisch reported that the Trade Committee meeting had been highly satisfactory and exceeded what might have been expected for a meeting designed to put the work into operation Four resolutions were approved authorizing ecla to continue work on a gradual system of multilateral payments an inventory of existing indus tries a Latin American regional market in manufactures and measures to stabilize traditional markets in intraregional trade Latin governments particularly those in South America were highly motivated The US posi tion was carefully watched given its central role in the region Before the meeting Swenson had cautioned Prebisch against claiming that the Western industrial centres wanted to keep Latin America to the produc tion of raw materials maybe some circles yes but in fact considerable Return to Santiago 329 progress has been made in recent years to change the view not only of economists but also of government officials and industrialists in the US and the West European countries13 Was ecla becoming paranoid At Santiago this advice appeared correct Prebisch reported to de Seynes that the US delegation accepted the Com mon Market idea under two conditions that any new arrangements take into account international commitments under the gatt and that they not prejudice the expansion of international trade And even though when it came to actual voting the US along with Cuba and the UK ab stained he felt that the positive US attitude went a long way towards meet ing the aspirations of the Latin American countries14 It was known that the US strongly supported the evolution of Western Europe and that while John Foster Dulles supported European integration for strategic reasons his long friendship with Jean Monnet had also convinced him of its intrin sic value15 The most serious problem at the Trade Conference had been the imf delegations open contempt for eclas emotional idealism and lack of clear thinking and its insistence on the need for the nonLatin American representation to prevent the worst absurdities from happen ing Prebischs group based its work on the principle of maintaining full employment in international institutions Being true Latins they unani mously and happily decided not to have meetings over the weekend but to relax in the balmy climate of Santiago Cadaverous Edgar Jones of the Fund scoured the meeting for willing Latins Perus dictatorship seemed a promising candidate at first to play some of the traditional conference tricks on its behalf to ensure imf keeping a watch on ecla16 But even Peru failed to play Jones claimed to have been misunderstood in his oppo sition to the commonmarket idea and despite the embarrassing clash Prebisch concluded that the conference had initiated a new period for ecla where repeating his now familiar admonition practical action had replaced theory Organizationally the work of the new Trade Commit tee was allocated to two working groups one on central banks to devise a regional payments system and another on the regional market to recom mend structure and principles17 Thus Prebisch could go forward to the decisive encounter at eclas sev enth meeting in La Paz in May 1957 with the blessing of New York as well as the Latin governments The meeting was heavily attended despite the cramped facilities of romantic but impractical La Paz with just two modest hotels the Sucre and the Copacabana the desolate classrooms of nearby San Andres University for meeting rooms and all paper office supplies and copying equipment having to be brought from Santiago De Seynes and Malinowski enchanted by the vertical streets exotic central market 330 The Life and Times of Raúl Prebisch and brightly costumed impoverished indigenous children wondered if it was politic to announce UN approval of eclas splendid new multimillion dollar compound in archrival Santiago President Hernan Siles caught be tween hyperinflation rivalling that in Weimar Germany and a catastrophic imfinduced recession about to descend on his country opened the meet ing lamenting the economic downturn throughout the entire region where per capita growth had fallen from 3 percent to 01 percent in 1956 Siless sober message set the stage for Prebischs upbeat call to action re worked from the Trade Conference into an almost personal appeal from Simón Bolivar himself The Common Market idea was vital for Latin Amer ica there was no other way to incorporate the masses from the country side Previous dreams of integration had been as ephemeral as the past attempts to give it substance All had failed But now Latin America could not afford to fail again when its future prosperity and place in the interna tional system depended on solving the integration riddle The audience applauded I believe ecla succeeded in awakening the interest of Latin America in the subject at the first meeting of the Trade Committee and La Paz Prebisch later volunteered and the issue dominated the subsequent sessions of the meeting Prebisch got what he wanted at La Paz regional integration was con firmed as eclas flagship project in a class by itself The regional market has become the new thing in Latin America Raúl concluded in a letter to de Seynes describing the results of the La Paz meeting as highly success ful from the point of view of practical accomplishments and the future role of the Commission in Latin America New York agreed Philippe de Seynes recently arrived from Paris was enthusiastic about Prebischs initia tive a bold assertion of regional leadership that revived eclas visibility after the depressed Argentine interlude In a letter to New York Prebisch urged de Seynes to see regional integration as a very big project for the UN New York had also been pressing him to be more relevant Maybe this is the proper time for you and perhaps for the Secretary General to give a step forward that may have great impact not only in Latin America but also in the US and Europe whose understanding and support of the idea may be of considerable value18 But the new period after Prebischs success in La Paz also began with a sur prise staff were shocked when Celso Furtado resigned Only thirtyseven and a founding member of ecla who had arrived even before Prebisch he was a bridge between Brazil and Hispanic America Personally magnetic and fearless in debate already established as a leading author and a presence second only to Prebisch in the organization Furtado constantly challenged ecla to grow and adapt to the emerging reality of Latin America His Return to Santiago 331 range of personal experience beginning with the Brazilian Expeditionary Brigade in World War II gave him a personal credibility in Europe shared by few in the secretariat A large and generous personality popular in Santiago at every level Furtado seemed to be Prebischs logical heir The dispute appeared trivial Prebisch called Furtado into his office be fore leaving for La Paz to tell him that he had decided not to publish his twoyear study on the Mexican economy Furtado was staggered This was a major project approved by the organization in 1955 In fact the opportu nity was so extraordinary the Mexican Government had previously been suspicious of ecla researchers that he had moved with his wife to Mexico City to lead the study out of Urquidis ecla Office There he put together a team including Mexicans Juan Noyola and Oscar Soberon and Osvaldo Sunkel Ahumadas favorite Chilean protegé recently returned from the London School of Economics with an established recognition for inno vative work With Soberons inside work they had pried open and gained access to Mexicos secretive national statistics and put together a compre hensive and independent if unorthodox analysis of Mexican develop ment and its prospects19 Furtados conclusions did not conform strictly to Prebischs thesis in the Havana Manifesto Unlike in Argentina import substitution in Mexico had delivered strong economic growth and in this respect was closer to the Brazilian experience But as in Argentina importsubstitution industrial ization had come with a high if different price growing inequality Furtado and his team found that Mexico had the advantage of a perma nently dynamic external sector thanks to its high interdependence with the US economy but that more effective government regulatory policies were required to prevent a persistent tendency to concentrate income in the upper classes20 It was a potentially groundbreaking report pressing forward into new terrain to renew and expand eclas earlier thought and work calling for a new look at the changing economic realities in the re gion While important as a case study not least given the size and role of Mexico in Latin America it also demonstrated the need for ecla to under stand the more complex phase of development now under way in the re gion Import substitution was wellestablished in the region but was it the answer The Argentine debacle suggested otherwise and contradictions such as regional disparities between the north and south in Brazil and inflation in Chile were emerging in other countries In a sense it was a generational challenge Furtado versus Prebisch and this was clearly understood on both sides Instead of having completed the theoretical phase ecla according to Furtado needed new thinking more than ever for guiding development policy The Mexico study was a 332 The Life and Times of Raúl Prebisch test for Santiago a test for the great heretic to accept that his was not a rigid school of thought but rather one that fed on debate The Govern ment of Mexico was not happy with the report and demanded that it be quashed for Furtado its publication became an issue of principle21 He pleaded with Prebisch but to no effect it was the first staff report that Prebisch had censored Furtado finally broke down and wept in frustration Prebisch deepened the wound by asking Roberto Campos to be rap porteur of the La Paz meeting and funded his trip to Geneva to present its findings to ecosoc The departure of Furtado and the arrival of Roberto Campos now president of the Brazilian bnde and the most so phisticated conservative advisor to President Kubitschek no message could be more clear that Prebisch meant business Urquidi was next While he accompanied Prebisch to La Paz and continued their argument over the Mexico study as they walked the winding cobblestone streets of the Bolivian capital he was as deeply hurt as Furtado and resigned a year later on 26 June 1958 with a symbolic act of defiance he authorized a limited publication of Furtados Mexico study in his own capacity as di rector of eclas Mexico Office But Prebisch went further After the La Paz meeting Prebisch invited Alex Ganz to resign by asking if he had ever belonged to an outlawed or ganization Ganz idolized Prebisch for his defiance of McCarthy in hiring him he had worked as a valued member of the ecla team for six years most recently in Argentina during which time his loyalty or political be liefs had never been questioned or confronted his exceptional gentleness and warmth poorly masked by gruff Bronx mannerisms had made him with Swenson the bestliked American in Santiago Prebisch already knew every detail of Ganzs file following years of fighting with US State Department security personnel after he joined ecla In 1956 the US Inter national Employees Loyalty Board again notified the UN that it had denied clearance to Ganz for a permanent UN appointment until then he had been kept on a temporary contract so that ecla and the UN could avoid directives from the US Board However in November 1957 the UN Secretary Generals Advisory Committee decided to set aside the US finding and of fered him a contract which Ganz accepted But now Prebisch insisted that he leave ecla when the threat was long since over and McCarthy was dy ing of alcoholism Why staff asked With Furtado and Ganz gone Juan Noyola in Mexico and Regino Boti having returned to the University of Havana in Cuba the Development Division the old socalled Red Division was no more Venezuelan José Antonio Mayobre who replaced Furtado as its director was a regional per sonality recognized for his personal and administrative skills within ecla Return to Santiago 333 and the UN but he had come a long way since his youthful membership in the Venezuelan Communist Party He was not a thinker like Furtado Mayobre would follow not challenge Prebischs lead Although resident in Santiago he had his eye on the presidency of Venezuela once the totter ing Perez Jimenez dictatorship should finally end and his exuberant but conflicted loyalties complicated his future with ecla Overall Prebischs staff changes before and after La Paz clarified the ecla succession Chilean Jorge Ahumada director of the Training Divi sion seemed poised to receive the baton but Mayobre was in the wings just in case Ahumada was of orthodox views and had close ties with Eduardo Frei leader of the Christian Democratic Party of Chile When Mayobre re turned to Venezuela as minister of finance in 1958 after Perez Jimenez fell Prebisch appointed Ahumada as head of the Development Division so that his eventual succession appeared even more secure But the FurtadoGanz affair cast a certain chill even as it strengthened the orthodox wing of the secretariat Until then the ecla team had seen itself as a petite troupe with shared loyalties enthusiasm for exploring new ideas in an atmosphere of complete intellectual freedom and a sense of family Now it was clear that innovation was welcome only so long as it was consistent with the practical results to be achieved in the new period It was no longer the golden period for ecla after 1956 It was as if autumn had succeeded spring in Santiago without an intervening summer after Prebischs disastrous year in Buenos Aires After La Paz Prebisch moved quickly to take advantage of the favourable regional momentum to launch his project the creation of the Latin American Common Market Coinciding with the Treaty of Rome in Europe it was immediately recognized as a major experiment in its vision and boldness and was followed closely in the media with economists from Europe and North America as well as Latin America such as Nicholas Kaldor Dudley Seers and Raymond Mikesell converging on Santiago22 Sidney Dell came from New York headquarters for special assignments eec consultants arrived to share their experience in negotiating regional trade pacts Such renewed visibility softened the downdraft in Santiago from the Furtado and Ganz departures and restored morale in the secre tariat eclas new InterLatin American Trade Division became the main hub of activity with additional staff allocated from other sections Nearly all travel funds were tapped for the Common Market project the balance scarcely sufficient for essential travel on other work Prebisch himself was I 334 The Life and Times of Raúl Prebisch invited by the American Economics Association to give a lead paper at its January 1958 annual meeting and otherwise inundated with requests for public appearances and lectures in the US No design or blueprint existed anywhere to guide Prebischs Latin American Common Market initiative and the problems confronting its success were obvious from the outset beginning with weak to nonexistent foundations for trade cooperation Latin America had a residual cultural and geographical meaning but regionbuilding was only beginning and the distance and difference among the twenty republics were more impres sive than the commonalities Roads and railroads between countries scarcely existed reflecting geopolitical rivalries and ongoing border dis putes and there was little trade or cultural interchange There were three Latin Americas Caucasian Indigenous and Black at different levels of development and exhibiting major differences in size and endowment23 The eec with just six members started with such great advantages as to make it an inspiration but not a model for Latin America Before 1914 Europe already had free trade which had collapsed with the outbreak of the First World War Latin America had no such history The eecs chal lenge was postwar reconstruction and accelerated growth among highly developed economies against the Cold War backdrop of powerful external institutional and financial support from the Bank of International Settle ments the Organization for European Economic Cooperation the Marshall Plan and nato Latin America had only the hapless oas nothing in short thus increasing its dependence on the imf the World Bank and Washington While US official support for Europe during the Cold War emergency was unequivocal its endorsement of a Latin American Com mon Market was distinctly uncertain since no comparable external threat existed to leverage attention in Washington However eclas first postLa Paz results were promising The two work ing groups on Central Banks and the Regional Market got off to a quick start holding meetings of experts in Montevideo and Santiago in early 1958 An eminent persons group was established on the Quintandinha model to support the Common Market work including Galo Plaza Ecua dor Rodrigo Gomez Mexico and Colombian Carlos Lleras Restrepo Leading consultants from Latin America the US and Europe were en gaged as experts to broaden the ecla research team and reassure the US the imf was invited to join the Central Bank Working Group and discus sions were opened with Eric WyndhamWhite at the gatt The objective of this first phase which lasted into early 1958 was to identify the key problems and prepare the background work required for their solution Return to Santiago 335 The second phase would culminate in eclas next Commission meeting scheduled for May 1959 in Panama City where it was hoped regional agreement could be achieved for a formal treaty establishing the Latin American Common Market24 Early positive news buoyed spirits On 29 May 1957 Chile and Argentina signed a bilateral trade accord with a unique feature it included eclas ap proach to liberalizing trade and transferring accounts to third parties and officials from these two countries plus Brazil and Uruguay scheduled meet ings in Santiago to discuss a coordinated trade policy and to begin prepar ing a Latin American position for the gatt Evidently the Southern Cone retained the historical interest in a regional market demonstrated during Prebischs 194041 mercosur initiatives and other failed attempts over the years Uruguay had proposed the formation of eclas Trade Commit tee in 1955 by inheriting the Perón mess Arumburus Revolución Liberta dora got a lesson in the folly of closed markets There in the regions richest country importsubstitution policy had advanced the furthest but had left Argentina with a vicious cycle of declining trade falling productiv ity stagnation and inflation there could be no better case for the regional market weeding out inefficient local monopolies and plants protected from competition in the longterm interest of Latin American develop ment as a whole Of course the results of the upcoming elections on 23 February 1958 were uncertain and the Buenos Aires political situation was highly charged but for Prebisch this parallel Southern Cone track of fered a nucleus for regional integration that could expand as other coun tries agreed to join like the example of benelux in Western Europe anticipating the Treaty of Rome The reality of different levels of develop ment in Latin America suggested that such clusters of countries would be the building blocks of an eventual common market Along with Brazil and the Southern Cone the Andean countries of Colombia industrializing rapidly Ecuador small but interested and Venezuela about to eject Perez Jimenez formed another potential subgroup Looking ahead a Common Market project comprising these countries along with Mexico added up to a perfectly respectable initial membership including most of the population and economic activity in Latin America and leaving Cen tral American integration to proceed at its own speed as it had since 1951 By February 1958 the US State Department was clamouring for member ship on the working groups an indicator of success and seriousness The imf was also coming on board There were still snide comments and smirks The idea is beset with so many practical difficulties that it will hardly have any chance of being seriously considered I suppose that the 336 The Life and Times of Raúl Prebisch ecla experts have just hit upon this fancy idea but have not given the problem adequate analysis and scrutiny Gordon Williams opined The imf should be cautious in its dealings with Prebisch We should not allow ourselves to become a servant of the ecla Secretariat25 But this hostile attitude changed to caution when regional political interest in a common market continued to build There are no reasons to belittle the efforts that are being undertaken an official mused on 15 January 1957 which are genuine and backed by strong feelings of prestige and political expe diency imf aloofness he noted would only egg on the ecla countries Behind this sensitivity lay a dark secret the imf had failed to assist Western European governments in the embryonic stage of the eec it had been asked to serve as the agent of the Six in organizing a payments system to resolve the credit problems of member countries but had declined by de fault when unable to make up its mind one way or the other Instead the Europeans formed the Organization for European Economic Cooperation in 1948 which oversaw the European Payments Union supported by the Bank for International Settlements First the European Coal and Steel Commission in 1951 and then the eec created by the Treaty of Rome in 1957 gave birth to European integration with extraordinary success Ever since the imf had had to live down its initial snubbing of the eec26 Given this historical miscalculation the Fund thought it wiser now not to snub Prebisch altogether and at one point thought it might end up fighting for a role in Latin American integration27 It would be better for it to be on the inside one official noted guiding it in the right direction and avoid ing what he termed the repetition of past mistakes When another coun selled a donothing approach Per Jacobsson and his deputy Merle Cochran were less certain and Jacobsson scribbled hard in the margin must not get off wrong epu European Payments Union turned out right we did not know The result was that the imf agreed to join the Central Banks Working Group and prepare a paper for its first Meeting of Experts in mid1957 in Montevideo a decision that produced guarded optimism in Santiago and New York De Seynes followed the unfolding negotiations closely and sup ported Prebisch with quiet diplomacy squashing UN reports that might damage relations with the Fund28 Prebisch was also extremely careful knowing the importance but also the fragility of the imf link29 The in tegration project for Latin America required imf support there was no op tion since ecla had few resources other than persuasion more like the role of Jean Monnets Action Committee for the United States of Europe in mobilizing public opinion behind the Treaty of Rome But the initial Return to Santiago 337 response of the imf was encouraging and Prebisch felt that the pieces were starting to come together as serious bargaining loomed30 US VicePresident Richard Nixons visit to Latin America two months later from 28 April to 15 May 1958 completely changed the future of USLatin American relations and therefore the prospects for a common market Strained since Eisenhowers arrival in Washington six years earlier relations had deteriorated further with the failure of the InterAmerican Economic Conference in Buenos Aires during August 1957 This event the origins of which few remembered stemmed from an overhasty US commitment in 1948 to strengthen USLatin American economic rela tions coinciding with the Marshall Plan in Europe the promised Eco nomic Conference was viewed by Latin Americans as a similar major departure in which finally they would become privileged postwar recipi ents of major American largesse Embarrassed by having no such inten tions Washington under Democrats and Republicans kept finding excuses for postponing the conference until finally after the fall of Perón Argentina revived the idea successfully as it turned out by pinning the US down to a date Convened by the oas with soaring rhetoric and customary ineptitude the meeting in Buenos Aires brought together all the finance ministers and most journalists from the entire region It should not have been held at all George Humphreys approach was so cold he repeated that the Eisenhower Administration had no intention of altering any estab lished policies that the US delegation was itself mortified Two of its members were strong personalities Core Republican C Douglas Dillon US Ambassador to France from 195357 and son of a powerful Wall Street investment banker had returned to Washington as deputy undersecretary for Economic Affairs in the State Department Ambassador Thomas Clifton Mann a capable career diplomat and Southern Baptist with a righ teous high forehead and pursed full welldefined red lips had just returned from El Salvador Both understood that the conference had re vived high expectations that its failure would ignite a predictable anti American outpouring in the regional media and that USLatin American relations seemed stuck in the Cold War years with the oas once again hu miliated as Washingtons doormat Prebischs update on the Common Market project was one of the Economic Conferences few nonpolarizing moments its contrast with the oas debacle reinforcing eclas prestige in the region as a centre of ideas and energy I complain many times about I 338 The Life and Times of Raúl Prebisch our organization he confided to de Seynes but when I heard the reports about how the Economic Conference was handled I do not think it is so bad31 Nixons trip was a spectacular disaster The US recession had spread to Latin America on 7 April Prebisch warned of stagnation and social prob lems ahead as young people faced unemployment Latin America is again displaying its usual high level of vulnerability he noted with a 6 percent deterioration in the terms of trade for the region We are again facing an emergency without the means of taking emergency action32 Spreading economic problems in the sprawling new urban centres brought latent frustration with US policy and multinational corporations to a head Signs of trouble were ignored in Washington however because of the Sputnik factor on 4 October 1957 the Soviet Union launched the first artificial satellite into orbit Only 22 inches in diameter and weighing 184 pounds it nevertheless opened the space age ahead of US engineers The new socialist society had turned the boldest dreams of mankind into reality Khrushchev noted In contrast US news headlines that week focused on Arkansas three hundred Army troops had to escort nine small and terrified black children to Central High School in Little Rock on 25 September after Governor Orval Faubus refused to end racial segrega tion33 This coincidence of vivid Soviet space success and US social failure rattled the selfconfidence of the Eisenhower Administration not just US education but also the security of its backyard Latin America could no lon ger be taken for granted Even John Foster Dulles suggested on 14 April two weeks before Nixons departure that US trade policy toward Latin America should be reviewed a hint that something really had to be done to improve relations after six years of drift34 But no one in Washington realized the depth of antiUS feeling in the streets of Latin America Nixons visit was billed as a goodwill tour of regional capitals at a time when democracy was returning to Venezuela and Argentina and his itinerary centred on the inauguration of Arturo Frondizi in Buenos Aires But from the start the entire trip was a night mare Violence in Caracas on 13 May reached a level of verbal and physical abuse sufficient for Washington to send four companies of marines and paratroopers to the Caribbean ready to assist the Venezuelan authorities if needed Nixon explained It is certainly not pleasant to be covered from head to foot with spit and to have a man spit directly into the face of my wife35 A day after Nixon returned to Washington the Senate Foreign Relations Committee launched an investigation into the background of the evident antiUS feeling in Latin America Nixon blamed the violence on a small Return to Santiago 339 minority of communistinspired students and hooligans but others in the Eisenhower Administration such as Deputy Undersecretary of State for Economic Affairs Douglas Dillon who had been with the US delegation at the Buenos Aires Economic Conference It was a revelation to me he noted supported a change of policy toward the region36 Sensing this opening Brazils President Juschelino Kubitschek wrote to President Eisenhower We must search our consciences to find out if we are following the right path in regard to PanAmericanism he confided Something must be done to restore composure to the continental unity USLatin American relations required what he termed a firmer basis37 The US re ply was delivered personally three days later by Assistant Secretary of State for InterAmerican Affairs Roy R Rubottom Jr John Foster Dulles would welcome being invited to Rio de Janeiro on 45 August for a bilateral dia logue In Rio the two powers agreed to convene a meeting of presidents at which new programs of economic development would be discussed and in August Kubitschek proposed that the Americas launch Operation Pan America reviving the Quintandinhna agenda from 195438 The pace of change was startling Not to be outdone by Brazil Washing ton moved quickly on the most visible Latin priority an interAmerican development bank so long a dream and so recently denied On 11 Au gust President Eisenhower gave approval for the initiative after the State Department and the US Treasury supported its creation and an announce ment was rushed out the next day39 By April 1959 when I Like Fidel bumper stickers could still be found on North American cars the Inter American Development Bank idb was a reality Other changes followed in Washington After Milton Eisenhower toured the region looking for sen sitive areas where action could be taken immediately he noted the appeal of Latin American nations for stable relationships between raw commodity prices and the prices of manufactured goods40 Washington heretofore had invariably opposed international commodity agreements during the 1950s Now after the Nixon shock the US hurriedly agreed to an Interna tional Coffee Agreement particularly important to Brazil and Colombia which was in fact concluded under UN auspices in 1962 It was another signal of the new era in USLatin American relations41 A few months earlier in January 1958 the US State Department had fulminated mightily against Prebisch for advocating progressive capital ism or a third alternative in which US relations with Latin America would more nearly approximate US domestic policy and support equitable growth Misrepresentations and fallacies it roared and US missions abroad were instructed to denounce them if the opportunity arose Six months later Washington had quietly adopted a good portion of Prebischs progressive 340 The Life and Times of Raúl Prebisch capitalism42 Senior US officials decided that he was not so bad after all Dour Assistant Secretary for InterAmerican Affairs Roy Rubottom from New England actually apologized for past behaviour noting for the record that he would like to dispel any possible misunderstandings that may have arisen in the past with respect to the attitude of the US Government toward ecla and his appreciation for the work done by ecla and of the leader ship provided by Dr Prebisch himself He reassured Raúl of our friendship toward ecla and of our desire to work closely with it notwithstanding dif ferences on specific questions in which problems could be discussed if not resolved on a friendly basis as to be expected among men of intelligence and good faith To which Prebisch for the record as well gave what State described as a gracious acknowledgement43 But how far did this change go in Washington For Prebisch the key test of the new spirit in USLatin American relations was the Latin American Common Market project now reaching a decisive point as his two working groups prepared to meet prior to eclas Panama session in 1959 The US role was vital in every area the financing of development and trade its dip lomatic support in the gatt and imf but also its private sector role since US transnational corporations were entering Latin America in large num bers Washington supported its firms advocating open markets to foreign investment in the region Kubitschek for example welcomed US multi nationals in his drive for rapid industrialization particularly in the more dynamic technologically advanced sectors their lobbying would drive US policy toward the proposed Common Market Prebisch had confronted Standard Oil in the Plan Prebisch and his version of regional integration implied a planning role for the state as opposed to unfettered foreign in vestment Now with Eisenhowers unexpected opening to Latin America in 1958 he felt on uncertain ground On 18 November 1958 Dillon clarified the US position noting that we are also prepared to do what we can to help interested Latin American countries in framing arrangements for economic integration which are ec onomically sound44 Assistant Secretary of State for Economic Affairs Thomas Mann and Deputy Director of the Office of International Trade Policy Isaiah Frank gave this same impression The US would support any Latin American initiative of economic integration but with a condition that it not reduce the volume of foreign trade or contribute to domestic monopolies by reducing competition It must be gattconsistent Frank stressed and he advised all the Latin countries to join so far only six were members Other than that Washington had no dogmatic attitude and in fact would prefer starting with groups of countries Mann mentioned his hope of an economic union between Argentina and Chile rather than all Return to Santiago 341 of Latin America The new position was not new at all merely a repeti tion of its approval in principle in Santiago at the first meeting of the Trade Committee the US supported regional integration without reserva tion subject to the gatt qualifier45 There were pleasantries Mann said that he recognized eclas pioneering work in the field of economic inte gration Frank with whom Prebisch had developed a friendly personal re lationship reminded him that the US had stood up for ecla in the oas defending its lead role in regional integration He hoped to organize a staff conference the next time Prebisch visited Washington to meet other officials in the State Department46 On the negative side and despite the new language in Washington most of the senior Eisenhower people drawn to his policies didnt like Prebisch personally He was frozen out of any role to do with the new InterAmerican Development Bank pointedly not being invited to an oas meeting of for eign ministers on 2324 September to discuss the new Bank project in the context of regional integration Of course I am willing to go to Washing ton on a moments notice to participate in this discussion he wrote to his Washington chief Milic Kybal but until now we have not received any in dication about it47 When the twentyone foreign ministers of the US Latin American region struck a group of experts for work to begin on the new Bank the US insisted on a blanket prohibition of observers with the express purpose of keeping Prebisch out despite his credentials as former head of the Argentine Central Bank and his earlier work with the US Fed eral Reserve throughout Latin America Since the Bank would become the most important interAmerican institution US officials wanted Prebisch as far away as possible from the key issues of policy location and leadership US Treasury official T Graydon Upton set to become the first US execu tive vicepresident in the new idb called him a leftwing economist with ideas about Latin American economic development that would be costly to the US48 Thomas Mann and Douglas Dillon the top two US officials in interAmerican affairs distrusted Prebisch intensely all the more because they had ended up adopting the ecla agenda they had previously re jected Mann a talented administrator reflected attitudes characteristic of the early 1950s Latin Americans he once said like a buck in their pocket and a kick in the ass They dont think like us Their thought pro cesses are different You have to be firm with them49 Confident in the special prerogatives of a senior US Government official in dealings with the South he enjoyed the exercise of power smiling at Latin officials while in sulting them to their faces Prebisch an even tougher negotiator and more experienced and more knowledgeable than Mann fit poorly into this Latin stereotype his toughness was arrogance Dillon and Mann made 342 The Life and Times of Raúl Prebisch sure that Prebisch was not invited to the opening ceremonies of the idb board of governors in El Salvador on 5 February 196050 When Prebisch visited Washington in late 1958 to discuss the project Mann told him to his face that he did not believe his claim that the Latin Common Market would be like Europe consistent with Article XXIV of the gatt ie not tradedistorting Prebisch maintained that it would be open rather than closed but as with Europe there had to be safe guards Moreover as a developmental model it would also require a dy namic policy of protectionism that would be rational orderly and selective in order to create an automobile sector and other new indus tries The eec had been granted huge exceptions in the Common Agricul tural Policy and privileged trade with old colonies why would the US refuse similar treatment for Latin America As in Western Europe so also in Latin America trade with the rest of the world would grow rather than decline and regional integration would benefit all Mann ruled out a development model for regional integration in Latin America that amounted to special monopolyfavouring provisions for the protected expansion of new products51 No matter how much Prebisch repeated his commitment to a gattconsistent process he was considered either wrong or deliberately misleading eclas regional integration proj ect was stateled a classic model of closed regionalism behind tariff walls which would take Latin America in exactly the wrong protectionist and antibusiness direction The future of Latin American growth de pended on foreign investment and US multinationals would only be at tracted by a business climate that guaranteed the free movement of capital It followed that the best strategy for regional integration was to combine open markets and minimal government regulation so that the private sector multinational and domestic would invest rationally within and across borders Mann bridled over Prebischs talk of automobile produc tion Latins could not make complex products like cars or airplanes It would be wrong to create an artificial or uneconomic industry in automo biles or any other product that could never compete Mann appeared to know already what products Latins could or could not make He seemed to be referring to existing products since soundly conceived ones would require time to demonstrate that they were outwardlooking and based on the idea of competition In the meantime they should be content to grow coffee bottle soft drinks make textiles and continue shipping minerals which accounted for 80 percent of its imports from the region to the US52 For Mann there was no budging from this position His constituency the US multinationals in the region were hostile to trade liberalization and full supporters of isi importsubstitution industrialization in order Return to Santiago 343 to expand in the small but lucrative national markets where high profits could be assured with existing technology from the US parents In Western Europe multinationals had endorsed the eec in Latin America they op posed it and only a core threat to national security would have convinced Mann and his associates to deviate from their position In lock step Eric WyndhamWhites gatt the gatekeeper for regional freetrade agreements which had just placed its stamp of approval on the eec rejected the Latin American Common Market as a legitimate accord using Manns argument word for word that it contravened Article XXIV53 gatt insisted that any trade arrangement resulting from the ecla initia tive be termed a free trade area rather than common market Urquidi railed against WyndhamWhites hypocrisy are not safeguards normal fare in international agreements he asked Are there none in the gatt in US commercial policy legislation or in the eecs notorious protectionism in agricultural products These are timehonoured devices he concluded economic facts of life which are worked out over time One cannot demand of Latin Americans that they be the last perfect freetraders on the planet54 The imf joined the US and WyndhamWhite in rejecting Prebischs Common Market project Its new quantitative model finalized in 1957 and applied to the Bolivian stabilization package that year effectively termi nated the more flexible ideological approach of previous years and Per Jacobssons arrival as managing director with Merle Cochran Jacques J Polak and Irving Friedman at his side further cemented the new line Jacobssen viewed the dividing line between civilization and the jungle as being close to the English Channel definitely excluding Latin America in which he had neither interest nor knowledge55 Jacobssons head of the Western Hemisphere Department Jorge del Canto symbolized the new line A Chilean and the first Latin appointed to the Fund after its creation not known for a penetrating mind he lived his life with one unwavering conviction monetary orthodoxy Del Cantos position on Latin integration was rigid the Fund should assist as long as it did not compromise the strict application of the four golden principles removal of discrimination con vertibility bilateralism direct dealings between the imf and member gov ernments and simplified exchange rates The Funds best contribution to regional integration was ensuring sound money period The good soldier Jorge del Canto was ordered to contain Prebisch at eclas eighth session held in May 1959 in Panama City at which the fate of the Latin American Common Market would be decided56 Prebisch tried to preempt his many adversaries by answering line by line Manns earlier criticisms about closed regionalism57 But del Canto took the offensive 344 The Life and Times of Raúl Prebisch against the Common Market proposal and became openly abusive toward the socalled ecla consultants or Prebischs stormtroopers58 The fu tility of the whole exercise was evident he reported to Washington while complimenting himself on the dignity and courage with which the imf observers defended the Funds point of view59 The imf need not have worried the Latin American Common Market had a new enemy Arturo Frondizi who effectively killed the project Combined with external resistance from Washington the gatt and the imf Argentinas opposition to effective regional integration ensured at best a minimalist facesaving compromise60 Winning the general elections on 23 February 1958 over Ricardo Balbin under the banner of the ucri Intransigent Radicals Frondizi assumed power on 1 May facing high ex pectations for economic recovery61 By January 1959 he had reversed di rection terminating his electoral alliance with Perón turning tanks on striking Perónist workers and adopting an imf structural adjustment pack age that made him del Cantos star performer in Latin America He also sharply reversed direction in US relations jettisoning his earlier national ism and opening the economy to US multinationals and other foreign in vestors at any price in a bid to replicate neighbouring Brazils growth under Kubitschek In effect Frondizi gambled on bargaining directly with the imf and the US and this meant restoring Argentinas standing in Washington with an active proUS diplomacy62 An immediate burst of eco nomic activity that rallied public opinion seemed to prove his point and with Standard Oil back the petroleum sector was headed for national self sufficiency within four years just as the US Embassy had predicted Frondizi opposed Prebischs approach to the Latin American Common Market integration for him meant building an Argentine identity rather than sharing sovereignty in a regional trade pact In any case he loathed ecla Prebischs talk of Latin America having to compete with the new global giants China and India as well as with Western Europe and North America left Frondizi uninterested63 At an imf luncheon in honour of Prebisch on 18 November 1959 Merle Cochran and his senior staff agreed holding up Frondizis stabilization program as one of Latin Amer icas finest achievements confirming del Cantos position at Panama that the imf would stick with existing policy of sound money in onetoone deal ings with individual governments64 Prebisch could not expect anything more from the imf Nor from Frondizi Raúl completely understood the old Argentine saying that in Argentine politics the predominant law is the law of hate The compromise solution so much investment in the Latin American Common Market had to result in the creation of something was lafta Return to Santiago 345 Latin American Free Trade Association All of Prebischs opponents from Frondizi to the gatt Washington and the imf could tolerate the Treaty of Montevideo signed on 18 February 1960 by initially Brazil Uruguay Argentina Brazil Colombia Mexico and Ecuador A modest step with nu merous loopholes and exceptions and explicitly not a customs union or common market lafta set up a mechanism for a freetrade zone as under stood under Article XXIV of gatt to be implemented gradually and pro gressively over twelve years with 75 percent of reciprocal trade in value to become free after nine years and substantially all thereafter The Confer ence of Member States with an executive committee formed the highest or gan of the association and its chief decision and policymaking body The secretariat would be located in neutral Montevideo headed by an executive secretary with officers and a budget The reductions of tariffs and other barriers were negotiated on the basis of product lists with countries ex changing preferences But governments retained a veto lafta was not a supranational entity and there were numerous safeguards for member governments and no provisions for commercial credit65 The Montevideo Treaty was an anticlimax Few agreements on industrial rationalization had less chance of success leaders like Frondizi were enthu siastic about free trade in their benefit but balked at concessions in difficult sectors agriculture automobiles textiles consumer goods etc as soon as jobs were at stake Meanwhile the private sector and workers in each country domestic and foreign multinational companies alike clamoured suc cessfully for high trade barriers to restrict imports Dag Hammarskjöld and de Seynes cabled their congratulations Highly pleased with outcome of Montevideo Meeting Consider agreement reached a major achievement in which the United Nations have been able to take an essential part thanks to your relentless efforts and enlightened leadership66 The regional press proclaimed lafta to be a historic achievement But Prebisch knew better Both Washington and the imf scoffed at it the idb was welcomed into the major league but no one stood up for lafta67 It was a thin beginning to regional integration considering the expectations of its launch in 1956 ecla in fact was denied the leadership of lafta in the Treaty of Montevideo and Prebisch dismissed out of hand the suggestion that he serve as its first executive secretary68 The Treaty of Montevideo behind him nearing sixty and disappointed Prebisch finally took a vacation at El Maqui to reflect on his successes and failures since 1956 There was little enough to show for it the costs of his I 346 The Life and Times of Raúl Prebisch singleminded fight for the Common Market dream were all too evident There had been mainly setbacks in the second period of ecla since 1956 the new mission of concrete action had come up short Of course staff had proposed big ideas the creation of a Latin American tropical insti tute for example but they were dropped to pursue the Common Market He had pushed hard maybe too hard ecla had lost its special cachet It had succeeded in carving out a niche for itself in the UN and Latin Ameri can landscape its divisions ground out their reports in four languages for the big commission meetings every two years Its statistics were now the most reliable in the region It had even spawned new additions like celade Centre for Economic Projections with its own board But it no longer had a monopoly on new thinking in Latin America as other well funded national institutes appeared throughout the region69 Nor after the Nixon visit and the evident thaw in USLatin American relations could Santiago maintain its image as embattled outpost in the American Empire If Prebisch and his small band had flourished on US hostility during the 1950s could they survive a suddenly friendly Washington Worse ecla was becoming fully ensnared in bureaucracy Having carved out its regional niche its work program threatened to become pre dictable ecla reports had even developed a recognizable deadening style The other UN regional commissions were caught in the same vise of pressures from centralizing New York headquarters and controlling mem ber governments A weariness was evident in Santiago a sense of nostalgia for the old days haunted the corridors ecla would never go away but it was in danger of degenerating into another dispirited UN organization Prebisch was tiring of the administrative burden after ten years of cease less work and felt personally stale after the long Common Market slog and the meagre results at the 1959 Panama meeting and then the lafta com promise reignited his desire to get back into the intellectual mainstream Invited to the 1958 meeting of the American Economics Association he realized that his paper had been an embarrassment a rehash of his Havana Manifesto showing that new international trade and development scholar ship was moving well beyond his earlier work It wasnt just Arthur Lewis younger scholars were moving ahead building on his pioneering work as he and ecla colleagues knocked themselves out with tedious reports Creative work Prebisch acknowledged had to be subordinated to the claims of practical action in compliance with the requests of govern ments The result was that for the last few years ecla has been living on a previously accumulated fund of theoretical interpretation which has not been progressively renewed or increased And in fact he had written to UN Personnel a year earlier about taking early retirement in 196170 But Return to Santiago 347 there was no push from New York for him to leave ecla In 1958 Dag Hammarskjöld had extended Raúls second fiveyear appointment to 1963 two years beyond the normal retirement age and Malinowski told him that he would likely get a third term if he wanted it so great was his prestige in New York71 Instead to recast the early doctrine which was now inadequate Prebisch craved a more autonomous body than ecla had become He had grown increasingly critical of Latin governments and the elites they represented he could no longer bear their posturing their complaining about the US or the world or the system while they refused domestic reform them selves A dynamism was lacking in Latin America the region was now more marginalized in the global economy than at the birth of ecla and com parisons with East Asian countries were embarrassing Although poorer Japan still had fewer automobiles per capita than Peru not to mention comparisons with Argentinas enviable standard of living these countries were moving forward They were spending no more on education and training than Latin America but their work forces were superior in quality Their importsubstitution industrialization strategies were broadly similar but unlike Latin America they were creating globally competitive indus tries Latin Americans had to rethink their model of development and Prebisch wanted to lead this next stage of creative adjustment In La Paz in 1957 he had proposed eclaled advisory groups to work at the request of governments on development planning and project evaluation with teams of experts inside ministries to attract capital and steer it toward pro ductive investment behind a realistic development plan Where possible they would work with sister UN agencies such as the fao or taa and Bolivia was the first to volunteer for a mission in 1959 But the concept was under attack from the beginning ecla was too rigid for successful advi sorygroup missions which required autonomy to be effective72 Prebisch needed a new centre sheltered from management and budgetary strug gles to become an advocate for new economic thought and planning in the region The unexpected solution for Prebischs dilemma came from Paul G Hoffman visiting Santiago after his appointment as manager of the newly created UN Special Fund Hoffman was a senior US corporate personality and confidante of President Franklin Roosevelt who had led the Marshall Plan 194850 served as president of the Ford Foundation 195053 and had been appointed US delegate to the UN in 1956 In March 1960 Hoff man visited Prebisch to explain his new operation they had dinner at El Maqui and Adelita played his favourite Goldberg Variations Hoffman ex plained that the Special Fund Consultative Board would be meeting later 348 The Life and Times of Raúl Prebisch that year in September and he needed a respectable stable of projects for a clean launch What did Prebisch think of creating a new Latin American research centre the Latin American Institute for Social and Economic Planning ilpes to build on eclas early work With a separate governing council for his Special Fund Hoffman was a powerful figure on the New York UN scene heading a new agency with the potential to grow into the single largest technical assistance agency in the international development game The Special Fund was the remnant of a much larger General Assembly proposal for the creation of sunfed Spe cial UN Fund for Economic Development recommended in 1951 by a UN group of experts to provide development capital on the basis of need rather than the approval of Western banks including the World Bank73 Supported by UN officials such as Hans Singer the concept had had no chance of success That the banks the World Bank and developed econo mies would fight back was inevitable and since they controlled the funds they were bound to be successful Yet they were shamed into two conces sions the ida International Development Association a softloan facility that the World Bank would manage and the Special Fund directed by the silverhaired patrician Hoffman which would finance large preinvestment projects such as research centres surveys or extension projects rather than investment capital as originally intended74 The Special Fund with its own governing council operated outside the regular UN budget if it funded the new ilpes Prebisch would have the necessary autonomy Moreover once the Special Fund was on board the much larger InterAmerican Development Bank would surely match it with counterpart funding for the institute Prebisch could envisage an ideal scenario the new ilpes would be in but not of ecla sharing the same building but with a separate board of directors and administration to free it from outside controls Raúl could handpick the economists he wanted and could give higher pay because the institute could bypass the strict UN cate gories for classification and salaries with him would come his Argentine cir cle Benjamin Hopenhayn Norberto Gonzalez Ricardo Cibotti and Oscar Bardeci and his favourite Chileans like Oswaldo Sunkel Unable to leave Swenson behind Raúl would attach him to the institute as his Special Consultant Prebisch himself would retain his UN undersecretary status as directorgeneral and now that he was out of the secretariat he could con tinue beyond the normal UN retirement age De Seynes and Malinowski who had briefed Hoffman before his trip to Santiago also endorsed the ilpes concept not only did they want Prebisch to remain in the UN after his retirement but regional institutes modelled on ilpes and linked to the four Commissions would add a Return to Santiago 349 creative element currently missing in the system while also satisfying the perennial demand for greater UN decentralization If successful in Santiago ilpes would become a model for the other regions Prebisch sent a short proposal to Hoffman and was rewarded with immediate ap provalinprinciple Malinowski and de Seynes drafted a General Assembly resolution for the creation of regional planning institutes linked closely to the commissions75 idb head Filipe Herrera agreed to cofund the insti tute with Hoffman In such a new environment Santiago could reclaim its leadership in training research and advisory services for development It was a neat package and a dignified exit from ecla when his term would expire in 1963 But as the new ilpes was born USLatin American relations were veer ing out of control And Senator John F Kennedy defeated Richard M Nixon to become the new president of the United States 16 The Kennedy Offensive Prebisch and Latin Americans in general awaited the US presidential elec tions on 4 November 1960 with anticipation sensing change Eisenhower had been the venerated military leader in World War II Democratic candi date John F Kennedy heralded the arrival of a new generation should he prevail against the dour VicePresident Richard M Nixon He was not much known in Latin America unlike Nixon who carried the baggage of April 1958 as an unsympathetic kneejerk anticommunist cold fish who had defended the destruction of democracy in Guatemala in 1954 This is the first instance in history where a Communist government has been re placed by a free one1 Kennedy was handsome wellmarried and rich surrounded by intellectuals writers and artists he and his young team ra diated an excitement that contrasted dramatically with the ambience in the tired EisenhowerNixon entourage He symbolized a confident US pro jecting vigorous international leadership Kennedy could it seemed make Washington the fascination of the entire world His campaign promised the Alliance for Progress a new US policy toward Latin America in fact rather than mere promise2 For Latin Americans Senator Kennedy seemed different he appeared to value international development as a human ob jective in itself rather than merely a tool to fight communism But was this image of Kennedy substance or mirage Or was he himself Prebisch wondered imagining things indulging in heroworship in his advancing years wanting to believe that the ideal of NorthSouth devel opment he had fought for these many years had finally become a genu ine foreignpolicy priority in Washington If USLatin American relations could indeed be recast in this vision under Kennedy Prebisch wanted to be part of this new Washingtonled awakening But during autumn 1960 as the US presidential campaign entered its final stage the tension mounted between Kennedy the humanist of the Alliance for Progress The Kennedy Offensive 351 and Kennedy the Cold Warrior obsessed with the missile gap the Soviet lead in the space race and the loss of Cuba Fidel Castro the spectre of communism incarnate hovered over the pres idential succession In the two years since his victory in Havana on 1 January 1959 Cuba had exercised an influence in Washington altogether out of proportion to its size and on 4 January 1961 three weeks before John F Kennedy and his family moved into the White House Eisenhower severed diplomatic ties with the island The US had engineered the downfall of Pres ident Arbenz in Guatemala in 1954 Latin Americans awaited Kennedys policy toward Cuba hoping for his victory over hardliner Nixon whose en thusiasm for military intervention was not in doubt Many at ecla rejoiced over the Cuban Revolution when the Batista re gime fell on New Years Day in 1959 Regino Boti became minister of econ omy in charge of Cubas National Economic Council Juan Noyola pleaded with Raúl to begin a special program for Cuba and to appoint him head of mission Filipe Pazos left the imf to resume the presidency of the Cuban Central Bank after a forced absence of seven years All believed that they could serve the new Cuban Revolution A sense of renewal flooded the re gion at the prospect of genuine social change in this inner redoubt of the US empire Batista fled to the Dominican Republic and the disgraced Eugenio Castillo found himself in Baltimore for good with his wifes family Prebisch feared from the first that the Cuban Revolution would come to a bad end He understood Boti and Pazos and their reasons for returning he also was an exile and yearned to return home some day He also felt the emotional impact of the Cuban Revolution and he agreed with Noyola that Cuba could not be denied technical assistance from Santiago since it was a founding member country of ecla that had always been loyal in dif ficult times Boti requested that Noyola come with a group of experts to help modernize the sugar industry and Prebisch supported a small ecla mission notwithstanding immediate evidence of US displeasure3 He was fascinated by the young men and women of the revolution led by Fidel and his fellow Argentine Che Guevara their zeal and seriousness of purpose their determination to do away with the venality and corruption of the Batista dictatorship He did not doubt their commitment to social change for the poor and dispossessed and the submerged black Cubans or their instinctive support for social movements elsewhere in Latin America But he feared fanaticism a reflex from his student days in Buenos Aires when he rejected MarxismLeninism and the mob psychology of Perónism which had driven him from Argentina He worried about what the revolu tion would do to Cuba and how Washingtons fury with Fidel would poison USLatin American relations 352 The Life and Times of Raúl Prebisch Despite initial caution in Washington CubanUS relations deteriorated when Castro tried and executed police and military officials and then an nounced sweeping reform plans in February Fidels first visit to the US capital in April 1959 was not a success Boti is here with Fidel Castro Kybal wrote from Washington on 17 April and I saw him yesterday I hope that together with Pazos they will carry some weight in their nations affairs4 At eclas May 1959 session in Panama Boti headed the Cuban delegation and reassured Prebisch that Cuba needed to undertake a se ries of domestic reforms agrarian reform tax reform etc which might appear revolutionary to the outside world but that the financial policies of the government were as conservative as those the fund imf would recom mend to any country no credit expansion budget surplus and the gov ernment was holding a firm line with labour He warned however as to how far these present conservative financial policies could be maintained depended on the cooperation they could get from abroad5 But US doubts were already solidifying into animosity Dudley Seers a British economist on leave in Santiago was detained by the fbi on entering Panama because he wore a beard Polarization quickly replaced farce as it became clear that this was not a typical Latin American coup détat that Fidel was fully in charge and that his vision of Cuba was unacceptable to the Eisenhower Administration In midMay 1959 the Cuban Government enacted the Agrarian Reform Act raising the prospect of nationalizing US owned property and prompting a sharp official warning from Washington rejecting Cubas compensation offer longterm interest bearing bonds and demanding immediate cash payment on its terms The situation be tween Cuba and the US now became tense with congressional demands to send in the marines and terrorist attacks launched from the growing com munity of Cuban middleclass refugees from the island By midNovember the US threatened to cut Cubas sugar quota its economic lifeline In response Havana proceeded on 15 January 1960 with a symbolic expropri ation of uncultivated USowned land clearly challenging Washington to react but the Eisenhower Administration stepped back from so drastic a reprisal against the island economy SovietUS relations now complicated the Cuban picture On the eve of Eisenhowers longawaited talks with the Soviet leader Khrushchev an nounced another success on 14 September a Soviet rocket had hit the moon the first object sent from one cosmic body to another carrying the hammerandsickle emblem to the lunar surface previous US attempts had failed Moscow went a step further on 5 February 1960 Soviet Deputy Premier Anastas Mikoyan arrived in Cuba to announce the purchase of five million tons of Cuban sugar over five years a 100 million credit and The Kennedy Offensive 353 supplies of oil and petroleum products This seemed to challenge Washington in its own region and Moscow also offered Cuba military sup plies when Western countries under US pressure refused Eisenhower thereupon cut sugar purchases by 700000 tons leaving only a token ship ment of 39752 and when US oil companies refused to supply Cuba Moscow announced that it would fill this gap After USSoviet tensions mounted when a US U2 spy plane was shot down over Soviet territory and its pilot Francis Gary Powers captured Khrushchev announced that the US would have to deal with Soviet rockets if it chose to intervene militarily in Cuba On 67 August the Cuban Government nationalized all US prop erty on the island breaking the pre1959 integration with the US that Washington and many Cubans had long taken for granted6 By mid1960 a dynamic of reciprocal accusation and radicalization had led to a new political icon in the Caribbean a proud Cuban revolutionary outpost surviving against US military political and economic siege wel coming Soviet economic and military support against the blockade while in sisting on an independent diplomatic voice in the UN reeling under mass emigration of the Cuban middle class but remaining a unique regional sym bol magnified by US hostility and intervention of building a new society in an unjust continent For every US denunciation of Castros humanrights violations Fidel countered with reminders of US atrocities drawn from a century of US intervention In his July 26 1960 Address which marked the anniversary of his first rising in 1953 he speculated that the Andes would become the next Sierra Maestra of Latin America By January 1961 when Eisenhower severed diplomatic relations preparation for the US Bay of Pigs intervention to topple the Cuban Revolution was in full swing The Cuban example was infectious Latins of all persuasions were more assertive less fearful of offending Washington Conservative President Jorge Alessandri of Chile visited Havana in April 1960 ignoring protests from Washington Writers throughout the region mocked US fears of Cuba How small this great United States has become How it has grown and grown only to become smaller Mexican poet Jaime Sabines jeered on 8 July 1960 hearing of US efforts to curb Mexicos continuing relations with Cuba7 The usual ingratiating Latin deference to Washington at re gional encounters evaporated The US and three other nonLatin Ameri can Members of the Commission were victims of a concerted power play sniffed a US official in a hurt tone reporting to the secretary of state from a special ecla meeting in New York on 2 July 1960 complaining of a seemingly deliberate rudeness to US in particular8 While ecla was heavily criticized in Washington for its alleged socialist tendencies and particularly its mission to Cuba Prebisch was increasingly 354 The Life and Times of Raúl Prebisch preoccupied by the course of the revolution In November 1959 Che Guevara who had been posted to the National Institute of Agrarian Re form replaced Felipe Pazos as president of the Cuban Central Bank Pazos had lasted less than a year in Havana before returning to Washington9 Neither revolutionary nor radical10 Che complained of him while in sisting that Salvador Vilaseca join him as deputy despite protests that he knew nothing about banking Listen when the revolution assigns you a job you have to do it and do it well11 Prebisch respected Pazos if such top economists who had left everything to return to Cuba could no longer work with Castro and his group something was seriously wrong In April 1960 he shared with the US ambassador in Santiago his own concern that radicalization and increasing state control in Cuba could lead to a Soviet style command economy assuring him that ecla would not allow itself to become a pawn in the unfolding USCuban chess game He was fully aware of what was going on he said and was determined that ecla personnel stay clear of political activities Castros invitation to ecla to send experts had been accepted in good faith in the early days of Castros regime but now he felt that some ecla officers had become too deeply involved with Guevara and other Cuban officials and he was seeking some graceful way of withdrawing them12 Prebisch and Washington had become strange allies in a touchy area Tension between Prebisch and Noyola grew as the crisis built toward the nationalization of all US property On 9 August 1960 in a personal note to David Pollock Noyola referred to certain problems he was hav ing with Prebisch but added that these were of little consequence I am working intensely on something which I consider the most important and decisive in my career and I am fortunate to be able to participate in a project which is the most important event in Latin America since its in dependence13 The following months grew more tense as Noyolas parti sanship strayed far outside UN rules On 20 September 1960 he gave a press conference in Havana as ecla chief in which he maintained that because it had a new economy based in social revolution Cuba had ad vanced more in the last ten months than many other countries in ten years The Cuban revolution he declared is example and guide for Latin America Unemployment had fallen more in ten months than in the last twentyfive years and Cuba had delivered a heavy blow to rela tions between imperialism and dependent countries Commercial and credit relations with the Communist Bloc were preferable to those with capitalist countries because they were not based in an ethic of accumula tion unlike the US for example which demands political conditions both international and national The Kennedy Offensive 355 Prebisch exploded and had him out of Cuba within a month on an order from the secretarygeneral Noyola resigned from ecla in protest return ing to Mexico and attacking Prebisch for intolerance14 To cool tempers on all sides Raúl sent Jorge Ahumada his most reliable of lieutenants to Havana to oversee the ecla office in the wake of Noyolas departure orthodox enough to satisfy Washington his many years directing the Santiago Training Division had also earned him the respect of Fidel Castro But Ahumada found Havana no less irresistible than Noyola he promptly threw over wife family country the Chilean Christian Democrats and the ecla succession for a woman half his age Rejected in turn he died prema turely in exile in Caracas slumped over an empty metal desk The defec tion cut Prebisch hard and complicated the ecla succession leaving his second choice Antonio Mayobre to inherit his office in Santiago if that is Raúl could persuade him back since he had just been named Venezue lan ambassador to the White House As the US presidential election approached and as the Cuban revolu tion became an ever graver crisis in Washington the Eisenhower adminis tration increased its attention to Latin America which could no longer could it be taken for granted as a safe region Building on the positive steps taken after Sputnik and Nixons 1958 visit it accepted Latin de mands for greater development support in lock step with the unfolding Cuban drama After the KubitschekEisenhower discussions of Operation Pan America the US had accepted the creation of the idb but it had held back from a major bilateral program beyond the normal commer cial trade and banking channels However as the CubanUS dynamic veered out of control a Committee of 21 or Special Presidential Com mittee of Representatives to Examine New Mechanisms of Economic Co operation was created to move from dialogue among the twentyone Latin and US presidents to a regional plan of action In February 1960 President Kubitschek revised his Operation Pan America as the blueprint for this new era of interAmerican cooperation and sent it to Eisenhower who then visited Brazil for the inauguration of the new capital Brasilia the first time a US president had visited the country Finally in July 1960 when Eisenhower eliminated Cubas sugar quota and plunged the island economy into chaos he announced a 500 million Social Progress Trust Fund for Latin America This was indeed the change of US attitude for which Latin Americans had long been waiting and a special meeting of the Committee of 21 was called for Bogotá in September 1960 to which the heads of international organizations including Prebisch were also invited15 The location Bogotá symbolized the renewal of the in terAmerican system twelve years after the adoption there of the oas 356 The Life and Times of Raúl Prebisch Charter in 1948 by extending USLatin cooperation to the social and economic dimension of the Western Hemisphere But agreement was not easy Latin Americans led by Kubitschek had different expectations a vision more like US policy toward Europe after 1945 the 500 million commitment to the Social Progress Fund seemed a timid limited and belated response They expected a multiyear and multi billiondollar US bilateral assistance program for the region and they also insisted on a new secretariat rather than the Washingtondominated oas to run the new Operation Pan America16 But the Eisenhower Administra tion had reached its limits Mann and Dillon representing State and the US Treasury refused to go beyond the US initiatives already announced and made it absolutely clear that Washington would accept only the oas to head a new interAmerican program Congressional support for the Social Progress Fund was far from certain in any case and the oas at least reassured US lawmakers that decisions on US money would be made in Washington rather than Latin America In fact Dillon had to intervene with Senator John F Kennedy during the Bogotá conference to get the leg islation through congress17 The compromise eventually achieved featured the Act of Bogotá to which all twenty countries could agree outlining a new set of principles to pursue justice and equity in interAmerican cooperation To these joint commit ments in principle was added US support for Operation Pan America al though suitably amended to meet its demands on the oas and the Social Progress Fund Fidel Castro denounced the agreement as unworthy What is understood by this he asked How can there be a solution to the social problems without a plan for economic development Do they want to make fools of the Latin American countries18 But for most Latin leaders Prebisch among them the Act of Bogotá marked a change in US thinking even if he was less enthusiastic regarding its prospects should Richard Nixon be elected to succeed Eisenhower in the elections only two months away However the Act of Bogotá with its commitment to the oas as lead devel opment agency in the Americas had complicated eclas future within the Big Three organizations in the Americas led by Mora Prebisch and Felipe Herrera for the idb Duplication was a first problem But if as now seemed certain the oas would be given an overall leadership role its bud get would be multiplied for an expanded program eclas role in con trast could correspondingly shrink or be squeezed out altogether because it was a UN agency in an era of expanding regionalism Only ecla faced the possibility of marginalization the oas had US funding while the idb as regional development bank had the inherent leverage of dispensing money Of course ecla had far deeper analytic capacity than the fledgling The Kennedy Offensive 357 idb and much greater organizational capacity than the oas not to mention credibility in practice the Big Three needed one another more than ever in this period of change in Washington and on this Mora Prebisch and Herrera were in full agreement Following the Bogotá meet ing Prebisch proposed a new coordinating mechanism the oasidbecla Tripartite Committee on Cooperation with a new division of labour to re flect their different strengths and improve coordination To gain full part nership Prebisch gave up the Annual Survey now to be jointly produced with the oas in Washington but kept the advisory groups as a special ecla niche His colleagues agreed so that the birth of the Tripartite Com mittee coincided with the arrival of the Alliance for Progress John F Kennedys victory over Richard Nixon was narrow but the enor mous promise of his arrival as president was confirmed the moment Nixon conceded defeat and the expectations of his presidency further escalated as his inauguration approached The new president decided to pursue the Alliance for Progress as promised during the campaign and a task force chaired by Adolph Berle worked up a background paper on the Americas with the assistance of Lincoln Gordon from the Harvard Business School On 19 December they called together a group of influential US academics including Albert O Hirshman Paul RosensteinRodan Frederico G Gil and Walter W Rostow along with private sector representatives to review a draft entitled Alliance for Progress A Program of InterAmerican Partner ship19 The election of Senator Kennedy has excited expectations and hopes throughout Latin America they warned but this new opportunity may be the last Without a prompt and drastic reorientation of United States foreign policy the opportunity will be lost Latin America was not only the richest of the developing regions but also the most vulnerable to communism they concluded and with public expectations peaking the regional crisis was now at the breaking point The Alliance would feature the unique challenge of using foreign aid to promote a peaceful social rev olution in Latin America in which communism would lose its longterm appeal combining it with immediate initiatives of unprecedented scale to meet Latin expectations in the areas of economic and trade policy re gional integration and land reform The new element for Prebisch was the attitude of Kennedys task force in immediately reaching out to Latin Americans the US as donors actually asking recipients for advice about what to do with their money and thereby giving meaning to the overused language of partnership and I 358 The Life and Times of Raúl Prebisch multilateralism Prebisch was amazed to be called by Richard Goodwin wondering if he along with Filipe Herrera José Antonio Mora and several other prominent regional personalities would help with ideas for the new Alliance for Progress Mayobres embassy in Washington served as a meet ing place for this small ad hoc group of Latin experts who met with the task force When therefore Kennedy announced the Alliance for Progress in his January Inaugural Address Prebisch and his colleagues felt involved and listened carefully for the presidents exact wording What they heard was better than expected Kennedy committed his administration to support international development as a first priority because it is right Prebisch heard that phrase on the radio and felt it signalled a new era or rather the definitive end of the 1950s in US foreign policy Belief became conviction when Prebisch and the Latin group were again approached after the inauguration to prepare more detailed comments for President Kennedys formal launch of the Alliance for Progress on 13 March at a special White House reception and press conference for members of congress and the Latin American diplomatic corps Prebischs situation in Washington was unique he was at the centre of the Alliance and no one would or could deny that he was its intellectual godfather Five days before Kennedys 13 March event Raúl drafted a joint letter to him from the heads of ecla the idb and the oas on a new approach to USLatin Amer ican relations Writing it out in longhand he circulated the memorandum to his colleagues for comments then sent the original draft containing the marginal notes to Adelita as a souvenir The memorandum it turned out discussed eight of the ten main points in Kennedys Address on 13 March including one key feature that the Kennedy speechwriters incorporated wholesale from Prebischs memorandum20 On the implementation of economic reforms he had recommended that each country could draw up its own program of social and economic development perhaps in a pre liminary form establishing realistic goals and setting forth the financial contributions and the social and administrative reforms that the country will undertake Rephrased by the White House this section became each country must formulate longrange plans for its own development These plans will be the foundation of our development effort and the basis for the allocation of outside resources This was a gigantic victory for Prebisch and ecla a vindication of their work over the last decade there would be more outside assistance but on condition that Latin governments were se rious enough about development to undertake the required reforms21 President Kennedys 13 March reception at the White House was an unforgettable coup de théâtre with Prebisch at the centre of a cluster of se nior Latin diplomats around Kennedy to whom the announcement was The Kennedy Offensive 359 addressed nothing like this had been seen before and the expectations it aroused in Latin America were enormous It was wonderful and gripping combining details drama and impact with flowing terms and stirring com mitment I propose that the American Republics begin on a vast new Ten Year Plan for the Americas Kennedy began a plan to transform the 1960s into an historic decade of democratic progress The majestic con cept of Kubitscheks Operation Pan America was only mentioned as a pre cursor as if to further dramatize the new Alliance for Progress a vast cooperative effort unparalleled in magnitude and nobility of purpose to satisfy the basic needs of the American people for homes work and land health and schools techo trabajo y tierra salud y escuela There would be 1 billion annually for the tenyear period and another 500 million as a first step in implementing the Act of Bogotá A special ministerial meeting of the oas InterAmerican Economic and Social Council would be convened 517 August in Punta del Este to draw up the new Charter and begin the massive planning effort which will be at the heart of the Alliance for Prog ress We have not heard such words since Franklin Roosevelt Mayobre exclaimed22 After the press conference Prebisch was invited to help prepare the Punta del Este meeting and Foreign Policy invited him to write a preconference article on USLatin American relations titled Joint Responsibilities for Latin American Progress23 eclas office staff was strengthened as a base for Prebischs increasingly long and frequent visits to the US capital Prebisch felt accepted in Washington in a way that recalled Ravndal and the years preceding Pearl Harbor or his later work with Robert Triffin and the US Federal Reserve During the twenty years that had passed since then USLatin American relations had sharply regressed He had been shunned during the Eisenhower years and although civilly tolerated Mann and oth ers had kept him at arms length in the reshaping of interAmerican eco nomic relations after 1958 Now it was different he was no longer an object of suspicion While not many members of Kennedy inner team ac cepted Prebischs economic ideas they were attracted by his social policy the coherence of his ideas his knowledge and contacts in the region and his force of personality In April Prebisch was invited to a gathering with the top Kennedy people including Douglas Dillon WW Rostow Richard Goodwin Adolf Berle Senators William Fulbright and Hickenlooper and Lincoln Gordon Gordon recounted Prebisch saying emotionally and with tears in his eyes Ive headed ecla for over a decade now and this is a wonderful experience for me because for the first time a highlevel US delegate has talked to me as an equal24 The Alliance for Progress seemed like a dream come true a version of progressive capitalism based in a 360 The Life and Times of Raúl Prebisch spirit of mutual interest and respect in which Latin ideas were once again welcomed rather than spurned or at best as a way to placate the unruly Southern neighbours barely tolerated Days later Prebischs euphoric sense of a new beginning and indeed the entire Alliance for Progress were swept away World news turned to Moscow on 12 April when Premier Nikita Khrushchev proclaimed the ge nius of the Soviet people and the powerful force of socialism as Major Yuri Gagarin orbited the Earth for 108 minutes in his Vostok space capsule and became the first astronaut in space Khrushchev compared the smiling quiet Gagarin with Christopher Colombus once again the Soviets had beaten the US in space But the US easily matched Moscow for headlines three days later by launching the Bay of Pigs operation against Cuba US B26 bombers struck airfields on the island followed by the landing of Cuban exile Brigade 2506 to overthrow the Government of Fidel Castro Bogged down in swampy terrain unable to link up with rebels operating in the Oriente denied decisive US air and ground support and above all un able to rally Cubans against their leaders the armed intervention stalled On 19 April the 1189 remaining members of the Cuban exile Brigade sur rendered in defeat and ridicule Several aspects of this debacle were highly damaging to Kennedy his overt violation of international law the obviousness of US intervention clearly planned for months under Eisenhower and reaffirmed by the new administration despite official denials the use of napalm against lightly armed Cuban militia but mostly the overwhelming incompetence of the botched operation It revealed the animating anticommunist instinct of the Kennedy Administration underneath the language of development and recalled vividly the US intervention in Guatemala in 1954 using cia dirty tricks and Latin turncoats For the already suspicious in Latin Amer ica the Bay of Pigs was unforgivable for Prebisch and fellow Latins at the White House reception it raised the first doubts about Kennedy In Cuba it was the point of no return Yet the remarkable feature of the Bay of Pigs fiasco was the rapid recov ery of Kennedys credibility and the popularity of the Alliance for Progress most Latins wanted to believe that a new period had begun and they were prepared to give him a second chance They like Prebisch saw the new presidents faux pas as an error of inexperience compromised by a flawed operation inherited from the Eisenhower years in a state of advanced de sign The presidents acceptance of personal responsibility combined with the deepening glamour of his new administration restored confidence and diminished the smell of deceit and failure By 5 May when President Kennedy sent a personal message of congratulation to Prebisch at eclas The Kennedy Offensive 361 May 1961 session in Santiago memories of the Bay of Pigs rout had been replaced with anticipation for the approaching Alliance for Progress Con ference at Punta del Este where a charter would be proclaimed and its structure established Offseason the coastal resort town of Punta del Este was deserted except for the oas delegates the media and security people but the weather was brilliant in this Argentine enclave of Uruguay stretching out over the white sand dunes of the Plate estuary 110 kilometres east of Montevideo A polo tournament was in full swing With so much at stake nothing like the Alliance for Progress in scope or money had been tried before anywhere in NorthSouth relations or with such expectations of a new era in the Americas it was the premier USLatin meeting since the founding of the oas in 1948 The Alliance was essentially political and the political back drop of the Conference was the containment of the Cuban revolution on everyones mind with the arrival of Che Guevara and the stir he created Douglas Dillon headed the US delegation intimidating wineconscious Latins less by his Harvard credentials his seat on the New York Stock Ex change at twentythree his family wealth his decorated warservice as Lt Commander in the US Navy or his personal friendship with Eisenhower than by owning the grand cru Chateau HautBrion estate in Bordeaux founded in 1550 by Jean de Pontiac and bought by his father for 23 mil lion francs in 1935 Everyone waited for President Kennedy but in the end he failed to appear The US and Cuban delegations watched each other and were watched by everyone else to see whether they would talk finally Richard Goodwin and Che Guevara met on 22 August25 President Frondizi invited his famous countryman across the Plate River to Buenos Aires for a secret fourhour visit provoking a crisis with his generals and the Washington se curity establishment cia hacks hovered their new Operation Mongoose ready for another attempt to eliminate Castro Felipe Pazos ostentatiously refused to acknowledge Richard Bissel coorganizer of the Bay of Pigs fi asco and exmit professor26 But Che was the star passionately applauded willfully insulted as spinachbearded and infuriatingly courteous Prebisch maintained as low a profile as possible bemused at the unfold ing scene at Punta del Este The issue was not whether Cuba would be ex cluded from the Alliance since this was the US objective at the conference Fidel Castro himself thought it a clever US strategy to preempt revolution in the region but Che was not authorized to sign the Declaration to the Peoples of the Americas which specifically excluded Cuba by insisting on the insti tutions of representative democracy Instead the main question at Punta del Este was the actual meaning of Kennedys 13 March commitment to 362 The Life and Times of Raúl Prebisch partnership with Latin America The dilemma was that the Kennedy intel lectuals backing the Alliance and omnipresent at Punta del Este had little or no prior experience in Latin America apart from holidays in Acapulco and pre1959 Havana Worse prior longterm thinking on Latin American development had been absent in the US State Department since World War II Suddenly the US needed a model of development to combat Fidel Castro whatever its problems ecla had the only program based on the les sons of the 1950s which also underlay Operation Pan America and the Act of Bogotá on which it could draw Thus the US delegation at Punta del Este came to incorporate virtually the entire ecla program in the Charter in cluding many ideas that Washington had fought with very strong language since its creation It approved for example the mutually supporting roles of developed and developing countries in development and the need for foreign capital on concessional terms social change as in land and tax reform longterm economic planning within mixed economies Latin America and a new regime for trade in commodities No fewer than ninetyseven recommendations covering the sectors from housing to infra structure were included in the Alliance program The US pledged to pro vide a major part of the minimum of 20 billion principally in public funds which Latin America will require over the next ten years from all ex ternal sources in order to supplement its own efforts27 Prebisch was alarmed by this unreality Taking basic ideas from a think tank like ecla and using them for a speech was one thing trying to turn them into a vast blueprint for action apparently conceived in the US was quite another I am really concerned about this trend he noted because its political implications are highly detrimental to the Alliance itself and to the broad popular support it requires in Latin America28 Grandiose rhetoric was not necessarily a negative tactic in promoting a historic cause but it could prove counterproductive if practice conflicted violently with reality The US Congress for example did not share the mixed economy language of the Punta del Este Charter even as the latter was being signed Congress only narrowly approved the presidents Act for International De velopment and only then with the addition of probusiness restrictive con ditions Prebisch did not doubt the sincerity of Kennedy and his advisors or their commitment to the reform goals of the Alliance he simply wondered whether and how they could be achieved The unreality at Punta del Este was equally evident among Latin Ameri can delegations which solemnly agreed to undertake the structural re forms required for peaceful democratic revolution Some like the new Brazilian Government of Janio Quadros who succeeded Kubitschek were too weak to undertake anything Others confronted vested interests and The Kennedy Offensive 363 embedded resistance to change which the Alliance for Progress mystique could not reverse In endorsing the Act of Bogotá a year earlier Prebisch was not optimistic that Latin American countries would be able to profit from US aid Greater assistance he underlined is not enough there will be greater international cooperation but will Latin America be able to use it In a sombre tone at sharp variance with the otherwise upbeat mood at Bogotá Prebisch noted the internal obstacles to development inequality unreformed land tenure poor education and lack of social mobility that had to be addressed if development funding was to be effective Are we prepared he asked not only from the point of view of technology which is certainly not an insuperable obstacle but also from the political point of view to introduce into our countries all the structural and social reforms required for the application of an effective economic policy Let us not turn a blind eye to the facts It is obvious even notorious that dis parities in income distribution in Latin America are growing and that in flation that monstrous evil is not being checked food production lags far behind the populations requirements Latin America has not been able to introduce the changes in its economic structure and pattern of pro duction which are the essential requisites for development29 The Cuban revolution had unleashed two waves one was directed from Washington to regain control of the region using all the economic political and military tools in its armoury and preempt further revolutionary change on the Cuban model but the other wave from Havana threatened the unre formed Latin American elites with social and economic change Beneath the Act of Bogotá and new promises sweeping Latin America lay polarized societies with suspicious and narrowly based governments preoccupied by internal challenges from below But because Latin elites refused manual work and insisted on cheap domestic labour a key incentive for basic re forms was missing The higherincome groups usually have a much higher standard of living than equivalent groups in more advanced centers be cause they enjoy both the benefits of the traditional ways of living and all the advantages offered by modern technology Prebisch warned that ma jor US resources could have the perverse effect of giving Latin govern ments the means to delay the hard but essential reforms required for healthy longterm development The combination of superlatives and idealistic clichés at Punta del Este left Prebisch determined to concentrate on the structure and mechanics of the Alliance for Progress for these decisions would determine its actual im plementation President Kennedy had promised a multilateral USLatin American program a vast new cooperative effort with oas leadership a greatly strengthened InterAmerican Economic and Social Council to 364 The Life and Times of Raúl Prebisch assemble the leading economists and experts of the hemisphere to help each county develop its own development plan The oas budget it was agreed would be doubled to 6 million and its staff increased to five hundred Prog ress was also made on the issue of coordination the oaseclaidb Tripartite Committee was reaffirmed as the senior coordinating mechanism within the interAmerican system subject to Frondizis insistence that Prebisch not be named its executive director30 Kennedys 13 March press conference had mentioned the importance of ecla and the idb the Tripartite Committee was a sensible mechanism to support the Alliance But the key issue facing the Alliance for Progress was approving or reject ing government requests for economic assistance and the delegates at Punta del Este kept postponing this part of the agenda as if wanting to avoid the question of actually running the Alliance Eventually however some committee would have to say yes or no to funding requests and this issue finally became the most controversial Prebisch had come to the meeting with a proposal to create within the overall oas system an inter American review mechanism for national development plans based on a conditionality principle namely that funds from the US and other donors would be linked to the performance of specified goals The challenge was to implement the Alliance from within the oas with sufficient autonomy to be effective in a weak parent organization and oversee the Alliance goals of development democracy and social change Prebischs proposed mecha nism would therefore comprise a committee of seven experts with its own executive director located in Washington with the responsibility for evalu ating national plans working with the oasidbecla Tripartite Committee where necessary Alliance funding would be directed to those countries that could demonstrate progress toward social reform selfhelp and sound economic policy A minimum annual growth rate of 25 percent was pre scribed as a target for each country Convinced that only a strong multilat eral body with executive powers could discipline Latin governments into accepting structural and social reforms and thereby ensure consistency with the social and economic goals of the Alliance for Progress Prebisch had aimed at a permanent committee with internationally recognized members who would evaluate development plans and issue a binding report to the oas the idb and the member country It would review the implementation of development plans each year with appraisals and rec ommend improvements in both plans and execution With such a mem bership and purpose and led by its own executive director governments would find it in their interests to cooperate with the committee In its closing hours the Punta del Este Conference rejected Prebischs recommendation for a strong Committee of Seven within the Alliance The Kennedy Offensive 365 for Progress Frondizi took the lead supported by Brazil in watering down Prebischs proposed review process into a new Panel of Nine with a purely advisory role While it would have a separate existence the panel would not have the status of a permanent oas standing committee and it was denied executive authority Instead its task would be to strike ad hoc committees to review country development plans with three panel mem bers and three experts appointed by the government in question With nine members rather than seven the new Panel of Experts as it became known would be larger and more unwieldy but it reassured Latin govern ments by maintaining the established norm for setting up regional bodies with two representatives from the US one each from the five largest coun tries Argentina Brazil Chile Colombia and Mexico and two rotating members from the smaller members of the region Disappointed Prebisch worried that these changes undermined the goal of a permanent effective and politically powerful review committee and therefore failed to create the necessary element required for the suc cess of the Alliance But he also realized that the Panel of Experts was a significant innovation and that only time and experience would tell if and how the mechanism would work He was also heartened by support for the oasidbecla Tripartite Committee the three executives Mora Herrera and Prebisch were asked to nominate the members of the fu ture panel Best of all the Kennedy people at Punta del Este approached Prebisch to head it31 Prebisch could be excused for a certain selfsatisfaction after Punta del Este The Alliance for Progress was moving ahead his personal role and that of ecla had been confirmed and its early success contributed to Kennedys proposal to the UN General Assembly on 25 September that international development be expanded and coordinated and that the 1960s be designated the UN Development Decade The new Panel of Experts drew Prebisch logically to Washington the centre of ideas and decisions under the Kennedy Administration which had welcomed him since its inauguration Much of 1961 had already been spent there al though sixty years old he was ready for a new challenge Rumours had circulated during the conference of Prebischs impending resignation that he would be leaving ecla before the end of his contract in 1963 with Alfonso Santa Cruz acting as deputy until Antonio Mayobres return to Santiago and US newspapers reported that Raúl would be moving to Washington immediately to set up the Panel of Experts in the oas Ar riving on 9 September he rented a suite in the SheratonPlaza Hotel for 500 a month and arranged for essential household effects to be sent from Chile in April32 366 The Life and Times of Raúl Prebisch That Eliana Diaz lived in Washington and that this relationship was spe cial for Raúl only confirmed the nearperfect alignment of stars over the New World in the glow of Punta del Este Ms Diaz was Chilean and they had met in Santiago Now working as Librarian in the imf she had become a permanent factor in Prebischs already complicated life as he planned the beginning of a new development era in USLatin relations Prebisch knew what he wanted in Washington Before his departure on 2 September he discussed his ideas with colleagues and these plans quickly made their way to Washington via the US Embassy from its mole in ecla headquarters He left convinced that he would be named directorgeneral and that he would have the lead role in shaping the new oas Panel of Experts In terms of overall Alliance architecture Prebisch foresaw three bodies working together the new oas Panel to oversee the evaluation of national development plans presented by Latin governments the oasidb ecla Tripartite Committee to coordinate the implementation of the Alli ance and the usaid Agency for International Development to provide most of its funding Since the three proposed structures were in the forma tive stage he wanted to get to Washington as soon as possible after Punta del Este Avoiding early mistakes with the Panel of Experts was particularly im portant because the quality of its membership would determine its success lacking executive power it could only persuade by respect Prebisch made no secret of his determination to attract the foremost personalities in the Americas comprising four senior generalists including himself as director general along with five highlevel specialists in the fields of industry and power agriculture transportation housing and urbanization and educa tion Such a combination would combine macroeconomic and sectoral com petence speed up the screening of the national development plans and instil sufficient regional trust in the panel to establish its credibility But Prebisch arrived to a frenetic Washington where little could be done in the dense and confusing cloud of briefings meetings and bar gaining sessions surrounding USLatin American relations The Kennedy Administrations appointments were slow in coming finally Teodoro Moscoso was chosen as US Coordinator of the Alliance the number two position in usaid the most important funder for Latin American devel opment over the next ten years This was welcome news for the panel Moscosos earlier leadership role in Operation Bootstrap in Puerto Rico and his strong support for the Alliance Charter made him a popular choice throughout Latin America But there were other delays the new I The Kennedy Offensive 367 offices for the Panel of Experts on the fourth floor of the Premium Build ing were not yet ready so that Prebisch worked out of eclas cramped of fices with appointments secretary Bodil Royem and Benjamin Hopenhayn whom he had chosen as secretary for the Panel of Experts The Argentine Government meanwhile was lobbying hard in the oas and White House against Prebisch with Frondizi objecting to his reviewing confidential national plans in the Panel of Experts and in general com plaining that the Alliance unduly extended eclas role and influence in Washington This vendetta reflected Frondizis political trouble at home the economic model pursued with the support of the imf and Washington after 1958 had collapsed in red ink unemployment and business bank ruptcies after its initial success33 Apart from privileged sectors such as pe troleum or auto assembly the economy was now floundering the national deficit for 1960 set an alltime record 75000 railway workers were dis missed and strikes spread across the country Increasingly vulnerable to a military coup and dependent on Washington for financial support the mortally crippled Frondizi took theatrical refuge in attacking his old foe from Plan Prebisch days However infantile in substance the attack came from a senior membercountry of the oas and it was effective Frondizis opposition meant that Prebisch lost his bid to lead the Panel of Experts as directorgeneral while Mora insisted that he had declined citing other commitments this was patently false Snubbed Raúl refused simple mem bership creating deadlock as he was the obvious candidate A solution had to be found In the end the position of directorgeneral was dropped and he was named coordinator on a parttime basis this Frondizi would ac cept as long as the nine members would be approved by governments as well as the Tripartite Committee Prebisch reluctantly concurred but the early row was a warning over the future of the panel Despite this setback Prebisch began his work convinced that the Panel could be a major departure in the Americas34 He had the advantage of starting fresh his terms of reference were broad convening and directing the panel supervising its working groups and leading its liaison work in Washington and Latin America and US support was strong On 29 No vember in a special ceremony at the oas President Kennedy officially an nounced the panel declaring that today marks another milestone in the Alliance for Progress for today we begin to select the Panel of Experts by the Charter of Punta del Este This Panel is an historic innovation not only in interAmerican affairs but in the effort to develop the economies of half the world Not since the Marshall Plan has a group of allied nations embarked on a program of regional development guided by a regional body largely selected by the developing countries themselves The panel 368 The Life and Times of Raúl Prebisch members seven Latin and two Americans did not reflect Prebischs pro posed mix of generalists and specialists but they were undoubtedly distin guished persons from across the region and all committed to the Alliance goals The two US members Paul RosensteinRodan and Harvey Perloff were Prebisch allies and he had close relations with Ernesto Malaccorto Argentina Ary Torres Brazil Raúl Saez Chile Hernando Agudelo Villa Colombia Gonzalo Robles Mexico Filipe Pazos Cuba and Manuel Noriego Morales Guatemala Douglas Dillon appointed secre tary of the Treasury by President Kennedy reaffirmed the US commitment of 1 billion for the first year of the Alliance ending 13 March 1962 and stressed the primordial significance of the panel in evaluating develop ment plans and strengthening project selection as well as assisting the US Government in providing and channeling external capital35 In a show of particular recognition the oas asked Prebisch to close its session Determined on a quick start in the new year Prebisch called an organiza tional meeting of the panel in December before the start of their official appointments on 1 January 1962 to decide on priorities The Punta del Este Charter spoke confidently of the plan as the principal instrument of the Alliance but Latin American countries had very different understand ings about planning and plans and they were at very different stages of development Brazils approach to the Alliance was to set up a national co ordinating committee for emergency projects36 Bolivia lacking compara ble expertise did have a national plan based on the work of an ecla advisory group since 1959 but it only set out broad goals and was nowhere near a blueprint for a coherent public and private investment program Detailed and operational development plans would take years to complete in many countries Before the Punta del Este Conference Prebisch had said that only mediumterm plans were feasible but he now faced the danger of governments running to him with emergency requests without a plan at all The Panel of Experts needed a test case to prove its work an early Alliance for Progress success story from a major country to set an example for the region by submitting its national plan to the panel as a condition for development funding Chile as usual was ready Unlike Argentina ill disposed Brazil reluctant or Mexico secretive President Allesandri was both committed to the panel process and keen to be leading the first country to have a national plan approved under the Alliance for Progress With a strong Central Bank and national institutions along with econo mists who had long experience with public sector planning Chile was de lighted to be chosen first by the panel and welcomed its help in finalizing a longterm investment plan Felipe Pazos Hernando Agudelo and Rodrigo The Kennedy Offensive 369 Gomez were selected by the Panel of Experts to serve on the Chile Ad Hoc Group assisted by the outside experts chosen in consultation with Chile37 With this decision made the panel settled into its new offices Hopenhayn came over from ecla as secretary and the nine experts began their work plied with requests for talks and papers given the interest aroused every where in the Americas and globally by the experiment Since success depended so much on Chile the Ad Hoc Group worked with intensity and commitment with promising first results But events in Argentina soon overshadowed its work On 29 March 1962 Arturo Frondizi was seized by the Army and imprisoned on the island of Martín Garcia in the Plate River in a set piece Buenos Aires melodrama Grenadiers came for him in the middle of the night as they approached the Casa Rosada Frondizi dismissed his personal guard to prevent bloodshed reluctantly it agreed to stand down rather than resist but remained in the palace with the entire civilian staff cheering their president When at last the grena diers arrived and led him away the entire assemblage soldiers staff and Frondizi himself broke into the national anthem amidst a wave of tears jailors included The military coup had been building for some time and was not unexpected but what concerned Prebisch in Washington and Alessandri in Santiago was that the new regime of José Maria Guido in stalled by the military until elections could be held the next year appealed to the Kennedy Administration for immediate economic assistance to head off another Cuba in the parlance of the day The postFrondizi USArgentine crisis went to the heart of the Alliance for Progress Argentina had so far submitted nothing to the panel not even the outline of a national plan Guidos bid for half a billion dollars from Washington therefore made a mockery of the Charter and the machinery set up for its implementation Alessandri was outraged when Washington agreed to the Argentine request on grounds of security I have opened my books for nothing he roared For the Panel of Experts and its Ad Hoc Group on Chile the USArgentine deal was doubly demoralizing in showing them to be both redundant in Washington and irrelevant in Latin America For Prebisch the tragedy of the military coup also affected him as a citizen but as an Alliance protagonist it was devastating to be undercut before office renovations were complete If Latin generals could get easy US money by waving communist threats at the Kennedy Administration why would any government take his Panel of Experts seriously Like a leaking airship accel erating earthward its deflation was all the more striking for the apparent vigour of the Alliances launch only six months earlier If the postFrondizi decision also revealed the weight of the security establishment in Washington the overall atmosphere in the US capital was 370 The Life and Times of Raúl Prebisch also hardening against the Alliance for Progress Compounding the dam age of Argentina President Kennedy backed down from the other key US Punta del Este commitment to a socalled new era in the trade of basic commodities the most important exports of Latin America by extending the International Coffee Agreement negotiated by Eisenhower to other products for greater market access and price stability Price fluctuations and the consequent unreliability of export earnings undermined consis tent financing for development a new USLatin American agreement would promote the trade agenda in parallel with Alliance commitments for greater aid But time had run out at Punta del Este and negotiations for a deal could not be completed Instead the Joint Working Group on the Stabilization of Export Earnings resumed negotiations in January 1962 with US officials apologizing for past US intransigence blaming the de parted George Humphrey for previous ill will and assuring their Latin American colleagues that things would now be quite different and that President Kennedy was personally committed to a regional export stabiliza tion policy The only question was the choice of policies and mechanisms By March it was obvious that US officials had raised unrealistic expecta tions a protectionist US congress preoccupied by a growing deficit and un employment would not accept what it saw as a program of socalled disguised aid For all the Kennedy bombast he could not deliver the Democrats did not control the congress and no solutions could be found neither policies nor mechanisms and the USLatin American talks termi nated in failure The entire political atmosphere in Washington was evolving rapidly in a new direction A surge of renewed optimism and confidence was sweeping the country In space rivalry the postSputnik trauma ended with a success ful US manned flight on 20 February 1962 when astronaut John Glenn or bited Earth in Friendship 7 It turned out that the feared missile gap with the Soviet Union was incorrect the US was in the lead For its part the US corporate sector had taken the offensive against the Alliance for Progress and Prebisch himself as antibusiness An influential article Latin America Bureaucracy and the Market came out in Fortune magazine in February 1962 describing Prebisch of Yugoslav background now as anti business doctrinaire perhaps the most influential but not necessarily the soundest political economist in the hemisphere with an engaging volatile personality and a mind as agile as it is capricious one of those politically minded economists who tailor their economics to fit their objec tives38 John D Rockefeller was forming the Council of the Americas in New York as a corporate counterthrust against the statist approach of the Alliance and in May Kennedy set up the Commerce Committee for the The Kennedy Offensive 371 Alliance for Progress composed of twentyfive business leaders led by him self Senator Bourke Hickenloopers amendment to the US Foreign Aid Bill mandated an automatic termination of assistance where US investors were subject to discriminatory taxation or nationalization39 US foreign di rect investment was only 85 million in 1960 and 144 million in 1961 while profit and interest remittances for these two years were at a postwar high an astonishing 632 million and 675 million40 The outlook for 1962 was no better Although Kennedy had armtwisted congress into a 20 percent increase in economic aid to 13 billion in 1962 the adminis tration faced a decrease for fiscal year 1963 and a dramatic cut in 1964 which would reduce the aid package to little more than 500 million Both public and privatesector funding for development in Latin Amer ica was therefore in trouble with midterm congressional elections ap proaching in fall During 1962 the Washington community as a whole shifted against the governance model represented by the Panel of Experts as a new and harder cohort of the Kennedy team took over Richard Goodwin was re placed by Edwin Martin Thomas Mann who would soon be recalled from Mexico City Douglas Dillon and WW Rostow were ascendant A new counterinsurgency policy adopted by the Kennedy team in August 1962 to combat the communist threat in Latin America accelerated the rising im perative of nationalsecurity thinking in the US capital The opposition lined up against Prebisch was deep the US Treasury resisted planning fis cal and monetary discipline solved everything the US private sector agreed Thomas Mann opposed Prebisch strongly on everything the cia saw the Alliance as a communist trap the imf World Bank and idb wor ried for their turf and State Department bureaucrats dismissed Latins as too flabby and corrupt to handle anything But if US officials could not accept multilateralism dismissing the Panel of Experts as irrelevant most Latin governments understood it all too well and resisted the model because it might be effective The defeat of the Alli ance therefore was mutual Latins criticized Kennedys failure to deliver but were relieved as Washingtons impulse for tax and land reform relaxed Neither the US nor Latin America was prepared for the commitments they accepted when signing the Punta del Este Charter A year earlier in the ex citement following Kennedys 13 March Address Prebisch had thought a new period was beginning he now realized that his sense of vindication had been premature Underlying USLatin suspicions remained the Alli ance shell in the oas would remain but people were no longer caught up in its spirit neither in Washington nor in Latin America The Year of Latin America was now over in Washington the Kennedy team was 372 The Life and Times of Raúl Prebisch moving on On 13 June Prebisch resigned it was his shortest job ever in which he shared the defeat of the Panel of Experts I have arrived at the conclusion he said that it is not possible to correct the grave error in my judgment committed at Punta del Este when it rejected the original proposal of a Chair forming part of group of seven experts41 Without le verage or executive power of any kind the panel was simply unworkable and the position of the coordinator untenable With the panel unexpectedly behind him Prebisch gave up his Sheraton Plaza suite and returned to Santiago Antonio Mayobre had now left Venezuela and was heading a UN assignment exploring the creation of a new centre on industrial development he could not return to Santiago un til August 1963 and Raúl therefore agreed to stay on as ecla executive secretary until the transition was complete But Prebischs career was veering toward ilpes the new Latin American Institute for Social and Economic Planning which had been gradually taking shape since Paul Hoffmans visit to Santiago two years earlier The alliance of Hoffman Herrera and de Seynes was unstoppable the UN Special Fund approved a 3 million funding package on 11 January 1962 Felipe Herrera contrib uted another 1 million from the Bank to complete a fiveyear funding package and de Seynes shepherded the appropriate resolution through the General Assembly approving the creation of autonomous regional in stitutes42 As the Panel of Experts began to fail Prebisch became increas ingly interested in the institute in May 1962 the UN named him the institutes directorgeneral for a fiveyear term and finally on 8 June he se cured eclas commitment allowing him to resign from the Panel of Ex perts and return definitively to Santiago with a new title and challenge It was a coveted honour to be invited by don Raúl to join this new auton omous centre of research and training and he staffed at choice from the ranks of ecla Hopenhayn who left the Panel of Experts with Prebisch to become secretary of the institute reflected staff expectations I have no doubt that the Institute embodies the highest hopes for Latin America43 No team was more eager to begin operations and the institute celebrated its official opening in July 1962 But much had occurred during its two year gestation There was now serious competition Unlike the idb the World Bank decided to create its own Economic Development Institute a very substantial expansion of our technical assistance activities primarily through creation of an elite corps of development officers available for field assignments44 Presented as the World Banks offering to the Alliance for I The Kennedy Offensive 373 Progress it was acknowledged to be directly competitive with the ilpes project offering a betterfinanced and sounder option for facilitating usaid programs in Latin America Richard H Demuth the director of Technical Assistance and Planning Staff for the World Bank noted that the proposal had put us back in touch with the whole US foreign aid program formulation and condescended Informally I think we should use our influence to keep the ecla program within reasonable grounds so that if as I suspect may be the case it is not wholly successful it will not be a great white elephant45 Hoffman and Prebisch felt preempted and unhappy but there was nothing to be done Latin governments wondered what the institute was to accomplish now that the new World Bank institute was created and other research institutes such as the United Nations Research Institute for Social Development were being established Two years earlier when Hoffman vis ited Santiago the concept of a regional UN institute in Santiago had seemed visionary by late 1962 the international development landscape was becoming cluttered There was also increasing resistance by Latin gov ernments which called the institutes mandate into question ecla already existed Prebisch was asked at its eighth plenary meeting in February 1962 why should the institute weaken ecla by extracting the best people celade the new Latin American Centre for Demographic Studies had been created as a separate but not autonomous unit and was working per fectly well why should the institute be privileged with a separate organiza tion when eclas entire professional staff numbered only eightyfive and why should it try to claim a status in the UN system comparable with the big UN specialized agencies Prebisch explained that the institute was to take over eclas role on the Tripartite Committee and therefore needed an autonomous character similar to that of the Special Fund and unicef led by a directorgeneral with UN undersecretary rank The institute also needed autonomy to reig nite the creative impulse of the early 1950s its governing council must comprise members acting in their individual capacity rather than as gov ernment representatives as in ecla to uphold the purpose of its creation If economists spend too much time on practical problems without being able to step back from them in order to engage in theoretical and scientific study directed to their solution they run the risk of becoming mere empir icists excessively pragmatic in their approach If on the other hand they devote all their energies to the scientific interpretation of facts and the for mulation of theories without coming down to earth from time to time the danger is that they will become enmeshed in abstractions that increasingly removed from reallife problems in Latin America46 ilpes and ecla 374 The Life and Times of Raúl Prebisch would be sister organizations expanding training and research for devel opment while maintaining the applied work of the Santiago Secretariat across the corridor Frondizi flatly opposed Prebischs plans and without the military coup that forced his exit ilpes would not have been approved at all Even so it required a special session of ecla on 2 June in New York where Raúl nar rowly beat back a challenge to replace his list of directors for the institutes governing council but only with the support of Celso Furtado now a power in Brazil who despite 1957 could not refuse the call of his old friend In the end the idb and ecla were both given full voting powers on a governing council expanded to eight Latin members to ease anxieties47 The institutes breech birth was a portent Listening to the proceedings surrounding the establishment of the new Institute the World Bank ob server to the New York meeting noted one could not help but gather the impression that the Institute is likely to be faced with more than the usual share of problems associated with the launching of any new organization The additional difficulties may be expected to stem from the deep cleavage among the States members regarding the nature purposes and scope of the organization These differences will probably exert a debilitating influ ence on the staffing curriculum and activities of the Institute and will limit its practical contributions to the economic development of Latin countries for some time to come48 ilpes could begin with the training program pi oneered by Ahumada These courses long competently taught and admin istered by ecla were definitely in demand and could be expanded and ilpess July 1962 opening event featured the standard basic course for eighty Latin American junior professionals from across the region Shorter training seminars in education and health were being planned But train ing alone was not enough to justify or carry the institute and staff looked to Prebisch for new roles anchoring the Santiago end of the oasidb ecla Tripartite Committee and turning ilpes into the leading develop ment think tank in Latin America Prebisch found ecla unrecognizably changed on his return from Washington The Alliance for Progress had absorbed its agenda Santiago headquarters although proud of its historical achievements felt bereft and somewhat out of place before the irresistible attraction of Kennedys Washington eclas situation was not unlike that of a minority political party in a coalition facing elections after its dominant partner had adopted its platform and now claimed it as its own In fact the almost embarrassing bows to ecla as pioneer and missionary at Punta del Este only deep ened a sense of malaise All the praise from Americans the UN and so forth seemed too much like funeral eulogies the centre of creativity and The Kennedy Offensive 375 action in development was moving to Washington with Latin Americans attracted into this orbit of light and power Outlying stars like Santiago were diminishing their days of glitter numbered The political impulse the agencies the money lay in the North ecla had peaked the region needed a new generation to retool the organization Prebisch was happy to be stepping down the institute was his new hope for reversing eclas decline Colleagues at ecla were more doctrinaire ar rogant and ideological and a new militancy was growing even as its pres tige waned Prebisch remarked to Mayobre Beware of the ecla horse You must ride it hard or it will buck you off49 The new dogmatism in ecla was a road that led to certain irrelevance at a time when Latin Amer ica faced growing challenges a declining share of global trade and produc tion and a loss of its privileged position in the UN and international organizations as dozens of new countries gained independence When asked by US officials about the future of ecla after his departure Prebisch noted the need for ecla to rebuild its stock of intellectual capital50 In stead of repeating old slogans from the past it should focus on areas where it had a particular competence social policy housing education and mi grant workers and microeconomic research in industry and agriculture to reconnect with the actual realities of the region But it would not be easy with the new ecla reflex of blaming the outside world for the failures of the region the violence of its attacks on the imf for example provoked even its usual critics such as Nicholas Kaldor or Joseph Grunwald into compassionate support for the beleaguered del Canto His farewell speech from ecla revealed the new direction in Prebischs thinking he now went much farther in criticizing Latin elites and linking ex ternal support with domestic change land tenure public education and income distribution Expanding markets technology and secure access to assistance and development capital were necessary ingredients of modern ization but political and social reforms were the fundamental preconditions for development without which such foreign assistance would fail51 It was a stark even gloomy assessment as polarization between Latin capitals and Kennedys Washington mirrored the internal polarization in Santiago It seemed doubly important therefore to try to reverse the negative dialogue and bitterness that had crept back into USLatin American relations during 1962 and Prebisch supported the oas calling a foreign ministers meeting to dramatize the problem and seek new directions for revitalizing the Alli ance for Progress The Kennedy administration supported the idea and Mexico agreed to host the highlevel event in October 1962 The conference opened on 22 October with a recorded message from President Kennedy praising the Alliance as the most valuable contribution 376 The Life and Times of Raúl Prebisch to the strengthening of the social and political stability in the American community and urging USLatin American cooperation for its renewal It was too valuable to let go he added and despite accomplishments the twentyone governments faced the challenge of revisiting the Charter But the delegates Prebisch included were not listening to this taped statement the real live Kennedy in Washington had just ordered a US naval blockade of Cuba and demanded the withdrawal of Soviet intermediaterange missiles from the island With the world facing nuclear peril US officials and foreign ministers rushed home in a mood of nervous excitement to confront a crisis against which the Alliance for Progress seemed minor fare The meeting stalled Prebisch waited out the standoff in Mexico City Three days later Khrushchev backed down to end the crisis and the oas meeting in Mexico City was recalled in a transformed atmosphere The US delegation entered to a packed hall and prolonged standing ovation Latins realized that Kennedys victory was shared Soviet nuclear weapons in Cuba threatened all countries in the Americas not just the US But a profound déjà vu accompanied the cheering a genuine Latin sense of relief in the Soviet defeat was shared by recognition of the new power equation facing them in the Americas Prebisch left Mexico City on 27 October knowing that the magnitude of Kennedys triumph had unleashed a new Napoleonic instinct in USLatin American relations that left little room for creativity in regional develop ment For five years since 1957 Latin America had been a priority in Washington because it was not fully secure and the Punta del Este Charter symbolized a new partnership born of necessity The October 1962 Cuban Missile Crisis was a dramatic US Cold War triumph obliterating the 1961 Bay of Pigs humiliation and restoring a US confidence rattled by Sputnik and the loss of control of Cuba US selfsatisfaction and the natural order of the Americas returned lingering selfdoubts and handwringing toward Latin America in Washington were over With Cuba neutralized as a direct national security threat Washington turned to counterinsurgency every where in the region toughening relations with nondocile Latin govern ments while strengthening conservative elites throughout Latin America resisting social change as communism Brazil had already emerged as a top US concern with President João Goulart identified as a particular threat to US interests52 Lincoln Gordon was named ambassador to Brazil assisted by Colonel Vernon Walters as military attaché to deal firmly with him Latin America was returning to its traditional status of safe US back yard in which the competing tendencies of US foreign policy mirrored the power struggles playing out in the capital a playground for an oversized and overconfident US national security establishment The momentum of change had shifted decisively to Washington as Latin America was being The Kennedy Offensive 377 reincorporated in a special embrace that much was certain and while a revival of the Alliance for Progress could not be ruled out the rules of the game would be set in Washington alone The fate of the oasidbecla Tripartite Committee Prebischs last link with Washington underscored eclas increasing marginalization Before leaving the Alliance for Progress he had agreed to head the new Advisory Committee on Planning of the Tripartite Committee after resigning from the Panel of Nine in June 1962 he had shuttled back and forth between Santiago and Washington for meetings with Filipe Herrera and Mora hop ing that the combined strength of these organizations would yield greater success and leverage with governments But now he found that the major countries 90 percent of Latin America were no longer interested they managed their own plans seeking consultants where they chose dealing with usaid and the banks and funding agencies on their own The ecla advisorygroup missions sent by the Tripartite Committee were outmoded even the small countries thar accepted them like Uruguay complained about cost and quality The turfconscious imf and World Bank had no in terest in the Tripartite Committee either which meddled in their areas of competence so to speak and usaid similarly played its own game The idb was respected no Latin American government large or small could af ford to ignore it since it was part of the big league with the World Bank and the imf But ecla did not lend money although Filipe Herrera treated them with respect and courtesy Prebisch and Mora were being reduced to play actors without resources pleading for money and attention Only three years old their Tripartite Committee had run its course As Prebisch listened to the many reports of the many meetings recalled the many letters he had promised to write and reflected on the littleness of it all he understood that a period was over even though the committee would not be officially disbanded until 1967 Prebischs friends in New York were urging him to look beyond the re gion to the global development agenda When he resigned from the Panel of Experts Raúl had no intention of leaving the Americas now he was open to offers 17 Global Gamble Friends in New York doubted that Prebisch wanted to return for good to Santiago The unravelling of the Alliance for Progress in early 1962 dismayed him all the more because it was after the Common Market his second setback in as many years But Malinowski knew that he was not resigned On 14 May after Raúl was finally officially appointed secretary general of ilpes they walked from the Secretariat up First Avenue to 69th Street and over to Central Park northward to the Conservatory Garden where the azaleas columbines and peonies were ready to bloom Prebisch wondered if he always aimed too high and set himself up for dis appointment or whether there was a natural perversity in USLatin Ameri can relations in which hostility and friendship bred contradictory results The idea of Latin America had advanced under eclas leadership during a period of US hostility in the 1950s led by governments it was true and not yet widely shared by society a regional identity was slowly forming But Washingtons reaching out to Latin America under Kennedys Alliance for Progress was killing it amidst special deals counterinsurgency and mutual recrimination Instead of good neighbors sharing strengths they were Abel and Cain feeding on differences or simply a bad marriage that mag nified only their latent defects and weaknesses Certainly nothing seemed to go right in the New World the fate of the Panel of Experts the most maddening of all since it had embodied a genuinely fresh start replacing power and envy with a practical system of development cooperation But it hadnt worked out chopped down only months after its launch exposing the ancient geopolitical frustrations of USLatin American coexistence Malinowski realized that in two hours of conversation Prebisch had not mentioned the institute once withdrawal to Santiago and the contempla tive life was evidently not a first choice for Latin Americas foremost devel opment celebrity Prebischs frustration was too visceral to accept defeat at Global Gamble 379 sixtyone with so much to be done he sought engagement rather than a secure retirement niche in the periphery Malinowski therefore pressed Prebisch to refocus toward a global rather than Latin American perspective and urged him to attend the upcoming Cairo Conference on the Problems of Economic Development in July 1962 as SecretaryGeneral U Thants rep resentative Thirtysix nonaligned countries from Asia Africa and Latin America were meeting to discuss a common approach and future program on international trade policy It would be an interesting pause from the pres ent stalemate in USLatin American relations it would be his first meeting in Africa and he might find surprises and opportunities Prebisch was skeptical He had heard it all many times before the pe rennial Third World demand for a new international trade policy which never went anywhere beyond the familiar diagnosis that he already knew as a policymaker from Argentine days Everybody could reel off the main points beginning with the failure to create the International Trade Orga nization ito as a complement to the imf and World Bank the socalled three pillars of a stable postwar order It had nearly happened Proposed at the founding of the United Nations in San Francisco in 1945 the ito promised fair and equitable global rules for trade to avoid the dangers of unregulated international markets which had contributed to the Great Depression Eric WyndhamWhite was selected as its first executive secre tary to prepare a special conference in March 1948 in Havana and devel oping countries with their special vulnerability in commodities trade were particularly looking forward to the ito as a foundation for growth and de velopment1 By 1948 however the initial enthusiasm for the ito had cooled in the US UK and other industrial economies and although a draft charter was adopted in Havana signed by fiftythree of the fiftysix participating countries ratification by the US Congress failed setting off a negative cascade and shelving the project only Liberia ratified the Charter Meanwhile in a parallel initiative beginning in 1946 also led by the US with the approval of Britain and the other Atlantic allies a much smaller group of twentythree Northern likeminded countries began tariffcutting meetings in Geneva By 1947 these partners created a new organization named the gatt General Agreement on Tariffs and Trade Although technically subordinate to the ongoing ito process with Eric Wyndham White as the gatts executive secretary while keeping his original ito title it flourished while the Havana Charter collapsed The reason was sim ple the twentythree industrialized members were rebuilding after World War II and they needed an organization to promote trade and settle dis putes They were not concerned with the needs of developing countries and still controlled Asia Africa and Latin America2 Instead of the universal 380 The Life and Times of Raúl Prebisch membership foreseen for the ito the gatt addressed the interests of the advanced powers lowering trade barriers in industrial goods and services where they had a comparative advantage while ignoring agriculture and tex tiles where developing countries had an advantage With the ito definitively dead the balding doublebreasted Wyndham White personified gatts narrowness and Atlantic focus But he was ef fective presiding in 1949 over a successful tariffreducing conference in France others followed By 1956 Germany and Japan had become mem bers and the gatts small but highly competent secretariat was firmly and permanently established in Geneva Instead of a single global trade organi zation as envisaged in 1945 a fissure had opened up in the international community between the gatt and the rest Virtually all developing primarily nonWestern countries agreed that gatt served the interests of the industrial powers very well indeed here they were in agreement with the satisfied founders of the gatt The problem was that it lacked a broader framework linking trade and development including stable and acceptable prices for agricultural exports as well as measures to support industrialization It was not meant to be fair WyndhamWhite rejected Prebischs Latin American Common Market as closed regionalism while welcoming the eec despite its protectionist Common Agricultural Policy and he suggested that developing countries join the gatt so long as they accepted the priorities and rules of the founding members As the gatt became a core feature of the Atlantic community and Japan deepening postwar cooperation among the Western industrial pow ers it increasingly became a target of Third World criticism As the 1950s progressed these countries were convinced that systematic constraints un dermined their economic progress even when they followed sound devel opment policies declining terms of trade lack of investment capital as compared with developed countries steadily declining aid disbursements rising debt rising trade barriers in rich countries to curb competition from Third World producers shipping and insurance services outside their con trol In other words the international economic institutional structure set up after World War II and managed by the advanced Western states oper ated primarily in their interests and to maintain this state of affairs they controlled the key agencies particularly the imf the World Bank regional banks and the gatt This image of skewed power relations and structural unfairness of them versus us was denied by the industrial countries which viewed the prevailing gattbased system as sound3 To them the chief obstacles to Third World development were internal once a favour able business climate was restored by their own governments there was nothing stopping economic modernization certainly not WyndhamWhites Global Gamble 381 gatt or the other big agencies The market worked the cry for socalled structural changes was frankly misguided and played into the hands of Soviet leader Nikita Khrushchev busy currying influence with developing countries with repeated calls for reviving the ito Prebisch asked Malinowski why the 1962 Cairo Conference should produce results when previous efforts had failed so predictably Latin Americans had had a particularly bitter experience since 1945 given their experience of the collapse of wheat coffee sugar and metal prices during the 1930s they had been the region most committed to the success of ito after the failure of the Havana Conference Latins used their voting power in the UN twenty out of fityone seats in the General Assembly to advance trade and development Throughout the 1950s they were strong enough to strike new committees with impressive names but never able to make them effective against the opposition of the developed countries satisfied with the gatt4 Latin governments also tried a regional USLatin Ameri can approach the proposed InterAmerican Council on Trade and Pro duction for example but that also failed And Prebisch himself had a ringside seat earlier in 1962 when Washington flatly rejected the trade agreement it had promised at Punta del Este5 Looking back Prebisch mused this huge effort in international trade policy had only yielded more UN bureaucracy and frayed nerves Malinowski was adamant Prebisch needed a break from USLatin American relations and should go to Cairo he was too consumed by Washington to note important changes building in the global system and getting out would do him no harm See for your self he advised After resigning from the Panel of Experts in early June Prebisch agreed finally to attend the conference and it was quite a revelation Impressively prepared attended and organized without inflamed NorthSouth rheto ric it resulted in a declaration that set out the main features of a common program dealing with both internal and external obstacles to development and endorsed a UN conference to deal with important questions relating to international trade primary commodity trade and economic relations between developing and industrial countries The Cairo Conference in fact was more than stimulating apart from introducing new faces and ideas it heralded a change in power relations Since 1945 the developed countries had controlled the global economic agenda and they had every intention of keeping things this way From the US Treasury in Washington francophile Douglas Dillon had further strengthened USEuropeanJapanese cohesion by leading the creation of the oecd Organization for Economic Cooperation and Development with a secretariat in Paris as an instrument for caucusing and research and 382 The Life and Times of Raúl Prebisch opening the Dillon Round of the gatt in which the eec for the first time voted with one voice6 On the other side of the NorthSouth divide the 1962 Cairo meeting brought together another group of countries around a common agenda while still much weaker than the oecd collec tively these thirtysix developing countries of Asia Africa and Latin Amer ica had the potential to influence if not yet shape the trade and development debate It was a key test of coalitionbuilding the failure of all previous UN trade initiatives during the 1950s had resulted from an in equality of bargaining power Cooperation among Third World countries across the three continents still in its infancy to be sure therefore had im mense potential At its meeting in Belgrade in 1959 the NonAligned Movement nam which had been founded in 1955 had agreed that trade and development required international action and that the disci pline and organization at Cairo was a major step forward in reshaping global politics Dozens of new countries were joining the international community with the end of colonial empires and trade and development reemerged after 1959 to become the biggest issue in NorthSouth rela tions fuelled by the declining share of the South in world trade7 The Cold War standoff between nato and the Warsaw Pact was of secondary impor tance to the Third World President Kennedys 1961 Address to the Gen eral Assembly was infectious catalyzing international interest in Third World progress and elevating the UN Decade of Development into an international priority for the 1960s8 Two weeks after Prebisch returned from Cairo ecosoc agreed on 3 Au gust to recommend the convening of an international trade and develop ment conference virtually guaranteeing General Assembly approval for unctad in fall 1962 Malinowski had correctly diagnosed the new interna tional dynamic Cairo demonstrated that developing countries could have an impact if they worked together From his key positions as secretary of ecosoc and the Economic and Finance Committee of the General Assem bly he had become an influential lobbyist urging delegates to unite on votes and resolutions aimed at global income redistribution and to caucus as a group in order to offset the power of the developed countries Faced by de termined Third World resistance Washington reversed its opposition to an international trade conference in order at least to influence what it could not prevent With that the remaining global holdouts also acquiesced9 But Malinowski wanted more unctad would require strong leadership and he urged Prebisch to consider taking on this new global challenge He called Prebisch repeatedly in Santiago and Washington and lobbied dele gates from Asia Africa and Latin America unctad is a top priority he argued with Prebisch the ideal head During his thirteen years as executive Global Gamble 383 secretary of ecla his global reputation and network of supporters were un rivalled by any other Third World figure unctad presented an extraordi nary opportunity to project his concept of the NorthSouth Dialogue to the international level and to forge a new organization just as he had molded ecla into a powerful regional secretariat In fact the parallels between re gionbuilding in Latin America after 1949 and this new challenge were in triguing under Prebischs direction unctad could be a global version of ecla in its diagnosis of structural inequity and global transformation the need for planning and proposed remedies Prebisch acknowledged that ecla had paved the way for the creation of unctad It was an idea he said gradually being deployed through the United Nations on the basis of activities of ecla10 Theoretically unctad drew on and extended eclas core concepts of unequal exchange and asymmetry to NorthSouth rela tions Tactically it offered a global alliance for progress which focused on trade stability and access oda and regional integration Would Prebisch Malinowsi continued agree at least to receive a Third World delegation After the Cuban Missile Crisis and the failure of the Tripartite Com mittee Prebisch notified Malinowski that he was open to an unctad offer and representatives from Brazil Argentina and Yugoslavia were soon in Santiago with a formal request to nominate him to head the unctad Preparatory Committee11 Furtado flew in from Rio Alfonso and Hernan Santa Cruz mobilized the Chileans After listening and speaking again with Malinowski Prebisch decided to gamble Im not asking for this post But if it is offered to me I will consider it Prebisch then visited New York for an onthespot assessment and further discussions with friends after the UN formally approved unctad on 8 December the Feast of the Immacu late Conception in Latin America and the best of omens12 The mood at UN headquarters was encouraging It was a tantalizing challenge to turn this mouthful of acronym unctad into a major showdown for equity within the global community Without lobbying personally I did not move a finger he later insisted Prebisch left no doubt with Malinowski and his friends that he wanted the position But his nomination was contested The UN search for a secretarygeneral to head unctad underlined a deep split between the Western industrial countries on the one hand and the developing world with the Socialist Bloc on the other The position was potentially significant but only Australia Canada and New Zealand among the developed countries had voted in fa vour of the unctad initiative against the opposition of the US Britain France Italy Spain Ireland and South Africa Japan the Netherlands the Scandinavian countries and the French excolonial states in Africa had abstained After caucusing the Western countries decided on Australian Sir 384 The Life and Times of Raúl Prebisch John Crawford as their nominee Malinowski was so detested in Washington that his vocal campaigning for Prebisch stiffened US resistance U Thant stalled and opposition to Prebischs candidacy mounted in the first weeks of 1963 Developed countries claimed that WyndhamWhites earlier refusal to support the Latin American Common Market had embit tered Prebisch toward the gatt deepening suspicions that he was too much his own man unwilling to compromise and a critic of free trade Prebisch waited anxiously in Santiago as silence from New York continued into the third week of January 1963 Since unctads first Preparatory Committee meeting had been called for 23 January the deadline was acute Only that morning at the very last moment could U Thant call Prebisch by telephone to offer the position of secretarygeneral on a fixed term contract until 1 July 1964 since there was no assurance that a per manent institution would be created Later that day U Thant cabled to apologize for this lack of formality in not sending a formal written offer in advance outlining the terms and conditions of his appointment The de cision had to be made in a great rush he noted in order to meet the impatience of many delegates The note expressed his pleasure and grat itude at Raúls acceptance of the offer I am convinced that your pres ence in this strategic position will be a most important factor in the success of the Conference13 To which Prebisch responded with my full apprecia tion for this new responsibility and to de Seynes that your continuous support and guidance will be more necessary than ever Wladek Malinowski circulated an enthusiastic announcement to his associates everywhere in the UN system I hope your health is improving U Thant had noted and I look for ward to seeing you soon in New York when we can discuss some administra tive and material arrangements Prebisch had been bothered by arthritis during December and responded Expect to be normal again in March But he was already on the telephone and settling affairs in Santiago for a much earlier appearance in New York surprising the First Preparatory Committee by attending its closing session on 31 January Malinowski had urged Prebisch to come to New York as soon as possible to prevent unctads opponents from gaining the initial advantage Arthritis or not Prebisch could not risk delay he had to assert his leadership immedi ately by taking control of the Preparatory Committee at its first New York ses sion This body of thirty country representatives from the industrial powers developing countries and the Socialist Bloc was one of two bureaucratic I Global Gamble 385 devices created to slow down and micromanage the new initiative the other was a separate group of experts to study the creation or not of a perma nent trade secretariat after unctad The meeting had started out well enough with friendly cooperation among the three camps only to witness a sudden cooling off to the point of deadlock as their divergence in expecta tions surfaced Leading developing country proponents like Brazil and In dia proposed nothing short of a new approach to NorthSouth relations the US and its allies were very reluctant participants in any case and doubly an noyed with Moscows loud and opportunistic backing of the Third World All of the disparate forces in the global economy quickly surfaced magnify ing the dilemma of compromise toward mutually acceptable decisions Ap pointing Mexican Cristóbal Lara as his deputy in ilpes Prebisch rushed to New York to prevent an initial failure that could undermine the entire initia tive In fact his unannounced arrival to a tense scene of hostile glares and ironic asides was providentially timed Raúls impromptu address as their new secretarygeneral calmed the encounter hailing the historic moment appealing for cooperation and lightening the ambience from approaching disaster to an auspicious if fragile beginning But while the unctad initiative looked more serious with Prebisch in New York the challenge was immense In 1950 when he assumed the leadership of ecla he had arrived to an existing if threatened organiza tion so far not even the location of unctad had been decided Before leaving Santiago Prebisch had cabled ahead to David H Pollock chief of eclas Washington office to meet him in Idyllwild Airport and accom pany him for the next year as personal assistant Be where I am he re quested simply for he needed Pollocks skills and unqualified loyalty to pull off unctad A genial and inoffensive Canadian and Washington in sider he could recall and summarize conversations and meetings with startling accuracy his role was to ensure an accurate record of meetings in New York and to monitor developments during the weeks Prebisch would be absent in Santiago14 Other than Pollock he had neither staff nor office not even a desk or a telephone four thousand square feet of office space would be available on the twentyfourth floor starting 1 March when unicef moved out The UN had set aside only 15 mil lion for financing the Conference during 196364 with Secretary General Prebisch and his immediate staff limited to 64400 in 1963 six to ten persons with up to a dozen consultants for nine months and 16000 in 1964 He had just over a year to hold the biggest event in UN history which developing countries considered the most important inter national gathering since San Francisco in 1945 and which Western coun tries wanted to bury 386 The Life and Times of Raúl Prebisch Prebisch had the formal position of unctad secretarygeneral but his actual authority was unclear within the New York hierarchy The two top UN powerbrokers in the Department of Economic and Social Affairs desa were Philippe de Seynes and his deputy Jacob Jack L Mosak di rector of General Economic Research and Policies Mosak and de Seynes were very different American versus French equally convinced that their countries approached perfection with past errors both minor and commit ted in good faith Mosak suspicious of Prebisch de Seynes a personal friend Mosak workaholic and earnest de Seynes relaxed and worldly Mosak square de Seynes sophisticated Mosak handson manager de Seynes cerebral tactician Mosak heterosexual de Seynes gay with Mosaks unselfconscious superiority of manner balancing de Seyness irritating ar rogance of tone But on one point they agreed maintaining their power in the UN Secretariat in New York Just as Prebisch was known as an advocate of decentralization in the UN system Mosak and de Seynes blocked any attempt to reduce their desas role Prebischs persistent attempts to wring greater autonomy for ecla from New York had been resisted on grounds of accountability and Mosak and de Seynes knew that unctad would provoke another chal lenge15 Neither they nor their governments in Washington and Paris had supported it but now that it had been approved they were determined to control it In practice this meant subordinate status for the new unctad within desa reporting to ecosoc Otherwise Prebisch could emerge as a rival power within the UN system Just as certainly Prebisch knew that unctad had to escape the clutches of Mosak and de Seynes to be considered legitimate by developing coun tries that it had to be autonomous from desa and that the title of secre tarygeneral the only other official in the UN system apart from U Thant to be granted this special recognition had to be matched by genuine au thority In fact developing countries had specifically demanded the title of secretarygeneral for the new unctad chief to keep it at arms length from desas control and ensure that Prebisch not become a figurehead for a Mosakde Seynes operation They also insisted on equitable staff appoint ments only two of seventeen officials in desas International Trade Rela tions and Commodities Studies sections were from developing countries one each from India and Indonesia with no representation at all from either Africa or Latin America This internal war began Monday morning 6 February when Prebisch and Mosak met for a first round of negotiations Mosak was confident and expansive and very much in command controlling staff and research Global Gamble 387 appointments in trade and development within the secretariat16 Even if Prebisch wanted senior people like Sidney Dell and Wladek Malinowski the two persons he knew Prebisch most needed he would have to talk to Mosak and de Seynes for their secondment from desa Mosak had been in charge of unctad preparations since its UN approval on 8 December and he wanted to remain so This Bureau he informed UN staff on 9 Janu ary has responsibility for the United Nations Conference on Trade and Development Having organized the first session of the Preparatory Com mittee in New York he was already deep into preparations for its next meeting in Geneva 21 May29 June contacting staff and experts and re questing support from other agencies The new Group of Experts was scheduled to meet on 18 February again under Mosaks direction17 His expectations for unctad were modest and well known he anticipated declarations of principles and a pious statement of intent but no new international trade organization at best a compromise committee or body reporting to ecosoc18 Such a solution essentially a UN headquar terscontrolled initiative would strengthen desa and gain the backing of the US France and the other industrial countries The one thing the US did not want was a creation of new machinery he noted The US like the other industrial nations was satisfied with gatt its rules are wellknown it has developed a substantial background of experience and most impor tant of all policy control is dominated by the developed western coun tries He compared unctad with the objections to the sunfed debate Special UN Fund for Economic Development of the 1950s where the de veloping countries finally had to content themselves with Paul Hoffmans Special Fund preinvestment facility If there was such tough infighting about 100 million being channelled through an aid agency without weighted voting imagine the opposition to an organization in which over 100 billion will be involved19 In fact Washingtons first priority accord ing to Mosak was preparing a new round of gatt negotiations to begin in 1964 to preempt eec protectionism So far Mosak had the momentum he promised Prebisch most of the staff required for the Trade Conference he advised economies Prebisch should limit travel to a few key countries perhaps half a dozen He had matters well in hand Prebisch should feel comfortable returning to Santiago to prepare for the arrival of José Antonio Mayobre as the exec utive secretary20 By 8 February when Raúl left for South America via Washington nothing of substance had been decided Prebisch realized that Mosaks compromise position on unctad was de facto as unaccept able to developing countries as to himself But he also realized that Mosak 388 The Life and Times of Raúl Prebisch was in over his head and that events would soon work in Prebischs favour he therefore avoided a direct confrontation in the interest of maintaining an essential working relationship Mosaks bid for leadership rapidly dissolved when he could not recruit leading economists and experts to unctad from developing countries At first overly optimistic the bigger the net the more fish can be caught he had joked the results were embarrassing Salant Myint from Burma and Nigerian economist Okigbo among others declined his invitation The elevencountry Group of Experts assembled by Mosak in late February was deadlocked between the oecd US UK Netherlands and Denmark and the rest Brazil India Lebanon and Mauritania for the developing countries and the ussr and Romania for the Socialist Bloc A second meeting from 25 March to 5 April with the same groups but different economists ended in the same stalemate With Prebisch away Mosak realized he could not fill the leadership vac uum in New York He was a capable and respected official his class at the University of Chicago producing four Nobel Prize winners while a gradu ate student he had worked with the Cowles Commission which pioneered the linkage of economic theory and mathematics and Mosaks 1944 book General Equilibrium Theory in International Trade was favourably reviewed as a workmanlike contribution Although an orthodox economist and un sympathetic to the structuralism of Prebisch Mosak was not in the rigid neoclassical mould of what the Chicago School would become in the 1960s But his tentative professional credibility was additionally handi capped by overly intimate relations with controversial agencies of the US Government during the McCarthy period By early April Prebisch was fulltime in New York and had taken charge of the unctad Preparatory Committee The drift was over He rented a small suite in the Beekman Towers Hotel within walking distance of UN headquarters and the new offices were ready The legitimacy of unctad would depend on the quality of its work and the international perception of Prebischs fairness as secretarygeneral and he therefore began by as sembling the nucleus of a future staff a trusted inner core that could di rect his work plans free his time for the lengthy consultations required to locate areas of consensus prepare the preconditions for compromise on key points plan the agenda and organize the tactical activities of the con ference In February he had requested Sidney Dell one of the UNs most capable economists The two had become close friends when Dell spent three months in Santiago in 1958 working with him on regional integra tion Dell had entered the UN in 1948 on David Owens encouragement with qualities of intellect and ethics heralded by a brilliant first at Oxford Global Gamble 389 in 1939 and subsequent wartime service in the British Army Tall and handsome incisive and decisive Dells commitment to global equity was unwavering and he had risked his career by defending UN victims of McCarthy But in addition he was one of desas senior economists who could also direct major projects and had risen rapidly within the Secretar iat in New York For Prebisch Dell was as vital on the substantive side as Malinowski was on strategy both serving as first among equals in the unctad team Although Dells relations with Mosak were correct if not cordial unlike those of Malinowski whom Mosak detested winning Mosaks consent for his release from other duties in desa proved difficult and Prebisch was finally forced to appeal directly to de Seynes who agreed to a oneyear leave on 5 April21 Malinowskis situation was more complicated Prebisch needed a deputy to absorb some of the administrative work and travel pressures he wanted Malinowski for this key position given his Third World contacts But nei ther the US nor senior UN officials would agree22 Seymour Finger from the US delegation warned that if Malinowski was formally nominated the other two camps developed countries and Socialist would put forward their own candidates and veto the others unless Prebisch accepted all three Faced with this hostility he dropped the idea of a deputy and in stead named eight Executive Assistants on 25 April to function as unctads informal steering committee With this number an acceptable geographic and professional balance could be found for a heterogeneous group that included Malinowski Poland and Sidney Dell UK but also J Mosak and S Shevchenko to reassure the US and the ussr Perce Judd Australia R Krishnamurti India Samuel Lurie Belgium and AH AbdelGhani Egypt Prebisch as an Argentine national represented Latin America Krishnamurti had arrived in April as with Dell Prebisch had asked that he be seconded in this case from ecafe in Bangkok given his proven abilities and accomplishments in Asia Perce Judd was one of the most knowledgeable specialists in international commodity markets and was named secretary of the Conference To these key secondments Prebisch added consultants Alfred Maizels UK Lal Jayawardena Sri Lanka Paul Berthaud Switzerland Christopher Eckenstein West Germany and others in a balance reflecting the subtle nuances of NorthSouth and East West divides as well as functional expertise Prebischs own office had a fourperson executive committee comprised of Jack Mosak in charge of Research and Policies and S Shevchenko Special Policy Problems while Sidney Dell Final Act and Report and Malinowski Coordination reassured developing countries While this lineup suggested the dominance of Western delegates Prebisch ensured that 390 The Life and Times of Raúl Prebisch developing country experts held key substantive positions Krishnamurti for example was in charge of the central issue of unctad the creation of a new institution and his choice of upwardbound Diego Cordovez Ecuador as expert was applauded in Latin America Prebisch reached back to ecla for David Pollock and Jorge Viteri de la Huerta Ecuador as special assistants in charge of political and general conference organiza tion and Bodil Royem from eclas Washington office managed the office as administrative assistant This was the initial core staff thirty in all by the end of 1963 including secretarial and administrative staff None were per manent appointments23 The nonNew York residents stayed at the Gorham or more modest but convenient Tudor hotels and worked tentotwelvehour days in a spirit of growing camaraderie Twice a week they fled the UN cafeteria for city res taurants La Cabana and Brazilian Pavilion Latin favourites or Tandoori and Madras Krishnamurtis choices alternating with the pricier Russian Tea House and Tobeus or the Kitchko Ramanyana Grove Street Café and the everpopular Stage Deli on Broadway for variety Prebisch would arrive at his office before his staff and still be there when they left a hard but fair boss who wrote his own reports in longhand retained a code of formality never mentioned his personal life and showed no indication of stress There was now a sense of urgency The date and location of the conference to be known as unctad I was finally secured Geneva at the Palais des Nations 23 March16 June 196424 But the Preparatory Committee would meet again in late May and for a final session before unctad I on 215 Feb ruary and they also required a mountain of documentation With its identity established the unctad team developed momentum and progress was rapid The timing was right the best minds around the world mobilized for this new focus of international development Leading consultants and aca demics took note and clamoured to be involved25 Special international workshops and research enriched the Groups of Experts meetings sched uled for Geneva in early July and New York on 1924 The World Bank imf gatt UN headquarters staff the UN regional commissions UN specialized agencies government departments and research centres cooperated in a deepening sense that unctad was a serious new international initiative26 This tide of public and media support for unctad provided a positive backdrop for cooperation across camps when Prebisch summoned the Preparatory Committee in Geneva for its second meeting on 21 May9 June 1963 Unlike the first of these sessions in New York it was marked by I Global Gamble 391 consensus from beginning to end Industrial country delegates were pleased by the businesslike conduct of the session the background work of Prebischs team was noted approvingly and agreement was reached on the five substantive themes for unctad I trade in commodities trade in manufactures financing and invisibles shipping and insurance related to trade new institutions and regional problems What had previously been seen as impossible highquality conference documents in all the UN languages by January 1964 in this vast area where many newly indepen dent states lacked adequate documentation no longer appeared an insurmountable task The meetings main achievement however was the birth of the G77 Group of 77 referring to the developing countries that voted for the Gen eral Assembly resolution authorizing unctad in 196227 At Geneva dele gates from Asia Africa and Latin America adopted a resolution pledging cooperation in the common cause of a new world order From that very first moment Prebisch noted I came to the conclusion that the similarity of concerns of problems and of ways of tackling them called for a uniting of wills and search for common methods of action to strengthen certain trends which had for some time been taking shape in the United Nations General Assembly The insight gave me enormous encouragement and opened new perspectives he added for it meant that a group identity the G77 was becoming a reality A historic opening for institutional innovation was taking place it seemed with the glimmer of an emerging counterweight to the geocentric approach of industrial countries28 Although still embryonic compared with the political and security under pinnings of the oecd the emergence of the G77 heralded the formation of a group system of negotiation within unctad Group A Asia and Africa together with Group C Latin America comprised the G77 while Group B included the Western industrial powers in the oecd The Moscowled coun tries of the Socialist Bloc became Group D There were anomalies Yugosla via and Israel needed a home and were taken in by the Asian group for example and New Zealand was uncertain for a while about whether it belonged in Group B or the G7729 But it seemed that developing countries from Asia Africa and Latin America were serious about a permanent nego tiating instrument Having come into independence in single file without such a caucusing device they were collectively vulnerable now with the G77 as a forum to prepare negotiations the developed countries would no longer hold all the cards in international trade and development A political breakthrough in USussr relations complemented these posi tive developments in international development On 5 August 1963 the superpowers signed the historic Nuclear Test Ban Treaty in Moscow and 392 The Life and Times of Raúl Prebisch opened a new period of détente Reduced fears of nuclear war would allow greater attention to poverty reduction and open more possibilities for devel oping countries to focus on development Kennedy and Khrushchev had stepped back from the brush with nuclear war during the Cuban Missile Crisis there were rumours of a CubanUS rapprochement as Operation Mongoose fizzled out and signs that Kennedy would control the escalation under way in Vietnam It was a blessed summer when idealism and support for international development had peaked Prebisch was surely not alone in referring to this first phase of unctad as a great adventure30 Prebischs next task was selling unctad finding areas of agreement and building a coalition of supporters in every continent especially outside of Latin America In the end he chose thirteen essential capitals for a 40 days around the world tour between 1 September and 9 October to be followed by visits to Washington and Ottawa31 Dell and Pollock prepared the trip with introduction and questions for governments sent in advance from New York and both men accompanied Prebisch as he departed for Australia Krishnamurti joined them for the Asian leg of the tour In each capital meetings with senior officials would begin at 900 am and continue in the afternoon until 500 pm Formal lunches and dinners with ministers vice presidents and presidents lasted late into the evening Prebisch never took notes during the interviews or carried a briefcase and a pattern emerged in the interviews where Raúl opened the discussion with general analysis and statesmanlike questions while Dell would take up the direct probing or embarrassing followon topics Back in their hotel Dell and Pollock would summarize the discussion and highlight key policy or procedural points dic tating onto the green plastic discs then used instead of tapes that were mailed to headquarters for transcribing prior to their return Lumbering DC7s flying between capitals contributed to an exhausting trip but Prebisch could sleep on airplanes and was in fine fettle as they reassembled in New York to evaluate their findings Hosts seemed confused on protocol No minister in Australia met Prebisch as back payment for defeating Sir John Crawfords bid for unctad lead ership but in India he was regally received and driven from New Delhi to the Taj Mahal for a midnight viewing under a full moon Moscow sent out a big black Chylka in the most elaborate reception of all the fifteen coun tries complete with side visits to the Hermitage in Leningrad and for Dell and Pollock the Bolshoi Ballet Warsaw displayed its Old Town rebuilt from the war with a procession of vodka toasts and heavy food which fi nally provoked Prebischs normally ironclad stomach When a local doctor who treated him refused payment Raúl presented him with the two bottles of French cognac he had received earlier in the day as a welcoming gift Global Gamble 393 from his hosts He then returned to the classics that he always read before sleep Yugoslavia was all business Cairo strictly ceremonial intent on secur ing Deputy Premier Abdul El Khaisani as president of the Geneva Confer ence In London Edward Heath and Harold Wilson Tory chancellor of the exchequer and leader of the Labour Opposition respectively both of fered Prebisch his most hated food steak and kidney pie Japan refused any individual initiative invariably siding with the US UK or Germany while India insisted on a visible leadership role Prebischs tour underlined the polarization of views between the G77 and industrial countries the developing countries were spearheading the creation of a comprehensive and highly visible trade policy initiative under the UN banner against a deep and broad opposition Prebisch addressed this issue frankly when he met informally with the Second Committee of the UN General Assembly for a debriefing after returning to New York Al though there were certain differences among Group B countries particu larly between the UK France and the US the industrial countries were in general agreement on main issues such as commodity agreements supple mentary financing and new machinery and they all supported gatt The developing countries were not nearly as organized as the oecd but they were in broad accord on the prevailing unfair rules of the game in interna tional trade and all viewed the imf the World Bank and the gatt as rich mens clubs32 There was Prebisch noted a growing anxiety among developing coun tries as their earnings from trade continued to fall relative to the industrial countries and the need was felt for longterm changes to create a new or der in the international economy33 The existing machinery centred on gatt lacked universality of membership and scope and while it benefited the industrial countries it was deficient for the G77 Instead the general framework the longterm relationship of trade and development had to be changed so that the market functions properly not only for the big countries but also for the developing countries in their relations with the developed Presently Prebisch noted there is a conspiracy against the laws of the market that cannot be met by shortterm gimmicks unctads challenge would be to produce an international economic policy that had no historical parallel but which the world needs today and which is possi ble for both the big and developing countries34 Prebisch reassured the industrial countries that any new institutional structure for achieving this new order would have to be a compromise position between Moscows ito concept which Group B would clearly veto and staying with the gatt which the G77 would find equally ob jectionable Such a compromise could take many forms but after his trip 394 The Life and Times of Raúl Prebisch Prebisch was thinking about a permanent unctad as a unique and auton omous agency within the UN Periodic trade conferences like unctad I in Geneva every 23 years would serve as a global forum and a permanent secretariat with a standing committee would set targets develop and pro mote policies and evaluate results The gatt Prebisch suggested would continue as an essential part of such machinery without losing its auton omy or role adapting itself to the problems of developing countries35 This update frank and provocative in its call for a new order was more favourably received than Prebisch had anticipated and other good news followed a week later in early November The acerbic plaintalking George Ball US undersecretary of state praised his work as extremely valuable and thoughtprovoking and noted the obligation on the part of the de veloped western world to find solutions in a sympathetic and constructive manner and his agreement that developing countries must increase their share of world trade36 George Woods president of the World Bank was even more supportive In a cordial welcome at a lunch given for Prebisch in Washington he stressed the importance of unctad for the World Bank itself Something is basically wrong when the annual gross lending by our Bank can be wiped out by commodity price reductions37 Such a counter productive situation should be tackled and he hoped for unctads suc cess in Geneva After all although aid could facilitate trade the reverse was also true unless World Bank customers could export their credit worthi ness would decline and constrain future lending Protecting developing countries against sharp reductions in trade earnings simply made good economic sense To Prebischs question about repeating his argument to the Geneva conference Woods not only committed himself to attending but said that I would hope to make an even more positive contribution38 Encouraged by positive news and widespread support Prebischs unctad team turned to the completion of a report of the secretarygeneral To wards a New Trade Policy for Development Document overload was al ready a corridor complaint a digestible focus had to be created out of the myriad background papers and technical data Prebischs Report would therefore shape the debate in Geneva as the one paper every delegation would read It had to be relatively short offering a statement of the problem a framework and a general summary of G77 demands It had to articulate the demands of the G77 while at the same time outlining a realistic agenda acceptable to the Western and Soviet Bloc countries The first draft was ready by midDecember to be celebrated with two bottles of champagne waiting under Prebischs desk for the event Approaching midnight as the last pages were completed and an early blizzard swirled around New York headquarters Prebisch asked Jovenes where can we chill these two bottles Global Gamble 395 at this late hour The cafeteria was closed and a search located no ice any where in the building But the everresourceful PollockViteri duo found an empty office on the 39th floor and chilled the champagne by hanging the bottles from a window with cords from Venetian blinds The driving snow soon accomplished its task and they returned triumphantly ingenuity at midnight Prebisch exclaimed Prebisch felt he had hit the right notes in his report I was able he later reflected to submit to the First Conference a report perhaps the sole virtue of which was that it expressed in systematic form those common concerns of the three regions of the developing world and served as the basis for the organization of action which was both urgent and unavoid able He followed the same working style in unctad as in ecla or the Argentine Central Bank every sentence and topic in the report was fought through by Dell and his staff Prebisch called special staff meetings to final ize a common secretariat outline for each chapter he requested written memoranda from staff members and consultants to debate different theo retical and regional perspectives and he invited both staff members and external persons from all sectors ranging from UN ambassadors and public or private sector officials to ngo academic and media representatives But at the end he sat down and wrote the text in a longhand that only Bodil Royem could decipher39 The core concept of the report was the trade gap impeding the eco nomic prospects of developing countries Prebisch developed his argument by endorsing the 5 percent minimum real economic growth rate accepted for the First UN Development Decade and demonstrating that success re quired an annual export increase of at least 6 percent per annum G77 countries were however far from this goal In real terms he continued the effective purchasing power of Third World exports had grown only 2 per cent a year since 1950 If export and import trends resembled those in the past they would face a large and growing trade gap estimated to reach a figure of 20 billion by the end of the decade Here was the dilemma the developing countries would either have to obtain 20 billion per annum in financial flows during the remainder of the 1960s or else increase their share of exports in commodities manufactures or services to fill this gap The body of the report therefore presented policy alternatives or what Prebisch termed a coordinated international strategy of converging mea sures for unctad I to debate and hopefully approve One cloud however remained The shock and consequences of Presi dent Kennedys assassination on 22 November 1963 had undermined the previous optimism about international development and NorthSouth rela tions Kennedys assassination elevated VicePresident Lyndon B Johnson 396 The Life and Times of Raúl Prebisch to the presidency and Johnson had been skeptical about the Alliance for Progress with its rhetoric of land reform and social policy Personnel changes also suggested a harder line Dillon left the US Treasury for Wall Street Isaiah Frank left the State Department for Johns Hopkins Univer sity and Thomas Mann succeeded Edwin Martin as assistant secretary of state and coordinator of the Alliance When he received a cable asking whether the US should support Prebisch as the new secretarygeneral of unctad Mann rolled his eyes Prebisch ruined Latin America But who cares about unctad It doesnt matter in the slightest what is going on in the UN40 From his first visit to Washington as unctad secretarygeneral in February 1963 Prebischs reception had been mixed since the US had only reluctantly accepted the initiative in the first place he had no illusions about its enthusiasm for the new organization But during Kennedys ten ure there was an opening for new initiatives reflected in a range of views on unctad within Washingtons foreignpolicy community If some US offi cials were consistently negative such as Lincoln Gordon US ambassador to Brazil since 1961 maintaining that domestic policies in developing countries were the entire source of the problem there were others such as Isaiah Frank who agreed that the industrial countries could not immu nize themselves against what is happening in developing countries and that a protracted polarization between rich and poor was a longterm threat to global and US security41 Most important Kennedy possessed the charisma to lead global change with his violent departure his underlying commitment to international development no longer animated the US capital quite as much Spurred by antiUS rioting in Panama Mann called all the Latin ambassadors together to redraw US policy toward the region there was no mention of the Alliance for Progress democracy or social re form Washington tightened its pressure on President João Goulart in Brazil The hopes of a CubanUS rapprochement prevalent in the months before the assassination faded Instead of deescalation in Southeast Asia the first US bombing raids on North Vietnam had just begun with the first combat troops about to arrive in March Prebischs unsuccessful meeting with Walter W Rostow chair of Johnsons Policy Planning Council was symptomatic of the uncertain but changing atmosphere in postKennedy Washington Rostow whose Stages of Economic Growth A NonCommunist Manifesto made him the resident White House in tellectual had formed a Modernization Institute in Special Group CI CounterInsurgency and was now a key Johnson advisor on Vietnam na tionbuilding and NorthSouth relations in general The interview was an important opportunity for Raúl to introduce his unctad I report and to lis ten and respond to US concerns Instead Rostow declared that unctad was Global Gamble 397 on the wrong track altogether that Latin America countries for example should rely more on importsubstitution industrialization than trying to export manufactured goods to foreign markets42 Prebisch thought he was joking import substitution within the closed markets after the Great De pression had produced Latin Americas current dilemma of protected and inefficient industries for local markets and asked whether this was US trade strategy in the current Kennedy Round of the gatt Challenged and unable to respond Rostow transformed into Mr Hyde and his earlier professorial tone turned to threats The best advice for developing countries was reme dying their own internal deficiencies and helping the United States develop new technologies with faster growth In this way old industries like textiles will gradually wither away on their own and transfer production to the Third World In any case the US administration was unable to do much for unctad since protectionist lobbies are protected by Congress and fiats es tablished by the State Department can do little about it The final meeting of unctads Preparatory Committee met on 215 Feb ruary in a curious humour On the one hand the interest was extremely high all thirtytwo members attended with observers from practically all UN members and international organizations Tempers on the other hand were short it looked like the General Assembly in the poorest of moods Intended to deal with strictly procedural issues for the conference which would open on 23 March the thirtytwo delegates could not resist jocular asides as they sorted out the general committee main committees committee chairs and so forth no fewer than twentyeight vicepresidents had to be selected and lightly barbed comments quickly intensified into a full display of global rhetoric Despite or because of this tension unctad I had momentum and was eagerly awaited Expectations were high the World Bank viewed it as too important to be allowed to fail and George Woods was a bellwether fig ure in international development in the US capital On 14 March Prebisch and his entourage arrived in Geneva to set up his office and Adelita came the next day giving her a week to organize their apartment in the Parc de Budé building across the road from the Palais des Nations She had accom panied Raúl to the League of Nations meeting thirty years before and for him her presence provided the emotional anchor he needed to survive the threemonth orgy of work that now awaited him Genevas UN headquarters and more particularly Georges Palthey di rector of conference services were in charge of opening ceremonies for I 398 The Life and Times of Raúl Prebisch unctad I Protocol was supposed to be his strong point and Prebisch had not bothered with it during the months of work before the meeting But on the morning of 22 March just to make sure that everything was in or der he decided to review preparations for the inaugural plenary the next day featuring U Thant and dignitaries from around the world What he saw exceeded any bureaucratic snag previously encountered in his UN or Ar gentine careers Instead of an appropriate auditorium with suitable transla tion and media facilities the Geneva staff had signalled the lowest priority for unctad a small thirdrate room with militarystyle metallic tables and ancient beatenup folding chairs in one of the oldest of its buildings dot ted throughout Geneva The podium looked like a small theatre stage sep arated from the delegates by a limp cloth curtain along an improvised wire with the overall effect of a wartime Gilbert and Sullivan production Prebisch stared then turned without a word and drove back to the Palais with Pollock and Viteri the three marching abreast into Paltheys office past a startled secretarial staff who had never before witnessed such an in vasion from the colonies Palthey retreated before the stonyfaced trio backing step by step to the large windows behind his desk As he cowered against the glass a peacock cried raucously from the courtyard below I will crush you like a bug and feed you to the peacocks Prebisch growled Later Prebisch chanced on Palthey in the neighbouring stall of the Palaiss marbled urinals I will piss all over you he warned The UN worked over night and the conference opened the next day in dramatically improved conditions to a growing drumbeat of excitement and tension Prebischs unctad was the international event of 1964 not to be missed and the largest international event ever held More than four thousand of ficial delegates from 119 countries the media international organizations and nongovernmental bodies were in Geneva hotels were long since booked forcing authorities to billet visitors in private homes UN transla tors were unable to accommodate five official languages for three months without assistance from private firms across Europe Che Guevara in a well tailored pinstriped suit was the social sensation of the event and Pope John XXIII detailed five robed monsignores from the Vatican and sang a special Papal Mass for the success of the conference Prebischs inaugural address was theatrical U Thants ponderous welcoming message read from a prepared text created no more than a sense of expectation Prebisch rose slowly evidently without notes to the vast and silent audience in the Palais and gazed over the assembled I Global Gamble 399 delegates with patrician ceremony In a voice so low that people strained to hear he requested their attention the global community faced a turning point in history and their actions here in Geneva would be mea sured against the challenge of their times History would be made for good or ill Even participants who had previously experienced Prebisch before a crowd marveled at the sense of moment that swept the Palais Old hands at such international conferences are unanimous in saying that they had never seen such a thing before a hardened World Bank observer admitted He then skirted melodrama by abruptly switching from solemnity to hu mour lacing his speech with irreverent asides and comments He criticized his own report as bland he would have preferred to be much more radical than the conferences secretarygeneral was allowed to be dramatized the crisis of development failure of the conference would be a world calamity praised the efforts made so far by the developed countries while avoiding specific commitments that might limit his freedom of action during the con ference itself and challenged Third World countries to hold up their end a policy of international cooperation is only complementary It cannot be a substitute for development In his closing remarks Prebisch urged a new partnership between rich and poor nations that would benefit all Boyscout or missionary motivations were irrelevant to the drama of development he insisted all countries rich and poor shared a longterm selfinterest in over coming poverty Converging measures were required as identified in his report to manage the trade gap With a last warning that growth in recent years had slowed he brought the audience to a standing ovation by return ing to the opening challenge they must succeed and they could succeed overcoming global inequity was not a utopian goal if the world community worked together for the common good Skeptical delegates agreed that it was quite a show Its start was well planned one noted Where it will end is anyones guess Two weeks later much of this initial cohesion had dissipated in an unwieldy and numbingly boring format Instead of a narrow and more structured agenda Prebisch had deliberately chosen an inclusive format in which all 119 governments not to mention the heads of international organiza tions were invited to present an opening statement to the conference The intention was admirable to focus attention on Third World develop ment to a global audience and enlist the broadest political support for unctad but this protocol was risky in practical terms Most delegations came with long formal statements and insisted on reading them in full At tendance flagged between the appearance of major figures and journalists complained that nothing was happening Che Guevara received a standing 400 The Life and Times of Raúl Prebisch ovation the only one besides Prebisch but Cuba was not far down the speakers list and the audience was still patient Prebisch sat through each daily eighthour session with stoic patience and apparent full attention Pollock asked him how he could stand it Nonsense David he responded I flick back and forth on simultaneous translation to practice my languages George Woods however was as good as his word and gave a strong official message of World Bank support for unctad for which Prebisch called him the Pope John XXIII of interna tional development And Eric WyndhamWhite acknowledged a clear dif ference of mandate between the gatt and unctad his organization had a narrow and focused purpose to lower tariffs it would not negotiate commodity arrangements for example a field which has been entrusted by the United Nations to its own organs There would not be therefore competition or duplication of purpose between the gatt and unctad and this forthright statement was hugely welcomed by the conference as a vote of confidence by its principal presumed opponent43 But everyone was waiting for US Undersecretary George Ball the key personality at the conference who spoke on 25 March following French Finance Minister Valéry Giscard dEstaing I was aware that the delegates expected the United States to offer similarly generoussounding promises he recalled but I held to my commitment to candour Balls bluntness was exceptional at a major international event where pleasantries and in gratiating intentions of solidarity were the norm and the speech fell like cold rain He warned that Prebischs report was idealistic ethically uplift ing and inherently reasonable but not unfortunately realistic he wanted to be clear that the US would not confuse this point with insincere flat tery44 He rejected virtually all Prebischs recommendations for a new system of international cooperation Ball challenged the statistical under pinnings of his projections for a 20 billion trade gap the central ele ment of the report which he dismissed as nothing more than a figure of speech Prebischs call for 20 billion financial or trade concessions from Group B countries without adequate controls risked the G77 using unctad as an escape from their own domestic responsibilities Prebisch had only concentrated on international deficiencies and responsibilities he should have been equally tough on the shortcomings of developing countries This gives excessive emphasis to only one side of the coin Richard Gardner Balls lead negotiator in the US delegation scurried about after the speech insisting that Washington took the conference very seriously and was indeed interested in promoting the trade and develop ment of the South But Balls pit bull attack so early in the game spelled trouble ahead just as the five committees Commodities Manufactures Finance Institutions and Regional Problems started their work Global Gamble 401 These five committees were responsible for shaping the conference rec ommendations their work over the next three months was therefore the key to the success or failure of unctad But all five committees were too large to be effective because all the 119 delegations insisted on representa tion they became as large as the plenary meetings and just as prone to speeches Although T Swaminathan India and Stanovnik Yugoslavia were accomplished chairs not all the committees were wellmanaged for example Commodities over which Bernardo Grinspun of Argentina presided Economic advisor to President Arturo Illia who was elected in 1963 a year after the military coup against Frondizi he represented an Argentine Government that supported Prebisch an amazing aboutface from previous experience and that was determined to match Brazil in unctad zeal Grinspun alas could never stop talking Urged by Prebisch to limit interventions to five minutes he spent twenty minutes announcing the proposed strategy to his colleagues Subcommittees and working groups pro liferated in a complicated undergrowth of NorthSouth activity the confer ence began to resemble according to one participant a curious mixture of political intrigues and seminars on economic development45 Prebisch and his team faced the challenge of monitoring preferably guiding this activity to locate areas of potential consensus Staff fanned out to observe as many meetings as possible and each day would begin with a staff meeting at 830 chaired by Prebisch to review developments in the five committees Delegate speeches would be analysed line by line summarizing views on the main agenda items How did the US UK France Canada and others approach commodity agreements for exam ple Or preferences These would be compared with the developing coun tries By 1000 am when the official sessions resumed staff were back at their assigned posts Staff also prepared backgrounders for Prebisch before his daily private meetings with delegations a personal diplomacy that con tinued into the social events crowding each evening Although sixtythree years old Prebisch absorbed this regime of seventeenhour days without ev ident stress Nevertheless he insisted on three groundrules when he cele brated his birthday on 19 April with a dinner for the Latin delegates no discussion of unctad Fidel or the Brazilian coup that had brought a mil itary regime to power three weeks earlier and sent Furtado and other asso ciates into exile Prebisch and Che sat together exchanging Argentine jokes Adelita found Ches eyes captivating Dangerous eyes Raúl com mented To his surprise Che sent Prebisch a photograph with his note of thanks which Raúl kept on his desk in Santiago until his death As May approached Prebischs team noticed some room for manoeuvre as the muchanticipated EastWest confrontation at unctad I failed to ma terialize East European countries led by Hungary and Romania openly 402 The Life and Times of Raúl Prebisch refused to accept Moscows leadership in international trade it no longer even headed a bloc Worse few developing countries beyond India saw EastSouth trade as a priority compared with Western markets and even the East Europeans focused on future trade opportunities with oecd coun tries Moscow itself seemed as uncomfortable with the G77 as Group B and the lavish banquets thrown for Prebisch during his tour only magni fied Moscows international parsimony it would give moral support to the G77 but had no intention of offering additional financial or com mercial resources to compensate for centuries of Western colonialism The Soviet Union had been in effect marginalized from the very outset of unctad preparations with progressively waning influence and now was re duced to sporadic eruptions of temper or routine demands for a new ito to replace gatt With superpower rivalry no longer a serious factor attention shifted to flexibility within the oecd and G77 groups Although the US and West Germany were implacably firm other countries appeared more flexible The UK and Sweden like George Woods were prepared to consider supplementary financing mechanisms and even trade preferences for de veloping countries Prebisch looked to Edward Heath shuttling between London and Geneva as his main interlocutor within Group B but both Belgium and the Netherlands were also committed to finding common ground46 In Asia Australia was noticeably more open to G77 positions than Japan the single greatest disappointment for the developing coun tries which sided with the US on every major point except for its en dorsement of the creation of an Asian development bank Agricultural trade commodities was more sensitive with Paris and Washington dis agreeing fundamentally on approach Frances Organization of Markets the socalled BaumgartnerPisani Plan proposed that primary producers in developing countries should be treated like the agricultural sector in the developed world with prices set higher than longterm levels In effect consumers in developed countries would be paying to stabilize Third World export earnings as France was already doing for Madagascar and sev eral other African countries The French plan proposed a global extension of its farmincome parity scheme for these excolonies The US opposed this indirect pricesupport system in favour of directly subsidizing its own agricultural producers and Washingtons skepticism about international commodity agreements was so virulent as to rule out major advances in this area in Geneva A major new international accord on say cocoa or sugar was simply impossible although the deliberations of Committee 1 did pro vide a basis for negotiations in future years And so the five committees plodded on Certain areas of agreement were identified and resolutions adopted by the end of May but they Global Gamble 403 tended mostly to be of secondary interest or useful only in setting the agenda for future negotiations Some recommendations were noteworthy explicit endorsement of SouthSouth trade among developing coun tries shipping conference reforms provisions to assist landlocked coun tries Western countries support of regional integration and so forth But these results fell far short of expectations The Prebisch Report had listed specific policies of international economic cooperation to close the trade gap international commodity agreements tariff preferences for Third World exports of manufactures greater market access for primary prod ucts expanded intraThird World trade new trade initiatives with Soviet Bloc countries and new supplementary financing mechanisms to compen sate for unexpected export shortfalls All were too radical for Group B No formula for international commodity market organization was acceptable the common denominator for Group B was a casebycase approach with minimum government interference in the workings of each individual commodity market Regarding exports of manufactured goods the lower ing of tariff barriers would also have to be negotiated on a casebycase basis and only within gatt not in a UN forum like unctad As for the proposed gsp Generalized System of Preferences it was considered broadly acceptable in concept but more study would be required before any implementation even partial could be envisaged The concepts of new complementary or supplementary financing mechanisms would have to await postconference study before anything concrete could be consid ered Even changes in terms and conditions of international loans whether public or private would have to await such further study by the imf and World Bank There were no new initiatives to emerge on the financing of intraThird World trade nor on G77 trade with comecon countries There was total stalemate on every important substantive issue Interlocutor states Belgium and Switzerland for Group B and Yugoslavia for the G77 had made no headway in such an arena of confrontation A corridor joke was that for developed countries in both West and East unctad was understood to mean Under No Circumstances Take Any Decisions Instead the Conference was polarizing between Group B and the G77 as each group realized that its common interests outweighed shortterm in ternal disagreements This was easier for the industrialized countries De spite certain differences of opinion on whether Prebischs proposed trade policy for development was unduly dirigiste or marketunfriendly Group B countries agreed to disagree over their differences and accept the US lead They were clearly very worried that the projected 20 billion trade gap would be used to justify Third World demands after the Conference ended Likewise for all the internal whining there was simply too much to 404 The Life and Times of Raúl Prebisch lose by breaking ranks in the end they shared a partnership of proven value forged since 1945 and symbolized by their oecd Secretariat in Paris Trade irritants could be managed they were no threat to the underlying unity of purpose shared in the success story of the Atlantic Alliance and postwar USEuropeanJapan trade and economic relations Agreement on the new Kennedy Round in the gatt to be officially launched on 4 May 1964 was all they needed for the expansion of world trade Nor were the muchdiscussed USFrench differences all that obvious in practice The French organization of markets when broken down into understandable terms looked surprisingly like US policy toward Central America with the French excolonial African dictators at Geneva playing the part of US clients like Anastasio Somoza of Nicaragua The situation confronting the G77 was much more challenging because these countries came to Geneva with no more than rhetorical solidarity Valuable as this had been in the UN General Assembly in getting unctad approved Geneva required actual coordination and cooperation to maintain this unity and differences within the G77 went far deeper than among the industrialized countries size culture levels of development se curity interests political ideologies and so forth Despite the Declaration of Algiers a year earlier the odds for success were low Some animosities were predictable To snub Israel for its invasion during the 1956 Middle East War Conference President El Khaissani of uar Egypt refused to invite its delegation for the opening G77 dinner in Geneva a move that cost Cairo the entire bill since UNfunded events did not permit the exclusion of any member state In practice Israel played an active role at the conference Latin America and Africa faced different challenges and were in some respects rivals The countries of the former were more developed with di versified economies requiring markets for manufactured goods and a legacy of autonomy in central bank and monetary policy The African sub Saharan states were newly independent and mainly agricultural producers with large subsistence sectors industrialization lay in the future The ex colonial francophone states in Africa with the exception of Guinea and Mali were Pariscentric to the point of retaining the franc and refusing separate national currencies47 If these differences were not enough eigh teen African states and Madagascar had a special link with Europe the Yaoundé Convention of July 1963 providing them with a mixture of aid and trade concessions to maintain close ties with Europe Africa and Eu rope could therefore pursue a twotrack trade policy at unctad while Latin America lacked such privileged ties with either the US or Europe48 But unity was achieved the most valuable outcome of the Geneva Con ference with the three UN Regional Commissions eca ecafe and ecla Global Gamble 405 playing essential support roles49 During the first month of the conference the developing countries gradually began to consult regularly though their separate regional groupings Africa Asia and Latin America As these talks matured mechanisms for regular consultation became formalized conflict resolution procedures to harmonize differences and permit uni fied proposals to the developed countries were approved And once the G77 had developed a pattern of collaboration its members realized that solidarity was their main weapon in these negotiations The unity of the developing countries has now been more or less institutionalised Krishnamurti wrote on 29 May as the conference entered its final stages and they are fully alive to the imperative need for preserving and strengthening this unity in the interest of economic development50 Unfortunately this growing unity within the G77 and Group B aggra vated the impasse for Prebisch and his team because growing internal co hesion in both camps made them increasingly unwilling to compromise51 Prebisch and his team watched the evolving paralysis and the diminishing possibilities of success Would it end in nothing more than a flowery communiqué The mammoth meetings droned on and on frustration mounted on all sides as deadlock emerged everywhere By now the confer ence was nearly chaotic with private caucuses taking control of its activities A newly arrived Indian diplomat tried to make conversation with Prebisch in a crowded elevator of the Palais Are you part of this zoo he asked Yes Raúl replied I am the ringmaster Prebisch had to achieve something concrete not just a string of resolu tions requesting further study and the one area where significant move ment was possible involved the institutional question Proposals from the AfroAsians Latin Americans and the Western powers had been debated to a standstill Meanwhile the developing countries had produced a unified document while the Western countries were revising their previous paper Deadlock meant that Committee 4 faced failure The crux of the matter was whether unctad would remain a mere single event with existing UN organizations and gatt responsible for implementing its recommenda tions or whether an entirely new and autonomous UN body should be created geared specifically to the link between trade and development It was clear both within and outside the conference that success or fail ure would depend on how this issue would be resolved By this time Group Bs position on unctad had evolved they no longer opposed the creation of a new international trade entity under UN aus pices and were willing to consider a new Centre or Institute that would report to ecosoc and be managed by desa in New York Mosak had sug gested this option to Prebisch back in February 1963 at the beginning of 406 The Life and Times of Raúl Prebisch the Preparatory Committee and it was really no surprise that it should emerge as the Group B final offer ecosoc was tame desa was directed by a Frenchman and managed by an American and Washington was close to New York for appropriate monitoring This was clearly not enough for the G77 Criticism of gatt was their rallying cry they demanded a far more independent body with its own staff and budget and not located in New York On 2 June the G77 countries brought the central problem of the confer ence the implacable adversarial relationship with Group B into the open by sponsoring a resolution in Committee 4 and thereby forcing a vote that passed easily given their greater numbers In response the Western coun tries warned them that the issue of institutional machinery had to be negoti ated rather than forced through by a majority vote that they would oppose it in plenary and refuse to support or participate in any new body even if the secretarygeneral decided to establish it Only two weeks remained before the end of the conference and disaster loomed for unctad52 Media attention dormant for weeks suddenly revived with the scent of crisis in the air Journalists flooded back to Geneva in waves reminiscent of the conference opening In a lastditch effort Prebisch inviting selected representatives of both developed and developing countries to his Parc de Budé apartment on 3 June for private discussions For ten days straight they met all day from morning to late night to find a workable compro mise Adelita organized food and refreshments The marathon negotiation resembled the last stages of a bitter managementlabour dispute with the same strategy of exhausting both sides until they would finally accept a compromise position The eight delegations were the US the UK and France as the key Group B countries with Pakistan and Nigeria from the G77 Yugoslavia was represented by Stanovnik the able chair of Commit tee 4 and Belgium and Switzerland played a similar interlocutor role From time to time Prebisch invited delegates from India Uruguay and Ethiopia but the Soviet Union was not part of this delicate negotiation Not even Dell and Malinowski were present Prebisch selected only one ad visor the infinitely discreet Krishnamurti master of UN institutional intri cacies to remain at his side for the marathon session Krishnamurti had worked at ecafe with CV Narisiham U Thants capable chef de cabinet ul timately U Thant would have to approve the arrangement worked out in the Parc du Budé negotiations and Philippe de Seynes was increasingly concerned about G77 insistence on an unctad separate from and with greater powers than his desa De Seynes lurked and Narisiham mediated The protagonists were Richard Gardner Washingtons amiable and ca pable US negotiator squaring off against the equally agile and agreeable Global Gamble 407 Amjad Ali Pakistani delegate and chair of the G77 at this stage who worked from the diplomatic advantage of requiring a deal that he could sell to his mobilized constituency in a ratification vote Washington wanted an agreement Gardner insisted but a fair one where the great trading nations of Group B would not be at the mercy of the G77 as in voting in the UN General Assembly The top six or seven countries accounted for 70 percent of global trade they could hardly be expected to accept a ma jority vote in a one country one vote system demanded by the develop ing countries Acceptable governing body models like the imf and World Bank would go a long way to allay Group B fears of a possible tyranny by majority Gardner therefore suggested a dual vote system where issues of substantial importance would require majorities of both Group B and the G77 Ali could only respond that the G77 viewed the issue of one country one vote as vital to their national sovereignty and the dual vote of Gardner was no more than the proverbial velvet glove over an iron fist the imf and World Bank were precisely the models most opposed by the G77 Nor would developing countries settle for another ineffective ecosoc body of the Mosakde Seynes variety Watching and listening with Adelita catering meal after meal at one point draining the nearby super market of its soda water and tonic Prebisch wondered what on Earth would come of it all and realized after a week that he would have to break the deadlock to avoid collapse Prebisch and Krishnamurti therefore drafted a new and unofficial work ing document for the Parc du Budé group the socalled Prebisch Paper as opposed to his Report of the Secretary General The key points built on the formula he had been considering ever since his September 1963 around theworld trip with Dell and Pollock only a compromise formula would bridge the gap between the G77 and the developed market economies and it would have to include three elements regular conferences every three or four years like unctad I where the entire global trading commu nity could assemble the creation of a trade and development board as a standing committee drawn from the groups on a representative basis and to meet regularly between conferences and a new and separate secretariat located outside desa preferably outside New York and reporting directly to the UN secretarygeneral Prebisch had endured a confrontation with de Seynes at a secret meeting in Paris brokered by U Thant to finalize a compromise on the relative hierarchical relationship between the pro posed new trade secretariat and desa The agreement reflected Prebischs demand that the secretariat have a separate budget and full autonomy subject to the condition that unctad would be an integral part of the entire United Nations Secretariat Its secretarygeneral would make 408 The Life and Times of Raúl Prebisch arrangements as appropriate in consultation with all the officials con cerned to integrate the work of the continuing secretariat with the total work of the United Nations in this field but would be appointed directly by the UN secretarygeneral and responsible to him rather than to desa or ecosoc U Thant sent de Seynes a copy of his letter to Raúl via Narisiham My dear Philippe it began I hope you will find it satisfactory De Seynes fumed over the accord negotiated behind his back which accepted Prebischs demand for autonomy but Raúl could not have gone back to the G77 with anything less53 To bridge the GardnerAli divide Prebisch recommended that the group system of negotiations be established on a permanent basis to gether with a special form of conflict resolution a conciliation process could be invoked by any group before voting on any action that might substantially affect the economic or financial interests of particular coun tries Gardner could live with this but the G77 would have to accept a wateringdown of their insistence on one country one vote decision making On the other hand the developing countries would get an in dependent secretariat with a privileged position in the UN hierarchy Ali realized this was the best the G77 could get like Prebisch he saw that it was the only realistic alternative Negotiations now centred on the details of the conciliation process and the role and composition of the new unctad Trade and Development Board Edward Heath arrived from Lon don at the last moment and told Gardner that that he was much less pessi mistic than the US delegation The entire Parc du Budé group thereupon endorsed a package over final dinner tired but jubilant with only days re maining Group B and the socialist countries Group D accepted the plan and Prebisch requested Ali to call a plenary meeting of the developing coun tries in Groups A and C where he could report proudly on the successful compromise achieved in the final negotiations and receive their ratification Prebisch was in a triumphant mood when he met the G77 the enor mous effort of his staff and his consultations and proddings over countless meetings and dinners had delivered But instead of congratulations he was confronted by an overflowing and hostile audience For the first time Prebisch faced open resistance from important segments of the G77 in a tumultuous meeting Third World countries had come to unctad I with high expectations Many especially from Africa had just emerged from de cades of bitter political and military fighting against colonialism and they would face bleak economic prospects unless major international assistance was forthcoming from unctad Many G77 delegates had little interna tional conference experience and did not have an oecdtype secretariat to help them prepare for such complex and giveandtake negotiations For Global Gamble 409 some newly emerging nations there was still a strong belief in revolutionary experiments and the word compromise was not in their political lexicon Many very poor countries had invested a great deal of scarce money in expensive Geneva during the three months of unctad I and ex pected something concrete in return They were as one staff member re counted like a group of tired soldiers under the leadership of a seasoned general being asked to storm a heavily fortified hill Halfway up the hill however the general suddenly orders his troops to stop Why Because they had achieved a successful compromise54 Given the force of his personality and with the conference deadline looming Prebisch carried the day against the more radical G77 elements He rejected charges that the compromise was undemocratic that it re stored a de facto Group B veto over unctad He insisted that consensus rather than confrontation was the only viable approach to the reform of global trade and development policy The Latin American group accepted this explanation and voted with him in a bloc Egypt and Nigeria together with India and Pakistan rallied most of the countries in Africa and Asia to him Even so the fragility of the G77 was obvious and worrying it could only counterbalance the superior resources of the oecd if it remained united But on the last day the divisions apparent in the ratification meet ing were healed by a final declaration of the entire G77 drafted by Gamani Corea and adopted unanimously in a dramatic show of cohesion as unctad I ended in success It was an unusual and paradoxical finale If the conference was a suc cess it was because of Prebischs skill as a negotiator Whereas at the be ginning of unctad I Prebisch had appeared to Group B as a radical ideologue at the end of the conference he had emerged as a pragmatic compromiser It was after all Prebisch who almost singlehandedly forced the radical G77 elements into a compromise with Group B on the central issue of unctads future organizational structure His global image al though resting on a precarious base had been substantially strengthened For all its frustrations the Geneva exercise could still be of historic sig nificance the skeptical Economist noted in an unusually positive followup editorial on 6 June 1964 Prebisch and the countries he represents are no longer outsiders A new force is the emerging leadership of the poor Some delegates from the developing countries and Dr Prebisch himself are a match for the best the industrial countries can put up As the likely head of the new UN trade secretariat Dr Prebisch will have his foot in the door and he is not one to take it out again 18 The Gospel of don Raúl After the triumph the closing of the conference meant packing and fare wells Staff dispersed recounting the bittersweet memories of unctad I Dell Malinowski and Cordovez returned to desa at UN headquarters Krishnamurti to Bangkok Pollock to Washington As yet unctad was only a UN proposal without a budget or organization and therefore without personnel Most of the Prebisch team hoped to return after unctad received General Assembly approval in autumn 1964 as expected but for now they were going back to the their regular jobs with some like Malinowski with Mosak in New York particularly unhappy Prebisch would obviously be named unctads first secretarygeneral and there was so little doubt that the new organization would be in Geneva that he was offered and accepted Villa La Pelouse on the Palais grounds in Geneva as an official residence Adelita prepared the move from Chile Prebisch walked the long shoreline road of Lake Geneva to the vine yards of La Cote to break the unctad routine but disengagement from the last fifteen months of intensive work despite its undoubted success brought little peace or comfort An urgent personal agenda loomed nothing less than a new family with Eliana Diaz and a son Raúl Jr born in December 1963 as Raúl was completing his unctad Report to the Secre tary General Prebischs new situation provoked dismay in New York and only his closest intimates were informed U Thant and de Seynes who was furious advised that the UN could not tolerate a scandal at this deli cate stage of unctad if it became public knowledge unctad would not survive To be openly if discreetly gay like de Seynes was tolerable to conceive a child outside of a highly popular marriage was not Despite the success of the Geneva Conference the UN insisted that Prebischs di vided loyalties remain hidden to protect the evolution of unctad in its formative years The Gospel of Don Raúl 411 Raúls secret life had finally caught up with him Strictly monogamous until 1949 the Havana Conference which launched his UN career had ignited an insistent sexual appetite that became known lamented or toler ated during the subsequent Santiago years Adelitas loyalty never wavered I became aware that what Raúl was doing was so important that I could not help but dedicate all my energy to assist him she observed1 To his friends this side of Prebischs personality seemed inconsistent and inexpli cable but the behaviour itself was a fact and it never interfered with his work Yet in all these years there was no hint of pregnancies with sexual partners just as Adelita had remained childless Prebisch had come to know Eliana in Santiago and the relationship had continued in Washing ton When she became pregnant and moved to New York some people questioned the paternity but Prebisch had no doubts thanking good for tune for the gift of a healthy son at age sixtytwo Bodil Royem his secretary in Washington agreed to assist Eliana in New York the secret was main tained while Raúl galvanized his team for Geneva The problem was what to do now after Geneva since the new unctad was intended for Europe rather than New York Adelita had seen him through the conference and would reside with him in the Villa La Pelouse while Eliana and the baby would be in the apartment at 340 64th Street in New York Maintaining these two households would require a transatlantic shuttle with the constant threat of discovery and scandal Washington would come to know certainly since the cia was certain to and did insert a highly placed source in unctad It also required funds beyond his UN salary and therefore he took a 25000 mortgage on El Maqui for which Adelita had to sign Only the inner core Malinowski Dell Krishnamurti Pollock Jorge Viteri understood the logistical complexity bringing Raúlito to Geneva would resemble an intelligence operation Altogether it was a hu miliating situation maintaining a secret family existence of unknown dura tion very much like his fathers he might have mused Nor was it clear how long so determined and capable a woman as Eliana Diaz would put up with this covert parentage in a foreign land Above all one part of Prebischs life would remain concealed and potentially turbulent as he returned to New York to establish unctad a cause he believed of generational signifi cance and one to which he was fully committed Turning to unctad Prebisch knew that success depended on moving forward quickly exploiting the momentum of unctad I to build a strong secretariat from the deliberately vague wording of the Geneva Final Act But now a completely unexpected and different crisis intervened ilpes his Santiago institute was under threat indeed its very existence was sud denly in question The new military government of Brazil notified him that 412 The Life and Times of Raúl Prebisch it was blocking idb funding for ilpes without that funding his staff in Santiago could not be paid Prebisch left at once for Brasilia to meet Roberto Campos Goularts exambassador in Washington promoted by the military coup to Castelo Brancos minister of planning to defuse the emergency Uncontrollably proUS even before the coup his immediate defection and endorsement of the dictatorship and now his key appoint ment in Brasilia made Campos an even more formidable favourite and in sider in Washington The threat to cut idb funding for ilpes was therefore credible Brazil could count on US support And much more was at stake than the institute Brazil was a critical G77 leader in unctad whose sup port before and after Geneva had been essential for its approval and for its continuing progress Brazil under military rule or not was a global and regional power and Prebisch would need its active support more than ever in building unctad Campos knew this as well Campos explained why he would oppose the institute with all the means at his disposal During the Geneva Conference while Prebisch was strug gling for the survival of unctad ilpes had given refuge to Celso Furtado Fernando Henrique Cardoso Francisco Weffort and other prominent exiles from the Brazilian military coup This was bad enough but ilpess management in Santiago went further by approving a development semi nar beginning 3 June in which the Brazilians particularly Furtado and Fernando Henrique had leadership roles and were directly criticizing Castelo Brancos new model of capitalism2 They were leftists and partisan and such activities were out of order for a UN organization Campos in sisted particularly one with a mandate to give advice on planning to Latin governments ilpes in short had insulted Brazil The actual events surrounding the ilpes Development Seminar were more complex Furtado was with José Medina coorganizer of the weekly initiative on succeeding Wednesdays but it went far beyond a response to the Brazilian military coup Instead the seminar featured a long overdue review of eclas original texts in light of recent experience throughout Latin America as a whole The fact that the participants were younger and not from the founding generation gave the initiative additional impor tance and it was a stellar group of young economists indeed On his first appearance at the seminar after his arrival from Geneva and listening to the quality of debate the Brazilian contingent having added both schol arly strength and personal commitment Prebisch beamed with satisfac tion here was the core of a firstrate institute indeed It was readily apparent that the old ecla doctrine required revision Profound changes in the region had occurred since the 1949 Havana Manifesto not least the growing importance of multinational corporations The Gospel of Don Raúl 413 Although the term itself had not yet been invented their role in produc tion technology and trade in Latin America was increasingly apparent mncs also challenged Prebischs original concept of centreperiphery rela tions for sociologist Fernando Henrique Cardoso this powerful corporate presence meant that the centre had moved directly into the periphery but Latin America was more dependent than ever and even less capable of incorporating the marginalized inside a democratic system The 1964 Brazilian coup was key to understanding this socalled internationaliza tion of the internal market he argued because the new national secu rity state introduced by General Castelo Branco and Roberto Campos demonstrated the new combination of open markets repression and a minimal state It was not just another military takeover instead it heralded many similar authoritarian experiments in Latin America In light of these developments eclas early faith in industrialization as the answer to devel opment should be critically reviewed and Santiago researchers should ex pand their disciplinary toolkit in exploring Latin dependency on the centres mncs were redefining and expanding international economic re lations profoundly affecting consumer choices class formation political parties and civil society not to mention the role of Washington evident in the Brazil coup The crisis was touchy and took time to resolve Campos understood very well that ilpes was supposed to be autonomous rather than a creature of governments but he also knew where the Development Seminar was headed and was determined to terminate research on multinational corpo rations which would examine corporateelite underpinnings of the new Latin military dictatorships He proposed a deal Explaining to Prebisch that the institutes relations with the Brazilian exiles had been an error of judgement committed by Cristóbal Lara he put the blame on Prebischs absence during the final climactic phase of unctad 1 When you were at the helm of the Institute such issues would never have occurred he noted I will give instructions to my representative at the idb that he sup port the Institute but with one condition that you promise to return to the Institute3 Eventually a solution was found Prebisch agreed to remain secretary general of ilpes during unctad and to return after he completed his term and Furtados edited papers from the Development Seminar were quietly shelved Campos knew perfectly well that Prebisch would hire whom he wished but he also knew that he would henceforth keep a close watch on institute activities Brazil restored its support for ilpes in the idb Furtado left for Yale Fernando Henrique Cardoso remained in the institute working with Chilean Enzo Faletto and Prebisch detailed 414 The Life and Times of Raúl Prebisch Benjamin Hopenhayn to inform him blowbyblow of institute activities4 Overall the decision to remain director general of ilpes was problematic the unctad challenge alone exceeded even Prebischs enormous capac ity for work and the fragile institute needed the fulltime and dedicated direction of a resident director to establish its identity without the addi tional political baggage of Geneva De Seynes was frosty when Prebisch returned from Santiago Neither he nor Mosak was happy that he had outbargained them at unctad I and ev ery detail of the new organization would have to be negotiated under their scrutiny Progress was bound to be slow and summer holidays were ap proaching On 29 July de Seynes wrote and complained to the secretary general that discussions with Raúl on setting up his secretariat its functions staff and location remain hazy He then left to spend the en tire summer in France so that Prebisch was not able to present the draft of his proposed new organization to U Thant until late October 1964 While they were personal friends de Seynes and Prebisch were also professional adversaries in this UN war an inevitable confrontation was approaching The secretariat Prebisch had in mind would be larger and more independent than desa and its Group B allies had envisaged at Geneva he rejected dependence or any kind of subordination to desa unctad had to be independent in the sense of being able to take full responsibility under the UN Secretary General not under desa for ser vicing the conference the tdb Trade and Development Boardand sub sidiary bodies requiring a separate budget and full autonomy subject to the usual financial rules and procedures of the United Nations together with its own Research and Projections Office and Trade Policy Division In practical terms this meant transferring positions and budget from desa to the new unctad De Seynes rejected this conception of unctad and fought back when he returned to New York on 31 October Taking the offensive he complained to U Thant of lack of consultation accusing Prebisch of threatening a de facto situation of apartheid He charged that a structure such as the one proposed by Dr Prebisch will have a depressing perhaps even devastat ing effect in other parts of the Secretariat working in closely related fields and requiring comparable skills and assistance The unctad Secretariat must be an integral part of a single United Nations Secretariat and its work as an integral component of the total work of the United Nations in the economic and social field Raising the familiar spectre of duplication of I The Gospel of Don Raúl 415 services in the UN system he demanded that unctad should be smaller and use desas existing programs5 Prebisch countered de Seynes appeal ing to the secretarygeneral that yes the integration of unctad into the UN Secretariat was vital but this did not go beyond consultation and coor dination it means interdependence but not dependence or any kind of subordination the intellectual monopoly implied in Mr De Seyness memorandum is not admissible6 U Thant agreed so far Prebisch was winning But de Seynes counterat tacked by stacking the UN budget committee with allies to slash Prebischs budget Raúl rallied delegates from twentyfive key developing country al lies in New York to intervene directly with the secretarygeneral over the heads of de Seynes and Mosak Led by Brazil and India the G77 delegation was successful in restoring the budget and with this victory Prebisch suc ceeded in wrenching trade and development out of desa7 Celebrations however were premature Key staff selected by Prebisch were under existing contracts in desa and de Seynes and Mosak weak ened unctad by refusing or delaying transfers Here they had a clear ad vantage since Prebisch had to get unctad under way while desa could stall forever Raúl needed Dell urgently to anchor the new secretariat but Mosak and de Seynes procrastinated in a new war of attrition refusing to release him from his work on the new Centre of Industrial Development Prebisch finally had to go directly to U Thant but even then desa kept Dell for another six months to mid1965 Prebisch had assumed that all the existing staff would be transferred together with their posts but Mosak refused insisting that desa had the right to pick and choose The Interna tional Trade Relations Section headed by Percival Judd and Commodity Studies Section directed by Reginald Smith of South Africa were clearly units within unctads mandate but Mosak disbanded the Commodities Studies Section to keep its senior staff arguing that they formed some thing of a task force for him to deal with general purposes He tried to un load two particularly unqualified political appointees from Britain and the Soviet Union If they desa had the right to select I have the same right and I refuse to accept G and K Raúl bellowed8 While generally prevailing in the struggle to protect his autonomy within the UN system he had accepted compromises on key provisions rather than risk derailing the whole project Agreeing to two meetings each year of the unwieldy fiftyfourmember country Trade and Develop ment Board in New York and Geneva respectively implied a huge bur den for the new secretariat when combined with its already huge work program and preparing a massive conference on the scale of unctad I every four years9 416 The Life and Times of Raúl Prebisch UN politics intruded at every turn Regional balance was essential but difficult to achieve in practice particularly from newly independent Afri can states which were entering the United Nations at the rate of ten a year with few professional economists available to fill the many offers from in ternational organizations10 Moscow insisted that Prebisch hire a Soviet nominee to balance the somewhat more qualified cia informer from West Germany already under contract Prebisch with U Thants support proposed Malinowski for the position of director of coordination given the size and complexity of unctad Everyone seemed to agree at first the G77 and the UN budget committee until Washington demanded an other deputy secretarygeneral for Group B preferably from Europe on grounds of NorthSouth balance Britain concurred It was in fact a good idea since Malinowski was identified with the G77 and unctad required a bridge to the oecd countries Prebisch agreed and promptly identified two suitable Scandinavian candidates but in one of its rare initiatives Moscow demanded a third deputy secretarygeneral from Eastern Europe for EastWest balance The ussr was adamant either scrap the USBritish proposal or appoint Czechoslovakias deputy minister of foreign trade as Prebischs deputy the appointment of a West European it argued would be unjust and contrary to the principle of equal treatment of various groups of countries Not even Finland could be considered a neutral country Confronting the certainty of an unmanageable troika in his office Prebisch dropped the position altogether weakening unctads future ef fectiveness No matter how many hours he worked Prebisch simply could not manage the large and complex unctad agenda without a permanent deputy like Malinowski with his G77 linkages and infectious energy11 A final and unexpected obstacle surfaced in May 1965 over the location of unctads permanent headquarters assumed from the beginning to be Geneva with the finance division remaining in New York under Dells di rection since that subject needed constant contact with Washington But on May 10 Director P Spinelli of the UNs European Office reported that the Canton of Geneva opposed another international organization in their city because outsiders were driving up the price of land and housing Additional foreigners it appeared would aggravate the psychological and social problems faced daily by its hardpressed inhabitants12 Dumb founded Prebisch cast about for alternative sites and set up a committee to evaluate offers Addis Accra Rome Mexico City Lagos and London immediately lobbied New York to host the secretariat When Britain of fered a new building in central London the Swiss Federal Council became alarmed and sent a letter to U Thant on 13 October welcoming the unctad Secretariat to Geneva after all13 The Gospel of Don Raúl 417 At last unctad was in place For months Prebisch had been virtually alone rushing back and forth between New York and Geneva where a skeletal staff worked out of UN headquarters But progress was made key positions were filled and the divisions of unctad began to take shape Krishnamurtis departure from ecafe was approved on 22 November 1964 Pollock soon followed from Washington Malinowski came over as director for international shipping With a rapidly growing core staff to reach 175 by 1968 unctad moved into high gear The teething problems were largely over complaints about inadequate secretariat work in pre paring meetings diminished with adequate staffing14 Morale in Geneva was high Although unctad was unable to match the salaries of the World Bank and imf the international response from economists was strong as unctad became a principal cause for an idealistic generation When Adelita arrived in Geneva and the official residence at La Pelouse opened to guests unctad had become the most exciting international experi ment since World War II Prebisch and de Seynes put the bureaucratic struggle behind them and re newed their close personal friendship over dinner at Au Pied du Cochon De Seynes worried that unctads relationship with gatt was still undefined WyndhamWhite had publicly endorsed a division of labour between their two organizations at Geneva clearly stating for example that Prebisch had responsibility for commodity agreements But this commitment was not in writing he warned Bullnecked WyndhamWhite was English but he was definitely not a gentleman Prebisch believed unctad had to lead he rejected from the outset unctad as merely a sounding board or forum for discussion Instead he wanted an organization with substance one that could undertake negotia tions to arrive at practical solutions unctad was set up to rethink and re cast the rulesofthegame in international trade leading the campaign for a world economic order with less unequal power relationships Prebisch was not neutral just as the imf World Bank and the gatt were not neu tral If these established bodies defended the interests of developed coun tries unctad would be unapologetic in promoting new rules to benefit the Third World The problem was that Prebisch lacked power His permanent secretariat in Geneva could lead with vision ideas and proposals for change but he could not command the compliance of governments International agree ments could only be reached if North and South the G77 and Group B I 418 The Life and Times of Raúl Prebisch kept lines open and worked together But if unctad could only succeed by persuasion and moral pressure Prebisch believed that people everywhere including the developed countries where governments remained skeptical would support his vision once they were correctly informed of the facts once they understood the huge stakes involved and the minimal sacrifices needed today to achieve global equity compared with the future economic and security benefits of a more equitable and peaceful world Prebisch sensed a surge of support after unctad I and he was not alone in noticing that the language of international development was already subtly chang ing the trade gap of Prebischs report to unctad I widely rejected at the conference as vague nonsense was already entering the daytoday vocabulary in Washington as a cornerstone of mainstream analysis15 But the G77 was impatient for actual results rather than a new vocabu lary expectations were high and Prebisch had to deliver concrete accom plishments from the unctad I agenda to maintain its support and nearly eighteen months had gone by since Geneva But there were in fact few possibilities for early and dramatic success At unctad I the four big categories for action had been identified commodities manufactures financing related to trade and invisibles and international shipping No agreements had been reached in any of these areas at Geneva given their complexity once it became clear that lengthy negotiations would be re quired and the main committees of the new unctad secretariat were set up to continue work on them after 1964 But the only candidates for im mediate action were in commodities and financing more specifically nego tiating an international commodity agreement ica for cocoa and a supplementary financing mechanism sfm led by the World Bank to stabi lize export revenues of developing countries Both concepts had been raised for years in the General Assembly and the gatt with limited suc cess Commodity agreements regulating markets in agricultural products and metals to ensure fair and stable prices would protect producers against boomandbust cycles since these products dominated the trade of Third World countries they were of overwhelming concern In supplementary fi nancing the World Bank also aimed at reducing trade vulnerability by compensating developing countries for unexpected shortfalls in export earnings Without such a scheme the best development plans supported by the most dedicated and noncorrupt government would still be destroyed by sudden price instability entirely outside their control The scheme a senior World Bank official explained in fact tries to help countries to carry out their mediumterm plans and to avoid a downward revision of tar gets16 The obstacles facing developing countries which both proposals addressed were so central that success would demonstrate that unctad The Gospel of Don Raúl 419 could deliver changing its prospects from a debating shop to a global decisioncentre and shoring up G77 unity behind the secretariat As soon the 1964 conference ended and within the limitations of the secretariats growing pains Prebisch began to explore the prospects for an international commodity agreement in cocoa Initial research turned up favourable prospects beginning with jurisdictional clarity the fact that trade negotiations in commodities had long been recognized as a UN rather than gatt mandate Moreover cocoa more than all other major commodities in world trade such as tin copper sugar coffee etc pre sented the fewest obstacles to early negotiation of an agreement Unlike sugar for example all the major cocoa producers were in the G77 and there was no competition from producers in developed countries There was also no Cuban factor to arouse a US political veto overproduction was not a serious problem and the demand for cocoa was steadily growing in world markets including the Soviet Bloc countries Moreover there were relatively few cocoa producers primarily in Africa the poorest region which had the greatest moral claim on priority action in unctad Within Africa there were large producers such as Ivory Coast and Ghana but no one country controlled the market Finally the G77 including Latin Amer ica was in agreement on proceeding with a cocoa agreement avoiding in traregional rivalry and the everpresent suspicion of a Prebisch bias toward the Americas Prebisch asked David Pollock to work with Perce Judd director of the new commodities division in designing an international cocoa buffer stock un der unctad auspices I assume youve read the Old Testament he asked Do you remember the story of Joseph and the seven lean years and fat Id like unctad to be able to carry out buffer stock activities like those of Joseph But with one difference well need to buy and sell information that doesnt come from God17 Alfred Maizels a UK specialist on buffer stocks at home in London with his leg in a plaster cast agreed to join the Geneva team Together they hired Jan Tinbergen then an economic consultant in the Netherlands to construct a simulation model for a cocoa ica and pre pare a cost estimate for the buffer stock prefinancing Lever Brothers in London had recently solved its own cocoa storage problem by using new kinds of airconditioned warehouses and had also developed an inexpensive process for converting surplus cocoa beans into margarine With these pre negotiation issues resolved the commodities division set up an expert work ing group to prepare a cocoa commodity conference in August 1966 to approve in principle the unctadbrokered Cocoa Authority18 But the cocoa conference failed before the implacable opposition of the US and West Germany instead of victory Prebisch had to admit defeat in 420 The Life and Times of Raúl Prebisch managing primary commodity markets Washington objected on familiar ideological grounds global supply management which it did not control as well as for financial reasons Washington rejected unctads formula for stock financing19 Direct private sector interests were also at stake as New York cocoa dealers lobbied hard to maintain this market Prebisch pro tested what he saw as the unreasonable positions of Group B countries and their lack of openness to change He even criticized Washington and Bonn in the UN General Assembly If in spite of these advantages Prebisch warned it is not possible to reach an agreement on cocoa I wonder what can be done to fulfil the hopes of the developing countries with regard to other primary commodities That surely was the main point of Group B resistance to change A major unctad success would only serve to consoli date its G77 constituency leading to other demands certainly for more international commodity agreements under unctad Jointly the Group B countries announced to Prebisch in mid1966 that they would only accept sugar negotiations under the gatt umbrella The initial optimism over a cocoa agreement and then the dashed hopes sparked bitter G77 criticism particularly from Africa and in creased the stakes for success in negotiating an sfm with the World Bank20 The odds here seemed more favourable because in this case unlike with cocoa Prebisch had a Washington champion in George D Woods the World Bank president Britain and Sweden had also supported the concept at unctad I and the Final Act instructed the World Bank to prepare a draft proposal on supplementary finance measures for postconference consideration Staff began work immediately by late 1965 the draft report was ready for circulation and George Woods sent the study to unctad as the basis for a feasible solution to a problem of major importance He underlined however that it was only a staff report This study does not purport to represent the views of the Executive Directors of the Bank or of their governments which appointed or elected them21 The Woods Report was favourably received by both developed and devel oping countries at the first meeting of unctads Committee on Financing in December 1965 evidence Prebisch remarked that the ideas of the first unctad conference were making headway22 The World Bank concept linked supplementary financing to performance there was little criticism from developing countries Indeed progress was so rapid that Prebisch opened its next meeting in April 1966 by stating that the proposed World Bank scheme was an adequate and feasible solution toward solving the se rious problems facing developing countries due to fluctuations in their ex port earnings It marked an important transition of unctad from a forum for discussions to an instrument of action23 Delegates overwhelmingly The Gospel of Don Raúl 421 agreed Only the Soviet Union dissented but it was completely isolated since all the other Soviet Bloc countries on the committee were interested in par ticipating Indeed the developing and developed countries found them selves in such agreement that the meeting concluded in three rather than seven days There was consensus that unexpected export shortfalls should and could be measured by export projections and the imf representatives also agreed that it was an interesting and practical solution24 As 1966 ended Prebisch was hopeful that a solution was close The Trade and Development Board endorsed the proposed supplementary finance agreement an international agreement seemed assured Only the work of a joint Group BG77 Technical Working Group of the Committee re mained to iron out details Relations between unctad and the World Bank were deepening Irving Friedman sent Prebisch a New Years card with personal good wishes25 From Santiago Raúl cabled his warmest re gards adding Let me in light of your excellent report on supplemen tary finance express to you my conviction on the important role the International Bank is bound to have in the positive work of unctad It was inevitable that Eric WyndhamWhite would counterattack and Pre bisch observed his sudden passion for developing countries after 1963 with increasing frustration It was however a compliment to Prebisch The convening of unctad I and its related mobilization of world opinion had a profound effect on gatt Already in 1963 anticipating the Geneva conference WyndhamWhite had rushed through a number of first steps to mollify Third World frustration over gatts exclusive focus on oecd countries and then attempted to undermine the new competitor by du plicating unctads mandate On 4 May 1964 in the midst of unctad I gatt opened the new Kennedy Round of trade negotiations with an elaborate ceremony of sixtysix countries making the point that G77 countries formed a majority of members for the first time On 19 March it followed up with another announcement for a longpromised trade pro motion program to woo G77 leaders from developing countries26 In a symbolic gesture he had his title upgraded from executive director to secretarygeneral After Geneva the gatt intensified its effort to undermine unctads ef fectiveness and future evolution Largely indifferent to trade problems of developing countries in the past WyndhamWhite added a fourth part to gatts mandate titled Trade and Development essentially the Final Act of unctad I Adopted in early 1965 the new Part IV flush with a I 422 The Life and Times of Raúl Prebisch committee on trade and development and working groups on commodi ties preferences and the expansion of trade among developing countries permitted him to move aggressively into unctads territory At unctad I WyndhamWhite had declared that gatt had no mandate in the field of commodities and no intention of entering it by 1966 it was heading nego tiations on cereals and sugar European leaders informed Prebisch that they had decided gatt should handle international sugar negotiations unctad should avoid duplication by withdrawing voluntarily from its in ternationally recognized area of responsibility in favour of gatt WyndhamWhites target was not the existence of unctad but rather Prebischs goal of a negotiating instrument In general Group Bs position on unctad was consistent it would accept a UN agency for trade policy debates and research but gatt should wield decisionmaking authority on international trade and development matters Using UN imagery unctad would be the equivalent of the General Assembly whereas gatt would function as the Security Council In this conception unctad would merely play a supportive and deliberative role leaving multilateral negotia tions to be carried out through a preeminent gatt Tactically Wyndham White sought alliances with key G77 states such as India and Brazil which would determine the success or failure of unctad exploiting the deep in ternal fissures among developing countries on international trade policy Brazil poised uneasily between North and South was particularly ripe for wooing after the 1964 military coup Brazil was turning inward toward a more nationalist conception of its future as a regional leader like India or China a continent on its own so to speak A growing tension with Argen tina over the Plate Basin and hydroelectric dams deepened this tendency toward Brazilian exceptionalism rather than regional integration with His panic America As a reflex Itamaraty had never fully accepted the language of G77 solidarity or considered Brazil as more South than North after twenty years of rapid economic development As Azeredo da Silveira cho sen to head the Brazilian mission to unctad II put it We must invade gatt or unctadize gatt before it gattizes unctad27 While this could mean simply linking trade and development in both forums it might also imply Brazil using unctad as a global soapbox to achieve its own goals in the gatt Prebisch called it playing on two pianos We are witnessing Prebisch wrote U Thant in March 1967 a general trend towards enlargement of the field of competence of gatt in clear duplication of the functions mandate and activities of unctad gatts competence in the field of policies and practices regarding tariff and nontariff trade restrictions is quite clear he argued but it is equally clear that unctad is the central organ on all matters of trade in relation The Gospel of Don Raúl 423 to development This fact should be fully recognized within the United Nations family so that gatt may not present itself as an equal or more competent partner in this field28 The issue for Prebisch was not merely territorial a turf war between two international agencies fighting for recognition and budget He had always recognized gatts role in trade negotiations and its efficient secretariat and he had never tried to under mine it or criticize the entry of developing countries that were able to profit from trade liberalization focused on the oecd Prebisch objected to WyndhamWhites approach because of its cynical opportunism de signed to destroy unctads credibility and bargaining power without a new approach to development or regional integration at all He was sim ply picking off selected G77 countries with targeted concessions leaving Group Bs power and priorities intact A new international economic or der would never emerge from gatt only in 2001 would its successor the World Trade Organization mount the socalled Doha Development Round in recognition of developing country issues and even then to the continuing indifference of northern negotiators and to failure in 2008 WyndhamWhite further strengthened gatts international standing with the successful conclusion of the Kennedy Round in May 1967 Prebisch con gratulated him in a gracious interview published in the New York Times on 16 May 1967 noting that while its trade benefits were marginal for the G77 it was nevertheless a considerable step forward in the achievement of a world policy of trade liberalization Signed by sixtytwo governments as opposed to only twentysix in the earlier 1962 Dillon Round it provided for acrosstheboard tariff reductions of 3540 percent it included an anti dumping agreement tarnished by its immediate rejection by the US Con gress and it contained an international wheat agreement providing for 45 million tons of wheat available to the most needy countries It also in troduced the concept of special and differential treatment for develop ing countries an important step in international trade agreements All the major G77 countries were included such as Brazil India and Egypt and even Yugoslavia had been accepted a year earlier as a market economy Not to be outdone Poland became the first country to accede to gatt as a nonmarket economy A rush of applications from the remaining G77 countries ensued the next round Tokyo of the gatt would comprise 102 members not far off unctads membership U Thant and Philippe de Seynes agreed to mount a campaign from New York to help shore up unctads authority within the UN system All agen cies were reminded to recognize its mandate and Prebisch met with Paul Hoffman and de Seynes on 7 April 1967 to draft a letter from the secre tarygeneral that recognized it as the focal point for all UN traderelated 424 The Life and Times of Raúl Prebisch activities Hoffman also provided Prebisch with new ammunition undp funding for technical assistance in support of trade promotion And while Prebisch rejected an imperious invitation from WyndhamWhite to form a joint programming committee to prepare the unctad II agenda he demonstrated that unctad sought a mutually beneficial relationship with the gatt by proposing a joint international trade centre in Geneva Here the two organizations should cooperate as equals rather than fight to avoid duplication of effort neither gatt nor unctad would have to give up their trade and development prerogatives and neither had much of an existing program to lose For once the two rivals agreed Operational on 1 January 1968 with joint funding by the UN and gatt and in equal part nership the itc became by far their most important cooperative achieve ment and an undeniable success29 Alas for Prebisch supplementary financing went the way of the cocoa fail ure in a similar trajectory of initial enthusiasm stalemate and defeat A change of tone from World Bank staff took hold early in the year picked up by veteran bank economists like Bela Belassa who noticed deliberate misinformation on supplementary financing in internal memos along with disparaging and dismissive references to unctad30 Senior staff also began to distance themselves from unctad using the oldest ruse claims of su perior efficiency My concern frankly Michael L Hoffman noted to Burke Knapp on 7 April 1967 is the number of occasions on which we undertake to make expert staff available to UN or unctad committees and then because of sloppy chairmanship or some other reason they sit around wasting their time while the delegates waffle along Invitations to cosponsor meetings were routinely turned down31 Prebisch had to inter vene personally with George Woods to receive World Bank documents previously shared as a matter of course after unctad I This gradual freezing out of unctad reflected the more hostile tone of Group B governments and the imf France flatly rejected supplementary financing Washington never liked the scheme and Britain could no longer be counted on for support A forceful speech by Prebisch in August 1967 in which he claimed that the imf rather than the World Bank or divisions between Group B and the G77 was the main obstacle to an agreement gave George Woods an opening to disengage An effort must still be made to reconcile the policy of the World Bank with that of the imf Prebisch had noted publicly32 Stung by what he felt was an embarrassing and unneces sary airing of wellknown World Bankimf differences in his final months as I The Gospel of Don Raúl 425 World Bank president and about to be replaced by Robert McNamara at the end of the year George Woods turned cold his officials were given clear instructions on future relations with unctad continuing moral support and amicable conversations limited to promises of further study33 All future staff dealings on the subject were to be cleared with Managing Director Burke Knapp Prebischs final appeal to Woods two weeks before his departure was unsuccessful unctad had been frozen out on another key issue and there was a new coldness in the air34 Sidney Dell put his finger on it when he referred to the strange taint of bilateralism that was reappearing in world politics What has happened he won dered to the economic philosophy of multilateralism which we were al ways told was an indispensable feature of a rational world35 The World Bank failure accentuated G77 complaints about unctads lack of progress Over two years had passed since Geneva with the next con ference not too far off India which would host unctad II had surveyed governments to confirm its opening in New Delhi on 5 September 1967 Prebisch was heavily criticized during a midterm review of unctads re cord36 Africans attacked him for alleged discrimination in selecting staff there were sneers of his alleged campaigning to replace U Thant as UN secretarygeneral and complaints that some recommendations in the 1964 Final Act such as an economic and social survey of depressed areas within developing countries had still not been tackled by his overworked secretar iat37 The Trade and Development Board is more depressing that ever a delegate mused the ldcs less developed countries complain of the lack of accomplishments Prebisch is on the defensive and the haves sim ply refuse to react38 The mood was surly and unctad no longer looked fresh and new To rally the G77 and restore confidence Prebisch promised that the New Delhi Round would be about actions rather than more talk not a general conference like unctad I but a negotiating forum on de velopment cooperation with representatives coming as plenipotentiaries with authority from their governments to make decisions rather than mere delegates39 Only those issues where concrete results could be achieved would be brought to the meeting with a much leaner agenda than four years earlier in Geneva and with some agreements either ready for signa ture or nearly in hand unctad II in short would showcase a global strat egy of development40 Privately Group B scorned Prebischs notion of delegates coming to unctad II as plenipotentiaries and objected to the term New Delhi Round for its implicit equation of unctad and the gatt the Kennedy Round was a true negotiation while New Delhi would be a mere trade conference41 Publicly the oecd countries despite origi nally voting for 5 September demanded that unctad II be postponed 426 The Life and Times of Raúl Prebisch until 1 February 1968 to avoid a conflict with the annual meeting of the World Bank and imf a poor omen of diminished ranking in the international family Group Bs tepid acceptance of unctad in 1964 had since declined Im portant political changes had taken place four years earlier in Geneva the superpowers were competitors in NorthSouth relations now the US was at war in Vietnam with a growing antiwar movement as well as having to cope with inflation jobs losses civil rights protests and approaching presiden tial elections The British economy was flagging with unsteady financial markets French society was rapidly polarizing toward student revolt and Tokyo was beset with governmental paralysis How different from 1964 when optimism was running high and the international economy was buoyant It was as if the easing of the Cold War had been offset by a prolif eration of internal woes in the oecd countries The G77 was hardly in bet ter shape as unctad II approached42 The June 1967 Middle East war was a shock to G77 unity with Egypts humiliating defeat in the brief sixday conflict knocking out a key unctad supporter Israels evident superiority of arms and occupation of Arab territories strained international relations as a whole Unresolved tensions kept flaring up on both sides as the Group system revealed its weakness a tendency to adopt the positions of their most extreme members to paper over internal disunity Nevertheless all was not gloom as unctad II approached At Geneva in 1964 Prebisch had proposed a group on preferences at Geneva within the Manufactures Committee to research and design a gsp for developing countries This concept unlike international commodity agreements which sought to regulate the production and trade of basic products to guarantee access and stability of earnings sought to promote the exports of manufactured and semimanufactured products through nonreciprocal preferential treatment Such preferences required Group B countries to recognize the special need of relatively weak infant industries in the Third World by waiving demands for reciprocal rights to market access in effect giving them an advantage in international trade The gsp was particularly attractive for the more advanced developing countries like Latin America and some industrialized countries like Britain and Australia accepted the concept of preferences But the gatt had long resisted and as late as August 1966 the unctad secretariat considered it unrealistic to put it on the agenda of the next conference But as the isolation of the Lyndon Johnson Administration in Washington grew so did pressure for a change of policy and Group A Latin America scored an unexpected success at the otherwise disastrous 1214 April 1967 Presidents of America Summit at Punta del Este where Johnson was persuaded to endorse a gsp scheme in The Gospel of Don Raúl 427 international trade negotiations43 Thereafter oecd opinion and with it that of the gatt evolved during 1967 into agreement in principle to dis cuss the gsp proposal at New Delhi Armed with this new possibility Prebisch and the unctad team per suaded the G77 into a unified negotiating position at a ministerial meet ing in Algiers in October 1967 Named the Algiers Charter and described by the World Bank as restrained and responsible it focused on a short agenda headed by commodity trade agreements and supplementary fi nancing the gsp for trade in manufactured products recognition of a 1 percent oda target and a package of international shipping reforms that the surprisingly effective Wladek Malinowski had prepared for New Delhi44 A delegation headed by Brazil left for Western capitals the World Bank and the imf to brief officials on the main features of the package be fore the opening of unctad II And in New Delhi preparations were com pleted on time for a conference much awaited by a government eager to demonstrate its leadership in global affairs Opened by Prime Minister Indira Gandhi on 1 February 1968 the elegant inauguration of unctad II in New Delhi could not conceal the sombre mood of the 1600 delegates from 131 countries and fortyfour interna tional organizations It was the first time ever that a really major UN meet ing would be held in the capital of a developing country and India was determined to host a success But despite the lavish hospitality in the new Conference Hall on the Curzon Road built specifically for the event the gathering lacked the spirit of guarded optimism and commitment of unctad I Gandhi invoked the promise of Geneva four years earlier the need for change and the urgency of the global development agenda and the symbolic importance of meeting in the Third World rather than in the familiar European or North American gathering places Geneva had been the beginning she said but unctad II would mark a watershed in North South relations But both superpowers were in poor moods Moscow faced a serious challenge after Alexander Dubcek took control of the Commu nist Party in Czechoslovakia on 5 January threatening its control of East ern Europe Only two days before North Vietnamese forces had launched the Tet Offensive which ended the Johnson Administrations illusions of military victory in Southeast Asia and galvanized domestic opposition to the war WW Rostow headed a much smaller US delegation than for unctad I less than a dozen down from thirtyfive A principal architect of the Vietnam War he was alternately truculent and withdrawn both I 428 The Life and Times of Raúl Prebisch anticipating and sensitive to criticism Gandhis appeal for international solidarity was diminished with a media captured by images of blood and bombs rather than economic development Prebischs address to the conference the next day opened with an anal ogy to the bad weather of international problems so evidently on dele gates mind in New Delhi and therefore the need for both perspective and action Optimistic arguments he noted have vanished into thin air Four years ago there were those who thought the radiation of prosperity from the centres and the good behavior of the periphery provided the key to the problem of development The terms of trade had improved pri mary exports were increasing at satisfactory rates and it was said that the Kennedy Round would offer the peripheral countries great opportunities for the expansion of their trade Now those hopes were gone he noted Financial transfers to developing countries were falling fast industrialized countries were making increasing use of nontariff barriers G77 export earnings were declining and creating a savings gap and their overall eco nomic growth was now barely 4 percent The socalled Decade of Develop ment according to Prebisch had become a Decade of Frustration Both sides the G77 and industrialized countries were understandably cau tious When things are going well he said attention is diverted away from the fundamental transformations that must be carried out to prepare for a higher rate of development And when times are bad these transfor mations which are difficult enough in themselves are usually postponed until some more propitious future date But that could not be allowed to happen This Conference is not just an excursion liable to be spoiled by bad weather he noted we are preparing a long and difficult expedition which while it has to cope with vicissitudes of weather must not be di verted from its final objective Circumstances of the moment must not make us forget that we are faced with basic problems which demand long range solutions If this is accomplished the Conference will have left a definite mark on the history of international cooperation45 Prebischs friends wondered where he was leading this windy opening was difficult to square with his magisterial address in Geneva four years ear lier and his phobia toward clichés As usual in international meetings he had written his own speech and although he spoke in Spanish without notes he always carefully prepared and memorized his texts As he pro ceeded it became clear that this was a special effort with a different purpose He did not centre his address on a main concept it offered no new theo retical equivalent to the trade gap of 196446 And while he enumerated the short list of items on the conference agenda It is only natural that the Second Conference should try to arrive at productive solutions he noted The Gospel of Don Raúl 429 he surprised everyone with a deliberately lowkey but solemn appeal for a new international economic order In Geneva he had invoked a new ethic of international development insisting that an unjust world of North and South was morally repugnant and politically unsustainable and that their fates were joined in this enormous but inescapable challenge of the twenti eth century He now repeated the urgency of this new global compact only a durable ethic of cooperation would safeguard the international com munity in the long term But unctad II must advance beyond moral appeal to the next step of identifying a global strategy of development Linking economic prosperity with global governance not revolution was the way to reform the international economic system only a program of convergent simultaneous and properly concerted measures involving trade and finan cial cooperation illustrated by the unctad II agenda could address the structural obstacles facing developing countries while maintaining the bene fits of expanding markets Indeed multilateral action was the only option to avoid polarization or revolutionary change It was also feasible Five years after beginning his unctad quest in New York he told his audience the first hurdle of moving the debate from vision to implementation had been achieved47 Prebisch had used the term new international economic order for the first time in October 1963 before unctad I and it gained clarity and pre cision as he spread the gospel in every forum stumping boards of trade universities and civic and international organizations around the world It went without saying that a global strategy required the combined effort of Group B and the G77 and for success their members had to accept joint responsibility and a longterm discipline of development Developing countries in particular could no longer shelter behind Third World rheto ric no matter how generous international assistance will be largely wasted unless developing countries themselves initiated internal reforms This policy makes it absolutely necessary for developing countries to un dertake a series of internal transformations of their structures and atti tudes where this has not already been done It also requires them to adhere to the reasonable discipline of a development plan to spur recip rocal trade by means of regional and subregional groupings aimed at economic integration and to promote interregional measures for the ex pansion of trade If the G77 had to accept difficult reforms and discipline their national economies for growth the developed countries and financial institutions were being asked to underwrite stable financing market access and trans fer of technology a global strategy therefore had to link resources and performance This was not charity or woolly headed idealism Prebisch 430 The Life and Times of Raúl Prebisch repeated but rather a longterm investment in the mutual interest Gov ernments of developing countries needed the backing of the international community to reform their societies while donors had to justify develop ment transfers to their electorates and therefore had an understandable stake in the results of the funding they provided meaning that G77 re cipients of assistance could not expect automatic support He was not how ever supporting imf conditionality which developing countries would reject as a model Instead the global compact required a credible mecha nism for determining which countries were eligible for support and he proposed two golden rules that only those countries actually committed to development should qualify for financing and that independent and polit ically neutral experts from both donor and recipient countries review na tional development plans In practice such sensitive evaluations could not be undertaken credibly by the imf or World Bank given their lack of trans parency and the fact that their staffs not only evaluated but also took part in loan negotiations they were both judges and executors so to speak48 Instead a separate agency would be required either in unctad or outside but in any case with the autonomy to serve this role Fortunately there was relevant international experience to demonstrate that such innovative evaluation mechanisms were feasible in practice While the oas Panel of Experts created at Punta del Este and on which Prebisch had served proved deficient in structure the work of the panel was strengthened in December 1963 with the creation of the new and more autonomous InterAmerican Committee for the Alliance for Progress ciap49 in which seven experts from the US and Latin America reviewed the development plans of member countries prior to submission to lend ing agencies Chaired by exColombian Finance Minister Carlos Sanz de Santamaria these country reviews offered a noncoercive forum for com paring ideas improving plans and helping countries develop their eco nomic and social agendas There were even three country review studies of the US economy This ciap model arrived too late to save the already blighted Alliance for Progress but it was the one part of the oas where American and Latin experts worked together effectively outside the nor mal political constraints to strengthen the planning capacity of govern ments Prebisch saw it as readily applicable in general terms to unctad with its much larger membership and shifting coalitions The essential point at unctad II therefore was the recognition of mutual commit ments for mutual benefits As the many difficulties since 1964 had already shown implementing the global strategy for development would be ardu ous but at least they now had a roadmap A great deal had been accom plished Prebisch concluded even if the hard part was only beginning The Gospel of Don Raúl 431 starting with the measures before them as delegates began their delib erations in New Delhi and he urged them to set aside differences for a successful conference The applause was sustained but not like at Geneva After Prebisch dele gates from 131 countries and fortyfour international organizations rose talked and sat down U Thants address to the conference delayed until 9 February proved controversial Noting the danger of assuming that problems of security could be dealt with by purely military means he commented that the most important ingredient of international security is economic and social development and not armaments and armed forces however powerful the latter may seem to be Rostow took it as a reference to the Vietnam War and as a serious slight to the US50 Most speeches were predictable The G77 endorsed the Algiers Charter elabo rating its main themes Group B delegates complimented themselves on their past records in aid and trade and refused to go into details The so cialist countries condemned Group B policies and the Vietnam War but rejected responsibility for redressing the evils of imperialism unless they got the same benefits as the developing countries The mood was notice ably worse than at unctad I in Group B as well as the G77 Delegates from the developed countries were fewer in number and less senior those from the G77 were bitter and aggressive51 It was a routine of merciless boredom as with unctad I Prebisch once again sat Buddhalike at the podium as days passed After the first week unctad II was barely men tioned in the global media which remained focused on the Tet Offensive and the Prague Spring The interminable plenary statements lasted through the end of February when in bad temper the Conference split into committees to debate spe cific agenda items and report back when and if agreements were reached With this morale picked up because the actual working phase was finally under way and there was a rush to join the five conference committees commodities manufactures financing invisibles including shipping insur ance and tourism and trade with socialist countries It seemed momen tarily that unctad II had found a second wind but optimism was quickly dispelled Procedurally the committees simply replicated the plenary both in size since at least one member from each delegation felt compelled to attend all meetings and format the long obligatory statements defeated virtually every chairperson There was little real chance of success on com modity agreements and supplementary financing as Group B dug in and refused further action the G77 quickly realized that further study was the most they could get in these categories52 Attention then shifted to the other committees particularly manufactures where easier market access 432 The Life and Times of Raúl Prebisch for exports of developing countries under a gsp became the most lively and promising conference topic Three working groups world food prob lems and transfer of technology economic integration among developing countries and landlocked countries were also under way The gsp was particularly closely watched but by 15 February these talks were floundering as Group B and G77 countries faced deadlock on key points while the former accepted nonreciprocal preferences in theory they differed with developing country delegates about the products to be selected safeguards for their own producers and the point of gradua tion out of gspeligibility when industries of G77 countries had matured Safeguards were a particularly serious problem Listening to the widening demands of Group B countries the World Bank delegate reported if this continues the only manufactures eligible for preferences will be jet planes53 Prebisch worried that the benefits would be limited to a small number of the more advanced among the developing nations54 African Latin American relations became tense with the former viewing the gsp as a Latin American issue especially favoured by Prebisch while the Latins re sented Africas demand to keep its special links with Europe in the Lomé Convention The prospect of agreement and the unity of the G77 on this issue were imperilled until a draft resolution was approved creating a spe cial committee on trade preferences to continue work after New Delhi for final approval of a gst in early 1969 with actual implementation forecast to begin in 197155 Chaos succeeded boredom lightened by frequent interruptions Ameri cans walked out on Cubans the French walked out when supplementary fi nancing was raised Arab delegates walked out on Israel and everyone walked out on apartheid South Africa until the conference expelled it alto gether from New Delhi Soon the Indian press was openly critical of the lack of progress with repeated articles about deadlocks in the main com mittees It became clear that there would be no agreement on any of the main agenda items and hence that smaller negotiating units or contact groups would be necessary to consider individual items and report back to the committees Since unctad maintained a democratic open commit tee rule the membership of each contact group inflated to full committee size as soon as its existence was known mirroring the parent committees they were supposed to simplify Critical of this proliferation Prebisch lamented I dont know whats go ing on Nor did anyone One staff member estimated a total of 965 meet ings took place during the eightweek conference adding together the plenaries the main committees and the related contact subcontact and minicontact groups By early March ninetysix inhouse meetings The Gospel of Don Raúl 433 were taking place simultaneously and teams of interpreters were flying to New Delhi from all parts of the world All this required far more monitor ing and coordination than Prebisch and his small team could manage it was impossible to deal with all of them seriously and in an orderly fashion he noted56 On 12 March Prebisch called a special plenary meeting warn ing delegates that unctad II was on the verge of failure Some Group B countries were refusing all compromise indeed were moving back from previously agreed positions and Prebisch met individually with them to re store diplomatic momentum Two schools of thought were coalescing within the G77 an agree ment at any price group versus a failure group demanding the disband ing of the deadlocked conference Silveira led the second group and demanded that Prebisch listen to him since Brazil had been selected as G77 coordinator for New Delhi many developing countries suspected him as a Trojan horse in their midst for the gatt In fact prone to emo tional outbursts in any case Silveira was overwhelmed by the violent deaths of both his daughters immediately prior to unctad II During a dinner for Latin American delegates called at this stage of the conference to demon strate Group A solidarity he called Prebisch a traitor to the Third World to which Raúl responded You son of a bitch and the group disbanded57 After this disaster Prebisch in a replay of Geneva used his personal au thority to rescue whatever might be salvageable before the closing date of 25 March On 12 March he created a summit group comprising the chairs of the committees and working groups to prepare a unified text for sub mission to the plenary with points of disagreement to be marked by square brackets The result was a blanket of square brackets covering all or most of the text but at least there was now some possibility of progress But the conference was still deadlocked by the third week of March and the sum mit group had swelled into another unwieldy committee of more than fifty delegates Meanwhile Group B delegates were distracted by student barri cades in Paris as the 1968 rising began on 22 March and the rush on gold in Londons financial markets As 25 March approached a World Bank ob server reported back to his headquarters in Washington that Im sorry I cannot give you a more optimistic report about this conference but this is how I see the situation to the best of my knowledge It is a pity that so much time and effort had to be spent for so little achievement I am doubtful whether we can still hope for a miracle in the course of the last six days58 Prebischs suite at the Oberoi Hotel now became the focal point for lastditch negotiations Even more than in Geneva in 1964 where a pack age deal was finally achieved at the Parc de Bude unctad II depended on a small band of insiders the Himalayan Group complete with its 434 The Life and Times of Raúl Prebisch inevitable sherpas which Raúl assembled in his suite Observers as sumed that a lastminute breakthrough was emerging when the confer ence president announced a twentyfourhour extension until midnight 26 March but the extension expired without result and delegates ex pected the worst However Prebisch requested a second delay this time of three days and a compromise formula was achieved at the last minute on 29 March The main achievements were the gsp commitment although success in the latter depended on followon negotiations and a specific international shipping resolution The unctad secretariat would con tinue its work on commodities and supplementary financing as well as numerous other interesting proposals that had emerged during the con ference and were included in the Final Act59 Prebisch could finally declare unctad II closed but the conference ended in pessimism despite the accord In contrast with 1964 when the creation of the organization in Geneva had made headlines around the world there was no dramatic announcement and both Group B and G77 countries immediately pronounced unctad II a failure Silveira de nounced it as falling far short of expectations amounting to no more than a few hesitant steps in the right direction60 Irving Friedman of the World Bank underlined the failure of the Conference to produce positive results61 The London Times the Manchester Guardian and the New York Times all concluded that the conference at best was not a success and at worst was virtually a total failure Conference a failure we got noth ing read one cable from a developing country versus Conference a suc cess we gave away nothing from a Group B country The Washington Post concluded that no important agreements had emerged from New Delhi The attitude of the wealthier nations could be summarized as We dont need them they need us62 Once untouchable Prebisch himself was the object of irreverent conversation by journalists speculating on the need for unctad to enter a new era In a sober evaluation of the Conference for U Thant Prebisch declared the results to be positive though extremely limited and that although the results did not match expectations they were more promising than the impressions one would draw from the press or the statements of the ldcs63 However he could not hide his disappointment the lastminute package deal at New Delhi had left Prebisch acutely upset A global strat egy without concrete measures is just another document of pious declara tions without any practical consequences Privately especially to his Latin American friends Prebisch could not hide his bitterness at the meagre re sults of all his work New Delhi had not been a negotiating conference at all Just as the cocoa conference and World Bank supplementary financing The Gospel of Don Raúl 435 scheme had failed so too the results of unctad II were largely symbolic and the results showed that unctad was never likely to advance decisively toward the goals of commodity market organization trade liberalization supplementary financing or the 1 percent aid target let alone the broader issues of multilateralism and a global strategy U Thant de Seynes and other close UN friends disagreed that New Delhi was a failure and urged Prebisch to be more positive The surprise of the conference was not what it failed to accomplish but rather the modest advances that it actually achieved There were no breakthroughs of course as many had hoped for but such expectations were not realistic in complex international trade negotiations But this did not mean defeat and reforming the international shipping conferences in the interests of the Third World was remarkable however unnewsworthy unctad faced the longterm uphill slog of incremental change fighting inch by inch and issue by issue to reform the international trade system It had been a mis take to raise the stakes for unctad II so dramatically when an incremental approach was both more likely and appropriate they argued Prebisch ex pected too much too soon By UN performance criteria such as the grad ual inculcation of new concepts and standards the educative function through quality reports and expert meetings and the adoption of impor tant substantive measures unctads results since its birth in 1964 were more than impressive It was now established as an important new member of the international development community even WyndhamWhites conversion to trade and development with Part IV in the gatt and the creation of the imf Special Drawing Right on a universal rather than re stricted basis had to be seen as unctad successes similar to the l percent oda target in the General Assembly and other Group B concessions in the World Bank and other agencies64 Although ahead of its time Prebischs new international economic order was a permanent vision against which progress in the NorthSouth Dialogue could be measured That a gsp was now in sight marked an impressive shift in Group B thinking The G77 was now a permanent reality with chapters formed in the fao unido unep and the Group of 21 in the imf and World Bank65 unctad had already introduced many new development concepts such as least developed countries to address differences within the G77 or the plight of land locked countries Adding everything together Prebisch had no reason to be discouraged with his years of work since 1963 Immediately after New Delhi Prebisch was back in Geneva and New York to deal with the unresolved issues from the conference particularly moving forward with the gsp proposal There was traction he found the actual design of such a system was now possible and the unctad Trade and 436 The Life and Times of Raúl Prebisch Development Board would complete the negotiations in 1969 as planned By 1990 70billion worth of G77 trade would be gsp related And there was movement in other areas It was possible to finalize a compromise inter national sugar agreement in October 1968 although tarnished by an eec boycott and a botched ceremony when the US walked out to protest Cuban participation There were even hints of reviving the cocoa talks Prebisch scored another success in streamlining the clumsy unctad machinery Af ter twenty years of international bureaucracy the question had to be asked was the present system of proliferating organizations and meetings the best Prebisch asked ecosoc on 10 July 1968 He was able to reduce the number of Trade and Development Board meetings to one a year from two and discussed with U Thant the possible hiring of a compromise candidate from Scandinavia for the muchneeded position of a deputy secretary general66 He was also reconsidering the harsh criticisms of New Delhi many of the judgments passed on the unctad II were exaggerated he noted in his report to ecosoc at its fortyfifth session in July 1968 Seeds had been sown which could prove important if they received the care that would enable them to germinate and bear fruit67 Prebischs more optimistic mood disappeared as autumn approached On the night of 2021 August Dubceks Prague Spring was crushed by five thousand Soviet tanks and more than 200000 invading East Bloc troops He had visited Prague only days before at the invitation of Foreign Minister Jiri Hajek because Czechoslovakia had been elected to preside over the next Trade and Development Board meeting on 2 September in Geneva the revival of democracy in Czechoslovakia accented by Dubceks bold Action Program in April had been the one bright spot of a violent year marked by student uprisings in Paris civil rights protests in the US and the assassinations of Martin Luther King and Robert Kennedy Meet ing under the venomous cloud of Prague delegates from the fiftyfour countries were negative and confrontational and took out their bad humour by again criticizing Prebisch for the meagre results at New Delhi His response to G77 criticism was unusually direct condemning their re sistance to domestic reforms while demanding foreign assistance and on 14 September he went so far as to urge the board to rank developing coun tries seeking Group B support according to their acceptance of structural reforms and realistic development plans A negative dynamic had devel oped with the oecd retrenching and the G77 radicalizing both seemed to be moving away from the convergence advocated by Prebisch From Geneva to New Delhi he had struggled to avoid votes in favour of decisions by consensus compromise produced decisions votes paralyzed If one of the G77 opposed something the whole machinery was paralyzed the same The Gospel of Don Raúl 437 applied to most of the West Dr Prebisch has always favored an agreement by consensus an observer concluded and if that is not possible he has urged the application of the conciliation procedure68 But how much further could he go The group system had become so entrenched as to be untouchable It could not be changed without damaging the soul of the institution an internal review concluded69 The Pearson Commission commissioned by Robert McNamara when he assumed the presidency of the World Bank in early 1968 was the final disillusionment Determined to shake off his Vietnam bomber image McNamara sought a softer NorthSouth face and he adopted his predeces sors call for a Grand Assize of international development In a speech to the Swedish Bankers Association on 27 October 1967 George Woods proposed that an eminent persons group examine the declining interest of developed countries in international development and recommend measures to launch a movement for exceptional action to recapture momentum behind a second and more successful UN Development De cade70 Prebisch strongly supported this initiative endorsing it in a letter on 13 December and inviting Woods to repeat his message in New Delhi71 Who better than George Woods to lead this review after his retirement Raúl had urged since he knew what did and didnt work and had the con fidence of Group B countries a senior statesman who believed in the new international economic order and the need for a new burst of leadership to match resources and reform Your own vast experience and wise coun sel he repeated will continue to be invaluable But when McNamara established his Commission on International Development in August 1968 he chose former Prime Minister of Canada Lester B Pearson rather than George Woods to lead it a blow to Prebischs expectations However admirable in personality and diplomatic accom plishment and a deserved recipient of the Nobel Peace Prize for his work after the 1956 Middle East war Mr Pearson lacked comparable North South experience At first glance his commission colleagues were well cho sen primarily from the North as expected since the industrial countries shaped the international architecture of trade technology finance and cooperation either bilaterally or multilaterally through decisions taken in the gatt and the oecd Douglas Dillon US Sir Edward Boyle Britain Saburo Okita Japan Wilfried Guth West Germany and Robert E Margolin France Only two members were from developing countries Sir Arthur Lewis expatriate St Lucian and longtime Economics professor at Manchester University and Brazilian Roberto Campos the most polar izing figure in Latin America McNamara offered his World Bank staff to support the Pearson Commission which issued its report Partners in 438 The Life and Times of Raúl Prebisch Development on 15 September 1969 Ironically World Bank economists who had resisted supplementary financing before unctad II formed Pearsons backup team72 Decent and committed Pearson began his appointment as a listener and it became clear immediately that his goal differed from Woodss ear lier intention It was certainly different from Prebischs expectations When McNamara met Prebisch for the first time after New Delhi on 12 April 1968 the North American insisted that he was just as committed to inter national development as Woods Raúl consequently assumed that the emi nent persons group would strengthen his own Global Strategy of Development presented at New Delhi by mobilizing the political coalition necessary to underpin its implementation broadening unctads support beyond the G77 base and nailing down the responsibilities of both G77 and indus trial countries If the 1960s had been so far a Development Decade with out a development policy Prebisch explained to U Thant in May their main goal now had to be a great effort at persuading public opinion and thus creating political will for the success of the Global Strategy of Develop ment This is a matter of the highest priority73 New approaches had to be found to locate and mobilize new constituencies for rallying civil society support for NorthSouth relations Instead the Pearson Commission offered nothing more than another di agnosis of a familiar problem with a set of sixtyeight predictable recom mendations This seemed going backward to Prebisch the problem was implementation not the agenda It was as if unctad didnt exist as if the intellectual advance since 1963 in understanding trade and develop ment problems meant nothing unctad had just spent five years and held two global conferences studying the problem and identifying the agenda numerous specific proposals for action from supplementary financing on down were ready for implementation if governments so chose The Pearson Commission was a lost opportunity to mobilize support within and beyond governments instead of supporting Prebischs Global Strategy of De velopment it broke its fragile momentum by providing a convenient excuse for delay and inaction unctad was marginalized as simply another defen sive and weak Southidentified agency instead of the lead organization on trade and development within the UN system the bridge where North and South met for policy development and new approaches No new knowledge could be expected from such an exercise or in the event was gained Partners in Development was filed away as the first of many such proposals for international commissions74 The evident fact that both McNamara and Pearson meant well and thought they were doing the right thing made it all even worse The Gospel of Don Raúl 439 Prebisch believed that his vision of a new international economic order was checkmated at least for the time being The dual concepts of planning and a global strategy so dear to his Cartesian dreams of an orderly world where developed and developing countries took converging measures for their common longterm benefit were buried by the Pearson Commission He felt blocked more and more out of place either dinosaur or visionary conservative or radical losing his constituency in the G77 as well as the industrial North spreading the gospel of a new international economic or der that few wanted to hear His underlying support for market capitalism while demanding deep reforms left him without support in either camp Group B distrusted him the G77 feared his insistence on conditionality and reform WyndhamWhite had retired in triumph in summer 1968 like de Seynes he had been ahead of the game compared with Prebisch Clever de Seynes had been right at the beginning in 1963 when they had fought over the design of unctad trying to lower expectations while Prebisch had been carried away by his vision trapped by its logic at the expense of political realism Other friends like Hans Singer who was heading for Sussex University were leaving the UN while Prebisch remained on the frontline Continuing on only made sense if unctad had genuine clout while Prebisch understood that it could never be the World Bank or the imf it should be the worlds leading centre of research and ideas on trade and development and a forum for global negotiations within its UN man date He was not interested in another expensive consultative body if this is what it was to become as now seemed inevitable he was not interested in its leadership After 700000 air miles since 1964 with worsening arthritis Prebisch was worn out and disillusioned beset with a growing malaise His personal di lemma had worsened the toll of living in Geneva while dividing his time with Eliana in New York was rising A Raúlito visit to Geneva had to be clan destine like something out of John le Carré Eliana was impatient and Adelita lonesome in La Pelouse The British were complaining about his many transatlantic flights and time away the Africans accused him of never visiting their region Prebisch became testy and provocative Dell and Krishnamurti were vigilant in revising his dictations and helping him main tain his trademark balance after New Delhi The first rumours of Prebischs resignation swirled up during unctad II but U Thant moved quickly to quash the gossip by renewing his contract to 1 July 1971 persuading him to remain in Geneva for another three I 440 The Life and Times of Raúl Prebisch years to implement the resolutions from New Delhi75 Both men would then be seventy and could end their UN careers together U Thant needed Prebisch to consolidate unctad in these difficult times of war and finan cial uncertainty But only months later on 15 June Prebisch met Filipe Herrera in Washington for confidential discussions on a major new project outside unctad In April 1968 during the annual meeting of the Inter American Development Banks board of governors Colombias President Carlos Lleras Restrepo had proposed that the idb fund a major study on the financing of economic development in Latin America a key problem for the region which was experiencing low domestic savings declining international assistance disappointing export values and therefore inad equate growth Latin America needed a parallel analysis to that of the Pearson Commission to highlight its own needs and Herrera wanted to leave the bank on a creative note as his tenyear presidency drew to a close Prebisch was the only Latin American personality with the international prestige to give its findings the required legitimacy and he asked him to consider an offer Their first meeting produced a first draft of a study that bank staff elaborated and sent to Prebisch for his comments A month later on 24 July Herrera sent a revised draft incorporating Raúls sugges tions and looked forward to continuing their discussions on his next trip to Washington or New York Herrera was already discussing possible comple tion dates he wanted a report by May 1969 for the next meeting of the banks governing board clearly too early for Prebisch Nevertheless Herrera continued to move the project forward completing the budget and plan of operations on 21 October on the assumption that Raúl would direct it76 Prebisch had not yet consulted anyone on this new career track not even Dell or Krishnamurti and he had not yet made a decision to leave unctad implying to Herrera that a shortterm assignment would be covered by a leaveofabsence and refusing any salary beyond travel and per diem expenses77 But Prebischs mood changed in midNovember as the global discontent of 1968 enveloped Latin America On 2 October the Mexican Army and police killed and wounded hundreds of students in the Plaza de las Tres Culturas immediately prior to the Summer Olympics The massacre shocked the region the Mexican miracle was suddenly suspect its stabil ity now in question The following day a military coup replaced the elected president of Peru Fernando Belaunde Terry with General Juan Velasco Alvarado Che Guevaras capture in Bolivia on 8 October 1967 and his ex ecution a day later by military dictator René Barrientos had unleashed a wave of sympathy that deepened antigovernment insurgencies throughout the region When Felipe Herrera invited Raúl again for talks in Washington The Gospel of Don Raúl 441 he was more interested in new approaches to Latin American develop ment and events accelerated Prebisch was also visibly ill On 18 November he openly speculated on an early departure from unctad commenting that he had not yet made up his mind about the idb offer but five days later after consulting with U Thant about a replacement he tendered his resignation effective 1 March 1969 on grounds of poor health Manuel Perez Guerrero Venezuelas ambassador and permanent delegate to the UN a friend since 1944 would take his place at unctad In addition to re turning full time to ilpes he agreed to remain an advisor to U Thant and de Seynes in preparing the UN Second Development Decade78 News of Prebischs abrupt resignation was leaked before the official announcement and stunned friends and colleagues But the decision was final he would be returning to the Americas unctads heroic phase was over79 19 Trials in Washington Prebisch returned to Santiago Chile on 27 November 1968 five days after submitting his resignation to SecretaryGeneral U Thant The unctad years had aged him his arthritis had worsened Ashen he had fainted twice en route to South America and craved the peace of El Maqui for physical and emotional renewal But undisturbed in his garden over the Maipo River Prebisch quickly revived His arthritis subsided colour confi dence and his familiar energy returned El Maqui was again full of guests and it was evident that he had no plans for retirement Within a week he held a press conference denying rumours that he was physically ill and urging Latin American leaders to engage the newly elected US President Richard M Nixon it was essential that the twenty governments put aside their differences and agree on a regional Latin American agenda Confu sion deepened when he announced that he would be resuming fulltime duties as secretarygeneral of ilpes and would reside permanently in Santiago1 But when he left on 8 December for Washington via Mexico to finalize the terms of his new idb Commission on Latin American Develop ment rumours were swirling of his remaining abroad and a journalist re ported that Despite the wishes of the dama de la casa that don Raúl remain in Santiago it is clear enough that he will be away for some time yet2 After New Years Prebisch left for New York to attend a special meeting of the UN Regional Commissions Executive Secretaries on 1314 January 1969 en route to Geneva and his last address on 22 January to the unctad Trade and Development Board Tanned commanding and youthful in a new wool pinstriped suit Raúl declared that he had resigned on grounds of poor health I am not leaving unctad because I am frus trated or disillusioned but because the executive and diplomatic burden is too heavy for me I am leaving unctad in order not to fail This is the reason for my resignation I do not wish to fail3 On 1 March 1969 Trials in Washington 443 Manuel PerezGuerrero with his lowkey style attention to bureaucratic detail and negotiating patience formally assumed office Prebisch gave his final press interviews and attended the last farewells with unctad staff and friends in Genevas diplomatic community Raúl divorced and remarried Eliana Diaz Prebisch emerged effortlessly from the shadows as his official spouse at a New York reception hosted by Robert McNamara This decision could no longer be avoided Raúl Jr was six years old he needed his father and a stable household But the break with Adelita who accepted his decision with typical stoicism after thirtyfive years together was not and would never be complete or final She never felt that the bond was broken or that his feelings toward her had changed Raúl would continue to spend as much time as possible at El Maqui still without telephone service and would call her on Tuesdays when she took her weekly piano lesson in downtown Santiago He sent fresh flowers Friends everywhere however divided into warring camps with loyalties to respective wives in Santiago and Washington On 10 March 1969 Prebisch flew to Washington there really was no other possible location for a residence Eliana reclaimed her position with the imf there was no reason to keep the New York apartment at 340 64th Street Santiago was out of the question after his divorce from Adelita and he was politically more unwelcome than ever in Buenos Aires after President Arturo Illia was removed by General Juan Carlos Ongania in 1966 In any case his idb Commission on Latin American Development to result in a document titled Change and Development Latin Americas Great Task had to be directed from the banks headquar ters in Washington The US capital was in fact the perfect address for the global elder statesman part of Prebischs postunctad life He was one of the most recognized Latin American personalities in the world he was a member of the leading international networks and he had an unparalleled insiders knowledge of international organizations after his twenty years of UN experience New York was close to Washington for consultations with U Thant and de Seynes while Washington was the ideal perch for heading eminent persons panels such as the idb Commission on Development or responding to UN or Latin requests for special or emergency assign ments Prebisch also had a special cachet in Washington as unofficial envoy for the region His spacious house at 6804 Tulip Hill Terrace in Bethesda Maryland became a gathering place for Latin and US leaders I 444 The Life and Times of Raúl Prebisch and scholars a destination for offtherecord talks and social gatherings Welcomed by his many friends in the city Prebisch made himself available he was keen to listen and lead and he joined the International Club at 1800 K Street where he lunched daily when not entertaining at home or in his favourite restaurants JeanPierre Chez Camille Sans Souci Toque Blanc and the Boston Prebisch flourished in the constant flow of people and power of the US capital the unchallenged centre of ideas and innova tion in the Americas happy to call it my centre of operations The dilemma for Prebisch however was that Washington was a poor location for the other half of his professional life as directorgeneral of ilpes based in Santiago The institute was his first responsibility in 1964 he had committed himself to retaining the position during unctad and now on leaving Geneva he saw it as his vehicle for leading an increasingly ur gent debate on the future of Latin American development4 But Prebisch also needed the institute because he was chronically short of money and could not subsist on a UN pension With ilpes he maintained his unctad salary but it could barely cover two households mortgages and a passion for cars he bought a white Mercedes 230 for his time in El Maqui and left him scrambling to pay the bills with extra income from speaking engage ments and travel per diems He would split these proceeds with Adelitas account but on occasion a slim balance resulted in dishonoured cheques Entertainment expenses up to ten lunches or dinners per month includ ing events in Europe when he was not in Washington could be clawed back and he even kept a detailed record of his tips for reimbursement Diplomatic privileges held down expenses his maid Maria Luci Loudrono de Arenas was brought in on a G4 visa not just Argentine wines but lib eral consignments of spirits champagne caviar and sherry arrived without tax and import duties for his private lunches and dinners In distant Chile Adelita grew a vegetable garden and watched every penny eking out a small profit from their rented house in Buenos Aires On her trips there she policed Raúls tailor Amadeo Maiolino on 570 Esmeralda for the highest quality at lowest cost Caught in the trap of needing ilpes but hav ing to live in Washington Prebisch convinced U Thant to approve a joint eclailpes office in the small Washington branch of ecla on the argu ment that the institute would benefit from the idb commission and his new base in the US capital But the joint office was little more than a ce lebrity perch no additional staff were hired beyond his everloyal personal secretary Bodil Royem who coordinated a heavy schedule of lunches and dinners funded by a representation allowance of 3500 per year and arranged his travels to and from Santiago Trials in Washington 445 Raúls dual careers of global elder statesman and directorgeneral of a regionally based UN institute were bound to conflict the former was post retirement where he was really free to do and say what he wanted while ilpes required the support of Latin governments which limited his inde pendence Despite its autonomous status even one powerful challenge as Campos had demonstrated in 1964 could paralyse the institute direct ing it therefore required handson management and constant negotiation with regional stakeholders Here Prebisch was at a disadvantage he had not lived in Latin America for years and his generation was being replaced though retirements and changes of government his international visibil ity did not necessarily translate into advantages in Santiago Above all ilpes required strong leadership to safeguard its independence living in Washington at the other end of the Americas magnified Prebischs chal lenge of managing two careers his institute staff wondered how much time he would have for them and how he would resist the temptations of special offers for speaking teaching or consulting in the North when they needed him so badly in Santiago Meanwhile younger leaders to whom Prebisch seemed a member of the venerable old guard had ideas and ambitions of their own This underlying generational tension awaiting Prebisch as he returned from unctad surfaced immediately after the inauguration of President Richard Nixon in January 1969 After the disappointing years of Lyndon Johnson Latin Americans were willing to reach out to Nixon despite the old negative images preferring his oldfashioned realism to the ideological paranoia of WW Rostow banished forever to a harmless professorship at the University of Texas or Lincoln Gordon whose warnings of the com munist hordes in Brazil turned out to be a fantasma of his fertile Harvard Business School imagination Even the appointment of Henry Kissinger as National Security Advisor seemed reassuring at first although his last known reference to Hispanic America was to the War of the Spanish Suc cession of 1821 he seemed a principled and intelligent conservative who understood the concept of enlightened selfinterest in US foreign policy someone to talk to after the unreliable Great Society dogooders of the chaotic Johnson years On 19 January 1969 the heads of Latin Americas three main Washington bureaucracies Felipe Herrera SecretaryGeneral Galo Plaza of the oas and Carlos Sanz de Santamaria of ciap asked Prebisch to prepare a letter to President Richard Nixon with recommenda tions for the new period approaching in USLatin American relations He agreed keen to lay the political groundwork for Change and Development Latin Americas Great Task The assignment fit perfectly with his role as elder 446 The Life and Times of Raúl Prebisch statesman an economist with international perspective close ties with the UN and interAmerican networks and a Washington insider His carefully crafted note stressed the need for reviving cooperation in the diplomatic vocabulary of mutual interest and reciprocal benefits Nixon announced the appointment of Nelson Rockefeller to head a new commission on US Latin American relations Prebisch looked forward to its work in charting a new path However the governments of Latin America sought a more direct ap proach to President Nixon and looked to Chiles multitalented Foreign Minister Gabriel Valdes to prepare a regional foreign ministers meeting The imposing and aristocratic Valdes riding the coattails of President Edu ardo Frei had emerged as the most dynamic foreign minister in Latin America after 1964 and this new initiative solidified his visibility in the re gion His idea was to create a new Latin American Forum including Cuba but without the US in short an authentically regional voice by recasting cecla Special Coordinating Committee of Latin America which had been born in late 1963 as unctad took shape with Prebisch as midwife to serve as a Latin branch of the G77 Instead of a caucusing mechanism for Latin American governments in global trade negotiations the new forum would become a permanent foreign ministers group and its first task would be to develop and send a message to Richard Nixon on USLatin American relations At its meeting from 31 March to 7 April at Viña del Mar in Chile with Patricio Silva Chilean ambassador in Washington as his lieutenant he challenged his fellow foreign ministers to be frank with Nixon about their profound dissatisfaction with US policies and to assert what they ac tually thought and wanted rather than retreat in fear behind the customary pleasantries on interAmerican relations5 We agree he noted that we have to be realists but not timid compromised small timid or cowards and he proposed the nineteenpage Consensus of Viña del Mar which the as sembled foreign ministers requested him to deliver personally to the White House on their behalf6 The subsequent meeting in Washington confirmed his fame in Latin America You come here speaking of Latin America Kissinger sneered but that is not important Nothing important can come from the South History has never been produced in the South The axis of history starts in Moscow goes to Bonn crosses over to Washington and then goes to Tokyo What happens in the South is of no importance Youre wasting your time7 Valdes stood his ground he was now an acknowledged regional personality and a rising power in the region Prebisch and Valdes were on a collision course although not on ideolog ical grounds Raúl attended the Viña del Mar meetings and was unim pressed with the Consensus which he saw as a wordy cocktail of old recipes Trials in Washington 447 and tired exhortations all over the map and with a superior tone Its many pages of good advice for Washington and US companies on everything from tariffs to transportation were bound to be rejected by any US adminis tration especially one facing a serious war and its first deficits since 1945 But its overall conclusions were not in conflict with his own Moreover President Eduardo Frei and his government were Prebischs closest politi cal allies in Latin America representing his ideal of developmentalism and Valdes himself had played a key role in supporting unctad Instead the issue dividing Prebisch and Valdes was ilpes Valdes loathed it as a nest of socialists interfering in Chilean politics who had strayed very far indeed from the institutes original purpose Presidential elections loomed in Sep tember 1970 as a senior Christian Democrat he was furious with institute staff for promoting Salvador Allende and his Popular Unity Front coalition and demanded that Prebisch do something about it For Prebisch such crit icism from a leading member of the host government was cause enough for concern Valdes was likely to succeed Frei as leader of the Christian Democrats but his regional stature made it even worse He would be a formidable opponent whether his party won or lost the approaching elec tions if the Christian Democrats lost Valdes would have sufficient political backing to come forward as automatic regional nominee for the next big UN job the most likely opening to be in the rapidly expanding United Nations Development Program the institutes main funder Prebisch agreed that the institute had become politicized but argued that Valdes was wrong in focusing his anger on Allende supporters there were as many activist Christian Democrats as socialists in ilpes and the line between research and advocacy was increasingly being crossed by both camps But the larger challenge facing the institute of which Valdess com plaints were merely the most visible symptom was that it had been floun dering since Prebisch left for Geneva and had to be fixed urgently The leadership issue had remained unresolved Furtado had left Santiago Chileans Osvaldo Sunkel and Anibal Pinto had the intellectual credentials to lead ilpes but lacked executive ambition the reverse of the Argentine contingent The result had been the continuing compromise of Mexican Cristóbal Lara as Raúls deputy but he was unable to assert control over the factions Raúls visits to Santiago since 1964 had been too few and too brief sometimes ilpes officials would go to the airport for briefings and instructions while he changed planes Benjamin Hopenhayn his trusted lieutenant and troubleshooter was disliked for his tight control over ilpess operations and the executive group As early as February 1965 José Medina Echavarria lamented to Prebisch Your continuing absence here is painful8 The work atmosphere became 448 The Life and Times of Raúl Prebisch poisonous morale and productivity were low Prebisch was informed that only half of his staff arrived on time for work9 By 1966 resignations began Osvaldo Sunkel departed on leave to Cambridge Fernando Henrique Cardoso left ilpes for the University of ParisNanterre By 1967 the lack of leadership in ilpes was a common topic in Santiago But the deeper problem facing the institute was its failure of innovation since 1964 which made nonsense of its ambition to be a regional leader in ideas and research an autonomous thinktank freed from immediate government pressures and UN bureaucratic politics The arrival of Celso Furtado and Fernando Enrique Cardoso could have launched frontier work on multinational corporations in the region but Prebisch had pointedly curbed this area of research in 1964 after Campos had threatened the insti tute The same fate awaited an ambitious project on marginalization ap proved by the institutes executive group and directed by the precocious Argentine scholar José Nun No research area was more important in Latin America given the rise of chaotic urban slum settlements fed by mass migration from rural areas Following the 1965 US invasion of the Domini can Republic this topic became politically controversial at a time when Prebisch needed US support for unctad he instructed Nun to scale it back and halt fieldwork and the project collapsed10 These messages did not encourage new thinking and ilpes had few published works to show for itself after eight years of existence Fernando Henrique Cardoso and Enzo Faleto had developed an internal study examining the new networks and forms of relationships emerging between Latin America and the industrial powers but Prebisch had vetoed its publication It appeared instead as Dependency and Development in Latin America11 If Prebisch rather wistfully compared the leadership role of the early ecla We didnt know much but we knew more than the others with what he called the present isolation of ilpes he had to take considerable responsibility for the mal aise The same problems had dogged its planning activities as Latin Ameri can governments no longer needed the institutes traditional offerings they wanted fundable development projects not more general studies Before he had left Santiago in 1966 José Antonio Mayobre asked rhetorically Why are the most successful countries in the region precisely those which have not received ilpesecla planning missions12 Attempts since 1963 to develop a niche market in consulting services had also failed Various governments Venezuela Dominican Republic Central America had tried ilpes but staff were not equipped for this role another weak point in our work Prebisch admitted Meanwhile the oasidbecla Tripartite Commit tee had folded officially in 1967 In training as well ilpes had worked itself Trials in Washington 449 out of a job More than five thousand professionals had passed through Santiago a whole generation of Latin Americans since the first ecla courses began in 1953 But now there were other training institutes Latin American educational establishments had matured and if ilpes wanted to stay in the training game it would require a new approach with more spe cialized and creative initiatives In short ilpes needed a fundamental overhaul and was dying from ne glect After a painful administrative scandal in June 1968 Prebisch prom ised his staff that he would give them more attention Now that the great intensity of work for New Delhi is over he wrote I intend to devote a sub stantial part of my time to the Institute13 When Prebisch suddenly re signed from unctad they were delighted with the imminent prospect of his return The US Embassy also welcomed his return to restore the insti tutes capacity and prestige Everyone waited But Prebisch bought a house in Washington and in 1969 would lead the idb Commission on Latin American Development which would postpone his attention to the insti tute for another year Nevertheless Prebisch brought together his board of directors in August 1969 and convinced them that his original vision of ilpes as the foremost policy research centre and networking hub on Latin American development was more important than ever and that the institute would regain the initiative with a brandnew mandate after the completion of his idb commission He insisted that the idb commission was actually an ilpes contract with himself only its executive director14 In the meantime he proposed and the board accepted a set of interim measures to restore momentum a special seminar composed of planning ministers in the re gion a dialogue of practitioners comparing concrete planning experi ences and practical lessons rather than mere theoretical discussion and a new program of resident senior Latin American practitioners15 To stiffen staff morale during his continuing absence he held out the prospect of creating a new research journal and raised the possibility of a special proj ect called The Volume a definitive multidisciplinary analysis of Latin American development embodying the collective experience of ilpes and ecla a vulgate Raúl called it for development specialists and a landmark work upon which the institute could reclaim the intellectual high ground in Latin America To tighten internal procedures Prebisch designated Argentine Oscar Bardeci as his new lieutenant and point man within the institute To shore up external confidence he hired a good American William Lowenthal to work within ilpes as his special advisor in Santiago very much on the early ecla model of Lewis Swenson These 450 The Life and Times of Raúl Prebisch measures behind a convincing show of leadership resolved the immedi ate crisis revived a favourable working atmosphere in the institute and liberated Prebisch for the final phase of the idb Commission on Latin American Development Unlike Lester Pearson with his goldplated World Bank Commission on International Development Prebisch worked with a small budget of 206680 reduced from 240000 with his own salary already covered by the UN Most of his staff were to be seconded from the idb ecla or ilpes and the small project office of five fulltime economists was housed in the idb in Washington He therefore started with a serious staff disadvantage in numbers quality and international experience particularly the absence of top UN officials like Sidney Dell or Krishnamurti who had helped shape ideas with their severe but loyal criticism Unlike at unctad where he could attract the best minds available for shortterm assignments he lacked a budget for mobilizing international talent Enrique Iglesias fulltime co ordinator of the project was his key collaborator President of Uruguays Central Bank between 1966 and 1968 and currently the chair of ilpess board of directors Iglesias was marked for rapid advancement in inter American politics He had admired Prebisch since they first met in 1951 at eclas third commission meeting in Montevideo while Raúl saw him as the next executive secretary of ecla to reverse its declining fortunes Prebisch had a deadline of 20 April 1970 when Change and Development Latin Americas Great Task would be presented to the eleventh annual meet ing of the idb governing council in Punta del Este The question facing him from the outset was his terms of reference The original idea when the concept was proposed in early 1968 was a narrow examination of the prob lems of financing development in Latin America The advantages of such a tightly focused commission on financing would be clarity depth and oper ational recommendations the potential disadvantage would be missing the key obstacles to growth and therefore the irrelevance of the entire effort After a first factfinding tour of the region in early 1969 Prebisch decided that it was essential to expand the terms of reference Wherever he looked from the crisis in USLatin American relations to Latin American domestic politics which were polarizing before a tidal wave of political anxiety or to the bankruptcy of the oas the region was at a crossroads a broader analy sis was required The growing antiAmericanism in Latin America became evident when the Rockefeller Commission tried to hold regional hearings in May and June 1969 and confronted a repeat of VicePresident Nixons I Trials in Washington 451 disastrous 1958 visit Opposition groups students and workers dismissed it as a public relations stunt from the beginning and while Latin leaders ac knowledged that Rockefeller was a moderate in USLatin American rela tions he was sufficiently identified with the US oil majors to be pilloried throughout the region when Peru announced it would nationalize a sub sidiary of Occidental Petroleum on 23 August 1969 and signed a first trade accord with the Soviet Union Student and union protests in Venezuela forced the commission to cancel its hearings altogether it quickly re treated to the airport before mobs in downtown La Paz and President Frei cancelled the planned Rockefeller visit to preempt hostile demonstrations in Santiago Only the rightwing military dictatorships of Brazil and Argen tina unconditionally welcomed the US delegation16 Mirroring the decline in interAmerican relations the oas was in eclipse as regional interlocutor discredited by endorsing the US invasion of the Dominican Republic in April 1965 in which Johnson sent 25000 marines to defend the US against yet another communist threat Even the Brazilian generals who played the role of loyal subaltern in the Dominican affair in a bow to Johnsons support of their conspiracy in the 1964 coup distanced themselves from Washington thereafter When Prebisch had left ecla in 1963 most countries were constitutional democracies after the 1964 Brazilian coup military dictatorships had spread to Bolivia Argentina and Peru with escalating violence guerrilla warfare and counterinsurgency operations The instability of 1968 had carried over into the new year In July 1969 war broke out between Honduras and El Salvador and Bolivia suffered yet another military coup on 29 September Terrorism and kidnappings were on the ascent in early 1970 The US am bassador to Brazil and a US military officer were kidnapped in Rio on 6 March another US Embassy official this time in Guatemala was abducted The Japanese consulgeneral in São Paulo was kidnapped a few days later on 11 March followed by a US air force attaché in Santo Domingo on 24 March During the following week in Argentina a Paraguay consul and a Soviet Em bassy official were kidnapped by left and rightwing groups respectively and the German ambassador to Guatemala was assassinated on 31 March 1970 as delegates assembled for the idb annual meeting Latin America was growing apart rather than integrating Brazil and Argentina were rattling sabres their borders practically closed to trade fa tally undermining lafta Latin America Free Trade Agreement and the HondurasEl Salvador conflict destroyed the Central American Common Market While the Cartegena Accord of May 1969 created the Andean Pact a regional integration project for the five Andean countries including Chile Perus new military ruler General Juan Velasco Alvarado was 452 The Life and Times of Raúl Prebisch pioneering a particularly unsustainable brand of Peruvian socialism Venezuela and Colombia appeared to be stable democracies but both political systems remained elitedriven and conflictprone Virtually every country faced new and complex prospects Brazils gdp was growing at over 11 percent a year as its 196873 economic miracle took hold with Campos boasting that the Latin countries doing best had the worst distri bution of incomes behind a strategy of open multinational corporation investment macroeconomic stability and social discipline17 But press cen sorship and political repression aside the future of the economic mira cle was linked to the millions of migrants arriving in cities without prospects of education Mexico where two decades of high growth had produced sufficient confidence to print the official pesodollar exchange rate in school textbooks no longer looked so stable after the 1968 student massacre Argentina was trapped in an escalating cycle of economic stagna tion and political violence and an abortive military mutiny on 21 October underlined the political fragility of Chile Prebisch therefore convinced the Bank to expand his terms of reference for a fullscale political economy analysis of the region The region con fronted a supremely significant turningpoint in Latin Americas history and needed new thinking on development rather than ideas that have been left behind by the demands of an increasingly complicated set of circumstances18 eclas doctrine of the 1950s for example needed renewal The challenge was transformation rather than a technical fix in short Change and Development Latin Americas Great Task would return to first principles rather than repeat the backwardlooking approach of Pearsons Partners in Development Additional funds of 98200 were re quired but Prebisch convinced Filipe Herrera that no other approach was realistic The result of such a spectacular expansion in scope however guaranteed that Change and Development Latin Americas Great Task would be vulnerable to familiar criticisms of projects with impossible deadlines It was an achievement to rush out a draft in Spanish for the April 1970 dead line the translation to English not yet available But it was overly long and repetitive and lacked editing and there were evident and inexplicable gaps19 Sections were leaked The tone of the report was reported to be sombre but Prebisch denied that it was fatalistic only realistic he argued Take note brother Sancho he quoted from Don Quixote in the preface that this adventure and those like it are not adventures on is lands but at crossways20 Uruguay itself was on edge for the idbs tenth anniversary annual meet ing violence was intensifying and security at Punta del Este was tight The Trials in Washington 453 Tupamaros a national liberation movement formed in 1965 among sugar workers in the north of Uruguay had evolved into a highly effective clan destine urban terrorist organization destabilizing one of Latin Americas most solid and wealthy democracies A spectacular prison escape on 8 March contributed to the prevailing sense of urgency and the meeting was there fore as guarded as a military headquarters creating a Hitchcock scene of Army trucks against moonlight seascapes21 It was offseason and except for the 1600 delegates and military police the enclave was deserted Trea sury Secretary David M Kennedy led the large US delegation which in cluded eleven wives of assorted congressmen and staff and its own secret service contingent and which occupied an entire apartment building at the tip of the narrow peninsula jutting out from Punta del Este Jack Daniels was selling for 4 a bottle Although not to be compared with Douglas Dillon in August 1961 with his fine French wines and elegant soirées Kennedys oldfashioned hospitality offered delegates a muchneeded ref uge from a dreary gathering But the deteriorating situation providing the backdrop to Prebischs Change and Development Latin Americas Great Task could not be ignored Latin America Prebisch told the assembled delegates was doomed to political extremes unless it accelerated economic growth Rapid popula tion growth alarming unemployment and increasing migration to hard pressed cities accentuated social exclusion soaking up this surplus labour and limiting poverty and inequality were essential to head off violence and social conflict which were polarizing the region The political turbulence throughout Latin America was increasing in cities and among the rural masses Time was running out revolution was on the horizon The grad ual aggravation of the ills besetting the Latin American economy is of course creating a propitious moment for ideologies which advocate trans forming the system root and branch Prebisch warned22 Populism was not the answer as a menace to sound regional development it equalled MarxismLeninism in the absence of strong convictions and in default of a wellknit system of ideas populism resorts to the unfailing device of using emotion in order to exalt the charismatic figures Populism is therefore not an acceptable alternative to a development discipline The root cause of the crisis was the exhaustion of the model of inward looking development and the onset of dynamic insufficiency The cost of import substitution Prebisch noted must count for much in eco nomic calculations it had long since served its purpose and was now gen erating another crisis of developmentalism in which Latin America was declining in trade and production in global terms while Asian economies 454 The Life and Times of Raúl Prebisch were advancing23 He warned that simply for the absorption of the labour force coming into the market Latin America required an 8 percent annual growth rate 2 percent higher than the level set for the UN Second Development Decade and well above the regions 52 percent growth rate since 1945 Such an increase required stepping up the investment rate from 18 percent in Latin America to the Japanese level of 27 percent and progress on eliminating the waste of Latin Americas considerable intra regional trade potential An overall rational approach to avoid excessive protectionism was essential including the promotion of foreign trade es pecially industrial exports the elimination of protectionist structures and greater international competition to improve productivity the promotion of private foreign investment and urgent taxation reform to increase domestic savings24 Prebisch had made these points before particularly during the last years of unctad The innovation of this Prebisch report was bringing them to gether into one systematic analysis with explicit links among economic re forms social change and development in Latin America From unctad he had seen South Korea for example apply the ecla doctrine much more successfully than Latin American countries Like Prebischs pre1943 work in Argentina that doctrine sought a combination of inward and out ward orientation but South Korea had been able to link success in export ing with companies producing for the home market The difference with Latin America was not doctrine but rather government policy and South Koreas policymaking reflected its more equitable social structure with ac cessible public education and successful land reform Latin American gov ernments remained elitedriven and weak less able to resist the special interests that undermined national purpose and priorities in development The causes of the difference in performance were less technical or related to resource deficiencies than institutional25 Restoring dynamism in Latin America therefore implied structural reforms social mobility and educa tion agricultural reform redistribution of income from the upper classes and above all the need for what he termed the discipline of development honest governments mobilizing support for rational development strate gies to foreclose both populism and socialist command economies It followed that Change and Development Latin Americas Great Task was highly critical of existing governments in the region Latin Americans Prebisch argued had to recognize hard facts inescapable realities and the need for changes in structures and mental attitudes with governments taking conscious and deliberate steps to influence them They should look first to their own failings rather than those of outsiders or the international system The chief effort in development must be internal Latins must Trials in Washington 455 discard their ingenuous and irresponsible optimism that development was synonymous with external cooperation The time has come he said to shake off the alltoocommon habit of attributing the inadequacy of Latin Americas rate of development to external factors alone as if there were no major internal stumbling blocks in the way We must fully recog nize our own responsibility It is inconceivable that an 8 growth rate can be reached in Latin America in the absence of profound changes in the economic and social structure and in attitudes towards the develop ment process And without these big changes even the best policy of in ternational cooperation is bound to fail If the developed countries as is often said must have the political will to cooperate the developing countries too must have the political will to introduce fundamental reforms into their societies26 Richard Nixon ought to be Raúl Prebischs most ardent admirer Stephen Rosenfeld of the Washington Post reported from Punta del Este it is apparent that the report is awfully good news for the United States27 But Prebisch also based Change and Development Latin Americas Great Task on his New Delhi Global Strategy of converging measures underlining the need for greater US and oecd commitment to Latin American develop ment strengthening international trade increasing oda to 1 percent gdp from developed economies and greater private sector investment Al though foreign aid was secondary to domestic efforts it remained a critical support for governments trying to increase production while facing grow ing political demands from the masses These national majorities as he called them had to be given a greater share in economic and political power an increasing level of international cooperation could ease the pressure on governments and help them maintain stability Prebisch was sombre on the prospects of such assistance materializing since there had been a significant outward flow of resources from Latin America to the de veloped world during the 1960s Felipe Herrera thanked Prebisch on behalf of the assembled delegates calling Change and Development Latin Americas Great Task a document of great importance and appealing to governments for increased lending ca pacity to meet the proposed growth target of 8 percent David M Kennedy agreed announcing that Washington would underwrite 18 billion of the projected 35 billion capital infusion required for the Bank to increase its lending capacity by 50 percent28 With that Herrera declared the annual meeting his last before retirement a success Still as the last delegates packed up to leave Punta del Este armed Perónists reminded them of 456 The Life and Times of Raúl Prebisch regional realities General Pedro Arumburu was captured and executed a settling of accounts as promised for the 9 June 1956 massacre of workers in Buenos Aires The institute staff in Santiago were delighted to see the end of the idb com mission Not only would Prebisch return to fulltime duties but Change and Development Latin Americas Great Task strengthened their mandate and fu ture opportunities Manuel Balboa Benjamin Hopenhayn Ricardo Cibotti Norberto Gonzales Oscar Bardeci and Giner de los Rios had worked over time deep into the night for months to complete the report and recognized that it could restore a leadership role to ilpes Prebisch had demanded new thinking for a new period of Latin American development and challenged both the dependency theory prevalent on the Latin left since the mid 1960s as well as the neoliberal authoritarian model being applied in Brazil and supported by economists at the University of Chicago and followers in Latin America and elsewhere His new developmentalism endorsing inter national trade market capitalism and reform of the state along with liberal democracy planning and international governance positioned Prebisch in the theoretical middle where he wanted to be and the timing was per fect with isi modernized after twentyfive years Latin America needed a completely new debate on development models and ilpesecla had a comparative advantage in leading it Santiago had research strength in key areas such as informal markets and marginalization Its turn finally seemed to have arrived29 But this opportunity could not be realized without Prebisch himself lead ing the effort to retool ilpes and he had less time than ever after April 1970 A first wave of briefings speeches and special events accompanied the release of Change and Development Latin Americas Great Task the inevi table byproduct of any major international commission but of particular intensity given its controversial findings The idb struck a special task force to work with Prebisch on distilling specific recommendations from the massive tome uncertain what to do with it since its academic structure gave little actual policy direction Then a special emergency mission was set up to coordinate a relief strategy after the 31 May earthquake in Peru U Thant asked him to lead it on 22 June and he felt unable to refuse Nor could he refuse joining the secretarygeneral and other members of the UN top echelon for the celebrations marking the opening of the Second UN Development Decade He did pass through Santiago in July but left af ter two days for Lima promising to return soon to follow up on Change and I Trials in Washington 457 Development Latin Americas Great Task But when Prebisch did return for ten days on 8 August Santiago ilpes ecla and the entire country were caught up in the approaching presidential elections Polls showed that Salvador Allende the Christian Democrat Radomiro Tomic and Conserva tive Jorgi Alessandri were roughly equal in public opinion support but all could agree that this was one of the most important elections in Chilean history Eduardo Frei was denounced by the left because his Chileanization of copper land reform and educational programs were too timid while the right criticized him as a radical Washington which under President Johnson had provided Chile with the highest US aid per capita in Latin America disliked his independent foreign policy and the reopening of diplomatic relations with Moscow Chiles sluggish growth and inflation meanwhile undermined the chances of reelection for the Christian Dem ocrats But the possibility of Allendes victory had polarized the country and the heavily Chileanized ilpes and ecla were split into four hostile camps the largely middleclass Latin economists were equally divided be tween Allendes UP and Freis Christian Democrats the secretaries women from the Chilean upper class solidly supported the antiAllende Conservative opposition clerks waiters and casual help from the lower middle class were determined Allende supporters and the nonLatin inter national professionals stayed out of the national political struggle content with buying farms and vineyards with their hardcurrency salaries The na tional ideological struggle pervaded the entire UN compound with active campaigning for the rival political parties Not much it was agreed could be done before the political situation cleared and Prebisch left Santiago for Washington and New York where he was invited to join U Thant on the podium in formally introducing the UN Second Development Decade on 24 October Ten days before this event however he was called urgently to Buenos Aires where his brother Alberto recently appointed director of the National Academy of Fine Art and Urbanism had died suddenly The two had been inseparable on arriving in Buenos Aires destined for differ ent careers and social trajectories they were eventually estranged by con flicting politics Albertos abrupt death preempted the reconciliation for which both had hoped Meanwhile Salvador Allendes election victory on 4 September 1970 stunned Chile and the region but his Popular Unity Front had taken only 363 percent of the vote against 349 percent for Jorge Alessandri and 278 percent for the Christian Democrats and so close a result required the Chilean Congress to decide the winner Since the nonsocialist parties outpolled Allendes coalition by far it seemed probable that Allende would be blocked by a TomicAllessandri deal But Allende promised to respect 458 The Life and Times of Raúl Prebisch Chiles democratic process Chile had a long tradition of party alliances Tomic and Alessandri could not cooperate and Congress endorsed Allende to take office on 4 November Thereupon the new president with one third of the popular vote opened a campaign to transform Chilean society by breaking the power of the elite The central objective he declared is to replace the present economic structure ending the power of monopo listic national and foreign capital in order to begin the construction of socialism30 Kissinger snorted I dont see why we need to stand by and watch a country go communist due the irresponsibility of its own people The Chilean elite agreed Nixon and Kissinger detested Allende even more than Frei Already in March 1970 a socalled 41 Committee chaired by Kissinger had approved funding for antiAllende electoral propaganda Livid at failing to prevent his victory Washington placed Chile on its geo political hit list as a pawn in the Cold War and outpost for CubanSoviet ex pansionism determined to destabilize its economy and government by fair means or foul Allendes victory was a turning point for Prebisch ilpes and ecla headquarters as a whole Prebisch did not trust the UP worrying that Allende would lose control of the movement Both Allende and Frei were friends and regular visitors at El Maqui During a dinner with the two poli ticians just the three of them he twitted Allende on class experience and his socialist credentials You have never put one foot inside a callampa squatter shack31 Chile was for him a country of fundamental impor tance in Latin America and now he saw the end of its leadership role for developmentalism in Latin America Allendes victory also completed the politicization of ilpesecla with Pedro Vuskovic becoming minister of economy and Gonzalo Martner the new minister of planning Allende said only half in jest If I fail it will be eclas fault32 A bad work environ ment became even more poisonous after November 1970 Lowenthal who arrived in Santiago full of energy wrote Prebisch My desire for your re turn is personal in the sense of wanting to discuss with you ways in which I can be of service to the Institute I consider my present position to be much on the periphery There are no regular meetings of the staff in which division heads and the executive officers can learn about what is go ing on or discuss ideas of mutual concern I have not been invited to any of the meetings which take place on the problems facing the Institute33 It was the worst moment for Prebisch to announce that he would be directing a thirteenweek graduate seminar at Columbia University begin ning in January with weekly commuting to New York from Washington and therefore would have no time for the institute until mid1971 Andrew Trials in Washington 459 Cordier former UN undersecretary Hammarskjölds special representative and outgoing president of the university personally invited him and he again could not refuse It fits very well with my wish to open my Institute to winds from the North34 he responded but it was a serious error of judg ment I should have been at ilpes when they needed me he later la mented35 Staff were further demoralized Cristobal Lara and the institute lived in confusion worry and private despair Recruiting international staff became impossible the dreams of attracting scholars like Yale economist Carlos Diaz Alejandro faded when he turned down their offer on 20 Febru ary 1971 Even qualified Latin Americans had other jobs only Chileans and Argentines it seemed were available in abundance to distort even more an already geographically lopsided staff The financial outlook was perilous Latin American governments most pointedly Brazil and Argentina were not interested in providing financial support fundraising from Canada Western Europe and the Ford Foundation was uncertain The undp United Nations Development Programme had been its primary supporter since its creation in 1962 and its contribution to the institute had been renewed in 1965 without opposition but at the undp governing council meeting in January 1971 only a threeyear phase was approved worth 39 million Ortiz Mena the new president of the idb was not sympathetic and cut its support from 1050000 to 437500 this left a 40 percent shortfall and did not even cover staff costs requiring drastic cuts in all six divisions and the shortening of staff contracts from three to two years36 Lowenthal who had emerged as ilpes financial advisor reported to Prebisch on 23 April I hope Don Raúl that this letter doesnt give you indigestion It is a sad reality that we cannot maintain our staff without all kinds of finan cial gymnastics and constant worry Paul Hoffman had retired as managing director of the undp and Prebisch barely knew his successor US banker Rudolf Petersen who was reorganizing his New York headquarters Now the largest funder of techni cal assistance in the world the undp had become a powerful international agency and an advisory committee on its future proposed that four re gional directors be appointed to oversee all UNrelated work in their regions and report directly to Petersen Approved during the 24 January 2 February 1971 meeting of its governing council the new undp structure required a Latin American regional director and Gabriel Valdes was ap pointed immediately He in turn lost no time in hiring Patricio Silva as his assistant With Chilean Christian Democrats in the political wilderness after losing to Allende they took aim at ilpes as a badly managed UN or ganization that had allowed leftist elements to distort its mandate and 460 The Life and Times of Raúl Prebisch interfere in Chilean internal politics The danger was suddenly obvious Prebischs last base in the UN system was under hostile fire and he commit ted himself to ilpes at last After his Columbia lectures Prebisch spent an uninterrupted six weeks in Santiago with his ilpes team reestablishing administrative control over the institute and preparing a new plan for future operations37 He turned down another teaching offer this time by RosensteinRodan at Boston Univer sity he vetted internal documents and demanded weekly reports he set up an editorial board for the proposed journal and allocated articles for the first issue and he tried to preempt Valdess criticism of professional stan dards with an internal review committee for curricula and publications To improve morale within ilpes he promoted all six directors four Argentines and two Chileans to L6 over the opposition of Quintana who had denied a similar request by the ecla directors on budgetary grounds Prebisch worked on US ambassador to Chile Edmund M Korry a dove and potential UN ally in the Nixon Administration to reverse his negative attitude toward ilpes Most of all he sought a secure independent funding base for the institute to limit its dependence on the undp The inevitable result was hustling for external contracts to cover the im mediate shortfall while convincing the undp and idb to maintain their longterm commitments There were successes Money was obtained from Canada and Holland but neither was likely to continue if Latin governments refused to contribute financial support However the Ford Foundation was interested in developing a multiyear program of resident practitioners from Latin America to spend a year at ilpes for advanced professional train ing This was a sound concept and it proposed funding an immediate pilot project for 1971 to get it under way But to the anger of the Ford Founda tion Prebisch appointed Sergio Molina Freis exminister of finance as the first residentpractitioner before selection procedures had been approved and despite his membership on ilpess board of directors Not only was the appointment of a senior unemployed Chilean Christian Democrat question able under these circumstances but Molina was given the top salary scale in hardcurrency dollars In August 1971 Prebisch saw another major opening when Nixon abandoned the gold standard and terminated the postwar Bretton Woods era He proposed an ilpesled continuing seminar in Washington for development bank and usaid officials to examine these im plications for USLatin American relations involving senior economists in the study including Gottfried Haberler who had retired from Harvard and moved to Washington The initial response was favourable and a multi agency working group was set up draw up a funding proposal Haberler noted that I find myself in agreement with most of what you are saying38 Trials in Washington 461 The attempt to diversify funding sources failed however so that the undp ultimately controlled the fate of ilpes Valdes could not see the potential of the institute and made no secret of his low regard for certain ilpes economists courses and reports were scrutinized for ideological ac ceptability Silva acting as Valdess lieutenant policed ilpess operations demanding time sheets to control attendance in a pervasive criticism that demoralized staff Giner de los Rios felt personally betrayed for the first time in 20 years with ecla and the Institute Lines of authority became blurred and the discovery of plagiarism by a senior staff member humili ated and angered colleagues Nothing that Prebisch or the staff did was ever good enough for Valdes or Silva José Medina Echevarria prepared to return to Spain which he had left in 1939 Even notoriously placid Norberto Gonzalez the director of research was disheartened On 25 Feb ruary 1972 Valdes finally made clear to Quintana on the eve of the latters departure as executive secretary of ecla that he had frank doubts re garding the duplication of tasks in various areas and the inadequate capac ity of ilpes personnel UN finances were in trouble with a continuing freeze that had begun in the 197071 fiscal year Cuts had to be made and he proposed that ilpes should reenter the ecla fold with a more limited training mandate Prebisch fought hard during 1972 to save ilpes because he knew that integration in ecla meant the end of the institute as an independent centre of research and ideas in Latin America Only the shell would re main But the battle was hopeless and disappointments accumulated His Washington seminar proposal failed as did the Ford Foundation project The idb under its new leadership turned cold in general toward the insti tute Canada and Holland did not renew their funding and since these two oecd donors were the easiest touches there were no other oda fish to be caught The journal concept had to be shelved for lack of resources El Vol umen was quietly abandoned Despite Prebischs reassurances in November 1971 that the atmosphere has been changing over the past year the US Embassy remained unimpressed By this time the struggle in Santiago was not merely for the institute but for saving the parent ecla increasingly the target of antiAllende critics as political polarization in Chile deepened ecla had long ceased to play the leadership role that it had exercised in previous times Mayobre had left Santiago in 1966 after only three years as executive secretary unable to tear himself away from Venezuela and the Caribbean under his Mexican successor Carlos Quintana a feudal structure had descended on the insti tution where no one knew what was going on outside the watertight com partments of their dispirited divisions innovation seemed to be limited to 462 The Life and Times of Raúl Prebisch building the gardens for its magnificent new compound39 Much deterio rated Prebisch had sniffed at its thirteenth session conference in Lima March 1969 Departures for service to Allende cut deeply into the staffing and morale of the secretariat when Quintana left Santiago to become gen eral manager of Nacional Financiera in Mexico Prebisch devoted his atten tion to locating a successor There was not much time U Thant was completing his last term after which Prebischs influence would certainly decline After his return to North America in 1971 Raúl invoked his accu mulated years of work with the secretarygeneral to ensure that Enrique Iglesias would inherit his old office No other colleague approached his potential for regional leadership he wrote to U Thant in January 1972 He was a brilliant man with great driving power People expect that he will give ecla a sense of mission Iglesiass appointment to begin 1 April 1972 constituted Prebichs only major victory during the ilpes fiasco40 On 24 January Prebisch had had enough and resigned before the end of his term tired of wasting his time in wearying bureaucratic infighting he wrote to a friend rather than working to resolve Latin American problems41 ilpes as originally conceived was history Before leaving he ordered a final consignment on diplomatic privileges eight cases of whis key fifty cases of wine a case each of Pieper Heidseck champagne and Tio Pepe sherry and twelve jars of Serraga Black Russian caviar Valdes did nothing to ease Raúls pain refusing to pay the ecla Washington Office for what Prebisch called the piltrafa scrap of 6600 rent for 1973 thereby immediately disbanding the joint ilpesecla operation in Washington They will only pay no doubt if Patricio Silva moves into my office Prebisch complained Bodil Royem was also out of a job her posi tion as his secretary eliminated and there was no work available for her in Santiago either Is it possible to believe that a UN agency would treat someone like this after 20 years of devoted service he asked42 He inter vened with Enrique Iglesias together they found a job for her in Nairobi with the new United Nations Environment Program What a way to close out a distinguished career The founder of structuralism and creator of unctad had been reduced to fighting over the least of the acronyms ilpes It was like an exarchbishop squabbling over a sidechapel in a remote country church He reflected on his old foe and friend Jorge del Canto who left the imf announcing to all that he was available for work only to find himself roaming the streets of Washington with an empty brief case It was all wrong He had hosted a marvellous farewell dinner party for I Trials in Washington 463 Filipe Herrera on 6 February 1971 but Herrera didnt even hear of Raúls UN retirement cocktail party in Santiago for weeks43 The baton had passed to a new and tougher generation with the exception of de Seynes his old friends such as Herrera Paul Hoffman and U Thant were retired or on their way out I have passed into the category of inter national daylabourer he wrote to his old unctad colleague Christopher Eckenstein which is to say working for profit44 Nearly seventytwo years old Raúl still needed extra income and with Eliana working as imf law li brarian he had to stay in Washington Stopping work wasnt an option Prebisch remained advisor on development to the UN secretarygeneral de Seynes Iglesias and the UN offered to pick up his remaining ilpes contract worth 3281247 for the period 1 February 1973 to 30 June 1974 In fact he had already lined up multiple and overlapping commit ments for 197374 even though this agenda came with as heavy a travel schedule as with unctad 104 days between 8 March and 14 October 1973 meaning an almost complete absence from his family in Washing ton He also agreed to direct a seminar at the School of Advanced Interna tional Studies at Johns Hopkins University for a stipend of 10000 There was also embarrassingly a contract with the oas the ugly duckling of the Washington circuit its beautiful official building off Pennsylvania Avenue hiding the tatty overstaffed and incompetent secretariat at 1889 F Street When he resigned from ilpes in January he agreed to a twentythree month contract to the end of 1974 to serve as principal advisor to ilpes SecretaryGeneral Galo Plaza45 It was a depressing year after an already hard landing in the Americas af ter returning from unctad The oas wanted him to come up with a new plan for ciap the obvious answer was nothing All major governments in the Americas starting with the White House wanted it terminated But a report was necessary and in September Prebisch presented a visionary con cept of transforming ciap into an oecdtype body with Canada Japan and Western Europe as full members It could contribute to a new phase of cooperation between Europe and Latin America he wrote to the foreign minister of Spain and by adding Canada it would also expand the concept of the Americas and thereby strengthen the Western Hemisphere community from Alaska to Patagonia46 Not surprisingly the governments were not interested and rejected it without discussion from Watergate in Washington to corruption and violence in Latin America they had weight ier things on their minds Carlos Sanz resigned and the whole oas system lay prostrate for another generation Prebisch instructed David Pollock to cover off further oas responsibilities and Pollock ended up teaching most of Raúls summer course as well 464 The Life and Times of Raúl Prebisch Kurt Waldheim the new UN secretarygeneral invited Prebisch to act as an external consultant to the newly created UN Panel of Eminent Persons on mncs Multinational Corporations comprising twenty experts nine from developing regions ten from industrial countries along with one Soviet Bloc delegate to examine a possible code of conduct and the setting up of a special UN centre to monitor mnc role and impact47 It was one of the most important and controversial subjects on the international agenda the UN secretariat was caught between on the one hand the demands of developing countries demanding the regulation of Westerndominated mncs given their powerful role in trade and technology and on the other the equally insistent handsoff approach of oecd governments This new UN assignment however coincided with increased political tension in Santiago and events in Chile would cast a heavy cloud over Prebischs life and work during 1973 Even as the mnc panel assembled for its first meeting on 4 September 1973 in New York his mind was on Chile as rumours spread of an imminent military coup Exactly one week later on 11 September the panel was interrupted by news that rebel forces under General Augusto Pinochet had seized areas of the capital and were attacking the Moneda Palace President Allende was trapped inside and re sisting against hopeless odds News gradually replaced rumour Salvador Allende was dead and Pinochets forces controlled the country Iglesias as sured Prebisch that Adelita was safe and Raúl arranged a visit to Santiago as soon as he could to arrive on 24 September for three weeks The violence of the coup overwhelmed Prebisch he had assumed that Chiles wellestablished democratic tradition would rule out gross human rights violations on this scale Mass arrests executions and torture were in progress as Pinochet decapitated civil society along with the Chilean left a flood of refugees beginning with Allendes wife Hortensia and children en route to Mexico via Havana clogged embassies and airports Internationally respected Orlando Letellier Chiles ambassador to the United States in 1972 and a regular visitor to Prebischs house in Washington was missing along with Carlos Matus and many other friends and colleagues ecla was now marooned in a hostile capital with some of its staff declared persona non grata by the military Allendes reforms were rolled back the estates of the oligarchy were restored Beyond its violence the Pinochet coup enlisted a small but zealous group of economists at the Catholic University associated with Milton Friedmans Chicago School to introduce a strict neoliberal ideology regardless of social cost or unemployment48 Even more than Brazils in 1964 this was therefore no ordinary coup The main debate in Chile over economic policy before and after 1970 had pitted Allendes UP against the Christian Democrats but both had rejected the Chicago School Trials in Washington 465 Pinochet in contrast would impose shock treatment a brutal regime of supplyside economics with democratic institutions and elementary human rights in Chile destroyed Without prompting from the imf Pinochets team privatized the nationalized industries drastically cut public expenditures and threw open the economy to global trade and investment Raúls letter of condolence to Hortensia Allende was brief and an guished Not knowing her address in exile in Mexico City he had it deliv ered by the local ecla office My dear friend he wrote on 24 September Salvador Allende will live in history as a shining symbol to encourage and energize movements of social transformation I have always had a great re spect and admiration for the force of his convictions and his extraordinary fighting spirit feelings which deepened in the long years in which he hon oured me with his friendship and which have cut deeply now with this trag edy I think that if he had lived he would have offered us profound reflections on his political life the events of these years as well as the enor mous obstacles confronting his efforts to realize his ideas including some obstacles from those who had no business being there His characteriza tion of postAllende Chile as a long night cruel and dark referred to his own gloom as well as Pinochets prisons49 Before 11 September he had criticized Allendes program now Chile lay under a barbaric regime and with the Chicago School in full swing Of course he had not anticipated this outcome but he also had no answers his own brand of developmental ism associated with Eduardo Frei had failed in Chile a true case of tilting at windmills while history passed him by The truth was that Prebisch was an Argentine citizen and UN civil servant however deeply his attachment and gratitude to Chile for its support since 1949 he could not become per sonally involved in the political drama unfolding before him But at the hu man level the gathering crisis was a constant and growing worry Adelita lived in isolated El Maqui Elianas family was Chilean ecla was engulfed by the crisis and Allende and many senior Chileans across party lines were personal friends Allendes policies after his November 1970 inauguration had increasingly worried Prebisch and three years later he witnessed the looming debacle as an unavoidable and disastrous tragedy For several years Prebisch had been having serious misgivings about the direction Allendes regime was taking When Allende had announced his intention in July 1971 to nationalize the copper mines and undertake a deep land reform Prebisch criticized the decision Populism is the nega tion of genuine transformation he argued A populist redistribution of I 466 The Life and Times of Raúl Prebisch income is unacceptable Cutting the income of minorities for redistribution frustrates development He had feared the masses since his first days in Buenos Aires in 1918 citing Marx regarding the danger of social mobili zation in a capitalist society because it destroys its leaders50 Prebischs di lemma was that his own report Change and Development Latin Americans Great Task had advocated precisely the deep land and social reforms that Allende was undertaking in Chile and he constantly repeated his belief that the concentration of wealth and power into few hands were obstacles to development But Allendes strategy was wrong Raúl felt that the mar ginalized were being radicalized into masses while stable development required democracy and material incentives through the market Allende he said was sincere but misguided51 Eduardo Frei rather than the UP had had the right approach by work ing with the elites to achieve consensus the new consciousness of the mar ginalized classes he insisted requires leaders who have been absorbed by the establishment52 Frei embodied Prebischs ideals of developmental ism regional integration and liberal democracy an enlightened leader from the middle class who sought a third way between the spreading mil itary dictatorships and the Cuban Revolution and this contest had made Chile the epicentre of the ideological hurricane sweeping the Americas Freis Chilean experiment had gained additional support in the Western capitals as well as financial institutions such as the World Bank and imf during the 1960s Chile had by far the largest US aid program in Latin America totalling more than 1 billion between 1962 and 1969 Instead UP leaders such as Pedro Vuscovic minister of economy until mid1972 when he was replaced by Carlos Matus another longtime ecla official had seemed intent on radicalizing Chilean politics deepening an already alarming polarization and provoking US support for a military coup Nixon had identified even Frei as antiAmerican and procommunist cut ting aid and striking his name from a list of foreign leaders to be received at the White House53 If Frei and Valdes both members of the National Fa lange in Chile before the creation of the Christian Democratic Party had been considered unreliable in Washington it was evident that Salvador Allende would face US destabilization By October 1971 Secretary of State William P Rogers had threatened to cut off US aid a slap in the face he admitted but the only language they understand54 In fact cia Director Richard Helms was instructed to make the economy scream With Chile isolated and beset with inflation and growing scarcities the opposition to Allende had accelerated The initial growth and then precarious stability that had held for a year and a half after his 1970 election had evaporated Trials in Washington 467 giving way to a vicious cycle of inflation paralyzing transport stikes gdp decline and rumours of military coups55 Chile had increasingly become an international issue during 1972 mo bilizing left and right in campus events and public protests By the end of 1972 Prebisch felt that the situation was getting out of hand Boo Royem had reported after a trip to Santiago in November that things are not just bad they are terrible56 In a letter to Galo Plaza on 15 January 1973 after the oas secretarygeneral had visited Chile Raúl remarked I agree com pletely with your views regarding President Allende Unfortunately factors beyond his power and convictions have led him especially as regards the copper sector into unadvisable policy directions Prebisch disliked disor der and the escalating tension and accelerating inflation had finally con vinced him that the president was losing control Leaving the Moneda Palace earlier that year for another meeting in the presidents car with mobs clashing with the police Prebisch had asked Allende if he worried about the loyalty of the police Turning toward him Allende had confided Yes I do worry but they are not as worrisome as my own people57 and he waved at his supporters Senior UP members were leading demonstrations supporting land seizures refusing compromise in the copper negotiations and unnecessarily baiting the opposition On 29 June Colonel Roberto Souper had surrounded the Moneda with tanks but the military remained loyal and the coup attempt collapsed On the other hand Chile under Allende remained a constructive inter national partner Despite the overt US campaign to isolate and undermine its economy the UP had tried to defuse tension and heal divisions with Washington in international forums including eclas Quito session in March 1973 the oas general assembly the next month in Washington 414 April and most notably in repeated calls for dialogue between North and South at unctad III in Santiago in 197258 Chile did not respond in kind to US provocation maintaining its traditional diplomatic balance and penchant for dialogue with Washington Allende also remained an unde niable constitutional democrat as he had promised in 1970 forging a unique Chilean Way toward a progressive construction of a new power structure59 In fact free and fair elections in March 1973 had increased UP support in the Congress to 43 percent from 362 percent in 197060 In April 1973 El Mercurio had attacked Prebisch in a lead article entitled ecla Doctrine and Failure This had set the tone for a debate in the Chilean Senate where he was held personally responsible for Allendes eco nomic policies a departure for a national press that had previously held back from such fingerpointing He had responded with a letter titled 468 The Life and Times of Raúl Prebisch Unjust Attacks on Raúl Prebisch identifying himself as Argentine Pass port number 339621 Argentine critics picked up the theme When Argen tine journalist Eudocio Ravines repeated El Mercurios line in La Prensa Raúl lost his temper the son of a bitch was a communist now hes jumped into bed with the reactionaries61 But Prebisch did acknowledge his concern about Allendes choice of advisors Some ecla seeds may have fallen on fallow ground he admitted but this was not eclas fault62 The political polarization deepened in Chile during 1973 against a back ground of growing isolation and destabilization So far from reassuring his opponents Allendes electoral gains in 1973 terrified them all the more by suggesting his eventual success In June the Uruguayan military seized power in a bloody crackdown signalling a shift to the right in the Southern Cone and a coup attempt the next month unnerved a deadlocked Chile Visiting Santiago in midAugust after a week in São Paulo Prebisch was in creasingly worried about the menace to Adelita living alone in El Maqui in the isolated mountains surrounding the Maipo Valley Over thirty kilome tres deep in the Andes outside Santiago trapped on a cliff three hundred feet above the Maipo River and with no means of communication not even a telephone the narrow access road to El Maqui was vulnerable to seizure and occupation by militant groups such as mir Revolutionary Movement of the Left that threatened the area Illegal land seizures had already occurred around El Maqui and the police had done nothing A ru mour spread that El Maqui itself would be next Raúl purchased a revolver for Adelita to fire warning shots over the heads of wouldbe intruders but in early August 1973 while he was in still in São Paulo this feeble defense proved inadequate Adelita was driven from El Maqui by a mob and nar rowly escaped capture as her car broke through their barricades which had closed the road to Santiago The Army had reopened the road and Adelita returned but the situation remained tense as Prebisch left for Washington en route to New York for the first meeting of the UN Panel of Eminent Persons on mncs on 4 September It was an excruciating dilemma for Prebisch He had foreseen the crisis en gulfing Allende but had felt helpless to avert the looming disaster Allende was unfailingly a generous friend despite all his troubles for example he had found time to send a letter of appreciation to Kurt Waldheim on Raúls departure from ilpes recognizing his efforts for Latin America and wishing him well in future work Against Allende were ranged thug gish elements like paramiliary leader León Vilarín head of the National I Trials in Washington 469 Truckers Union As in 1956 depression invaded Prebischs life as the mili tary coup of 11 September approached The period following the Pinochet coup was a bleak time the worst year for Prebisch since 1943 Alliance for Progress economists like Paul RosensteinRodan hailed Pinochet as Chiles Jean Monnet but Prebisch wrote little and rarely spoke about the coup instead following the politi cal prisoners he knew encouraging them to be patient congratulating them on their eventual release and helping to find them jobs63 Orlando Letelliers release in September 1974 for exile to Venezuela and then Washington raised Raúls spirits Carlos Matus reappeared in 1975 But the succession of failures ilpes the oas and the Allende debacle drained Prebisch of intellectual and physical energy He had resigned from unctad to make a difference in Latin America but these five years had been undoubtedly his least creative and even Change and Development Latin Americas Great Task had been shelved Since then he had merely witnessed the gathering political crisis in the region without producing a single article of consequence Once again he withdrew to El Maqui to recuperate As usual his complicated finances were in trouble a cheque was returned nsf after he prematurely transferred 577 into Adelitas account and he was reduced to the indignity of submitting a travel claim for 553 In December 1973 five years after resigning from unctad Prebisch called together a small group of associates led by Enrique Iglesias for a weeklong retreat at El Maqui They met day after day with walks in the gar den the atmosphere of the city heavy with worry and fear Latin America was in turmoil What had gone wrong Where was it heading The coup deepened Prebischs postcoup catastrophism an intimation of impending confrontation and social violence He warned that many Che Guevaras would appear in Latin America if socioeconomic disparities were not cor rected The rural and urban masses he argued had new expectations be cause of the mass media new Che Guevaras might have more success than Allende He remembered the 1961 Punta del Este meeting where Che had had a door slammed in his face Slamming the doors of history might be harder this time around he predicted64 Frustrated and depressed Prebisch decided to retire as international consultant Life as a daylabourer had not been easy Between 1 February and 6 April 1974 he had logged 154 days for the UN alone not to mention the oas work fulltime in short mostly away from home on assignments of secondary interest He had been as busy since leaving ilpes as during unctad but to what purpose Even the UN Panel of Eminent Persons on mncs the most interesting of his UN assignments no longer engaged his 470 The Life and Times of Raúl Prebisch full commitment and he attended its followon sessions in Geneva and Rome in early 1974 more as bystander than participant his friends were alarmed at his passivity Prebisch realized that he was outside the power networks that a new generation saw him as elder statesman rather than a decisionmaker and therefore that his proper role was to shape ideas rather than work within the system He had to change course to begin a new stage free from the big international bureaucracies he had conceived and shaped but where he no longer fit And there was never a more ur gent need for analysis and new ideas given the changes sweeping Latin America and the international system It was essential he decided to join the global dialogue with an independent voice As if to demonstrate the proverb that good fortune follows a return to vir tue a pleasant surprise rewarded Raúls decision to retire On 7 May 1974 Kurt Waldheim asked him to return to New York for a special oneyear assignment as his special representative to head the UN Emergency Op eration uneo on behalf of the socalled msa most seriously affected countries Developing countries dependent on oil imports were strug gling with opecs fourfold increase in the price of petroleum following the 1973 war in the Middle East which threatened international economic stability for rich and poor nations alike The developed countries faced a serious unexpected downturn depending on their exposure to petroleum imports developing countries without oil the majority faced an ad ditional huge burden and increasing trade deficits and the opecled oil exporters which had pulled off this upset confronted the prospect of lop sided profits A sixth special session of the UN General Assembly had been called by the developing countries for 9 April2 May 1974 to discuss changes in the international economic system advanced at the nam Sum mit held in Algiers during the previous September Two days before the special session closed the gathering turned its attention to the immediate emergency facing the fourth world the msa countries after the oil shock and a shortterm emergency operation was approved with a lon gerterm possible special fund to be discussed later65 Waldheims call to Prebisch engaged him immediately and his depres sion lifted It was just what he needed a final mission that combined NorthSouth idealism with high international priority This is a new ad venture which has come rather late for my years but which I have accepted with enthusiasm he noted to Aldo Solari on 24 May On the same day he wrote to Enrique Iglesias The adventure has begun Tomorrow I leave for I Trials in Washington 471 a trip starting with the European Community and continuing on to Algeria Rome Libya Kuwait Abu Dhabi Lebanon Saudi Arabia and Iran He felt morally compelled to accept the Waldheim mission not just on the merits of assisting needy peoples and nations in the present emergency but also out of loyalty to the UN which he had served for twentyfive years All the secretariesgeneral since 1949 have treated me very well But there was another reason The mission will help me forget some unfortunate episodes Prebisch plunged into his job with an almost youthful energy but his mandate was narrow Although the UN response dealt with both the short and medium term an emergency operation to help the hardesthit coun tries cushion the immediate shock and the creation of a special fund to help countries develop policies for balancing imports and exports in this new topsyturvy world he was only in charge of the emergency operation Having been snubbed for two years by the likes of Patricio Silva and oas underlings Prebisch was back in the circuit Robert McNamara World Bank and his imf counterpart Johannes Witteveen invited him for discussions President Carlos Andres Perez of Venezuela invited him to Caracas and over dinner Minister of Finance Hector Hurtado the conti nents most powerful financial figure presented him with a 50 million cheque for the emergency operation He reassembled some of his old teammates Sidney Dell as his deputy David Pollock as personal assistant and Diego Cordovez now secretary of ecosoc complemented by secondments from other UN and outside agencies the tiny group the InterAgency Committee with never more than a dozen members guided the emergency operation between June 1974 and July 1975 The goal was 3 billion in money grain and fertilizers to help the msa countries cushion the immediate oil shock Detailed background studies regarding contributions allocations coordination and followup were woven into Prebischs visits to foreign capitals Targets were discussed formal requests for donations followed and an informal group of UN ambassadors from the US Algeria Iran France Japan Sweden Venezuela and Saudi Arabia succeeded in achieving consensus rather than conflict between opec and the oilimporting Western countries To general surprise Prebisch and his team managed to exceed the origi nal target at a donors meeting in September collecting nearly 5 billion for the fortytwo hardest hit countries of which 290 million was in cash with no strings attached Oil exporters had committed 2736 billion while the US and the eec had contributed 926 and 500 million respectively in food aid with Europe committing the first 150 million on 18 October Canada Japan and a number of European countries rounded out what Prebisch 472 The Life and Times of Raúl Prebisch called an extremely impressive sum In his final report on 15 September 1975 Prebisch added with some satisfaction that the administrative cost to the United Nations of running this entire 5 billion program had been less than 300000 Washington in a rare compliment to the UN noted the excellent use he had made of limited staff resources66 He was frustrated by the unwillingness of the Arab opec countries to take his emergency operation seriously They acted like nouveaux riches he complained much worse than the old rich67 And he was disap pointed at the fate of a newly created UN special fund to continue his work on a permanent basis A board of governors was selected and met on 31 March but only Venezuela and Norway were prepared to make com mitments 116 million and 10 million respectively The vicious circle of opec and the industrial countries pointing fingers at each other could not be resolved and followup to the emergency operation at the global level therefore failed68 Venezuela alone again assisted hardpressed neighbours by selling oil at a discounted price and lending at longterm concessional rates Kurt Waldheim wrote expressing my sincere gratitude for your most en ergetic and effective accomplishments as my Special Representative for the UN Emergency Operation Yet another achievement of characteristic loyalty dedication and competence69 Bidding farewell to the emergency operation Prebischs earlier pessimism vanished the difficult post unctad years were behind him and he could now start afresh yet again at the age of seventyfour 20 Prophet The gospel of don Raúl dormant since New Delhi became the fashion of 1975 the power of oil brought the New International Economic Order nieo to the top of the global agenda The South now had bargaining power small countries had raised oil prices dramatically without retaliation from the industrial powers for all its military might the US had lost the war in Vietnam and Cuban forces had sent the powerful South African Army packing from Angola back to its apartheid heartland Diplomacy between East and West had given way it seemed to the other chessboard North South relations Action moved from the Security Council of the great pow ers to the UN General Assembly of the heretofore disenfranchised The nieo pioneered by Prebisch in the unctad years the package of proposed changes in international trade finance and cooperation re quired for southern countries to break a cycle of dependence and poverty was suddenly in high demand1 Brought forward to a sixth special session of the UN General Assembly in April 1974 it was accepted in principle in the Declaration and Program of Action of the New International Order Momen tum built quickly The Charter of Economic Rights and Duties of States was ap proved later that year and in September 1975 the Northern countries endorsed the demands for a nieo in a UN resolution considered a break through for developing countries2 So stunning a change of prospects for global governance rebounded to its authors credit Prebisch was rediscov ered after his slog in Washington and was honoured as a global visionary with awards invitations and numerous honorary doctorates from around the world Among these the Nehru Prize for International Understanding received 10 November 1975 and the first Dag Hammarskjöld Medal awarded on 24 October 1977 had special significance The election of Jimmy Carter in November 1976 confirmed Prebischs recognition in the US capital as well as the new administration promised 474 The Life and Times of Raúl Prebisch to support the nieo restore the NorthSouth dialogue and promote hu man rights rather than geopolitical confrontation US funding for inter national aid had fallen by more than 50 percent in real terms during the 1960s and was now down from 2 percent during the Marshall Plan to 023 percent gdp well below European and Canadian levels Kissinger gave good speeches and he could herald the nieo as a collective decision to elevate our concern for mans elementary wellbeing to the highest level but his instinct was geopolitical the US 15 billion aid package for Israel and Egypt to support the 1975 Sinai Agreement equalled the entire aid budget for development3 When the Marshall Plan was announced there were 100 people in the bureaucracy waiting to move on it noted Professor Gardner who covered US negotiations for the nieo Here there are 100 powerful interests who would like to sabotage it4 With Carters election these interests seemed to cast a shorter shadow over the nieo Cyrus Vance the new secretary of state called for a positive longterm strategy toward the Third World and Andrew Youngs appointment as US ambassador to the UN was a particularly promising sign of Carters sensitiv ity to NorthSouth relations President Carters first address to the UN Gen eral Assembly stated his countrys readiness to promote a new system of international economic progress and cooperation We will contribute our own ideas and ask that you examine them as we examine yours The time seems ripe for this manner of exchange New ideas ideas that grow out of a common concern and out of new experience are usually generated in an atmosphere of common search rather than one of mutual distrust It is that lesson that the nations of north and south are learning again today Prebisch in fact could have written Andrew Youngs statement to the UN Economic and Social Council on 8 July 1977 which identified US policy with the achievement of the nieo The aspirations of the developing coun tries the Third World for achieving economic justice he noted have come to be symbolized in the phrase New International Economic Order We support this concept whatever particular phrase is used to express it How times have changed since we started to work at ecla Prebisch wrote to Alfonso Santa Cruz Remember in those days how they would not stoop to receive me at the State Department5 He felt vindicated for twentyfive years he had been setting an agenda and his ideas might be come reality in the nieo The magnitude of his achievements creating unctad from scratch attracting so many of the best people and willing it into so powerful a presence that it set the international agenda for fifteen years was recognized He was again an international celebrity in demand everywhere praised by Washington and the G77 as the father of the nieo During his first years in Washington after unctad he had felt somewhat Prophet 475 on the shelf All this was now gone international cynicism seemed to wilt under the CarterYoung offensive perhaps a breakthrough between North and South really was possible6 The practical complexities of Prebischs life were resolved and his fi nancial worries settled by finding the secure anchor of a major journal Raúl needed a base he was not a solitary scholar and dreaded retiring to his study on Tulip House Terrace Latin exiles could not find shelter in major universities or research institutions creating and editing a journal was in fact his only option for obtaining the voice and independence he required He had tried unsuccessfully to found one in 1948 in the Uni versity of Buenos Aires before his abrupt departure from Argentina In the early ecla years he had set up a bulletin but nothing more After leaving unctad he had floated the idea of an ecla journal with Quin tana but Change and Development Latin Americas Great Task intervened Then he raised it as a potential project of ilpes only to see it cut for lack of funds as the institute entered its downward cycle But in the gloom fol lowing Pinochets military coup Enrique Iglesias invited Prebisch to edit the new cepal Review so named to reflect eclas Spanish acronym to help elevate eclas diminished prestige While it had to be postponed until after the UN emergency operation by August 1975 Prebisch could devote full attention to the journal charging forward with the energy of earlier times hiring Argentinean sociologist Adolfo Guerrieri as secretary in charge of production and planning the format and layout of the new publication7 He faced the challenge of writing the opening lead article he had broken his right hand in a fall but nothing could hold him back now The prospect of the cepal Review lifted staff spirits and Raúl set about soliciting articles letters went out everywhere and he blocked out prospective issues In September 1976 Prebisch announced that the first number of the journal was in press De Seynes recently retired from the UN urged him on8 When it appeared the following month it was imme diately apparent that the cepal Review filled a gap in the development literature giving staff in Santiago as well as external economists an outlet for their work ecla was back in the work of ideas and debate with the worst period of the Pinochet dictatorship behind them It was also Prebischs best possible reintegration within ecla At the far end of the long corridor from the desk of Iglesias his warm and dignified corner of fice with his old antique desk and leather couch symbolized perma nence and memory In Washington David Pollock supported the journal by restoring funding for the secretarial position Raúl has lost when ilpes was disbanded in Santiago his evercloser friend Iglesias assured long term support for his latest venture 476 The Life and Times of Raúl Prebisch Liberated for good from multiple careers Prebisch left the world of organizations with a sense of mission completed and the luxury of un encumbered freedom to criticize and reform the system he had so long served Whether official or consultant he had never been entirely free to speak his mind I could not he explained present a report to govern ments preaching the need for drastic internal measures because they would have responded drastically by going after my head rather than ac cepting my ideas During his long professional life he had accepted these limits as the price of engagement but in this final stage Prebisch sharp ened his criticism well beyond his centreperiphery framework from the 1950s and Change and Development Latin Americas Great Task toward a new formulation of dependency theory As late as December 1973 after the Allende debacle he had rejected dependency theory now in the first issue of the cepal Review he re turned to the more critical tone of his 1924 talk to the Lloyd George Club in Melbourne Australia when he had condemned the Argentine elites and demanded land reform Peripheral capitalism he claimed was in creasingly exclusive and conflictual because it was based in social inequal ity the model developed by the industrial countries and projected into Latin America was incapable of raising lowerclass living standards in the periphery Whereas capitalism succeeded in distributing benefits through out society in rich countries the imitative capitalism of developing countries benefited only the haves because the structural surplus ex tracted by the elites in Latin America and their transnational corporate al lies was used for consumption rather than productive investment In effect the penetration of a US ethic of consumption brought with it capital intensive technology that reinforced the classbased structure of these societies the result was high consumption low savings and growing un employment with undynamic economies prone to featherbedding cycli cal crises and the embedded poverty of migrants in urban centres In contrast the core industrial states had more equitable societies in which all groups had social power and could demand a share in the benefits of technology To put it another way US social relations mediated a US ethic of consumption and reinforced productivity while the extreme inequality characterizing Latin American societies which was alas its distinguish ing feature when compared with any other region of the world was in compatible with development Attacking social exclusion implied transforming the elite system and political power and such a revolution required new thinking It is not enough to proclaim the wellknown for mula of neither capitalism nor socialism Prebisch wrote in 1977 it is Prophet 477 the unshirkable duty of the development economists or rather the devel opmentalists to offer a socially and politically valid way of solving the crisis of the system on the basis of political consensus9 The new stage also freed Prebisch to take up topics beyond interna tional development and the Latin American economy returning to the breadth of interests that had characterized his work much earlier before he had become a senior official in Argentina These included the envi ronment human rights ethics history economic theory food security social policy and regional integration in a vast educational campaign of writing media interviews and public lectures Recurring themes or warnings dominated his work Latin Americans had to become serious regional integration was essential if a strong democratic and prosperous Latin America was ever to take its rightful place among the regions of the world and they had to end their uncritical fascination with foreign fads and models in economic theory and produce their own approaches to sustainable development Development implied social and political change not just economic growth and was a difficult ethical challenge without a global strategy and governance it would not succeed Finally in the search for a model extremes had to be avoided despite temptations A strong state was as important as open markets in economic develop ment and a regression to Friedman neoliberalism on the grounds that import substitution had been abused by Latin governments was danger ous and counterproductive The new stage of Prebischs life restored his youth and his striking features displayed serenity and command a sculptors dream an observer noted10 His enthusiasm and conviction were undimmed after seventyfive years Life is too short he would say I would like to have an other 40 years to see the changes that must come Prebisch now had a regular schedule with three months in Santiago he rented a small apart ment near the UN compound on Vitacura which became a favourite afterwork destination for colleagues and friends and spent weekends at El Maqui Both houses one in each continent were busy with guests He travelled widely with Eliana lecturing in Spain Japan India Europe the Middle East the US Canada and Latin America His speeches became more playful and personal everyone had an anecdote about don Raúl Drawn more often to Europe and Asia where his thinking had greater im pact Prebisch received a recognition often denied in the Americas11 He was a frequent guest of former colleagues in Europe or of Dudley Seers and Hans Singer at the University of Sussex and he took a special interest in rebuilding the cultural ties between Spain and Latin America curtailed 478 The Life and Times of Raúl Prebisch during the long Franco dictatorship12 No session of unctad or ecla was complete without Prebischs opening call to arms The Carter team brought an entirely new face to US relations with Latin America Nixons selfproclaimed nonpaternalistic lowprofile policy to ward Latin America had turned out to be no policy at all After Allendes removal US interest in the region lapsed in favour of other agendas East West relations Africa and the Middle East the Ford years closed out with the assassination of Orlando Letelier in Washington on 21 September 1976 by agents of Pinochet revelations by the Church Committee of cia covert activities in Chile and Latin America and calls on all sides for a re vived US engagement in the region13 Carters agenda in Latin America marked a sharp break from that of the previous administration a new re gional dialogue on development negotiations for a Panama Canal treaty to end the US enclave human rights and rapprochement with Cuba Beyond his Cabinet Carters choice of officials looked promising with Sol Linowitz attracted back to head the negotiations for the Panama Canal Treaty and senior officials like Viron P Vaky who preferred dialogue to confrontation Carter identified Prebisch personally as a leader in NorthSouth rela tions and singled out ecla for special attention referring to the urgent need to mould together the concepts of social justice and economic de velopment so that the poorest people of the region may share in the fruits of Latin Americas impressive economic growth This was astonishing Despite what they so often say Alfonso Santa Cruz wrote to Prebisch there is no doubt that there are differences between the Democrats and Republicans toward Latin America and the attitude of Carter reminds me of the early Kennedy years when I travelled with you to Washington to influence policy14 Abraham Lowenthal normally an astute observer of USLatin American relations declared the end of Washingtons hegemonic presumption in Latin America and the Caribbean I hope you agree that the new US Administration and the statements of its leaders represent the best hopes for a favourable change in the near future Cordovez noted to Prebisch shortly before Carters inauguration15 eclas meeting in Guatemala City on 6 May 1977 marked the recovery of its prestige in Washington Since its decline af ter 1963 its primacy as regional thinktank had been challenged by cecla under Valdes the new Latinonly Latin American Economic System sela based in Caracas and even the oas But the Carter Administration decided I Prophet 479 that ecla should be the regions most influential policymaking forum The Financial Times underlined this change Mr Young threw his weight behind ecla as an intellectually impeccable body given to creative thinking about the future managed by economists and not like the oas by often less than respectable politicians16 Waldheim arrived in Guatemala for the event and Iglesiass electrifying opening speech marked his arrival as a major figure in interAmerican relations A microcosm of world diplomacy a journalist gushed a UN in miniature Andrew Young was the undoubted star how ever unleashing wild applause for his comment that trickle down as a social theory is increasingly a cruel joke17 Prebisch immediately backed the Carter approach to human rights in Latin America Young defined development as a process by which full hu man rights and dignity are achieved rather than just an economic process and he attacked the skewed income distribution and repression in Latin America as key obstacles to be corrected But even the US State Depart ment acknowledged that Prebisch drew the longest applause for his per sonal statement The more I study Latin American development he began the greater is my concern18 Prebisch appealed to Latin govern ments to support Young to understand US humanrights policy as an ex pression of moral solidarity from the northern hemisphere that we are not used to and to support conditionality on this broader humanrights di mension rather than the narrow imf formula As one observer who heard Raúls speech noted he rejected the belief that the New International Economic Order which all governments supported publicly could ever be achieved without a domestic ethical impulse19 Critical poverty was the result of maldistribution of income it could not be resolved only by eco nomic growth The issue had to be faced squarely without blaming Latin Americas wasteful imitative consumption patterns on multinational corporations although they encourage it and profit from it or other in fluences Latin America had chosen the pattern itself and must accept the responsibility20 The result was an unexpected realignment in interAmerican relations If the CarterPrebisch position on linking the promotion of human rights and economic development gathered supporters throughout the Ameri cas the Southern Cone military dictatorships fell back on the doctrine of nonintervention insisting that social issues not be linked with economic questions In fact the NorthSouth and humanrights rhetoric of the Guatemala meeting tended to obscure a lack of substance in Carters new agenda for Latin America caught up in domestic issues like inflation unemployment and energy the new administration lacked so far a development strategy for the Western Hemisphere In any case it faced a 480 The Life and Times of Raúl Prebisch protectionist congress skeptical about resource transfers to the Third World and labour unions worried about trade concessions that threat ened US jobs Excessive Latin expectations of US largesse were matched by naiveté in Washington about the socalled economic tigers of the region under mining Prebischs early enthusiasm for the Carter Administration Econo mists from all parts designated Latin America as having the greatest potential of any Third World region Assistant Secretary of State for Inter national Affairs C Fred Bergsten claimed that Latin America has become a central actor in the world economy21 The Latin America Economic Report predicted that its per capita income would rise to the level of Italy by the year 2000 giving the region the same gdp as Japan22 It would outpace Asia onehalf of all industrial production in developing countries would be Latin American it would enjoy a projected growth rate to 2000 of 78 percent In many respects Latin America seems closer to the ad vanced industrial countries than to the developing world it noted During the 1970s the regions growth rate was 6 percent a year the second fastest in the world after the miracle East Asia countries Even the exports of manufactured goods which Prebisch had called for in 1970 had ex panded rapidly at a rate of 2025 percent a year compared with 27 per cent for East Asia WW Rostow maintained that Latin America was moving rapidly in the right direction with great strides since the Alliance for Prog ress in 1961 The region was now far along in its drive toward techno logical maturity which is the post takeoff stage in which countries develop diversified industries applying to them in both the agricultural and industrial sectors increasingly sophisticated technologies and levels of real output per capita Mexico Brazil Venezuela Colombia Chile and Argentina could now be classified as upper middleincome countries23 Prebisch swam against the prevailing tide of public and professional opinion he knew his region as they did not and he warned that Mexico and other economies were heading for serious trouble Already in Change and Development 1970 he had identified the danger of foreign lending as a shortterm expedient for a style of growth that hid an underlying fragility The international banks needed customers after the oil boom in October 1973 and urged Latin Americans to take advantage of petrodollars at cheap rates with the US in recession they were looking for other markets and Latin governments were eager Endorsed by the imf as sound develop ment policy the debtled growth converted Latin governments into the best customers of international bankers Already by the end of 1975 the US banks had 595 billion in outstanding foreign credits of which 239 billion were in Latin America more than twice as much as all of the Prophet 481 eec 90 percent were shortterm loans In the 1970s a senior Latin American banker later regretted the private initiative of the international banks turned into a kind of blank check that regrettably underwrote many of the whims and policy errors of the period24 By 1976 Prebisch was lambasting debtled growth as a distortion of sound development that was reversing the gains of the postwar decades by underwriting bloated state enterprises and bureaucracies using borrowed dollars or what he called elephantiasis of the state25 During the 1960s public investment and budgetary management in most countries of Latin America had been prudent devoted to priority infrastructure and social projects rather than expanding inefficient and protected state enterprises now with easy money governments and bankers channelled a large part of their borrowing to state and parastatal enterprises The state structures in Latin America have not known how to adapt modify or transform them selves to respond to the needs of development he noted and he pre dicted a crisis when interest rates rose and borrowed money could no longer paper over the growing cracks of corruption in Latin America Publicsector spending almost doubled during the single decade of the 1970s from 25 percent to 42 percent gdp with the foreign debt rising from 10 billion in 1965 to reach 150 billion in 1980 But income distri bution public education and agriculture had not improved for the bot tom 40 percent Thirty years of industrialization accompanied by high rates of growth have left 40 percent of the population lagging far behind For them there has been no progress Prebisch noted Inadequacies of state enterprises have not only contributed to leaving the masses behind but are also affecting the middle sectors of the social structure This of course did not exonerate the international banks for acting like judges he continued but Latin American state enterprises were frankly unsus tainable and the region lacked a healthy and legitimate social sector26 Prebisch was particularly concerned about Mexico where President Luis Echevarria 197076 broke with a cautious style of economic manage ment and a lowkey foreign policy to project his country as a major Third World leader and business leaders and ministers from around the world lined up in front of the presidential palace to share in the miracle No one in Mexico was interested in Prebischs warnings his audiences yawned Instead of an era of progress and leadership the 1970s would stand out as a lost decade for Latin America Prebisch argued In 1975 Mexico had a deficit for the first time obscured by the discovery of a major oil deposit the next year there was already a balance of payments crisis in the region and low internal savings ensured that the model could not be sustained27 The state was failing Twenty years of economic plans havent worked 482 The Life and Times of Raúl Prebisch Prebisch concluded urging the region to regroup behind a revived inte gration framework before it was too late and repeating his fears about the shortsightedness of the oil boom in Mexico For the first time in human history we have the means to accumulate capital in physical as well as in human terms to change the face of the Earth And the danger is that we may allow this opportunity to be frittered away through greed and con flicts28 Prebischs analysis of peripheral capitalism and prediction of an approaching debt bubble were widely criticized in Washington and Latin America He was denounced as a doomsayer generalizing from the narrow experience of stagnant Argentina and Uruguay and ignoring the success stories like Mexico and Brazil which were growing at 7 percent a year with strong manufacturing sectors Since these countries were now substantial powers what was the crisis of peripheral capitalism and what was wrong with the current model29 By mid1978 internal tensions stalled the Carter Administration Prebisch admired Carters commitment to the Panama Canal Treaty and his success in steering it through powerful congressional opposition until its ratifica tion by one vote But this enormous effort seemed to exhaust the Carter team and from now on it gave confusing signals about policy toward the region30 The humanrights language of the administration was under mined by contradictory messages from State Department officials and the National Security Council Viron P Vaky the new assistant secretary of state for Latin America spoke the language of human rights but his deputy John Bushnell supported dictatorships in the region Vaky spoke of reform and social change and promoted US citizens of Latin origin to his team while Bushnell openly praised the governments of Chile and El Salvador and lobbied for World Bank loans to Argentina to prop up General Jorge Rafael Videla one of the worlds most flagrant violators of human rights since the mad dictator of Uganda Idi Amin was driven out of power as columnist Jack Anderson put it31 Within two years the Carter team had fractured Vance and Young de parted the early promise of détente diminished as USSoviet rivalry intensi fied after 1978 from the Horn of Africa to Grenada and Central America and the Islamic Revolution in Iran in January 1979 was a severe setback to US foreign policy in the Gulf32 Carter encouraged the fall of Nicaraguan dictator Anastasia Somoza in July 1979 and even prepared an aid package to the fsln Sandinista National Liberation Front but he panicked in Octo ber after the outbreak of civil war in El Salvador CubanUS relations chilled Meanwhile the G77 was increasingly confrontational and the NonAligned Movement summit in Havana in September 1979 was aggressively anti American and morally indignant Lacking power and profoundly and Prophet 483 increasingly divided below a shallow rhetorical unity the G77 depended on the industrial countries if the nieo was ever to be more than a rallying cry for the South In fact its implementation was going nowhere33 Prebisch warned the G77 at unctads fifth global conference at Manila in May 1979 that selfrighteous confrontation would fail only reasoned and constructive cooperation would resolve the problems of developing countries He urged selfhelp measures among the nations of the South opec oil producers should invest more of their revenues in developing countries for example and exhorted poor countries to stop blaming their own mismanagement on the North Many G77 countries such as India and Brazil were pragmatic in private but went along with G77 rhetoric to avoid the appearance of break ing ranks it was evident that the NorthSouth dialogue was in trouble with the nieo as its likely first casualty The geopolitical shock of the Soviet invasion of Afghanistan in Decem ber 1979 brought USSoviet relations to a level of tension not seen since the Cuban Missile Crisis and shifted international development to the margin of global politics The fraying of NorthSouth relations prompted another commission on international development again funded by the World Bank and headed by former West German chancellor Willi Brandt to find new directions another special summit of twentytwo leaders four teen from developing countries and eight from the oecd was called for Cancun in early 1981 to revive the stalled nieo negotiations34 When the Cancun meeting assembled however it was Ronald Reagan rather than Carter who attended for the US With the Carter Administration flounder ing at home and abroad unable to rescue US hostages held in Iran unable to revive the economy or restore national morale Americans looked to Ronald Reagan for leadership His landslide presidential victory also showed the force of the New Right a militant movement of social conserva tives swelling in Washington against the Democratic liberal consensus35 The second Cold War was under way Reagans victory in November 1980 opened a new period sweeping away New Deal liberalism and Carters for eign policy of dialogue to reassert US primacy in which the Third World was cast more as enemy than friend and there was no room for the nieo or its supporters The eruption of Ronald Reagan onto the US national political scene bewil dered Prebisch who at eighty was an oldtimer in Washington Looking back he recalled all his experiences with Americans his first trips to Washington as a young man his meeting with President Roosevelt his I 484 The Life and Times of Raúl Prebisch work with Triffin Ravndal and many others he had admired for their dedication and social commitment He recalled Urquidis amazement at established US professors doing without maids in fact not imagining hav ing domestic help This vision of an open and inclusive society sustained through the McCarthy period and with added momentum during the civil rights movement had made US civilization the central attraction of Latin Americans seeking the reform of their own polarized societies New Deal liberalism which the Republicans under Richard Nixon had maintained was considered the domestic reflection of an overwhelmingly admired US foreign policy Even when tracked by the fbi during the McCarthy years Prebisch had never lost his positive vision of the US whatever his criti cisms and during the 1950s there were many Washington had led a stable multilateral framework for the post1945 world Dulles might have de stroyed democracy in Guatemala but at least he supported postwar recov ery and European integration The US under Reagan seemed a different and hostile place President Carter had attempted a new approach toward Latin America based on shared values that looked beyond US hegemony But in the Manichean world of the Reagan Administration divided into good and evil there were also good and evil Latins the CubanSoviet threat was entrenched in Nicaragua El Salvador and Grenada and had to be rooted out Cutting the tentacles of the Soviet beast in such Third World outposts in Latin Amer ica Angola Afghanistan and so forth would force the evil empire to con tract US rearmament would rally the world in a crusade for freedom Cuba braced for an attack instead the US escalated intervention in Central America with a war of destabilization using proxy forces In the Southern Cone the dictators were welcomed as ideological allies along with PW Botha of apartheid South Africa Argentine General Roberto Viola was wel comed to the White House and decorated as a hero In return he agreed to train Reagans Nicaraguan contras Prebisch had no friends or admirers in the new administration My exis tence continues to be very confused he confided on 12 January 1981 re signing from the International Club that afternoon one last good lunch before Reagans inauguration As an Argentine patriot he was shamed by Reagans reception for Viola appointed president in March 1981 after Videlas failure to avert a banking crisis Viola had maintained his prede cessors humanrights violations while overseeing an even worse economic meltdown and had finally reduced his onceproud country to training USbacked terrorists The new US administration was almost violently anti UN the appointment of Jean Kirkpatrick as US permanent representative sending the appropriate message and particularly hostile to the Third Prophet 485 Worlddominated General Assembly Multilateralism was out in favour of unilateral US power Americans could be unashamed nationalists again free to retaliate against the Third World which had voted against the US during the 1970s and then demanded more aid into the bargain They could tell the UN to get lost they finally had a leader who would rearm challenge the enemy and whatever liberals might say reward anti communist friends whatever their background No one felt more out of touch in the new Washington than Prebisch If the opec oil shocks of 1973 and 1979 had been the first blow to the post 1945 consensus on North South cooperation the supplyside economics of the Reagan Revolution completed the rout Tax cuts of 749 billion over five years combined with increased defense spending and a restrictive mon etary policy produced interest rates of 20 percent which beggared Third World countries and sucked global capital to the US But Reagan pulled the US out of recession whatever the future costs of ever greater deficits and federal debt and the tax cuts were wildly popular within the Republican Party Multilateralism however was out of favour in Washington power and the market replaced governance and equity and the nieo and NorthSouth dialogue were dismissed as antiWestern relics The very principle of devel opment assistance was questioned in the US capital as the Reagan Revolu tion put the welfare state behind it both at home and abroad Even as he felt so acutely unwelcome in the twilight of internationalism in Reagans Washington Prebisch received his highest distinction the 100000 Third World Prize presented in New York on 2 April 1981 at the Hilton Hotel Led by the UN secretarygeneral seven hundred of Prebischs closest friends and associates gathered to honour him in a swan song for NorthSouth relations as a whole accentuated by the title of his acceptance address The Crisis of Advanced Capitalism Even the lan guage of the media describing him as patron saint and grandfather gave him the feeling of being passé The New York Times referred to him playfully as the scourge of industrial nations for thirty years and the grand old man of Third World economists36 A US friend wrote to him objecting to his being characterized as the grandfather and patron saint in the mainstream press It makes me suspicious that the capitalist world is about to take you into their establishment and go so far as to award you a Nobel prize37 This was a sore point Prebisch had been nominated for the 1977 Nobel Prize in Economics by a group of economists and inter national personalities led by Victor Urquidi and Jan Tinbergen the first winner in 1969 and supported by fellow recipients Paul Samuelson 1970 Gunnar Myrdal 1974 and Wassily Leontief 1974 As Tinbergen and others wrote Prebischs contribution was multidimensional and unique 486 The Life and Times of Raúl Prebisch comprising theory institutionbuilding and policy no other develop ment economist of his generation could match his record of achieve ment38 But the nomination was rejected in favour of Sir Arthur Lewis39 Tinbergen resubmitted Prebischs nomination for 1978 but it was equally unsuccessful confirming that Prebisch lay outside the circle of economists with acceptable northern credentials Prebisch watched the predictable unravelling of the Latin American economy from Washington it was poor comfort for him to cry I told you so after his warnings throughout the 1970s that easy money was not a sound basis for growth The crisis came to a head in August 1982 as US in terest rates rose servicing the debt became onerous until investment flows reversed and repayments exceeded new money Latin America became a net exporter of capital to banks in the developed countries and growth fell from 58 percent in 1980 to 12 percent in 1981 collapsing altogether the next year Neither trade deficits nor interest payments could be financed When Mexico announced its inability to service its foreign debt in August 1982 a crisis enveloped all of Latin America and plunged the region into its worst decade since the Great Depression40 The collapse of growth and access to credit sent poverty and capital flight skyrocketing and the Latin selfconfidence of the Carter years disintegrated Chile did not escape Pinochets socalled economic miracle evaporated into deep recession41 From a region of global promise Latin America became synonymous with problems debt dictatorship depression and drugs and its leverage be came the humiliating threat of international financial insolvency A funda mental restructuring could no longer be avoided the Latin American state had to be reformed the lush undergrowth of protected state enterprises had to be curbed stability had to be restored and the Latin private sector had to be modernized and made more productive It was the worst possible mo ment for overhauling the state Latin America had never been more vul nerable and the imf and Western banks were not going to be lenient All of the regions gains since the Second World War were at risk as Latin America began adjusting to the new globalization taking place under the leadership of a resurgent Washington Prebisch felt completely isolated completely outside the triumphant Reagan mainstream The centreperiphery concept became hopelessly old fashioned almost an embarrassment After 1981 the notion that develop ment cooperation was an ethical imperative seemed quaint in Washington the euphemisms of NorthSouth relations such as converging measures reciprocal interests and the like out of favour While American universi ties were narrowing their analysis and focusing increasingly on mathemati cal techniques Prebisch stressed the multidisciplinary origins of the study Prophet 487 of economics and the ethics of development He noted the fundamental problem of the ecla years common to all economists in centreperiphery relations but also in domestic affairs focus was narrowly economic rather than technology culture and politics These are not marginal he insisted but form part of economic theory or the ethic of development He re ferred to economist Adam Smiths tenure as the chair of Moral Philosophy at Glasgow University and quoted Pope John Paul II Property is bur dened by a social mortgage42 When he was not forgotten altogether Prebisch was vilified for leading the region in the wrong direction pigeonholed as the author of Latin Americas downfall for promoting an importsubstitution model For this reason he was also made responsible for the 1970s bubble as well as the ensuing crashanddebt crisis No one remembered Change and Development his term elephantiasis of the state or his warning that the 1970s would be seen as the lost decade But no matter an enemy was needed and his attempts to set the record straight were drowned out in a wave of misrepre sentation43 The popular identification of Prebisch with the failure of the model and debt crisis meant that eclas work of the 1950s was distorted and consigned to a remote historical corner for the next generation44 Under attack in Washingtons policy circles Prebisch also faced criticism from theorists of all schools for his last work Peripheral Capitalism Crisis and Change published in 1981 to faint applause Chilean Marxist Heraldo Muñoz took him to task severely for his theoretical failings quoting chap ter and verse from Marx Lenin and Rosa Luxemburg Osvaldo Sunkel found that Prebischs analysis had strayed into his dependencytheory turf that it lacked a theory of the state and left too many loose ends Even Dell al though increasingly deferential to Prebisch as years passed volunteered a fivepage critique and reverential ecla colleagues like Octavio Rodriquez were perplexed by his imprecise definition of terms such as structural surplus in the text45 Meanwhile supplyside economists now in the main stream and supporting the existing global power networks were miles dis tant from Prebischs commitment to ethics and multilateralism Post Marxists such as his countryman Ernesto Laclau and other postmodern theorists were developing a discursive vocabulary foreign to Prebisch who used language simply as an instrument to talk about the real world Here also he appeared inadequate and oldfashioned But Prebisch held his ground In his final years he was writing from his immense experience as a great intuitive economist turned prophet he was not writing for academic journals In this final phase of his thinking he enlarged his approach to development discussing poverty capital for mation consumption patterns multinational enterprises human rights and 488 The Life and Times of Raúl Prebisch institutional change alongside regional integration and international trade obstacles In a return to the radicalism of his student days in Buenos Aires and traces of his thinking in the 194348 years he directed discussion to social exclusion as the primordial obstacle to development in Latin Amer ica46 Confronted by the Reagan challenge his task was to help focus the debate on development in Latin America Equitable distribution vig orous economic growth and new institutional patterns in a genuinely participatory democracy these are the major objectives he underlined Prebisch was certain that communism didnt work because it eliminated political freedom and moreover didnt work in practice while unre stricted liberalism was economically efficient but socially unsustainable The challenge in building a new order was to bring together the advan tages of both systems while avoiding the pitfalls I ask you what are your other solutions he demanded The free market and authoritarian gov ernments have not solved the problem Im not dogmatic I am just trying to provoke discussion47 Of course life went on in Washington and Prebisch refused to regret or despair When Sidney Weintraub worried in April 1981 about the fallout from Reagans victory Raúl chose to describe it as a transition period in which a few more years are necessary to see the light in another long and tortuous tunnel48 Old friends were dying and leaving José Medina Echevarria had returned to Santiago to die in 1978 rejected by the Spain he had longed for since exile in 1939 and to which he had returned in 1973 José Antonio Mayobre passed away in September 1980 Alizon Garcia was terminally ill David Pollock was returning to Canada to teach at Carle ton University Raúlito was grown up and would soon be off to Boston Uni versity Raúls health was still strong but not many more good years could be assumed Unexpected disasters struck in July 1982 surging floods on the Maipo undermined the cliff under his house and onethird of his gar den broke off into the canyon Even the weather seemed to be turning against him He renewed his US drivers license on 2 February 1981 to set tle in for the longer haul and even became interested in his own history as long as this could be kept to his early Argentine years and the UN period49 But increasingly Prebisch yearned to return to Buenos Aires the city of his boyhood dreams and now those of his final years Indeed his greatest joy was involving Argentine colleagues in the cepal Review or joining them in special events such as the Oxford Conference in July 1981 on Argentinas political economy 192060 which included leading scholars I Prophet 489 such as Guido di Tella Arturo OConnell Tullo Halperin Peter Alhadeff and Javier Villaneuva But returning to live was another matter His depar ture in 1948 was an age away and the only friendly government since the disaster of 195556 had been the brief Illia presidency 196366 snuffed out by General Juan Carlos Ongania after which Prebischs name re mained toxic in Argentina A press rumour in February 1972 that General Alejandro Lanusse Onganias second successor had invited Prebisch to lead another economic recovery program provoked protests in the capital with Perónists denouncing him as an ultraimf liberal and business groups labelling him an ecla socialist Facing this outburst Lanusse immediately denied any offer to Prebisch who sent cables swearing that he would never drunk or sleeping work for the Argentine military50 Since then the sit uation in Argentina had become increasingly violent and chaotic the re turn of Juan Perón on 20 June 1973 and his death a year later on 1 July failing to stem a virtual civil war The socalled National Reorganization Process led by Army Chief of Staff Jorge Videla after deposing Isabel Perón in March 1976 witnessed a descent into barbarism worse than Chiles under Pinochet and deepened Raúls despondency Videla was the twentyfirst president since Prebisch had been named undersecretary of finance in 1930 and Argentina was approaching Bolivia in Latin America as a special study in political instability and decline But he kept an eye on Argentina nonetheless hoping for a break in news In 1980 he visited Tucumán with Eliana to meet his sisters Rosa Elvira and Lucia Piossek and found it sullen and neglected moreover their old family home had been pulled down to widen a street It used to be like Burgos in Spain he lamented but no more51 He envied Celso Furtado Gabriel Valdes and others who had returned to their countries as the dictatorships eased and civil society was gradually rebuilt Valdes was now president of Chiles Christian Democrats organizing a Democratic Alliance to prepare for a restoration of constitutional government But while there were signs of prog ress in Brazil and Chile Prebisch saw only steps backward in Argentina The Ongania dictatorship had followed up its military coup against President Arturo Illia in 1966 with a selfdestructive assault on Argentine scientists the Night of the Long Police Clubs which sent 309 specialists into exile and terminated its regional leadership in computer technology medicine and agricultural research and the 1976 Process had resumed the witch hunt against Argentine intellectuals The 1982 FalklandsMalvinas war unexpectedly interrupted the mili tary regime in Buenos Aires General Leopoldo Galtieri successor to Videla as the newest strongman decided to reclaim the FalklandsMalvinas and GeorgiaSan Pedro Islands by force invading and occupying these 490 The Life and Times of Raúl Prebisch undefended British territories on 2 April in open violation of interna tional law Sovereignty over the islands was a popular theme at a time of growing shortages and Galtieri believed that his training of Nicaraguan contras in Honduras counted more in Washington than two centuries of historic ties and shared interests with Britain a fantastic dream that vanished on 30 April when the US formally supported Britain and de clared economic sanctions against him Argentina was therefore isolated before an approaching British naval group prepared to recapture the FalklandsMalvinas with his lightly equipped soldiers stranded far from the mainland without adequate supplies Trained to fight urban guerril las they were no match for Margaret Thatchers Royal Marines and while the Argentine Air Force proved plucky and skilful Galtieri was forced to surrender and resign after seventytwo days Even before the war inflation was running at 600 percent and the economy had con tracted 114 percent the previous year defeat and 655 casualties added to economic isolation and gross economic mismanagement left the military unable to govern the country and the junta was humbled into calling elections for 30 October 1983 I am intensely attracted by the restoration of the democratic process after years of disaster Prebisch re marked after hearing the news The long exile it appeared might finally be ending52 With democracy in the air after dictatorship and terror Buenos Aires was transformed once more into an exciting world capital Argentines ev erywhere shared the exhilaration of a definitive break from the long cycle of political futility and repression and Prebisch used every opportunity to visit Buenos Aires A G77 meeting there from 28 March to 2 April 1983 followed a major allparty conference convened at the Faculty of Economic Sciences and he was back again in July for a seminar on Latin American integration sponsored by intal Institute for the Integration of Latin America Both speeches emphasized the link between development and democracy and were widely reported in the media Prebisch returned 2326 August to attend a major conference The Construction of Democ racy in Argentina organized by Aldo Ferrer an unusual preelectoral event that rallied old foes from across the political spectrum and with representa tives from both the corporate world and labour The leaders of all the polit ical parties were present including Perónist labour leader Saul Ubaldini pledging to work together and build a new future for the country Celso Furtado and Gabriel Valdes were also invited as symbolically essential rep resentatives of Brazil and Chile as they also prepared their return to de mocracy Prebisch gave the opening address in which he laid out an agenda for restoring sound economic growth by ending the vicious cycle Prophet 491 of deficits inflation and decline He participated in a special closed meeting of the core group at Aldo Ferrers home after the conference with Radical Party candidate Raúl Alfonsín Chosen party leader in July Alfonsin was a veteran party militant and humanrights activist whose criti cism of the military regime in The Argentine Question had made him a na tional figure Alfonsín and Prebisch had only briefly met over dinner in Washington five years earlier with Bernardo Grinspun but Raúl knew ex President Illia and many Radical Party members close to Alfonsín had been his students before 1948 or had worked with him at ecla ilpes unctad or elsewhere in the UN It was logical therefore that he should be per ceived as a valuable link with the past When Alfonsín arrived in Washington in September for a preelection briefing with US Congressional leaders he met with Prebisch again to dis cuss the difficult economic options for an Argentina mired in debt and re cession Practically the entire future Alfonsín Cabinet was with him including Bernardo Grinspun Juan Sourrouille and Enrique Garcia Vasquez Whoever won the elections Alfonsín or the Perónist Party would inherit a miserable legacy from the Argentine generals The new government would face the double challenge of reviving the country polit ically while coping with 400 percent annual inflation a 46 billion debt and an annual economic contraction of 43 percent since 1980 In addi tion capital flight by wealthy Argentines had to be reversed The ten larg est US banks had about 20 percent of their capital invested in Argentina interest rates were rising and Argentinas debts could no longer be serviced without rescheduling After years of encouraging borrowing the imf and the banks had changed their tune they were now insisting on belttightening in exchange for new credits During Alfonsíns visit to Washington a national rage against the imf swept Argentina to the point where a judge froze negotiations between the Central Bank and foreign bankers and imprisoned Central Bank President Julio Gonzalez del Solar for ignoring domestic interests Although he was released within a week del Solars experience frightened foreign bankers and there was wide spread speculation of a debt default with serious damage to the US banks holding most of the debt53 After his election victory on 30 October Alfonsín called Prebisch im mediately to ask him to assist the new government No other Argentine national could articulate Argentinas needs more forcefully with interna tional agencies and the range of Prebischs experience made him an ideal senior advisor given the economic challenges facing the country For his part Raúl was overjoyed by Alfonsíns prompt invitation yearning to leave Reagans Washington and be part of the rebuilding of Argentine economic 492 The Life and Times of Raúl Prebisch and political life I had to accept the kind invitation of President Alfonsín he stated later The President is an excellent person but the difficulties ahead are enormous I came with the emotion of an Argentine to see the country return to normality under such a great man54 They discussed options for Prebisch in the new government there was no Council of Eco nomic Advisors and Raúl wanted more than the title of roving ambassa dor preferring something closer to the president and actual political power Alfonsín therefore suggested Advisor to the President with the rank of Secretary of State immediately below ministerial rank in the new Cabinet an advisor at large so to speak on domestic and international economic matters facing the new government It would be a unique posi tion Prebisch would work out of the Central Bank and report directly to the president but he was to assist the four economic ministers Minister of Economy Bernardo Grinspun Minister of Foreign Affairs Dante Caputo President of the Central Bank Enrique Garcia Vasquez and Minister of Finance Juan Sourrouille As in 1955 he insisted on working pro bono to preempt criticism of his motives unlike in 1955 he had decided to return for good no matter what happened By mid1984 Eliana and Raúl had sold their property in Washington and purchased a spacious apartment in the centre of Buenos Aires on Galileo 2425 Appointed before the inauguration Prebisch started work immediately after President Alfonsín took office on 10 December 1983 It was a deli cious moment he was installed in a small suite across from the Church of the Merced down the corridor from his grand old office in the Central Bank inhabited by Enrique Garcia Vasquez who clearly valued his pres ence He rehired Pedro Orradre his secretary before October 1943 and again in 195556 who was now approaching seventy He was lionized by the younger bank staff and adopted as éminence grise given his inter national reputation and strong personality But it was not clear whether Alfonsín or his ministers saw him as an ideas person or as Raúl as sumed a handson advisor on government policy His first assignment an analysis of the economic crisis facing the new government monopolized his time until 19 January when he submitted his report to President Alfonsín The Preliminary Plan for the Immediate Reac tivation of the Economy began by repeating the grim diagnosis set out in the presidents address to the nation on 16 December a per capita income less than in 1970 a disorganized banking and financial sector declining pro ductivity and entrenched inflation and all this in an international cli mate of falling terms of trade low commodity prices and high interest rates It was Prebisch acknowledged an extremely serious crisis indeed a second depression which was more difficult for Argentina than the Prophet 493 first Great Depression55 Argentina had to return to stable growth job creation and higher productivity to increase real incomes The dilemma facing Alfonsín was fighting inflation while simultane ously reigniting growth and employment with the Radical Party deeply split on policy Prebisch had no doubt that the first and overwhelming pri ority had to be deficit reduction and the control of inflation even though such measures were politically difficult for the new government The great economic and social objectives of the Government as a point of de parture for a longterm policy of development will fail if public expendi tures are not reduced and if the necessary resources for a planned reduction of the deficit are not located Alfonsíns entire plan lower in terest rates higher return on capital increased investment and a return of prosperity rested on liquidating the inflationary spiral The government therefore had to be prudent on wage increases and expenditures while cleaning up the disastrous mess left by the military and reactivating pro ductive investment to expand exports of manufactured goods within a ra tional policy of import substitution Once sound growth was restored high prices and interest rates would gradually decline and Prebisch urged that Alfonsín adopt an approach of sacrifice with equity or what he called a rational sequence of measures to deal with the crisis But the starting point had to be controlling inflation Garcia Vasquez supported Prebisch but Grinspun opposed him and the Cabinet was split Alfonsín faced strong public sector demands for wage in creases after the fall of the military resisting these pressures in favour of deficit reduction ensured a challenge from the Perónist labour movement The president had already agreed to a big public sector salary increase after taking office to Prebischs sharp disapproval The substantial adjust ments granted in the second half of 1983 impose a heavy burden in the current year since wages account for an important share of government ex penditure he noted I am not arguing against wages which are notori ously low It all depends on how and when this is done He concluded It is a difficult choice but it must be made56 Grinspun and Alfonsín decided to disregard Prebischs advice choosing a path of socalled moderate inflation to spread the adjustment process over a two to threeyear period It was a difference Grinspun claimed of tactics rather than strategy Confronting many challenges and strong con stituencies they decided that a slower consensual approach would placate the opposition and allow time for a still very fragile democracy to coalesce Circumstances were difficult the Radical Party victory had raised expecta tions threats of a military coup remained and so forth Instead of decisive action therefore they preferred timid steps and were surprised when they 494 The Life and Times of Raúl Prebisch proved ineffective the first wage increase produced immediate demands for another while their joint committees of labour management and gov ernment created in each economic sector to agree on wage and price guidelines collapsed in deadlock Grinspun explained his dilemma on inflation to Prebisch using a homely analogy of the family kitchen Like pepper and gefilte fish he explained It needs pepper my father would always complain How much mother would ask Just right How much is that Just enough Just enough which way Not too much and not too little No Bernardo Prebisch differed No pepper at all57 Successful stabi lization was the central challenge and decisive action at the outset would be accepted by the Argentine public he argued in fact it was the only way to maintain the prestige of the Radical Party Internationally Alfonsín also had strong support if he acted quickly with his victory endorsed by leaders in France Spain and Italy Bold action meant shortterm but nevertheless major sacrifices from all the sectors business labour and government and Prebisch felt that any delay would undermine the sense of solidarity re stored to Argentina after the return of democracy in 1983 The mood of the country in December was still positive but the postmilitary euphoria was fragile Once the glow faded Argentine political life might return to its chronic paralysis and governments in Argentina did not have a history of extended honeymoons He openly condemned the governments wage in creases Bad policy he commented to the press58 Grinspun and other members of Alfonsíns team saw his criticism as disloyal and damaging but Prebisch felt it his duty to warn the public against taking the wrong path in the forked road that lay ahead of his country As inflation resumed and the earlier favourable public opinion toward the government began to reverse his fears seemed justified Alfonsíns next assignment for Prebisch was leading a delegation to Washington to find a way out of the Argentine debt impasse The near satanic public image of the imf in Argentina made this mission practically impossible Much of the foreign debt contracted by the military regime and previous governments had been lost squandered or siphoned off to personal accounts and pressure to default had initially persuaded Alfonsín to suspend interest payments59 But pressure also mounted for ending Argentinas international isolation and in March 1984 Prebisch was sent Prophet 495 to negotiate an imf agreement Grinspuns erratic behaviour at times con ciliatory and at times bellicose but always arrogant and ignorant of the rules of the game had brought relations with the imf to a standstill Like the inflation issue Washington could not be avoided and Prebisch agreed to travel to Washington as a personal delegate of the president with all the bargaining power of an empty treasury The negotiations were complex involving the US Treasury as well as Mexico Brazil Colombia and Venezuela but an agreementinprinciple was reached on 29 March which ended Argentinas exclusion from global capital markets on surprisingly favour able terms Argentinas access to imf lines of credit was restored with a more generous servicing and repayment schedule on its 46 billion for eign debt than normal imf practices In addition instead of Argentina re suming payments without regard to economic growth the preliminary agreement signed by Prebisch and imf Managing Director Jacques de Larosière linked debt payments to import needs servicing the foreign debt would kick in only after these were satisfied But although the agreement was a major achievement it only gave breathing space until 30 June As news emerged of the imf agreement a public furore led by the oppo sition Perónist Party enveloped the Alfonsín Government Argentine am bassador Julio Garcia del Solar an incorruptible who had spent seventeen years in the UN during the dictatorship gave a blacktie dinner for Prebisch in Washington the night of the imf agreement during which news arrived that someone in the Foreign Ministry had leaked the topsecret cable to La Prensa the extreme rightwing newspaper of Buenos Aires Next morning a frontpage story titled The Yellow Canaries carried the full text of the agreement60 Returning home Prebisch held a press conference in the Casa Rosada introduced by Alfonsín himself in which he tried to explain what he had signed in Washington a preliminary agreement and why a formal agreement would take much more work The journalists were inter ested only in taunts and personal insults61 Prebisch found himself celebrating his eightythird birthday in an atmosphere reminiscent of the RocaRunciman Pact or the 195556 syndrome hounded on all sides by an ignorant and abusive press Prebisch was condemned as imffriendly in his insistence on sound money as the prerequisite of healthy economic re covery He was denounced for duping Alfonsín and Grinspun for selling out Argentina to Western imperialism and for negotiating an important state agreement as an unelected advisor behind the back of the Argentine congress Behind the structural adjustment favoured by Presidential Adviser Prebisch lurks the ghost of orthodoxy Clarin warned62 The apparently inexhaustible undercurrent of Prebischphobia in Argentina was easily activated in academic circles as well In 1983 the University of 496 The Life and Times of Raúl Prebisch Tucumán had approached him to accept an honorary doctorate but professors in the Economics Department protested until the invitation was withdrawn Grinspun tried to defuse the growing opposition with a special visit to the Senate Accompanied by his wife Eva two children and fortyone officials to give a majority one Senator noted he spent eleven hours on 16 May 1984 answering questions about the imf negotiation in Washington When he mentioned Prebischs name Vicente Saadi the Perónist majority leader from Catamarca rudely interrupted I would like to say that the Perónist bloc does not share the Ministers views regarding the prestige of Doctor Prebisch who has only served to deepen the colonialism and slavery of na tions The memory of his Central Bank work is still fresh63 Grinspun went over the imf agreement word for word trying to clarify the difference be tween the role of an advisor on the one hand and that of a negotiator on the other Prebisch had not negotiated the memorandum of understand ing Alfonsín and he Grinspun had made the political decisions He in sisted that the imf austerity plan was not forced on Argentina but instead was freely agreed to as necessary public policy The new wage policy has nothing to do with the imf discussions he said with or without the imf it has to be done By this time Grinspun and Alfonsín realized that they badly needed Prebisch in regional diplomacy on the debt crisis In early 1984 ecla had organized a foreign ministers meeting to coordinate interAmerican eco nomic policies on interest rates all Latin American countries were faced by a credit squeeze and virtually all Latin American and Caribbean coun tries supported a new regional initiative64 But in practice it was left for the Big Four Brazil Mexico Argentina and Colombia to take the lead Prebisch prepared the Argentine position with Foreign Minister Dante Caputo and the Four met in May 1984 immediately before the G7 Summit issuing a joint statement that the debt was both a political and economic issue implying joint responsibility of debtors and lenders in finding a solution The Four then convened another foreign ministers meeting in Colombia a month later and signed the Cartagena Consensus whereby Latin American central banks would discuss and coordinate re gional debt negotiations with creditor governments and institutions The imf the World Bank the US Treasury and Western banking consortia worried that it was a first step toward forming a debtors cartel In fact Prebisch and the Cartegena Group were not opposing negotiations with debtor countries but rather insisting that they take place within a regional framework linked to trade and development policy which recognized the principle of coresponsibility of debtors and creditors in resolving the Prophet 497 problem Step by step Prebisch observed a revival of Latin confidence after the disaster of the debt crisis a precondition for the socalled Baker Plan of 5 October 1985 which transformed the Third World debt crisis into a manageable problem65 Grinspun asked Prebisch to return to Washington in summer 1984 for a second round of negotiations with Jacques de Larosière and another provisional agreement was signed on 25 September Paul Volcker chair of the US Federal Reserve commented Raúl is a man of great prestige and suggested that he be named Argentinas permanent negotiator in Washington66 But Grinspuns own support in the Cabinet was under mined as the austerity program failed and the inflationary spiral contin ued from Alfonsins inauguration where it stood at 402 percent it climbed to 449 percent by March and reached 7134 percent by the end of the year I do not yet see a clear decision for a good emergency plan he wrote on 10 September I am persuaded that it is absolutely possible to attack very vigorously the problem of inflation but regret to say that ideas exist different to mine that interfere with the formulation of a good plan67 Government policy was not successful in reversing a deep ening malaise the early glow and sense of common effort surrounding the return to democracy dissipated during 1984 sapping the credibility of the Alfonsín Government and Grinspun the wild man of Argentine politics was replaced by Juan Sourrouille in February 1985 Prebischs usefulness as advisor to the president diminished as differ ences with the new minister proved unbridgeable and inflation climbed to four digits As Prebisch left Buenos Aires for eye surgery on 14 May the US Embassy reported that he had resigned68 Subsequent efforts to stabi lize the economy with a new currency the Austral were no more success ful hyperinflation would reach a record level by Alfonsins exit in 1989 and the Argentine public finally endorsed stability under his Perónist suc cessor Carlos Saúl Menem when all other options had been explored and had failed 21 House of the Spirits If the practical outcome of Prebischs advisory work for Alfonsín was simi lar to that with Lonardi and Arumburu in 195556 his reaction to failure was very different This time he took his fate as advisor in stride if disap pointed he was not wounded or depressed and had no intention of leaving Buenos Aires He moved from the Central Bank to a modest desk in the local offices of ecla and became a public fixture with his daily long march head high and shoulders back between Galileo and Corrientes There was no bitterness in his relations with Alfonsín Grinspun or Vasquez when the president made a state visit to India Raúl accompanied him given his many personal contacts and friends and worked to rebuild Argentine ties with this global giant after its long diplomatic isolation In fact Alfonsín refused to accept Raúls resignation and proposed his appointment as AmbassadoratLarge1 In fact he was gripped by a curious infectious excitement at a structure appearing in his own long life that he was seeing the end of the twentieth century just as he had arrived in Buenos Aires in 1918 as that terrible new century was taking shape Then the situation of the world militarily po litically and economically was unrecognizably different from the safety and prosperity before 1914 Empires had fallen free trade had ended and the Soviet Revolution had opened an EastWest ideological divide Now Gorbachev was in power and the end of that defining rivalry between Soviet communism and market capitalism was playing out in triumph for the West with Washington poised to become the sole superpower The Soviet Empire would fail incapable of maintaining control of Eastern Europe or its own republics Along with this geopolitical transformation a new period of globalization in international trade finance and technology was about to sweep the entire world of developed and developing coun tries changing their status and future some like China and India to House of the Spirits 499 emerge as great powers One could hope that this postCold War transfor mation would see democratic change a winding down of regional con flicts and a peace dividend to be invested in the great remaining agenda area of international development From Buenos Aires Prebisch saw important prospects if not yet secure hopes for a better century He had arrived there sixtyeight years earlier to begin university Argentina and Latin America had now changed in every way For his homeland the comparison was unhappy when he arrived from Tucumán on his birthday in 1918 Argentina was the second wealthiest country in the world by 1986 it had been reduced to developing country status with an uncertain future For Latin America as a whole the balance was also uncertain The region had looked so promising in 1945 relative to Asia or Europe now it was stuck in recession and debt and had fallen be hind in the global system However the worst of the Latin American debt crisis was over with the Cartagena Consensus and the Baker Plan govern ments were shaking off the lost decade of the 1970s and the great shock of 1982 and were again thinking as a region as if to enter the new century with profile and energy slowly regaining a political personality In Central America the Contadora Group was challenging US intervention in the region and actively launching a peace process with their own stamp2 Latins were discussing the launching of a new round of gatt negotiations Uruguay was reemerging as a regional interlocutor with the return of Enrique Iglesias from ecla as foreign minister A new impulse in regional integration was visible Politically the Rio Group Annual Summit of Presidents was emerging in Latin America from the habit of consultation that had been taking shape over debt trade and the Contadora peace pro cess since 19823 In regional trade within the Southern Cone Prebisch also witnessed the change he had longed for since the 1930s as Brazil and Argentina agreed to end their competition in 1985 Picking up where they left off in 1941 they began negotiations for mercosur4 initially with Uruguay and Paraguay in a bid to anchor regional free trade and termi nate a dangerous nuclear and military rivalry Some salutary lessons had been learned in Latin America from the tur moil of the twentieth century Democracy was returning to the continent as a generally recognized human right military rule had ended in Argentina Brazil and Uruguay and in Chile Pinochet was under pressure from an in novative left and the Christian Democratic Party who were building a more enduring and flexible democratic consensus If Gabriel Valdes was reaching out to his erstwhile opponents Heraldo Muñoz was abandoning Marxism for political pluralism and tolerance The shock of the 1982 debt crisis had also yielded some lessons for economic policy in the region the folly of 500 The Life and Times of Raúl Prebisch closed markets for example or bloated state bureaucracies with high defi cits and inflation or the high cost of corruption If macroeconomic stability did not guarantee growth at least it was now seen as its prerequisite If the twentieth century could be described as the Age of Extremes5 Argentina and Latin America had suffered sufficiently to enter the postCold War era with the knowledge learned the hard way of what to avoid But had Latin America learned enough Prebisch wondered in his final year and in his final essay he turned to this worry Globalization was emerg ing as the new cliché in Washington a new consensus was forming about measures appropriate for developing countries and Latin economists were now as enthusiastic in importing North American models as they had been in 1918 when they devoured the English classics wearing their waistcoats and smoking briar pipes Prebisch titled his paper Absolute Imperative New Economic Thinking in Latin America to warn against accepting ideas uncritically6 He had survived too much of the twentieth century to believe in magic the new religion of open markets could lead to extreme measures after the Cold War as easily as the previous abuse of isi in the 1970s If this happened after the Cold War Latin America would find itself twenty years later in another period of disenchantment and sense of fail ure He was not sure where Latin America was headed this task belonged to the new generation But eventually perhaps not before another round of extremes Latin Americans would find their own way out of the periph ery to growth and equity His own legacy to future generations was less policy than a distinctive style of thought action and ethics whatever the fashion of the day globalization must and could be guided by purposeful and rational policies but success also required a new spirit of international cooperation to motivate societies and their governments Prebisch remained in flattering international demand with as much travel as he wished He still directed the cepal Review in Santiago visits to Santiago were always events memorable to the junior staff he would invite for conversations But most of all Prebisch was home this was it he would move no more In Buenos Aires Elianas infectious energy and quick wit quickly turned their attractive large apartment at 2425 Galileo into a meet ing place for friends and the political debates he enjoyed so much Already there was talk of designating a Raúl Prebisch Library in the Central Bank Times were changing a Prebisch revival in Buenos Aires was slowly but un mistakeably building His popularity rose to the point where he and Eliana couldnt eat in restaurants without being disturbed They deepened ties with Tucumán and family Each day produced a greater calm and accep tance after a life of stiff formality he began to tutear everyone He rejoiced House of the Spirits 501 in the company of his disciples don Benja Hopenhayn and his owl collection mi querido Vasquito Bardeci Nuns great size What Pepé are you still growing Pollocks hypochondria Cibotis engineer jokes Aldo Ferrers excessive earnestness por favor Aldito He was at peace He had coffee in all his old haunts lamenting the decline of Buenos Aires while extolling its indestructible charm and compelling civic culture Hav ing returned he realized how much he had missed this great city How had so much survived so well Buenos Aires for all its scars potholes calami tous telephone service and decaying subways had retained an urbanism without parallel in the Americas If the country seemed ungovernable the capital was worthy of its great promise And of course across the Andes above Santiago he had El Maqui his refuge and house of dreams with its view of canyon peaks and skies em bodying the majesty and mystery of Latin America where Adelita was al ways ready to welcome him home Here alone Prebisch could ask the hardest questions What was the balance of so long a life Had he done his best With all his gifts and talents Prebisch had seen most of his great proj ects fail or not meet his expectations the Central Bank ecla unctad and ilpes Was he marked by birth his fathers son so to speak denied that singularity of purpose for the final hurdle Could he have steered the Argentine Central Bank through the war intact Or could his return in 195556 have worked out differently if he had not become personally in volved Why had he turned on Furtado and Ganz Why had he not spoken out in defense of Allende Why had he never written the big book on de velopment theory after Havana when it was crying to be completed Why was he driven to treat Adelita the way he did or to live like a millionaire while condemning imitative capitalism A thousand failings and more notwithstanding the odds against him in his work at every stage The historical verdict is different Greatness Prebisch would have re membered from his Jesuit teachers in Tucumán is not the absence of vice so much as the achievement of good works and his harsh selfcriticism it self illustrates the deep and complex humanity that touched the lives of those around him Prebisch was never neutral he was a driving force in de velopment thought and diplomacy who changed the vocabulary of interna tional politics and cast a long shadow over the twentieth century Theorist humanist and builder he insisted on excellence with his innovation with standing the ebb and flow of fashion in development theory and current debates on Latin America and international governance Without wielding state power Raúls vision and leadership achieved an extraordinary hold over those who knew and worked with him in Argentina Latin America 502 The Life and Times of Raúl Prebisch and the global system Prebischs idealism carried him into the top inter national group of people who make history rather than endure it and con tinues to animate his followers in the struggle for global equity and justice On 6 April 1986 Prebisch left Buenos Aires for a conference in Ottawa organized by David Pollock The students heard his attack on imitative cap italism they marvelled at the time he spent with them and at his uncom mon consumption of red wine at lunch and dinner He then left to attend eclacs conference in Mexico City and delivered a lively address to the delegates But the April chill of Ottawa and Mexico gave him a cold and he returned to El Maqui on Sunday 17 April looking tired But he drove to ecla next morning in his white Mercedes for a full days work on the journal returning for dinner at 530 strolling with Adelita in the garden enjoying an aperitif whisky for Raúl sherry for Adelita as the sun fell be hind the pines He retired early to read Isabel Allendes new novel House of the Spirits a multigenerational family saga of great crimes and generosity love of the land and fortunes made and lost where those who struggled hardest were the first betrayed a portrait of a Latin America of power and vitality beauty and forgiveness Turning off the light Raúl looked at Adelita That is a great book he smiled before going to eternal rest at 215 am Acronyms abc Argentina Brazil Chile banfaic Banco de Fomento Agricola e Industrial de Cuba Cuban Agricultural and Industrial Development Bank bew Board of Economic Warfare US bna Banco de la Nacion Argentina Argentine National Bank bnde Banco Nacional de Desenvolvimento Econômico National Economic Development BankBrazil capi Corporación Argentina para la Promoción de Intercambio Argentine Trade Promotion Corporation 1941 cebrap Centro Brasileiro de Análise e Planejamento Brazilian Centre of Analysis and Planning cecla Special Coordinating Committee of Latin America cgt Confederación General del TrabajoGeneral Confederation of Workers or National Labour Federation Argentina ciap Comité Interamericano de la Alianza para el Progreso Inter American Committee for the Alliance for Progress comecon Council for Mutual Economic Assistance Soviet Bloc csn Companhia Sidirogica Nacional National Steel Company Brazil desa Department of Economic and Social Affairs UN ecafe Economic Commission for Asia and the Far East UN ece Economic Commission for Europe UN ecla Economic Commission for Latin America in Spanish cepal Commissión Económica para America Latina The name was changed in 1984 to eclac to highlight the inclusion of the Caribbean region ecosoc Economic and Social Council UN eec European Economic Community fao Food and Agriculture Organization UN 504 Acronyms FM Fabricaciones Militares General Agency for Military Indus tries Argentina fsln Frente Sandinista de Liberación Nacional Sandinista National Liberation Front Nicaragua G77 Group of 77 gatt General Agreement on Tariffs and Trade gou Grupo de Oficiales Unidos Group of United Officers Argentina gsp Generalized System of Preferences iaecosoc InterAmerican Economic and Social Council iapi Instituto Argentino Para la Promoción de Intercambio Argentine Institute for Trade Promotion 194656 ica International Commodity Agreement ida International Development Association idb InterAmerican Development Bank ifi International Financial Institutions ilo International Labour Organization UN ilpes Instituto Latinoamericano de Planificación Económica y Social Latin American Institute for Social and Economic Planning imf International Monetary Fund intal Instituto para la Integración de América Latina Institute for the Integration of Latin America iro International Relief Organization later renamed the Office of the UN High Commissioner for Refugees ito International Trade Organization UN lafta Latin American Free Trade Association ldc Less Developed Country mnc Multinational Corporation msa Most Seriously Affected Countries nam NonAligned Movement nato North American Treaty Organization nieo New International Economic Order oas Organization of American States oecd Organization for Economic Cooperation and Development pri Partido Revolucionario Institucional Institutional Revolu tionary Party Mexico sela Sistema Económico Latinoamericano Latin American Eco nomic System sfm Supplementary Financing Mechanism sra Sociedad Rural Argentina Argentine Rural Society Acronyms 505 sunfed Special UN Fund for Economic Development tdb Trade and Development Board unctad uba University of Buenos Aires ucr Unión Cívica Radical Radical Party Argentina ucri Unión Cívica Radical Intransigente Radical Party Intransi gent Argentina uia Unión Industrial Argentina Union of Argentine Industrialists unam Universidad Nacional Autónoma de México National Auton omous University of Mexico unctad United Nations Committee on Trade and Development undp United Nations Development Programme unep United Nations Environment Programme unesco United Nations Educational Scientific and Cultural Organi zation unido United Nations Industrial Development Organization unlp Universidad Nacional de La Plata Argentina usaid United States Agency for International Development This page intentionally left blank Notes c h a p t e r o n e 1 Magariños unpublished part of an interview with Raúl Prebisch that was edited and published as Diálogos 12 Future references are to the published Diálogos 2 In a vast bibliography see Walter Politics and Growth in Buenos Aires Abós ed El libro de Buenos Aires Keeling Global Dreams Local Crises Ruggiero Modernity in the Flesh Bailey Immigrants in the Land of Promise Press Scobie Buenos Aires From Plaza to Suburb 3 Lalanne Los Uriburu The following pages rely on interviews with Raúl Prebisch be fore his death in 1986 particularly Pollock Conversations with Raúl Prebisch subse quently edited and published in sections by Pollock Love and Kerner Magariños Diálogos and Gonzalez del Solar Conversaciones 4 Scobie Argentina A City and a Nation 143 5 Magariños Diálogos 303 in particular 6 La Prensa 21 November 1903 quoted in Korzeniewicz Labour Unrest in Argentina 7198 7 Magariños Diálogos 31 According to Prebisch his grandmother would say Hijo no te juntés con lomos negros Boy dont mix with these dark ragamuffins 8 Magariños Diálogos 36 She was the one who protected us 9 Ibid 38 10 Pollock Conversations with Raúl Prebisch 6 Adela Moll de Prebisch interviews with the author between 1989 and 2001 c h a p t e r t w o 1 The best account of Prebischs experiences during this period is found in Magariños Diálogos 508 2 For the history of political parties in Argentina see Pasos Historica del Origen de los Partidos Canton Elecciones y Partidos Manzetti Institutions Parties and Coalitions Gibson Class and Conservative Parties 3 Lewis Crisis of Argentine Capitalism 34ff 84 112 4 Scobie Argentina A City and a Nation 134 191 5 Lalanne Los Uriburu 3969 4079 6 See Magariños Diálogos 3946 on Prebisch and the intellectual life of Buenos Aires after the Soviet Revolution See also Kay Latin American Theories of Develop ment 16 7 Gonzalez del Solar Conversaciones 34 10 8 Love Economic Ideas and Ideologies in Latin America 9 Lewis Crisis of Argentine Capitalism 62 Dorfman Historia de la industria argentina 207 10 Ibid Lewis Crisis of Argentine Capitalism 87 See also della Paolera and Taylor eds New Economic History of Argentina 11 Pollock Conversations with Raúl Prebisch 7 Quoted in Gonzalez and Pollock Del orthodoxo al conservador ilustrádo 45586 12 Lopez Hugo Broggi 30328 13 Magariños Dialogos 20 Gonzalez del Solar Conversaciones 8 Pollock Conversations tape 1B 1 21 May 1985 14 Prebisch La cuestión social 1112 15 The first eight articles in Prebisch Obras vol 1 are examples of these 16 Magariños Diálogos 47 17 Malaccorto interview with the author 18 Magariños Diálogos 501 19 Ibid 20 Ibid 50 21 Gonzalez del Solar Conversaciones 8 22 Magariños Diálogos 50 23 For Prebischs defense of the conventional view of the international division of labour during the 1920s see De cómo discurre el profesor Olariaga 46680 24 I am indebted to Dr Mario Bunge for his insights and assistance particularly in this section 25 Lalanne Los Uriburu 3878 394 26 Palacios Dos años de acción socialista cited in Lalanne Los Uriburu 38791 Justo was sufficiently prominent in the Second International to have been invited at its an nual meeting in 1914 to address the socialist gathering on the subject of worker wage parity 27 Mario Bunge interview with the author 28 Gonzalez del Solar Conversaciones 45 Notes to pages 2235 509 29 Malaccorto interview with the author See also Pollock Kerner and Love Aquelles viejos tiempos 164 30 Prebisch La Conferencia de Bruselas 4354 31 Prebisch Anotaciones sobre nuestro medio circulante 93175 32 Ibid 95 33 Ibid 149 34 Ibid 126 35 Prebisch Planes para estabilizar el poder adquisitivo 176216 36 Barone Studi di economia finanziaria In Magariños Diálogos unpublished version Prebisch says that Pareto had a great influence on my intellectual formation 35 37 Prebisch La sociología de Vilfredo Pareto 36574 c h a p t e r t h r e e 1 See Gurrieri Las ideas del joven Prebisch 6982 Gonzales and Pollock Del ortodoxo al conservador ilustrado 45586 and Lewis Crisis of Argentine Capitalism 212 2 Magariños Diálogos 52 3 Lewis Crisis of Argentine Capitalism 52 Also see Thorp Progress Poverty and Exclusion 4 Thorp Progress Poverty and Exclusion 102 5 Prebisch Información estadística sobre el comercio de carne vacuna 236303 Mowat Britain between the Wars 257 6 Prebisch Sobre la degradación del marco 234 Mowat Britain between the Wars 257 7 Prebisch Comercio de carne vacuna 259 8 Lewis Crisis of Argentine Capitalism 52 Gonzalez del Solar Conversaciones 6 9 Prebisch Anotaciones sobre la crisis ganadera 30449 10 Eleodoro Lobos Prologo to Cercano Evolucion historica del regimen 323 11 Gonzalez del Solar Conversaciones 6 12 Quoted in Prebisch Primer informe del Doctor Raúl Prebisch 403 13 Prebisch El problema de la tierra 37680 14 Prebisch Determinacion de la capacidad impossible 38192 Primer informe 4013 15 Gonzalez del Solar Conversaciones 7 16 Lewis Crisis of Argentine Capitalism 72 17 Prebisch Aclaraciones al Proyecto de colonización del Poder ejecutivo 393409 also Gonzalez del Solar Conversaciones 910 18 Magariños Diálogos 57 Notes to pages 3652 510 19 I am indebted to Ernesto Malaccorto for this section 20 Gonzalez del Solar Conversaciones 11 21 Prebisch Anotaciones a la estadística nacional 40420 22 Prebisch Anotaciones demográficas 42165 23 Prebisch Anotaciones demograficos addresses the neoMalthusian controversy 4603 24 Gonzalez del Solar Conversaciones 13 25 Thorp Progress Poverty and Exclusion 112 26 Ibid 101 27 Malaccorto interview with the author Meltzer A History of the Federal Reserve 191351 28 Gonzalez del Solar Conversaciones 12 29 Followed by Prebisch organizing Argentinas First National Statistical Conference in Cordoba bringing together statisticians from all over the country and represent ing every sector Gonzalez del Solar Conversaciones 13 30 Correspondence between Albin Prebisch and Raúl Prebisch 20 September 1926 Prebisch Papers See also Margarinos Diálogos 501 for Prebischs description of fatherson relations 31 Prebisch El régimen de pool 48197 32 De la Torre was also a wealthy landlord but he belonged to the cattlebreeders sup plying calves to the sra ranchers who sold mature animals to the Buenos Aires stockyards 33 Prebisch De cómo discurre el profesor Olariaga 46680 34 Prebisch El movimiento internacional del oro 553 c ha p t e r fo u r 1 Bunge interview with the author 2 Revista Economica 1 no 1 1928 35 3 Magariños Diálogos 63 4 Scobie Argentina A City and a Nation 219 5 Lalanne Los Uriburu 4467 6 Lewis Crisis of Argentine Capitalism 8991 7 Magariños Diálogos 301 8 Ibid 65 Bunge interview with the author 9 Lalanne Los Uriburu 44554 10 Gonzalez del Solar Conversaciones 14 11 Ibid 15 12 Gonzalez and Pollock Del ortodoxo al conservador ilustrádo 4601 Louro de Ortiz El Grupo PinedoPrebisch 289 13 Lewis Crisis of Argentine Capitalism 117 Notes to pages 5270 511 14 Mowat Britain between the Wars 441 15 Ibid 41718 Love International Intellectual Environment 5966 16 Mattera Argentine Commercial Banking 656 Gonzalez del Solar Conversaciones 1420 17 Gonzalez and Pollock Del ortodoxo al conservador Gonzalez del Solar Conver saciones 15 18 Magariños Diálogos 6970 19 Lewis Crisis of Argentine Capitalism 86 Lalanne Los Uriburu 476 20 Gonzalez del Solar Conversaciones 20 21 Adela Moll de Prebisch interviews with the author 22 Adelita Prebisch to Rosa Linares 10 October 1932 Prebisch Papers 23 Adela Moll de Prebisch interview with the author 24 When Argentina rejoined the League Saavedra Lamas became president of the League Assembly in 1936 25 Printed in The Times London June 1933 26 Adelita Prebisch to Rosa Linares 6 January 1933 27 Cassel Recent Monopolistic Tendencies 434 Noted in Love International Intellectual Environment 5966 28 Manoilescos book The Theory of Protection and International Trade Love has written extensively on Manoilesco and Prebisch in the history of economic thought in the 1930s See for example his Manoilescu Prebisch and Unequal Exchange 29 Mallorquín Un texto de Raúl Prebisch quoted in Eichengreen Golden Fetters 3201 30 Prebisch La Conferencia Económica y la crisis mundial 86101 31 Mowat Britain between the Wars 41718 32 Lewis Crisis of Argentine Capitalism 86 33 Gonzalez and Pollock Del orthodoxo al conservador 1016 Lewis Crisis of Argentine Capitalism 90 See among others Di Tella and Platt eds Political Economy of Argentina Villanueva Economic Development Di Tella and Halperin eds Los Fragmentos del poder Fordor and OConnell La Argentina y la economia Atlántica Escudé The Argentine Eclipse 34 Keynes The Means to Prosperity 35 Quoted in Mowat Britain between the Wars 414 c h a p t e r f i v e 1 Lewis Crisis of Argentine Capitalism 813 88 Diaz Alejandro History of the Argentine Republic 11 2 Malaccorto interview with the author Prebisch La producción rural y el mercado de cambios in Obras vol 2 14657 For further discussion see Gurrieri Las ideas del joven Prebisch 789 Notes to pages 7091 512 3 Lewis Crisis of Argentine Capitalism 50 91 4 Gonzalez and Pollock Del orthodoxo al conservador ilustrádo 4702 5 La Nacion 2930 November 1933 29 January 1934 Enrique S Perez directed the National Mortgage Bank 6 Adela Moll de Prebisch interviews with the author See for example La Nacion 13 November 1933 27 December 1933 30 January 1934 All of the newspaper articles Prebisch wrote during this period are in the Prebisch Papers 7 Love Economic ideas and ideologies 214 8 Deutsche la Plata Zeitung 9 February 1934 9 Critica was owned by Natalio Botana 10 Bunge interview with the author 11 La Nacion 19 July 1934 12 La Prensa 18 July 1934 La Nacion 16 June 1934 13 Prebisch Anotaciones sobre el Cambio y los Emprestitos La Nacion 28 June 1933 14 La Nacion 3 August 1934 15 La Nacion 18 November 1934 16 Mattera Argentine Commercial Banking 401 17 Triffin Central Banking and Monetary Management Prebisch Papers 10 18 La Nacion 7 June 1935 19 La Nacion 16 July 1935 Mattera Argentine Commercial Banking 58 20 La Nacion 2 September 1935 21 Gonzalez del Solar Conversaciones 223 22 Adela Moll de Prebisch interview with the author The original typewritten draft of the speech is in the Prebisch Papers 23 La Nacion 20 December 1934 24 La Nacion 9 January 1935 25 La Fronde 20 February 1935 26 For Prebischs thoughts on Lisandro de la Torres banking activities in this period see Magariños Diálogos 117 27 El Hogar 28 June 1935 28 Caras y Caretas 13 July 1935 29 Magariños Diálogos 49 30 Triffin Central Banking and Monetary Management 11 31 Love Economic Ideas and Ideologies 212 32 For example 6 March 1938 regarding exchangerate policy of the Central Bank 33 Berger to Prebisch 23 September 1938 All correspondence referred to in this chapter can be found in the Prebisch Papers 34 Mattera Argentine Commercial Banking 67 35 Berger to Prebisch 21 November 1938 36 Prebisch to Brebbia 15 July 1939 Notes to pages 91115 513 37 Mannheimer to Brebbia 16 July 1939 38 La Nacion 22 August 1939 c h a p t e r s i x 1 The official Nazi agency Deutsche Dienst announced the news indicating that a diplomatic breach had opened between the two countries US Embassy Berlin to Secretary of State Cordell Hull 9 January 1940 2 US consulgeneral Buenos Aires to State Department 28 October 1940 The Cumulated Index to the US Department of State Papers 193945 volume II 481 3 For example in a letter of 12 January 1940 the California Deciduous Growers Group representing 75 percent of all deciduous and grape growers underlined the desperate condition of its members to Cordell Hull and their urgent need for a quota on Argentine imports 4 Armour to Hull 17 June 1940 5 Armour to Hull 17 June 1940 This was the second telegram that day to the secre tary of state Armour used the phrase in the second 6 La Nacion Tomara el PE una Serie de Medidas para Promover un Desarrollo Industrial Sano 28 June 1940 Llach El Plan Pinedo de 1940 Baldinelli Comercio Exterior Argentina Diaz Alejandro Essays on the History of the Argentine Republic Di Tella Policy Changes in Argentina Alhedeff The Economic Formulas 7 Porcile The Challenge of Cooperation 193955 12959 8 Llach El Plan Pinedo de 1940 5245 9 Ibid 533 Rapaport Clases dirigentes argentinas 1976 10 Alfonso Sanjuan Camino al mercosur 505 11 La Nacion La conferencia económica ArgentinoBrasileña fué inaugurada ayer en Rio 10 October 1940 12 John W White Argentina Seeks Trade Concessions Washington Post 17 Novem ber 1940 13 John W White Customs Union with the United States Real Goal of Argentine Economic Mission Boston Herald 17 November 1940 14 The Times Herald 20 November 1940 15 Gonzalez del Solar Conversaciones 33 16 The capi is not to be confused with iapi the Argentine Institute for Production and Trade set up in the time of Perón 17 Ibid 31 18 Ravndal to Lawrence Duggan 9 August 1941 19 US State Department memorandum The Pinedo Plan to Stimulate the Export of New Articles from Argentina 29 November 1940 20 Adelita Prebisch interview with the author Notes to pages 11530 514 21 Henry Frantz us Argentina sign 50 m Economic Pact The Times Herald 28 De cember 1940 Wall Street Journal 28 December 1940 22 Journal of Commerce New York 26 and 28 December 1940 Agreement Signed to Help Argentina New York Times 2 January 1941 23 Gonzalez del Solar Conversaciones 33 24 Ibid 36 25 Hull to Armour 8 January 1941 26 La Prensa 25 January 1941 27 Lewis Crisis of Argentine Capitalism 1923 28 Llach El Plan Pinedo de 1940 52930 29 Hull to Roosevelt 6 February 1941 30 For example articles praising the state of usArgentine relations appeared in the New York Journal of Commerce 26 December 1940 the New York Times 2 January 1941 and the Times Herald 24 December 1940 31 Norbert A Bogden J Henry Schroeder Banking Corporation New York to Laurence Duggan advisor to the secretary on political relations US State Depart ment 8 July 1941 32 US State Department Memorandum 5 and 18 August 1941 Llach El Plan Pinedo de 1940 528 33 L Duggan to Welles 31 July 1941 Welch to Welles 31 July 1941 Welles to Welch 5 August 1941 Ravndal to Duggan 9 August 1941 34 US Embassy to State Department 23 May 1941 35 Armour to Hull 5 July 1941 Llach El Plan Pinedo de 1940 522 36 Gonzalez del Solar Conversaciones 35 37 Washington Post 17 September 1941 38 Newton The Nazi Menace in Argentina 219 Gonzalez del Solar Conversaciones 489 39 Llach El Plan Pinedo de 1940 530 40 Ibid 539 41 Prebisch to Armour 9 May 1941 42 Brebbia to Prebisch 24 January 1940 c ha p t e r se v e n 1 Cordell Hull to Norman Armour 7 January 1942 2 Armour to Hull 19 December 1941 3 Rapaport Gran Bretaña Estados Unidos y las clases dirigentes Argentinas particularly chapter 2 4 US State Department memorandum Argentine Delegation to the Rio Confer ence 2 January 1942 Quoted in Scobie Argentina A City and a Nation 221 5 Armour to Hull 2 January 1942 Notes to pages 13147 515 6 Hull to US Embassy 4 January 1942 7 Welles to Hull 19 January 1942 8 Welles to Hull 22 January 1942 9 Armour to Welles 11 June 1942 10 Armour to Hull 15 June 1942 11 Bohan Oral Interview 9 12 Gonzalez del Solar to Prebisch 10 February 1942 13 Armour to Hull 14 October 1941 14 US State Department Foreign Relations of the US 193945 II 435 15 US secretary of state to US ambassador 8 October 1941 16 Hoover to Assistant Secretary Of State Berle 22 January 1942 17 Armour to Hull 2 January 1942 18 Armour to Hull 2 January 1942 Adolphe Berle has less patience with J Edgar Hoover In a letter of 25 April 1942 to US Attorney General Francis Biddle he em phasized that Dr Prebisch has been very cooperative with the American Ambassa dor in Argentina and added that Alfredo Moll at Raúls insistence had visited the US Embassy specifically to discuss his previous work with Germanowned firms US Department of State Adolfe A Berle to Frances Biddle 25 April 1942 19 Gonzalez del Solar Conversaciones 34 20 US Treasury Department memorandum 12 May 1942 21 US State Department memorandum of conversation with Raúl Prebisch 5 August 1942 22 Merwin Bohan US State Department memorandum 17 April 1942 23 US State Department memorandum of conversation 5 August 1942 24 Ravndal to Prebisch 7 January 1943 25 Rapaport Clases Dirigentes Argentinas 1357 26 Merwin Bohan US State Department memorandum 24 May 1943 27 Newton Nazi Menace in Argentina 219 28 Ibid Indeed Britain demanded that Argentina continue its beef exports to support the war effort US State Department Economic Policy toward Argentina 23 Sep tember 1942 29 Hull to Armour 14 December 1942 30 Bohan Conversation of Visit to Raúl Prebisch in the Central Bank 27 March 1943 31 Bohan Memorandum 26 April 1943 32 Bohan 12 April 1943 33 Bohan 26 April 1943 34 Malaccorto to Prebisch 27 May 1943 35 Ravndal to Prebisch 31 August 1943 36 Bohan memorandum of conversation 24 May 1943 37 Ibid 38 Argentine Central Bank Annual Report Buenos Aires 1943 Notes to pages 14760 516 39 Revista de la economia Argentina 22 May 1943 Lucchini 42 4458 Central Bank Annual Reports 1942 1943 40 Lewis Crisis of Argentine Capitalism 124 Llach El Plan Pinedo de 1940 41 La Nacion 20 April 1943 42 Rapaport Clases Dirigentes Argentinas 13740 43 Ibid 142 44 British Chamber of Commerce Buenos Aires 22 November 1942 45 Rapaport Clases Dirigentes Argentinas 133 14851 46 Bunge Una nueva Argentina 47 US State Department Armour to Hull 5 June 1943 48 New York Times 5 June 1943 49 Gonzalez del Solar Conversaciones 34 50 Bunge interview with the author fbi records for this period its 23 July and 2 August 1943 reports in particular have been totally blacked out c ha p t e r e i g h t 1 The authors interviews with Adela Moll de Prebisch are a key source for this section of the book 2 La Nacion 23 August 1943 3 La Nacion 1 and 3 September 1943 4 La Nacion 1 September 1943 5 La Nacion 17 September 1943 6 Pollock Conversations with Raúl Prebisch 7 US Embassy to US State Department 15 October 1943 8 The Prebisch Papers contain a full record of media coverage of his dismissal 9 Armour to Hull 25 October 1943 10 Bohan to Associate Advisor on Economic Affairs Emilio G Callado marked Strictly Confidential 11 Time Magazine The Harm Is Done Argentine Military Fascism Is Well Estab lished 31 January 1944 12 Allan Dawson to US State Department 12 January 1944 13 Silva to Prebisch 23 October 1943 14 Adelita bequeathed the family estate in Plön on the Baltic Sea to the Lutheran Church which converted it into a youth centre and school 15 Prebisch La moneda y el ritmo de la actividad economica Subsequent quota tions in the text are taken from this important document which was never published located in the Prebisch Papers Reel 2 194447 16 For details see Dosman Markets and the State 904 17 Gonzalez del Solar to Prebisch 28 December 1943 also MA Martinez to Prebisch 27 December 1943 Prebisch met the dean on 2 January 1944 he had not given his seminar for the previous six years Notes to pages 16084 517 18 Ambassor Carlos Dario Ojeda to Prebisch 22 December 1943 19 Manuel Monteverde to Prebisch 6 November 1943 20 Prebisch to Dario Ojeda 25 December 1943 In fact the Bank of Mexicos invitation had been sent 1 December 1943 by air mail and had not yet reached Argentina Banco de Mexico Memorandum para don Raúl Prebisch en relacion con su viaje a México Banco de Mexico Mexico 1 December 1943 21 Prebisch had not given up the prospect of eventual return to the Central Bank he was therefore cautious about publication They invited me to explain the experi ence of the Central Bank of Argentina It is the best explanation and the best criticism of what I did I spoke openly on the condition that they would not publish it immediately but only after a couple of years Pollock conversations tape 3A 1 21 May 1985 22 Bosch to Prebisch 5 January 1944 c h a p t e r n i n e 1 Prebisch often spoke with great affection about this first trip to Mexico Margariños Diálogos 1313 2 Thorp Progress Poverty and Exclusion 114 313 3 Robert Triffin Central Banking and Monetary Management in Latin America 1112 This manuscript is included in the Prebisch Papers 4 For example RH Thomson of the National City Bank of New York 20 January 1944 and G Butler Sherman Manufacturers Trust Co 5 April 1944 5 Daniel Cosío Villegas would be offered the position of founding executive secretary of eclA in 1948 which he declined he would later serve as Mexicos ambassador to UN ecosoc from 1957 to 1968 6 Prebisch Conversaciones en el Banco de México During the same period Prebisch also gave a seminar at the Colegio de México El patrón oro y la vulner abilidad económica de nuestros países 7 Prebisch to Triffin 17 June 1945 8 El Federal The AntiPatria is trying to conceal its financial leaders like Prebisch to control the country 5 May 1944 9 MA Martinez to Prebisch 17 March 1944 10 Roberto Hurtiacavq Argentine Embassy in Washington to Prebisch 7 March 1944 11 Republic of Paraguay Presidential Decree 5130 Que Crea y Organiza el Banco del Par aguay Asuncion 8 September 1944 12 Triffin to Prebisch 28 March 1945 13 Coll Benegas Anotaciones sobre las negociaciónes comerciales con el Paraguay Argentine Ministry of Foreign Affairs October 1943 14 Needless to say J Edgar Hoover took a different view of the Paraguay mission reporting possible subversive activities to the US secretary of state US National Archives Diplomatic Branch 27 June 1944 89420210 foia Notes to pages 18599 518 15 The preceding section describing the river voyage to Asunción relies on the detailed accounts of Adelita Prebisch particularly the many interviews conducted between 1989 and 1995 16 Whigham and Potthast in The Paraguayan Rosetta Stone 17486 estimate the pre1864 population at between 420000 and 450000 The authors reply to cri tiques of their work in larr 373 2002 See also Scheina Latin Americas Wars Leuchars To the Bitter End Maestri Guerra contra o Paraguai 17 Bunge El Culto de la Vida 18 Prebisch Informe sobre la organization y el programa de tareas de la Division de Investiga ciones Economicas 19 Triffin to Prebisch 23 July 1945 20 Family of Carlos Moll interview with the author Santiago 16 March 1998 21 Triffin to Prebisch 28 March 1945 22 Ibid 23 Triffin to Prebisch 23 August 1945 24 Prebisch to Triffin 17 June 1945 25 Ibid 26 Prebisch to Triffin 21 September 1945 27 For example La Epoca The Failure of the Plan to Reinsert Prebisch in the Central Bank 19 September 1945 and again on 30 August 1945 The Snipers of the Central Bank Semana Financiera 1 September and La Nacion 14 September carried long reports on the case and the US Embassy in Buenos Aires followed the Central Bank crisis closely us National Archives on 17 August 1945 and 835 26 September 1945 28 La Prensa 22 September 1945 Emilio F Cardenas and Faustino Infante were ap pointed Central Bank president and vicepresident respectively 29 Prebisch to Triffin 21 September 1945 30 For the rise of Perón see Murmis and Portantiero Estudios sobre los origins del Per onismo Alexander Juan Domingo Perón A History Brennan Peronism and Argentina 31 Crawley A House Divided 958 32 Prebisch to Triffin 10 December 1945 33 Prebisch to Manuel Noriega Morales 10 December 1945 34 The infamous US State Department Blue Book was titled Consultation among the American Republics with Respect to the Argentine Situation Spruille Braden briefly US ambassador to Argentina had returned to Washington as undersecretary of state for Latin American Affairs Crawley A House Divided 1035 provides a spirited ac count of the incident 35 Prebisch to Luis Montes de Oca 2 November 1946 c h a p t e r t e n 1 Triffin to Prebisch 30 October 1945 Notes to pages 199211 519 2 Welch to Prebisch 23 April 1946 3 Villaseñor to Prebisch 23 April 1946 4 Prebisch to Villaseñor 14 May 1946 5 Margariños Conversaciones 137 for explicit mention of these students and his commitment to their future as professional economists 6 Ibid 7 Quoted in Lewis Crisis of Argentine Capitalism 177 8 Prebisch Introduction to Keynes Cosío Villegas to Prebisch 16 December 1946 13 October 1947 The correspondence between Prebisch and the Venezuelan Central Bank in 1946 regarding the Keynes project is contained in the Prebisch Papers See particularly JM Herrera Mendoza to Prebisch 30 July 1946 9 Urquidi to Prebisch 28 November 1946 10 La Nacion 16 August 1946 11 Prebisch Panorama General de los problemas de regulación y credito 12 Prebisch Proyecto de Ley Organica Prebisch Bases para la creacion de una Escuela de Economia For Prebischs views on the inadequacies of his faculty see Prebisch Introducción al curso de dinámica económica Revista de la Facultad de Ciencias Económicas Ano I 2 March 1948 13 Prebisch to Cosío Villegas 8 November 1946 14 Ibid 15 Prebisch to Urquidi 28 January 1947 16 Prebisch to Urquidi 28 November 1946 17 Urquidi to Prebisch 6 December 1946 18 You can imagine the anxiety I have regarding the early announcement of Mitchells book he noted to Urquidi on 8 November 1946 19 EA Goldenweiser to Prebisch 10 October 1946 20 Prebisch to Goldenweiser 18 October 1946 21 Prebisch to Urquidi 12 February 1946 22 Prebisch to Enrique Frankel 19 February 1946 23 For example Urquidi to Prebisch 12 April 1946 see also Prebischs Anotaciones acerca de la reforma del plan de estudios de la facultad de ciencias económicas Prebisch Papers 1946 24 Urquidi to Prebisch 10 December 1947 25 Prebisch to Eugenio Gudin 31 July 1947 26 Gudin to Prebisch 5 May 1947 27 Prebisch to Otavio Gouvea de Bulhões 4 November 1946 28 Prebisch to Gudin 31 July 1947 29 Prebisch to Eugenio Gudin 17 July 1947 30 Prebisch to Lope Bello 4 November 1947 31 Magariños Diálogos 1278 32 Raúl Prebisch Apuntes de Economica Politica 1 33 Prebisch to Eugenio Gudin 10 February 1948 Notes to pages 21124 520 34 Prebisch to Gilberto Lara 23 February 1948 35 Prebisch to Jacques Appelmans 23 February 1948 36 Manuel Perez Guerrero to Prebisch 30 July 1948 Perez Guerrero was Venezuelan minister of finance 37 Prebisch to Eugenio Castillo 23 November 1948 38 Prebisch to Jésus Silva Herzog 13 December 1948 39 David McCord Wright to Prebisch 12 November 1948 40 Prebisch to Jésus Silva Herzog 13 December 1948 41 Ravndal to Prebisch 21 October 1948 The letter makes clear that Prebisch seri ously considered visiting the US in early 1949 42 Hernan Santa Cruz to UN secretarygeneral 12 July 1947 for the document that launched the creation of ecla 43 Eugenio Castillo to H Caustin 13 August 1948 After I explain in detail the work of the Commission he might show a deeper interest he noted 44 Prebisch to Castillo 23 November 1948 45 Urquidi wrote I hope to see you one day in Washington You could do much for Latin America here where the region is poorly represented 46 For a detailed discussion of this event see Dosman Los mercados y el estado 945 47 Urquidi to Prebisch 3 December 1948 Ravndal to Prebisch 9 December 1948 c h a p t e r e l e v e n 1 Gutt to Prebisch 23 December 1948 This and the following correspondence is found in the Prebisch Papers unless otherwise noted 2 Maurice L Parsons to Prebisch 19 January 1949 3 ML Parsons to Prebisch 11 March 1949 4 Adelita Prebisch to Raúl Prebisch 13 and 30 March 1949 5 Eckard to Prebisch 22 March 1949 6 Lewis Crisis of Argentine Capitalism 1912 7 US State Department Internal Memorandum 83551517149 1949 8 Rovensky to Prebisch 28 December 1945 9 Bulhões to Prebisch 11 February 1949 10 Lobos to Prebisch 20 March 1949 11 Wallich to Prebisch 3 June 1949 12 Hernan Santa Cruz to SecretaryGeneral Trygve Lie 12 June 1947 E Cuesta provides an inhouse report on the formation of ecla in The Background to the Terms of Trade Controversy Santiago 12 December 1971 13 Hanson Preliminary Report to the United Nations 14 Owen to RGA Jackson 19 May 1948 15 Memorandum Malinowski to Caustin New York 12 November 1948 16 Ibid Notes to pages 22539 521 17 Dorfman to Eugenio Castillo New York 23 July 1948 18 Croire to Prebisch 24 December 1948 19 Croire to Prebisch 28 February and 8 April 1949 20 Croire to Prebisch 24 December 1948 21 Love Doctrine of Unequal Exchange especially 605 for the classic treatment of this issue 22 Furtado A Fantasia Organizada 60 23 Later renamed Relative Prices of Exports and Imports of UnderDeveloped Countries United Nations 1949 24 Gustavo Martínez Cabañas to Prebisch 5 March 1949 and Croire to Prebisch 8 April 1949 See Toye and Toye The Origins and Interpretation of the Prebisch Singer Thesis for a valuable account of the transmission of Singers findings to Santiago See Shaw Sir Hans Singer for the authoritative biography of Hans Singer 25 H Singer The Terms of Trade Controversy 275311 26 Toye and Toye The Origins and Interpretation of the PrebischSinger Thesis 25 27 United Nations Relative Prices of Exports and Imports of UnderDeveloped Countries 1617 28 Kindleberger Planning for Foreign Investment Samuelson International Trade and Equalization of Factor Prices The Prebisch Papers in particular Prebischs correspondence with Victor Urquidi such as on 2 June 1944 which dealt with the work of Kindleberger shed light on the evolution of Prebischs theorizing during the period 194349 29 Sir Hans Singer when questioned on the PrebischSinger thesis and whose name should come first responded in 1990 All I can say now is a it seems natural that Prebisch should come first in due alphabetical order and b it terms of UN hierar chy Prebisch was the senior man However all this is probably secondary in my own mind I always thought of Prebisch as a senior man and in fact his views with more emphasis on factoral terms of trade rather than barter terms of trade were better integrated into general development thinking than my own original empha sis which was more on barter terms of trade although pretty soon afterward and under the influence of my first meeting with Prebisch in Santiago which must have been 1948 or early 1949 I quickly came round to accepting his emphasis Singer to David Pollock 22 October 1990 Pollock Papers Box 8 30 Within the vast literature on this subject note the particular contributions of Love Crafting the Third World Theorizing Underdevelopment in Rumania and Brazil Mallorquín Raúl Prebisch before the Ice Age Rodríguez Aprendizaje acumu lación pleno empleo Gurrieri Technical Progress and Its Fruits Mallorquín Un breve recuento de la deconstrucción del estructuralismo latinoamericano and Sprout The Ideas of Prebisch Also useful are all the articles in Iglesias ed The Legacy of Raúl Prebisch Spraos The Statistical Debate on the Net Barter and Tanzi and Chu Fiscal Policy for Stable and Equitable Growth in Latin America Notes to pages 23944 522 31 Prebisch The Economic Development of Latin America and Its Principal Problems 11 and 4850 32 Prebisch to Ravndal 10 May 1949 33 Adelita Prebisch to Raúl Prebisch 25 May 1949 34 President Carlos Prio Socarros Address to the Second ecla Session Havana 29 May 1949 35 SecretaryGeneral Trygve Lie Address to the Second ecla Session Havana 29 May 1949 36 See Solís Raúl Prebisch at ecla for a preliminary examination of the scholarly controversies surrounding the Prebisch thesis 37 Viner International Trade and Economic Development 44 Alemann El pensamiento económico de Prebisch 38 Furtado gave Prebisch this title El Gran Heresiarca at the height of his fame in the early 1950s A Fantasia Organizada 99 Hodara called him a profeta armado and a cuadillo intellectual Hodara Prebisch y la cepal 12 39 Prebisch The Economic Development of Latin America and Its Principal Problems 59 and ff 40 Ibid 2 See Toye and Toye How the UN Moved from Full Employment to Economic Development in their Political Economy for a Divided World c h a p t e r t w e lv e 1 Singer to David Pollock 22 October 1990 Singer recalled the atmosphere Prebisch as a Latin American and safely away in Santiago was much less vulnera ble during the McCarthy period than I was sitting in New York and the Prebisch Singer thesis was considered subversive 2 HE Caustin to David Owen 8 October 1949 which clarifies the background to giving Prebisch credit and responsibility for his report which is contrary to the adopted policy See also Magariños Diálogos 131 for Prebischs account of the incident 3 Caustin to Gustavo MartinezCabañas 18 July 1949 4 Raúl Prebisch to Adelita Prebisch 26 June 5 July 1950 Adelita Prebisch to Raúl Prebisch 30 June 1950 5 Acting oas SecretaryGeneral William Manger to Trygve Lie 5 May 1950 for the formal communication of the oas position 6 Swenson to Caustin 27 July 1948 7 Hodara Prebisch y la cepal especially 17683 Furtado A Fantasia Organizada for a more personal assessment of the early cepal years 8 Singer Comments on Raúl Prebisch The Continuing Quest 44 9 Prebisch Growth Disequilibrium and Disparities Notes to pages 24557 523 10 US State Department office memorandum Development of USLatin American Policy in Terms of US World Objectives 195055 Edward G Miller to L Halle 24 March 1950 11 See US State Department Supplement D US Latin American Development Pol icy 9 November 1950 12 Halle to Miller 27 March 1950 13 Manger to Lie 5 May 1950 14 US State Department memorandum of conversation Future of ecla 16 and 26 May 1950 15 US State Department Confidential Report on the Third Session of the Eco nomic Commission for Latin America 7 September 1950 Regarding Prebischs position on the European refugee issue see Prebisch to David Owen 19 June 1950 16 Chris Ravndal US State Department confidential report 7 September 1950 17 Ibid 18 New York Times 4 6 and 7 June 1950 Pierre MendèsFrance Annual Report of the Economic Commission for Latin America ecosoc 7 August 1950 2213 US State Department Comment by Under Secretary on Montevideo cepal Meeting 12 July 1950 19 Ravndal US State Department confidential report 7 September 1950 20 United Nations Economic and Social Council Eleventh Session 7 August 1950 21 Prebischs account of his accession to the position of executive secretary is related in Magariños Diálogos 1323 US State Department Activities of Secretariat of United Nations Economic Commission for Latin America Santiago 27 June 1950 22 Prebisch to Rist 20 January 1950 23 US State Department memorandum 27 July 1950 24 Furtado interview with the author Ganz telephone interview with the author 25 US State Department Activities of Secretariat of United Nations Economic Com mission for Latin America Santiago 27 July 1950 26 United Nations Economic and Social Council Eleventh Session Geneva 7 August 1950 27 David Owen to Trygve Lie 31 March 1951 Report on the Fourth Meeting of Con sultation of Ministers of Foreign Affairs of American States Washington 2630 March 1951 Compare US State Department Accomplishments of the Fourth Meeting of Consultation of Ministers of Foreign Affairs of American States 12 April 1950 28 Energetica Intervención de Mexico Lic Carillo Flores en Favor de la cepal El Popular Mexico City 7 June 1951 29 M Bohan to US State Department 14 June 1951 Notes to pages 25871 524 30 Report of the United States Delegation to the Fourth Session of the Economic Commission for Latin America 17 July 1951 Compare with Instructions to the US Delegation at the Fourth Meeting of ecla Mexico City 28 May14 June 1951 ch apt e r thirt een 1 Avance 5 July 1951 The Prebisch Papers include the entire press commentary on his visit to Cuba 2 Informacion 5 July 1951 3 El Mundo 5 July 1951 4 US State Department office memorandum 24 October 1951 5 Furtado A fantasia organizada 12735 6 Bohan Oral History Interview 52 7 Interview of Dr Raúl Prebisch executive director of ecla with President Vargas Rio de Janeiro 27 August 1951 8 Interview of Dr Raúl Prebisch with Brazilian President Getulio Vargas 27 August 1951 9 Bohan Oral History Interview 52 10 ecla The Visit of Dr Raúl Prebisch Executive Secretary of ecla to Brazil 1951 See also Furtado A fantasia organizada 16271 11 O Estado de São Paulo 1 September 1951 Diario de São Paulo e Rio 19 April 1953 12 Alemann El pensamiento económico de Prebisch for a personal account of Prebischs critique of Viner at eclas 1953 session in Rio 13 See Gudin A Mistica do Planjamento Diario de Noticias 29 May Subsequent issues on 2 6 9 and 11 June carried the full text of this polemic Prebischs response began with the title A Mistica do Equilibrio Espontaneo na Economia 14 Mallorquín Celso Furtado um retrato intelectual 15 Folho da Manha São Paulo 31 August 1951 Toye and Toye Raúl Prebisch and the Limits of Industrialization 2130 16 O Estado do São Paulo 1 September 1951 17 Harrison A Strategy for Unification and US Disengagement 9 18 Joint press conference held by UN Executive Secretaries New York 4 June 1952 19 Ferguson ecla Latin American Development and the United States 45 20 He spoke very positively regarding eclas fifth session in Rio in April 1953 We have been impressed not only with the caliber of eclas economic analysis but above all by the actual economic progress being made by Latin America The devel opment process is really under way Its momentum must be maintained Omnipress New York 28 April 1953 21 US State Department memorandum 13 March 1953 22 Ferguson ecla Latin American Development and the United States 46 23 New York Times 22 November 1952 24 Bohan Oral History Interview 84 Notes to pages 27187 525 25 United States Senate Subcommittee on Internal Security Washington 10 April 1954 26 Alfonso Santa Cruz to Wladek Malinowski 27 February 1953 Bohan Oral History Interview 49 27 50 percent of the regions imports and 48 percent of its exports were with the US Latin America is our largest customer supplier and field of foreign investment a US State Department official explained but also an indispensable and irreplace able ally Latin America lies within our inner fortress no error of omission or com mission is permitted there US State Department memorandum Informal Review of UN Paper on Integrated Economic Development Washington 22 September 1954 28 Garcia Márquez lamented the fate of Alberto Lleras A great writer led astray by politics Cromos 3 May 1993 29 Technically the 8th Extraordinary Meeting of iaecosoc 30 John Foster Dulles to Milton Eisenhower 14 September 1954 I fully share your view of the importance of this conference and of developing hemispheric rela tions Washington did however agree to reopen ExportImport Bank operations in Latin America 31 International Cooperation for a Latin American Development Policy ECN12359 United Nations 1954 32 Lewis Swenson to Philippe de Seynes 30 November 1955 retrospectively describ ing Prebischs exceptional intervention at Quintandinha 33 Discussed with characteristic energy in Toye and Toye The UN and Global Political Economy 34 Henry Holland State Department office memorandum 11 December 1954 Washington was convinced that Prebisch had supported a personal appeal by John Foster Dulles in mid1954 just after the Guatemala fiasco to defeat a Soviet invita tion for Latin governmental officials to visit Moscow merely as a ruse to divert at tention from the bombshell he was preparing for Quintandinha US Embassy Santiago to State Department 31 July and 4 August 1954 35 David McKey to Andrew Overby 18 November 1954 36 If we are to demonstrate the worth of the free enterprise system to the Latin Americans we must prove that our system will raise the standard of living which is far below that of his opposite number in the US Peter Grace to John Foster Dulles 3 September 1954 37 Prebisch to de Seynes 23 January 1955 38 Malinowski to Swenson 3 April 1954 39 Prebisch to de Seynes 16 September 1955 c h a p t e r f o u rt e e n 1 Crawley A House Divided Argentina 18801980 16674 2 A Echegoyen to Prebisch 26 September 1955 Notes to pages 28799 526 3 For example La Nacion 2 October 1955 4 La Nacion 4 October 1955 5 La Nacion 8 October 1955 6 La Nacion 7 October 1955 El Mercurio 9 October 1955 7 El Mercurio 9 October 1955 8 La Nacion 8 October 1955 9 Wladek Malinowski to Prebisch 3 October 1955 10 El Mercurio 12 October 1955 11 La Nacion Informe sobre el Estado Economico 27 October 1955 12 Norman Crump Argentine Hopes Times London 6 November 1955 13 US Embassy Buenos Aires to secretary of state 31 October 1955 Sikkink Ideas and Institutions 7880 in particular 14 Times London 31 October 1955 15 US Embassy Buenos Aires to secretary of state 27 October 1957 16 Politica y Politicos 25 October 1955 17 Clarin 26 October 1955 18 La Prensa 18 October 1955 19 Crawley A House Divided 1689 for the initial response of the cgt the base of Peronista power to the Revolución Libertadora 20 La Mañana Montevideo 12 November 1955 21 Lewis Crisis of Argentine Capitalism 130 22 Clarin 16 November 1955 23 La Nacion 15 November 1955 24 Prebisch press conference Buenos Aires 15 November 1955 25 Manchete 21 July 1956 26 L Swenson to Philippe de Seynes 27 November 1955 27 Sikkink Ideas and Institutions 183 28 Lewis Crisis of Argentine Capitalism 335 29 La Nacion 12 January 1956 30 Clarin 18 January 1956 El Mercurio 4 February 1956 31 La Razon 24 January 2007 32 Raúl Scalabrini Ortiz 10 November 1955 Federalista 23 December 1955 Scalabrini published a column in que sucedio en 7 dias a weekly supporting Arturo Frondizi dedicated to attacking the Plan Prebisch See for example La Carta de Scalabrini Ortiz 15 January 1957 33 Siempre 18 January 1956 The most important attack apart from Scalabrini Ortiz came from Arturo Jauretche El Plan Prebisch retorno al coloniaje Buenos Aires Pena Lillo 1984 Other critics included Abraham Guillen Oscar Alende Carlos Correa and José V Liceaga 34 Clarin 19 January 1956 35 La Razon 24 January 1956 Notes to pages 30012 527 36 La Nacion 29 January 1956 37 Arturo Frondizis book Petroleo y Politica Buenos Aires 1954 featured an uncom promising defense of the state oil monopoly 38 La Nacion 27 February 1956 39 Holland to Henry Cabot Lodge Jr 27 January 1956 40 Dulles to Cabot Lodge Jr 3 February 1956 41 Holland to Dulles 2 February 1956 42 Cabot Lodge Jr to Dulles 24 January 1956 Prebisch now in Argentina appears to be in full charge of this operation from both ends and he seems person best able answer question on US personnel on this mission Essential to discuss entire matter fully and frankly with him 43 Lewis Crisis of Argentine Capitalism 289 3001 44 Manchete 21 July 1956 45 La Prensa 30 May 1956 46 Manchete 21 July 1956 Publication of The Economic Development of Argentina was delayed until the 23 February 1958 elections in the hope of interesting the new government but the winner Frondizi had his own ideas about development in which Prebisch and ecla had little part Part I a summary of the report finally ap peared on 9 July 1959 Apart from the National Institute of Agrarian Technology the most lasting impact of Prebischs work in Argentina in 195556 was the migra tion to Santiago of a cadre of young Argentine economists who would play a lead ing role in ecla for the next generation Internationally his most durable result was the eventual formation of the Paris Club 47 La Nacion 15 April 1956 48 Prebischs interview with Theophilo de Andrade Reforma Cambial Argentina O Cruzeiro 28 January 1956 provided a preview of his critique of import substitution under Perón 49 Decree 4161 tried to erase a decade of Argentine history by formally banning the use of Peronista symbols including the mention of Juan or Eva Perón 50 Bustelo Bodegas Esmeralda to Prebisch 13 April 1956 c h a p t e r f i f t e e n 1 Noyolas work differentiated between inflationary pressures and mechanisms of propagation to distinguish between underlying weaknesses such as agrarian struc ture a weak state or class system and the visible inflationary process of declining currency values culminating in calling in the imf Aloof from the messiness of decisionmaking his interest lay in the former socalled root causes See Danby Noyolas Institutional Approach to Inflation 2 While Prebisch admitted to inherent structural problems facing Latin America such as a builtin trade deficit given declining terms of trade the central banker Notes to pages 31222 528 in him feared the visible effects of inflation far more than his younger colleagues and he concentrated more on the permissive behaviour of governments 3 Furtado A fantasia organizada 4 Ibid 17785 5 Raúl Prebisch opening address to the first meeting of eclas Trade Committee Santiago 19 November 1956 6 El Mercurio 20 November 1956 7 UN SecretaryGeneral Dag Hammarskjöld to Louis Swenson 9 December 1955 8 ecla Resolution 101 1 Sixth Session Bogota 1955 El Mercurio 20 November 1956 9 Notas de la cepal Summary Latin American Working Group of Experts on the Iron and Steel Industry and Transformation of Iron and Steel Santiago 15 December 1956 10 El Mercado Comun Latinamerican Exposicion del Doctor Raúl Prebisch en la segunda re union del comite especial para estudiar la formulacion de neuvas medidas para la coopera cion economica Buenos Aires 28 April 1959 11 Ibid 12 Prebisch El Mercado Comun Latinoamericano 13 Swenson to Prebisch 12 October 1956 14 Prebisch to de Seynes 24 December 1956 15 They had become such close family friends that Monnet was the only foreigner in vited to Dulless funeral in 1959 and the person to whom Janet Dulles entrusted his private papers 16 Edgar Jones deputy director of the Funds Exchange and Restrictions Department to imf Managing Director Per Jacobbson Washington 25 November 1956 17 Sumario Primera Reunion del Comite de Comercio de la cepal Notas de la cepal Santiago 10 December 1956 18 Prebisch to de Seynes 29 May 1957 19 Furtado A fantasia organizada 18892 Furtado had a particular interest in Mexico since his first visit in 1951 and observed the profound US connection so different in impact from the Brazilian experience 20 Furtado A fantasia organizada 189 21 In any case he was heading another more limited but equally controversial study of the Venezuelan economy under the Jimenez dictatorship which Prebisch also refused to release I felt blocked he noted like an athlete having to change his sport to continue advancing Furtado A fantasia organizada 201 22 Raymond Mikesell a delegate at the Bretton Woods Conference was professor of Economics at the University of Oregon Dudley Seers was acting chief Economic Survey Division of ecla while Nicholas Kaldor worked with Furtado in the Devel opment Division 23 Central America was tiny poor and virtually without industry eclas integration work here offered no guide for the more developed countries in the region like Argentina or Chile Notes to pages 32234 529 24 Prebisch to de Seynes 10 February 1958 The two working groups would next meet in Rio Central Banks 24 November to 4 December 1958 and Mexico Common Market 1625 February 1959 to finalize a package for backtoback sessions of the Trade Committee and eclas eighth session in Panama in 1959 25 Williams to Irving S Friedman 24 January 1957 26 A fact well remembered in Latin America as well 27 F Keesing to Irving S Friedman 15 January 1957 28 The exchange reforms currently taking place made the payments problem one of great urgency All the research in this field was very political Prebisch for exam ple vetoed the publication of an ecla paper on the eec without first passing it by gatt and ece De Seynes and Hans Singer both thought it important not to risk angering the imf 29 Prebisch didnt want the loan of an imf expert until we have a clear idea of the possibilities and nature of a payments scheme for LA De Seynes to Milic Kybal 20 September 1957 30 European integration provided one lesson the importance of a payments system to facilitate trade in periods of balanceofpayments difficulties In fact from 1950 to 1953 ecla had studied the European Payments Union carefully to see how Latin America could enter the system or cooperate with it to expand trade across the Atlantic In Santiago at the first Trade Committee meeting a resolution had been passed supporting the establishment of a regional payments system as a cor nerstone of the future Common Market the question was whether such a scheme on the European model was possible in the special circumstances of Latin America 31 Prebisch to de Seynes 17 September 1957 32 Prebisch Address to eclas Committee of the Whole Despite this generally sour mood however he did not foresee that Nixons visit would ignite hostile antiUS demon strations Rabe Eisenhower and Latin America 10016 33 On 17 May 1954 the US Supreme Court declared in Brown vs Board of Education that racial segregation violated the Equal Protection Clause of the US Constitution But on 4 September 1957 Governor O Faubus called out the National Guard to pre vent the children from entering the school in Little Rock Arkansas 34 Kybal to Prebisch 16 April 1958 35 Richard M Nixon Six Crises See the chapter titled Caracas for his personal account 36 Scheman ed The Alliance for Progress 636 37 US State Department office memorandum 15 June 1958 38 The five points included enhanced access to development capital a financial and technical program for Latin American agriculture and food industries raw materi als and primary commodities stabilization and pricing technological and produc tivity research for Latin American industrial development and technical assistance for combating illiteracy and training in development David Pollock to Guy Trancart 18 February 1960 Notes to pages 33539 530 39 Douglas Dillon made the announcement on that day so that it would precede a press conference featuring a similar US initiative for the Middle East Rabe Eisen hower and Latin America 112 Christian Herter represented the US State Depart ment given John Foster Dulless illness which led to his resignation on 25 February 1958 40 Milton Eisenhower Report to the President on United States Latin American Relations 41 Stephen G Rabe Eisenhower and Latin America The Foreign Policy of AntiCommunism 11112 42 Robert J Dorr US State Department 30 December 1958 43 Roy Rubottom Memorandum of Conversation US State Department Washington 18 November 1958 44 US State Department Office memorandum 18 November 1958 45 Kybal to Prebisch 15 October 1958 46 At the September foreign ministers meeting the US delegation had stood up for ecla repeating that it was and remained the lead international organization in the project as per Resolution 40 of the Buenos Aires Economic Conference 47 Prebisch to Kybal 6 October 1958 48 Scheman ed Alliance for Progress 40 49 Levinson and Onis The Alliance That Lost Its Way 151 50 In contrast Filipe Herrera the thritysevenyearold former Chilean finance minis ter and Central Bank manager who was elected as the first idb president acknowl edged his debt to Prebisch and welcomed him as one of his closest associates visiting ecla during his first trip back to Chile after the Bank began operations David Pollock to Louis Swenson 19 May 1960 51 US State Department Office memorandum 18 November 1958 52 US State Department memorandum 18 November 1959 53 WyndhamWhite had suggested that a committee of experts meet in Washington to examine a joint USBrazilian proposal for a standing forum comprising the six Latin members of gatt the US Canada and several European countries that would examine regional economic integration in Latin America and report its findings to the gatt Prebisch was neither informed nor invited 54 Urquidi The Montevideo Treaty 5164 Only six Latin countries were in the gatt and it was unlikely that WyndhamWhite would repeat the endorsement he gave to the Treaty of Rome when it came to the proposed Latin American Common Market Latin America remained on the periphery of the global system with eco nomic modernization just getting under way the gaps between Latin America and Europe in infrastructure education human resources state structures and social and political cohesion were enormous Latin American integration Prebisch ar gued therefore required a development model different from Europe where growth could build from foundations already laid Latin America had yet to build them meaning that eclas project combined the opening of regional markets with Notes to pages 33943 531 a strategy of industrialization to create competitive regional firms To Wyndham White this seemed like importsubstitution at a regional level designed to keep out goods currently imported from Europe or the US and therefore fell afoul of article XXIV of the gatt charter which made the endorsement of regional freetrade agreements conditional on increasing overall international trade rather than di verting trade and investment When asked if the Latin regional market would be discomforting to freetraders Urquidi replied Indeed it will The facts of indus trial development and not only in the Latin part of the Hemisphere are that it has to be carried out behind a protective tariff and similar measures 55 In May 1957 Per Jacobsson visited Santiago on his first trip to Latin America and lodged with Raúl and Adelita in El Maqui He thanked them for their hospi tality but pointed out that his views on the need for stability have not changed Jacobsson to Prebisch 20 September 1957 56 La influencia del Mercado comun en el desarrollo economico de America Latina ecla eighth session Panama City 1959 sent to Dr Milton Eisenhower Johns Hopkins University on 1 June 1959 The Latin American Common Market and the Multilateral Payments System and eclas Annual Report to ecosoc Geneva 1959 See also Milic Kybal to R Mikesell 3 June 1959 and 1 June 1959 57 Louis Swenson to oas SecretaryGeneral José A Mora 6 October 1956 58 Del Canto to Jacobsson 22 May 1959 While the Common Market project implied regional preferences and gradual and progressive reciprocity to achieve competi tive regional industrialization ecla rejected the charge of closed regionalism it aimed to intensify interAmerican trade without prejudice to the expansion of trade with other areas bearing in mind the fundamental necessity to increase world trade in general Regional import substitution would therefore replace not limit thirdparty exports to Latin America since rapidly developing economies would constantly require higher valueadded imports to mature into developed economies 59 In fact Del Canto became confused while sparring with Prebisch and had to be res cued according to the World Bank representatives by the US delegation When challenged to explain how the imf model of strict convertibility promoted regional trade without other measures such as reciprocal credit arrangements he was un able to respond With strict convertibility alone Prebisch argued Latin economies would be more than ever watertight compartments competing for fdi foreign direct investment behind high tariff walls while depending on customs receipts to balance their budgets 60 There were of course other divisions within the region del Canto was correct that there was little political appetite for regional integration in Latin America 61 Since the Perónist Party was banned and the Socialist Party was too small to be a factor the choice was between Ricardo Balbin and Frondizi the two Radical leaders heading separate factions of the party to fight the elections under different Notes to pages 3434 532 banners Frondizi negotiated a pact with Perón in January 1958 and won easily revealing the strength of the Perónist revival 62 Frondizis economic program was based he said on integration but his concept implied social cohesion rather than trade liberalization 63 ecla Progress Report on ecla Work Program Santiago 6 October 1958 It was not clear at first whether Frondizi would continue his vendetta against the Plan Prebisch once elected particularly after a successful fourpower meeting of Argentina Brazil Chile and Uruguay at the senior officials level in Santiago which recom mended a deepening of Southern Cone integration and the presentation of a common position to the gatt 64 Hosted by Merle Cochran the luncheon included Director of the Exchange Re strictions Department Irving Friedman Director of Research Jacques J Polak and Jorge del Canto 65 Firstperiod decisions would require a twothirds majority provided there was no negative vote ie each country retained a veto power There was no imf role mfn MostFavouredNation treatment was compulsory and there was equal cov erage of new and existing products 66 Hammarskjöld to Prebisch 18 February 1960 67 After the signing of the Montevideo Treaty US State Department officials repeated their support of its underlying principles but maintained sufficient reservations about its practicality to recommend the eec rather than lafta to US privatesector investors For his part Per Jacobsson scoffed at lafta in pocas palabras at the Annual imfWorld Bank Meeting in October 1960 There were no congratulations and not one Latin American delegate spoke on its behalf Pollock to Swenson Review of Raúl Prebischs July 78 Visit to Washington 11 July 1960 H Turkel State Department Office Memorandum 8 July 1960 68 De Seynes in fact tried to persuade Prebisch but Malinowski agreed that the job was not worth the effort 69 For example El Colegio in Mexico the Getulio Vargas Institute in Brazil and the In stitute of Economic Research in Los Andes Colombia Chile and other countries were not far behind 70 Robert Hausner to Prebisch United Nations office memorandum 29 September 1958 The calculated annual pension was 3820 yearly after retirement on July 1 1963 71 Malinowski to Prebisch 17 May 1960 72 The weakness of development planning was one obvious lesson from Peróns Argentina and it was even more apparent in poorer countries From Dag Hammarskjöld down agencies were being asked find ways of accelerating growth in developing countries Hammarskjöld pressed the need to move from theory to practice in international cooperation and to improve national planning to mobilize foreign and domestic capital since market forces would not lower their vulnerability Notes to pages 3447 533 He raised the spectre of two economic regions in the world growing apart unless the global community could agree on new measures to assist the Third World ecla apparently had an opportunity because advisory groups represented a logi cal continuation of its work in Santiago since the early years capitalizing on its in vestment in training and development research But the initiative was not easy to sell to Washington where it was seen as another Prebisch attempt to extend eclas original mandate or New York where UN officials like de Seynes and Mosak insisted on keeping a tight leash on the Regional Commissions UN Secretary General Dag Hammarskjöld Remarks to the July 1956 ecosoc Meeting Geneva July 1956 73 UN General Assembly Measures for the Economic Development of Under Developed Countries New York 1951 74 Maizels Refining the World Commodity Economy 108 Bello The Iron Cage 27 Eugene R Black in the World Bank finally accepted the ida as a necessary bone to placate developing countries while he disagreed with the concept the Bank at least would control it 75 By December 1961 the Resolution had made its way through the UN system and been approved c h a p t e r s i x t e e n 1 It was assumed correctly that Nixon was actively plotting the overthrow of Castro 2 In autumn 1960 Richard Goodwin was busily exploring a campaign slogan that could evoke Roosevelts Good Neighbor Policy In September he seized on the word Alliance and with Karl Meyer at the Washington Post and Ernesto Betancourt at the oas broadened it to Alliance for Progress Kennedy liked it By October it became a plank in the campaign promising an initiative comparable to the Marshall Plan for Europe Scheman ed Alliance for Progress 1956 3 Diario las Americas Miami 22 September 1960 Milic Kybal to Jorge Ahumada 2 September 1959 4 Kybal to Reynold Carlson Vanderbilt University 17 April 1959 5 ecla office memorandum 20 April 1959 6 For a contemporary leftist account of the chronology see New University Thought 48 7 Included in Joaquin Martiz Recuento de Poemas 195093 179 8 US Mission to the UN to secretary of state 8 July 1960 The meeting was convened following the earthquake in Chile with a solid front of Latin delegates confronting the US and European members From outset of session perfectly clear that four nonLatin American members were tolerated in Commission solely on basis of being necessary evil 9 Resuming work with EM Bernsteins economic consulting firm David Pollock to Lewis Swenson 30 August 1960 Notes to pages 34854 534 10 Regino Boti Leon interview with the author 12 January 1995 11 Che Guevara quoted in ibid 12 US Embassy Santiago to secretary of state 20 April 1960 13 Noyola to Pollock 9 August 1960 14 Regino Boti Viaja a Estados Unidos Diario las Americas 22 September 1960 15 Allentown Chronicle 8 March 1960 A ninenation technical committee was ap pointed by foreign ministers for the Committee of 21 16 They wanted primary price stabilization increased diversification higher produc tivity in agriculture and industry more technical assistance and greater access to development capital 17 Dillon The Prelude 636 Considering his appointment of George Humphrey as treasury secretary in early 1953 Eisenhowers change of attitude toward Latin America was spectacular It was also an unacknowledged compliment that both Kubitscheks Operation Pan America and the new principles adopted by the Com mittee of 21 were a flagrant poaching of ideas from ecla in Santiago 18 Fidel Castro Ruz The Problem of Cuba and Its Revolutionary Policy United Na tions General Assembly 26 September 1960 19 Walt W Rostows influential books A Proposal Key to an Effective Foreign Policy with Max Milliken and Stages of Economic Growth a NonCommunist Manifesto brought him into the Kennedy team 20 President John F Kennedy Address at a White House Reception for Members of Congress and for the Diplomatic Corps of the Latin American Republics Washington 13 March 1961 the Prebisch Papers include the original draft of Prebischs joint letter sent to President Kennedy 21 But a key element of Prebischs draft his linkage of regional integration with the promotion of industrial exports was dropped His recommended text Without such arrangements there can be no efficient progressive industrialization nor can industrial exports achieve appreciable proportions either within the Latin American area or as regards the rest of the world Latin America must enter the industrial export market was watered down into a bland endorsement of support for all economic integration which is a genuine step toward larger markets and greater competitive opportunity This was a defeat for Prebischs efforts since 1956 to dis tinguish a rational importsubstitution policy from its misapplication and errors of Argentina under Perón 22 Schlesinger Myth and Reality 68 23 Prebisch Joint Responsibilities for Latin American Progress It offered a tough message to donors and recipients Development assistance from outside he argued was essential but secondary to the responsibilities of Latin countries themselves if they were to prosper But the latter needed predictability in financing For planning to succeed each country must know with certainty that for the duration of the plan it can count on those international resources which are indispensable for putting it into practice In the same issue Jacob Viner agreed with Prebisch longterm plans Notes to pages 3549 535 had been the key to the success of the Marshall Plan he concluded the outstanding success in the past history of foreign aid and longterm authorizations by the US Congress were also necessary for the success of the Alliance for Progress 24 Lincoln Gordon interview with the author 25 White House memorandum secret Conversation with Comandante Ernesto Guevara of Cuba 22 August 1961 Guevara thanked Goodwin for the great political victory of the Bay of Pigs invasion but called for a modus vivendi with the US Government 26 Filipe Pazos had just walked out of a dinner with Moscoso and Prebisch when he arrived 27 Lerdau The Alliance for Progress 16584 28 Quoted in ibid 167 29 Prebisch Vamos a tener mas recursos 30 Ferguson ecla and the Alliance for Progress Frondizi had also intervened to prevent Prebisch being named executive director of the new oaseclaidb Tripar tite Committee apparently to prevent its possible effectiveness in interfering with Argentinas direct access to the US and funding agencies 31 US Embassy Santiago to State Department 2 September 1961 It repeated the ru mour at Punta del Este that the US delegation had approached Prebisch to head the Panel 32 Manuel J Rios to Bodil Royem 24 June 1962 33 Sikkink Ideas and Institutions 10110 Lewis Crisis of Argentine Capitalism 3367 for an example of how Frondizi did not nurture Argentine domestic capitalists in this case siam in the automobile sector although his 1958 National Commission on Foreign Investment and Stabilization Plan had accommodated the US and the imf according to script 34 Prebischs buoyant mood was confirmed in Ottawa which had recently joined ecla where he briefed Canadian officials on new Alliance developments He was notably proUnited States in all his comments and enthusiastic about the Alliance for Progress Canadas Foreign Affairs noted and did not appear to be interested in any special selfadvancement or in any special position for ecla US Embassy Ottawa to US secretary of state 1 December 1961 35 Remarks by the Hon Douglas Dillon secretary of the US Treasury at the Special Meeting of the InterAmerican ecosoc Washington DC 30 November 1961 36 oas press release Brazil Moves to Organize Its Alliance for Progress ShortTerm Projects 29 January 1962 37 Bolivia and Colombia were the next countries to be reviewed by the panel 38 Gilbert Burck Latin America Bureaucracy and the Market Fortune February 1962 39 Schlesinger Myth and Reality 70 40 Grunwald Invisible Hands in Inflation and Growth 318 When Business Week declared its loyalty to the Alliance for Progress the early reformist impulse was truly under siege Notes to pages 35971 536 41 Prebisch to los Senores Expertos del Comité de los Nueve 12 June 1962 42 A month earlier in December 1961 Despite rumours of opposition lower down in the Special Fund staff Hoffman went so far as to have a statement read at eclas ninth meeting in Santiago on 5 May 1961 immediately before the Punta del Este Conference which literally guaranteed funding In return the government dele gates at that meeting endorsed the project in principle with virtually no debate or discussion leaving Raúl free to advance the institute project 43 Benjamin Hopenhayn to Raúl Prebisch 17 July 1963 44 Richard E Demuth to J Burke Knapp 1 May 1961 45 Demuth to Burke Knapp 10 July 1962 46 Prebisch Address to eclas Eighth Plenary Meeting 14 February 1962 47 To speed things up with Paul Hoffman Prebisch had convinced five governments Brazil Bolivia Chile Venezuela and Colombia to submit a formal request to the Special Fund project After it was approved in January 1962 Prebisch proposed a board of directors nominated from these five countries the three sponsoring orga nizations Special Fund idb and ecla along with himself as directorgeneral Such a composition broke the rules in Latin America for a regional organization ignoring Mexico and Argentina which insisted on individual representation He was compelled to back down in favour of an elevenmember council with eight Latin representatives using the traditional selection from Argentina Brazil Mexico and Chile VenezuelaColombia as well as collectively Central America Andean region and the Southern Cone Bolivia Uruguay or Paraguay However Prebisch was successful in an agreement that the directors would act in their indi vidual capacity rather than as government delegates 48 Murray Ross to William Diamond World Bank office memorandum 15 June 1962 49 David H Pollock interview with the author 12 July 1992 50 Record of meeting with US State Department Officials Washington DC 15 Febru ary 1963 Pollock Papers box 3 51 Prebisch Address to the Tenth Session of the Economic Commission for Latin America Mar del Plata 6 May 1963 52 Lincoln Gordon interview with the author The US offensive against President Goulart who opposed US sanctions against Cuba began before October 1962 President Kennedy abruptly cancelled a visit to Brazil scheduled for 20 November instead sending his brother for a humiliating public dressingdown of Goulart in his own capital c ha p t e r se v e n t e e n 1 With US leadership the newly founded ecosoc invited eighteen countries to form a preparatory committee the Interim Committee for International Trade Organi zation for drafting an ito Rejected by Moscow the committee met anyway in London and moved forward toward Havana Notes to pages 3729 537 2 New York Times About That Free Trade 15 May 2006 for a retrospective a half century later 3 Although certain imperfections at the margin such as excessive bureaucracy were admitted 4 Such as the UN Commission on International Commodity Trade It was largely ineffective only one of a host of new traderelated agencies that proliferated be cause the issue was of global importance and filled the ito vacuum with rampant bureaucratization 5 Leaving the 1958 Coffee Agreement as the one USdeveloping country achieve ment in commodity trade 6 Replacing the oeec which had been established in 1949 to guide European recon struction The developed market economies already had their own group serviced by the oecd in Paris since 1945 they had learned the importance of working to gether on the key files whatever their individual policy differences and they had deepened their international collaboration since 1960 when the oeec was re shaped into the oecd 7 One only had to look behind the flurry of resolutions in the UN General Assembly GA Resolution 1421 XIV a general statement on trade and development for un derdeveloped countries approved on 5 December 1959 followed by GA Resolution 1519 on 15 December 1960 Strengthening and Development of the World Market and Improvement of the Trade Conditions of the Economically Less Developed Countries Neither implied action 8 Formulated by UN officials led by Hans Singer the UN Development Strategy set out a minimum annual growth target of 5 percent between 1960 and 1969 Three months after Kennedys address on 19 December 1961 GA Resolution 1707 International Trade as the Primary Instrument for Economic Development was approved calling on the secretarygeneral to consult with member governments regarding the convening of a UN conference on international trade and development issues 9 Toye and Toye From New Era to NeoLiberal Era 1545 10 Pollock Love and Kerner Prebisch at unctad 467 11 Final Report of the First Annual Meeting of the InterAmerican Economic and Social Council at the Ministerial Level oas Mexico 27 October 1962 12 UN General Assembly Resolution 1785 8 December 1962 13 Prebisch to de Seynes 23 January 1963 14 Prebisch still headed ecla to August 1963 and the new ilpes was just getting under way He therefore decided to spend an initial three weeks in New York to claim the role of secretarygeneral and then return for two months to prepare ecla for the handover to José Antonio Mayobre He decided to keep ilpes since his unctad contract expired in mid1964 appointing Cristóbal Lara as his deputy bringing Benjamin Hopenhayn back from Washington to serve as secretary and reassuring his team that he would be back as their leader Notes to pages 37985 538 15 In fact de Seynes had opposed sending Prebisch to the Cairo Conference Wladek Malinowski to Halina Malinowski Malinowski personal correspondence 8 July 1962 16 As well as desas new World Model Projection Centre 17 J Mosak to Oscar Schachter 9 January 1963 18 David H Pollock resumé of meeting 6 February 1963 5 Pollock Papers Box 3 Subsequent Pollock references in this chapter are in the same location 19 Mosak confided that Washingtons support for holding unctad had less to do with developing countries than with its disappointment in recent trade talks with Europe unctad would be a warning to the eec to get serious or the US would go elsewhere 20 David Pollock notes of meeting 7 and 8 February 1963 21 Although Dells role in working on unctad had been discussed since December Mosak kept avoiding the issue 22 UN Chief of Personnel Dharman who was close to Mosak and de Seynes cautioned Prebisch that it would be a serious disruptive idea to certain governments 23 Pollock to Prebisch 2325 April 1963 24 But only through the personal intervention of U Thant who persuaded the Euro pean UN Office to relocate meetings scheduled for who and the ilo 25 Including Jan Tinbergen T Balogh Ray Vernon Nicholas Kaldor Paul Rosenstein Rodan Ed Mason Gerald Helleiner Arthur Lewis among other distinguished economists 26 Chatham House for example followed up in October with a conference at Bellagio funded by the Carnegie Foundation in which economists selected for maximum impact upon governments would propose recommendations for the Trade Conference Pollock Notes 22 April 1963 27 Originally seventyfive and subsequently including a far higher number of UN states as the years passed and membership increased 28 For a detailed assessment of the preunctad I negotiations see Dosman and Pollock Hasta la unctad y de regreso divulgando el evangelio 196468 Estu dios Sociologicos del Colegio de México 14 SeptemberDecember 1998 48 Diego Cordovez The Making of unctad Institutional Background and Legislative History Journal of World Trade Law I no 3 MayJune 1967 243328 and Thomas G Weiss Multilateral Development Diplomacy in unctad 29 New Zealand met with the G77 until the end of the Conference before deciding that it belonged in Group B 30 Pollock to Prebisch 25 June 1964 31 The trip began in Canberra followed by twotofour day visits in Tokyo Bangkok New Delhi Karachi Cairo Belgrade Warsaw Moscow Bonn Paris Brussels and London 32 De Gaulle had just rejected Britains bid to join the eec the US and Europe were deadlocked on trade issues and so forth leaving some prospect of diverging Group Notes to pages 38693 539 B approaches in Geneva However the oecd secretariat in Paris played a skilful cau cusing role with the technical and analytical capacity to interpret complicated is sues of international trade and finance for its members 33 Statement by Dr Raúl Prebisch informal meeting of the General Assembly Second Committee 18 November 1963 34 Ibid 35 Ibid 36 Record of meeting with US State Department Officials Washington DC 1 Novem ber 1963 Pollock Papers box 3 37 Address by George W Woods luncheon in honour of Raúl Prebisch 2 November 1963 38 Ibid 39 Dell worried that the report was too Latin Americaoriented in criticizing inwardlooking development and pressing for the promotion of exports of manu factured goods since most developing countries remained commodity producers fully 90 percent of Third World trade with large subsistence sectors Dell and Krishnamurti also felt that Prebisch should tone down his sharp criticism of the gatt a lower tone might make our case for its improvement much stronger 40 Ray Sternfeld interview with the author Mann had turned down Kennedys offer to be assistant secretary of state for Latin America because he thought the Alliance for Progress to be softheaded His appointment accelerated the Alliance fatigue evident before Kennedys assassination two weeks before Dallas on 6 October Assistant Secretary of State Edwin Martin decided to continue aid to the new mili tary governments of Honduras and Dominican Republic despite their overturning democratically elected governments 41 unctad needed Washingtons support so badly that Prebisch had rented an office in the oas building to coordinate meetings with officials legislators and the pri vate sector in the buildup to Geneva Although falling to 394 percent in 1982 the US produced more than half of the developed worlds gdp in 1960 it hosted the imf World Bank and the idb and its immense influence gave it a de facto veto at the UN 42 Pollock notes of meeting on 1 November 1963 Department of State Washington DC The argument was that developing countries were key to EastWest relations the swingfactor in USussr rivalry and vulnerable to communist subversion Rostow was convinced that he had constructed a new blueprint for US foreign pol icy which the G77 failed to grasp 43 Statement at the 24th plenary meeting 8 April 1964 Proceedings vol II 436 44 I saw logic in the concept of the advanced countries opening their markets to Third World the only problem was that they would never do it and I did not want to be party to a fraud George Ball The Past Has Another Pattern 1935 45 Arthur Karasz to Richard E Demuth 26 May 1964 Notes to pages 393401 540 46 Heath The Course of My Life 602 47 Helleiner The Southern Side of Embedded Liberalism 2636 48 Asia was even more complex but agreed to incorporate Yugoslavia Israel and the nonAfrican Middle East countries R Krishnamurti laboured to maintain a united front among these governments during unctad I notwithstanding historical issues such as Kashmir and the difficulty of handling Japan Australia and New Zealand who were members of ecafe but also outside the G77 as part of Group B 49 Group C was a building block of unctad itself both in geography and ideology and therefore vital to Prebischs political credibility and overall strategy in the G77 unctad gave ecla a new mission to coordinate a united Latin American position on trade and development for Geneva taking the leadership in forming cecla Special Coordinating Committee for Latin America in November 1963 as a model of regional consultation and caucusing for the other regional commissions ecafe in Bangkok or the eca in Africa which faced a similar challenge Brazil was vital in carrying the unctad initiative forward before Geneva In November 1963 President Goulart told a meeting of the oas that Latin unity at unctad was vital led by Minister of Planning Celso Furtado Brazil facilitated the work of cecla in early 1964 to prepare for Geneva In January 1964 cecla organized a Meeting of Experts where Prebisch gave the lead paper and a month later at eclas Commit tee of the Whole a position paper for unctad I was accepted in principle with Mayobre announcing that integration had become the meta el eje y el centro of eclas future activities El Clarin 16 February 1964 cecla was again convened in Alta Gracia Argentina for a final Group C strategy session The result was a Group C so prominent during unctad I that many African and Asian delegations worried that their interests might be submerged by Latin America 50 Krishnamurti to U Nyun 29 May 1964 Jawaharlal Nehrus fatal heart attack and death on 27 May also stimulated Third World cohesion 51 Cordovez unctad and Development Diplomacy 52 R Krishnamurti Note on the Confidential Negotiations Convened by Dr Prebisch from 315 June 1964 on the unctad Recommendations on Institutional Machin ery June 1964 53 Narisiham to de Seynes 11 May 1964 54 See Diego Cordovez unctad and Development Diplomacy Journal of World Trade Law I no 3 MayJune 1967 c h a p t e r e i g h t e e n 1 Celso Furtado Os Ares do Mundo 49 2 This section relies heavily on the authors interviews with Celso Furtado and Fernando Henrique Cardoso 3 Raúl Prebisch unpublished recorded interview Santiago 19 December 1973 Notes to pages 40213 541 4 Celso Furtado Os Ares do Mundo 301 5 De Seynes to Prebisch and CV Narasimhan 30 October 1964 6 desa could not be allowed to dictate unctads policy or research which had its own requirements what is needed is to combine variety and freedom of research with uniformity of methodology and consistency of basic data results and interpre tation Prebisch to de Seynes and Narasimhan 1 November 1964 7 This was the notorious UN acabq Advisory Committee on Administrative and Budgetary Questions Essentially de Seynes proposed consolidating and merging services with desa The issue was critical for Prebisch in securing personnel and the G77 meeting was held on 14 January The G77 will strongly support the sub mission of the Secretary General and would not be able to concur in the proposals of the Advisory Committee Prebisch wrote to U Thant after the meeting BR Turner UN controller wrote to CV Narasimhan regarding these basic differences of opinion on matters of policy between Dr Prebisch and Mr de Seynes and re questing advice from the secretary general on solving the crisis in view of its importance within the organizational framework of the United Nations 6 and 18 November and Report of Secretary General to Advisory Committee 8 Decem ber 1964 Staff needs were projected at seventyone in 1965 and ninetyfour in 1966 including twentyone for work in commodities 8 In the end he was worn down into accepting one of the pair Twelve professional and eight generalservice posts were to go from Mosaks bureau to unctad Dell was released to Prebisch on 10 November while his area of specialization was fi nance related to development he was also one of Prebischs key overall advisors 9 The new unctad machinery was far too complex The top organ remained the conference initially to meet in 1966 but delayed until 1968 after which a fouryear interval between conferences became the rule Next in the hierarchy was the Trade and Development Board tdb encompassing no fewer than fiftyfive members from the four regional groups with its own president and mandated to hold two sessions a year in New York and Geneva respectively Reporting to the tdb were the three main unctad committees commodities manufactures and invisibles and financing The complexity of these subject areas necessitated in turn subsidiary working groups and intergovernmental subcommittees Although the secretariat expanded to 175 professionals by 1968 including a special division of conference affairs there was too much perpetual motion for consistently highquality work 10 From the beginning African states complained that they were being excluded from senior positions in Prebischs new secretariat Some of them like Tanzania and Ghana openly attacked Prebisch for favouritism toward Latin Americans and for giv ing Africans jobs as in their words elegant messenger boys By February 1966 only six Africans had been hired in unctad Tanzania charged and half at the lowest professional levels Prebisch rejected the serious accusations as fundamentally un just Out of a regional quota of thirteen eight had been hired with five others to be Notes to pages 41416 542 appointed soon while only ten positions for Latins had been approved for unctad He had tried immediately after Geneva to locate qualified African candidates but they were rare highpriced and with many other options He thought he had two including a D2 appointment lined up in 1965 But in July of that year U Thant asked him to back off since the economists were from Nigeria and Ghana countries already over represented in the UN secretariat Prebisch then tried to hire Michael Imru Ethiopias ambassador to Moscow for the position of director Trade Policies Division earmarked for an African but U Thant wrote unsuccessfully to Addis Ababa for his release In another case Prebisch noted negotiations with an African were almost completed when the person in question said that he would only accept a post as UnderSecretary But unfortunately I hold this post 11 Pollock Love and Lerner Prebisch at unctad 446 Malinowski agreed to stand down but told Prebisch that he would consider the appointment of any other person as deputy secretarygeneral even Sidney Dell a personal betrayal The de bacle was a serious loss for Prebisch in New York he had Dell but his Geneva office was overburdened from the outset 12 P Spinelli to SecretaryGeneral U Thant European Office of the UN Palais des Nations Geneva 10 May 1965 13 A special tdb Trade and Development Board meeting later that month in New York approved the move 14 World Bank Karasz to File 29 December 1965 15 GD Arsenis to David Pollock 6 October 1972 Note Walters International Orga nizations and Political Communication 16 Bela Belassa World Bank memorandum 15 July 1965 17 David Pollock Conversations with Raúl Prebisch Washington 2123 May 1985 18 The Conference preceding the Fourth Trade and Development Board Meeting in Geneva an agreementinprinciple would be approved at unctad II in New Delhi 19 Toye and Toye From New Era to NeoLiberalism 1612 20 Prebisch had raised the issue with the World Bank in July 1963 before the Geneva meeting requesting a study of its potential role in providing assistance to devel oping countries experiencing a secular decline in export receipts Prebisch to Richard H Demuth 17 July 1963 21 Woods to Thant 6 December 1965 22 World Bank office memorandum 29 December 1965 23 World Bank office memorandum 1320 April 1966 24 Even though they argued a number of important questions of detail administra tion and finance need further enquiry before an international agreement would be possible World Bank Report on the Meeting of the unctad Committee on Invis ibles and Financing Geneva 1320 April 1966 3 Both developed and develop ing countries also agreed that the new scheme should be coordinated with the imfs shortterm compensatory financing facility Notes to pages 41621 543 25 Moved to sweeping hopes for the UN Development Decade Friedman expressed his satisfaction at hearing a number of delegates from donor and recipient coun tries stress the need to increase the flow of development finance and to extend this assistance on more concessional terms World Bank Report on the Meeting of the unctad Committee on Invisibles and Financing Geneva 1320 April 1966 6 Another meeting of the unctad Committee on Invisibles and Financing Related to Trade was called for 21 November2 December 1966 again in Geneva 26 Prematurely established with three professional public relations officers the itc was not granted trust funds from donor governments for developing country proj ects until 1 May 1966 and was dismissed as insincere and ineffective 27 Luis Augosto Castro Neves interview with the author 13 June 1991 28 Raúl Prebisch to U Thant 27 March 1967 29 U Thant to Paul G Hoffman 16 May 1967 Washington was pleased and even de Seynes and Mosak approved since they were convinced that Malinowski was behind the scheme of cornering export promotion for unctad The old rivals Prebisch and WyndhamWhite had other interests in common like their mutual dislike for the upstart unido United Nations Industrial Development Organization based in Vienna Both saw it as a UN throwback committed to the worst features of in wardlooking development They agreed therefore to present a common front against the new unido because it was ideologically opposed to regionalism and might exercise excessive influence toward protectionist policies leading to prema ture industrialization US Mission Geneva to State Department 15 August 1967 30 Bela Belassa to N Sarma 3 February 1967 This was an important symptom be cause the concept of supplementary financing originated from bank staff rather than its board representatives Irving S Friedman to George C Woods 5 Decem ber 1967 31 Woods to Prebisch 23 June 1967 32 Speaking in Spanish without notes he contrasted their two distinct views on devel opment policy and international cooperation On the one hand there was the con cept that to enable a country to implement its economic development effectively its plan for investment and stabilization of domestic resources must not be subject to disturbing influences On the other there was the concept that in such situations the country must adjust its economy and investment plans with a consequent de crease in its development rate A corrected version toned down the dichotomy merely stating that and that if a country is to apply an economic development plan with some measure of efficiency it is vital that its plan of investment and mobiliza tion of internal resources should not be at the mercy of unforeseen external con tingencies which have the effect of reducing its resources For the actual address see Arthur Karasz to Michael L Hoffman 19 September 1967 The milder print version is Prebischs Introductory Statement to the unctad Trade and Develop ment Board Fifth Session Geneva 16 August 1967 Notes to pages 4214 544 33 Raúl Prebisch address to the Trade and Development Board Fifth Session unctad Provisional Summary Record Geneva 16 August 1967 34 Prebisch to Woods 14 December 1967 35 Sidney Dell to Raúl Prebisch 18 March 1972 36 unctad Fourth Meeting of the Trade and Development Board Geneva Septem ber 1966 37 De Seynes to Woods 26 May 1967 38 Federico Consolo to Richard H Demuth 5 September 1966 39 Does he have an eye on U Thants job the World Bank delegate mused Consolo to Demuth 5 September 1966 Prebisch had been considered for UN secretary general in 1966 40 V Dubey to Files ibrd office memorandum 7 October 1966 Statement by Raúl Prebisch at the 93th Planning Meeting of the Trade and Development Board 41 Consolo to Demuth 7 August 1967 42 After the 1964 election of Eduardo Frei as president of Chile a popular Christian Democrat committed to development and support for unctad Prebisch drafted a letter for Frei to send to Filipe Herrera idb José Antonio Mayobre ecla and Carlos Sanz ciap proposing a new program of action to relaunch the integration process in Latin America But this promising mood in the Americas was soon reversed with the 1965 US invasion of the Dominican Republic splitting Latin America between US allies like the Brazilian generals and antiinterventionist Mexico Argentina and Chile This regional chill compounded the global impact of Johnson Administrations fixation with Southeast Asia after the August 1964 Tonkin Gulf Resolution and the ensuing military involvement in Vietnam 43 Declaration of the Presidents of America Meeting of American Chiefs of State Punta del Este 1214 April 1967 44 Irving S Friedman to George D Woods 5 December 1967 45 Prebisch introductory statement to unctads second conference New Delhi 1968 S Johnson to Friedman 13 September 1967 had reported Prebischs use of this term in his address to the unctad Trade and Development Fifth Session on 17 August 1967 International oda had declined from 083 percent gdp in 1961 to 069 percent in 1965 well off the 1 percent target of the UN Development Decade and fully half was offset by debt and service repayments Economic growth was barely 4 percent as opposed to the UN minimum goal of 5 percent and net import capacity from export earnings fell from 3100 million in 1961 to 400 million 1965 46 Although Prebischs report to the second unctad conference did contain certain new concepts a distinction between lessdeveloped and more developed peripheral economies for example which he repeated it as an obstacle along with the sav ings gap the chronic disparity between domestic savings and mounting investment requirements and the more general external vulnerability of peripheral economies Notes to pages 4258 545 47 Prebisch address to ecosoc 14 July 1966 Prebischs Trade and Development Board text was delivered on 29 August 1967 48 Arthur Karasz in the World Bank called Prebischs recommendation excellent Karasz to Richard Demuth 22 February 1968 49 In March 1966 the original Panel of Nine was reduced from nine to five members and integrated into the ciap machinery as a technical advisory group prompting the resignation of the eight remaining members See oas Declaración del ceap sobre Resolución 27 M66 Washington 3 June 1966 and PN RosenteinRodan to José A Mora 26 April 1966 50 Arthur Karasz report on unctad II World Bank 18 April 1968 51 Wall Street Journal 21 January 1968 52 One thing that is new is supplementary financing Prebisch claimed disingenu ously in his opening address this together with the financing of buffer stocks un der commodity agreements would be a fitting sequel to the great achievements of Bretton Woods 53 Karasz to Demuth 15 February 1968 54 NA Sarna to Demuth 12 March 1968 55 Karasz to Demuth 20 March 1968 56 Pollock Love and Kerner Prebisch at unctad in Dosman ed Raúl Prebisch Power Principle and the Ethics of Development 55 57 Karasz to Demuth 8 March 1968 India was equally ready to play at unctads expense as were other developing countries including Argentina after President Arturo Illia was overthrown in 1966 58 Arthur Karasz to Richard E Demuth 8 March 1968 59 The conference also accepted the UN goal of official development assistance equivalent to 1 percent gdp from developed to developing countries but without specifying when the policy would come into effect 60 Arthur Karasz to Richard E Demuth 20 March 1968 He reported that the Brazilian delegate continues to talk about failure and would like to have the con ference suspended 61 Minutes World Bank senior staff meeting 29 March 1968 62 Washington Post 29 January 1969 63 Prebisch acc report on unctad II Geneva 24 April 1968 ecosoc report on unctad II 10 July 1968 64 Toye and Toye From New Era to NeoLiberalism 1623 65 Love Latin America unctad and the Postwar Trading System especially 1819 66 By 1968 the group system of decisionmaking in unctad was observed with reli gious conviction and impervious to change despite its rigidities As Secretary of the Board Paul Berthoud noted to Prebisch in a confidential internal review The System of Groups in unctad Its Merits and Drawbacks Suggestions for Improvement 10 June Notes to pages 42936 546 1968 The system of Groups which developed during the 1964 Conference has now become an integral part of the working machinery of unctad 67 Federico Consolo World Bank Memorandum 17 July 1968 68 Consolo World Bank Memorandum 24 April 1968 69 Three days of riots during the US Democratic Convention in Chicago 2629 Au gust added to the chilling disillusionment 70 To avoid what Prebisch called a second Development Decade of even deeper frus tration than the first Prebisch Introductory Statement to the unctad Trade and Development Board Fifth Session Geneva 16 August 1967 71 Prebisch to Woods 13 December 1967 72 Richard Demuth World Bank memorandum 12 April 1968 73 Prebisch report to the UN secretarygeneral 1 May 1968 74 Pearsons report Partners in Development 1970 contained a list of sixtyeight recommendations in effect a clinical inventory of useful measures deemed appro priate for all regions and countries to achieve a growth rate of 6 percent 75 Karasz to Demuth 20 March 1968 KB Lall of India was rumoured to be his likely successor 76 In the amount of US240000 Joaquin Gonzales to Prebisch 20 June 1968 77 Pedro Irañeta to Mario Mendivil 13 November 1968 78 These jobs together with undertaking the major idb commission prompted doubts in some quarters that he quit unctad for health reasons U Thants acceptance of his resignation on 26 November 1968 stated mainly for reasons of health 79 Prebisch to Michael Hoffman associate director Development Services Depart ment Word Bank 13 December 1968 We in the Bank will miss you greatly c ha p ter nineteen 1 US Embassy Santiago to secretary of state 2 and 4 December 1968 2 Economia Santiago NovemberDecember 1968 3 Prebisch address to unctad Trade and Development Board 15 March 1969 4 Prebisch declined a 100000 salary offered by the Arthur D Little management consulting firm to remain in the UN circuit 5 cecla Informe del Relator Reunion Extraordinario de cecla a Nivel de Expertos Viña del Mar 714 May 1969 Anexo V Intervencion Inaugural del Ministro de Rel aciones Exteriores de Chile senor Gabriel Valdes Valdess forum was much better organized and attended than eclas Lima session 6 Valdes boasted that cecla had been of the highest importance because it had clout such as its success in persuading President Johnson to support the gsp in unctad and proposed strengthening their new forum with a permanent execu tive group It took another meeting on 714 May to finalize the Viña del Mar Notes to pages 43646 547 Consensus Prebischs letter to Nixon was grounded in mutual USLatin American interests while presenting the minimum needs for successful Latin development policies 7 Armando Uribe The Black Book of American Intervention in Chile 312 8 Echavarria to Prebisch 23 February 1965 9 ilpes minutes of the emergency meeting of the board of directors Current Problems Facing the Institute and the Reorientation of Its Future Activities 1213 September 1969 10 José Nun interview with the author 11 Cardoso and Faleto Dependency and Development in Latin America Fernando Henrique Cardoso returned to São Paulo in 1969 to cofound cebrap Brazilian Centre of Analysis and Planning 12 Mayobre office memorandum 18 October 1965 13 Prebisch to Cristóbal Lara 22 June 1968 14 US Embassy Santiago to secretary of state 23 December 1968 15 ilpes ninth annual meeting in Santiago 610 January 1970 Felipe Herrera agreed to join the board as a special mark of idb confidence in the future of ilpes De Seynes had the same idea Other traditional missions would be recast Training for example would move from basic courses to specialized seminars for business executives trade unionists or community leaders particularly relevant for the smaller countries that clamoured for them there were fifteen such applications for 1970 alone 16 The New York Times 20 May 1969 advised Rockefeller to cancel visits to the hard pressed democracies of Chile and Uruguay on a mission that turns out to have been badly conceived and badly timed Nor the editorial argued had the risky trip been necessary Before Mr Rockefeller left it argued two eminent economists Carlos Sanz de Santamaria Chairman of ciap and Raúl Prebisch had underlined the needs of the region 17 For example Roberto Campos Roundtable on Latin American Development Boston University 5 October 1972 18 Prebisch Change and Development 7 19 T Graydon Upton to Mr Cecilio Morales 10 November 1970 noting that the prob lem of capital flight from Latin America was ignored entirely Examples from Asia were also not sufficiently used although Prebisch was uniquely qualified to strengthen his report with comparative studies 20 Prebisch Change and Development Latin Americas Great Task According to Paul RosensteinRodan the Prebish report was like a seismographic apparatus sensi tively registering social tremors Pollock The Pearson and Prebisch Reports 77 However Prebisch did not share the widespread catastrophic view of North South relations being promoted by prominent individuals such as philosopher CP Snow Disaster is quite avoidable provided we recognize the complexity Notes to pages 44652 548 the seriousness and the urgency of the problem Richard Holloran A Non Catastrophic View Washington Post 23 March 1969 21 The Tupamaros had adopted the name of Tupac Amuru the Indian nationalist who had resisted the Spanish invaders and was subsequently captured and quar tered in 1781 22 Unless changes were made quickly Prebisch argued the course of events might lead to the socialist method of development even if that had not been the original intention of those who set themselves to strengthen the dynamic impetus of the economic system events themselves might impel the State to take over the very sources of income of the upper strata by a process of socialization of the major en terprises at least even if no ideological considerations were involved Ideologies would come later to justify faits accomplis and strengthen their significance Raúl Prebisch Teme Prebisch una Explosión Social en IberoAmerica El Universal Mexico City 27 April 1972 23 Change and Development Latin Americas Great Task 1819 Already in 1961 ecla had warned about the distortion occurring in Latin American economies with over protected industries incapable of exporting unlike the importsubstitution model as applied in South Korea for example Sunkel and Zuleta Neostructuralismo ver sus neoliberalismo 44 24 The figure of 8 percent had been established by an econometric model developed by the research team headed by eclas Manuel Balboa I never understood computers Prebisch remarked until I worked with Balboa Raúl warned that this would be an enormous challenge Pollock and Ritter Pearson and Prebisch Reports 6 25 Hans Singer transcript of oral statement presented at the Prebisch Symposium Geneva 2 July 1986 45 26 ceres fao Review 3 no 5 SeptemberOctober 1970 87 27 Washington Post 18 September 1970 28 Lewis Diuguid Latin Development Aid Boosted Washington Post 26 April 1970 29 ecla experts were already looking at informal markets see Love The Rise and Decline of Economic Structuralism 10810 30 Washington Post 3 January 1971 31 Adelita Prebisch interview with the author 32 Ibid 33 William Lowenthal to Raúl Prebisch 27 February 1970 34 Prebisch to Andrew Cordier 12 February 1970 35 Prebisch to Paul RosensteinRodan 12 July 1972 36 Latin governments remained as unwilling as ever to support the institute at the meeting Brazil was deleted from the names of the eleven governments supporting the institute At the most they would provide 300000 but only for contracted services Notes to pages 4539 549 37 How the Institute Can Best Serve the undp and the idb Santiago 1971 38 Haberler to Prebisch 4 February 1972 39 Cuban VicePresident Carlos Rafael Rodriguez and Charles Meyer Nixons new as sistant secretary for Latin America were the centre of attraction 40 Prebisch to de Seynes 17 January 1972 In recommending Iglesias for ecla execu tive secretary Prebisch noted that Furtado was also brilliant but that Washington would never accept him 41 Prebisch to Alberto Morales 23 February 1973 42 Prebisch to Enrique Iglesias 23 April 1973 43 Herrera to Prebisch 8 January 1973 44 30 July 1973 45 The appointment was heavily criticized throughout Latin America as patronage in fact Raúl postponed the announcement until after eclas Quito session in March His duties included attending major international meetings and drafting think pieces for the secretary general and Walter Sedwitz executive director for eco nomic and social affairs 46 Prebisch to Laurencio Lopez 18 July 1973 47 United Nations Panel of Eminent Persons to Study the Impact of Multinational Corporations on the Development Process and on International Relations David Pollock to Enrique Iglesias 11 September 1973 48 Valdez Pinochets Economists 49 Prebisch to Hortensia Allende 21 September 1973 50 Prebisch interview with El Tiempo 11 July 1971 51 Jornal do Brasil 4 August 1973 Eugenio Gudin attended this bnde conference on socioeconomic development 52 El Tiempo Raúl Prebisch El populismo as negacion de una transformacion real 11 July 1971 53 But in the end Washington threw Latin America a bone agreeing to create yet an other oas body the Special Commission on Consultations and Negotiations with the acronym cecon quickly changed on the ground to seco dry 54 New York Times 23 October 1971 55 Birns ed The End of Chilean Democracy 56 Bodil Royem to Prebisch 15 ovember 1972 57 Adelita Prebisch interview with the author 58 Stephen S Rosenfeld The Poor Nations Get Short Shrift Washington Post 7 April 1972 The US had unilaterally broken the postwar Bretton Woods monetary system on 15 August the previous year and the Nixon Administration seemed unwilling to move on NorthSouth issues Quoting the Journal of Commerce Rosenfeld continued just about every major proposal put forth in the interests of protecting the ldcs less developed countries from further deterioration in their terms of trade is drawing a negative response from Washington unctad was treated by Washington Notes to pages 4607 550 not as a policymaking forum but as a sounding box for havenots malingerers and assorted other antiAmericans and Santiago was probably its least preferred loca tion on the globe aside from Hanoi 59 Salvador Allende The Chilean Way first message of President Allende to the joint session of Congress 21 May 1971 60 Although for certain opponents this undisputed political legitimacy made his UP more subversive than the Cuban Revolution In contrast in Argentina where Perónist and leftist guerrilla groups roamed the country despite repression there were 417 shooting incidents in 1972 which left 356 killed and 286 wounded Twenty million pesos were seized in 277 bank robberies See E J Hobsbawm Chile Year one New York Review of Books 23 September 1971 for an interesting assessment before the roof fell in on Allendes UP 61 Prebischs marginal comment scribbled on Endocio Raviness article Culpa de quienes tienen es que otros no tengan La Prensa Buenos Aires March 1973 62 El Mercurio 7 April 1973 63 cies statement by Professor Paul N RosensteinRodan Washington 31 January 1974 64 Luis de Cervantes Pueden Surgir Otros Che Guevara si Continúa la Desigauldad Excelsior Mexico City 20 January 1974 65 United Nations General Assembly Resolution 3202 SVI May 1974 Barbara Ward First Second Third and Fourth Worlds The Economist 18 May 1974 66 Juliet Halley to Raúl Prebisch minutes of the meeting of the InterAgency Commit tee 23 May 1974 US Department of State secretary of state to US UN Mission memorandum of conversation 8 January 1975 Raúl Prebisch to US Mission usun 1 August 1974 67 Prebisch to Julio Silva 6 October 1975 68 For the US position see US Department of State Raúl Prebisch to William B Buffum memorandum of conversation 8 January 1975 Also Department of State Henry Kissinger note to file 14 August 1974 instructing staff to observe a strict principle of noncommitment in any case 69 Waldheim to Prebisch 18 August 1975 c h a p t e r t w e n t y 1 The Summit Conference of NonAligned Nations held in Algiers in September 1973 was the catalyst for calling the sixth special session of the UN General Assem bly and the subsequent nieo initiative 2 UN GA Resolution 3362 adopted by consensus endorsed the concept of price in dexation a 07 percent aid target 07 percent of gdp of the developed countries the linkage of development aid with the imfs special drawing rights and the man agement and pricing of core commodities Notes to pages 46773 551 3 However the confidence of the West after the initial shock of the opec crisis was insufficiently restored for Kissinger to challenge the nieo directly as indicated by a conciliatory address to the special session of the UN General Assembly in September 1976 He also took the rare step of visiting ecla headquarters in Santiago But after unctads fourth meeting in June 1976 the outlook was uncer tain even more after the Paris Conference on the nieo failed over oil security Financial Times 1 June 1976 The Financial Times reported that Third World countries and the West are still on speaking terms But that was all New York Times 19 September 1975 During the weak followon presidency of Gerald Ford Henry Kissinger adopted an approach of talking them to death of an nouncing vague proposals in support of NorthSouth relations unlikely to be sup ported by the US Congress waiting for differences among developing countries to emerge 4 New York Times 19 September 1975 5 Prebisch to Santa Cruz 29 June 1977 6 Robert McNamara established the Brandt Independent Commission on Interna tional Development in 1977 to help restore a momentum that had flagged since the 1960s 7 Prebisch reassured Iglesias and the editorial board I will not forget the Revista he wrote I wish to assure you that after all the bustle is over I shall return to Santiago to take up the reins of the Revista which I do not want to abandon for anything Raúl Prebisch to Enrique Iglesias 24 May 1974 With this Raúl con vinced the holdouts among his authors the recalcitrants he called them to wait for his return 8 Philippe de Seynes to Prebisch 11 September 1976 9 Prebisch The New International Order and Cultural Values 526 10 The Guardian 26 March 1979 11 Seers had worked with Prebisch in Santiago and then returned to Britain to found the Institute for Development Studies at the University of Sussex to which Sir Hans Singer retired in 1968 12 Prebisch to José M Lacalle director of the Centre for Research and Promotion of Exports Barcelona He had attended the first IberoAmerican Conference on Planning and Development in 1973 where he met his retired friend Giner de los Rios What a pity that I do not know Spain better when I feel the attraction so strongly Raúl exclaimed his discovery of Spain a personal high point of his trip to Europe 13 The Select Senate Committee to Study Governmental Operations with Respect to Intelligence Activities chaired by Senator Frank Church issued fourteen reports in 197576 14 Santa Cruz to Prebisch 21 April 1976 15 Prebisch to Diego Cordovez 23 December 1976 Notes to pages 4748 552 16 Financial Times 11 May 1977 Washington in fact was busy trying to reduce the US share of the oas budget by cutting its bloated staff of 1200 officials with higher salaries than at the US State Department 17 Los Angeles Times 5 May 1977 18 US Embassy in Guatemala to secretary of state 6 May 1977 19 Raúl Prebisch address to eclas seventeenth session Guatemala 6 May 1977 20 Ibid The State Department Telegram quotes Prebischs text at length 21 C Fred Bergsten testimony to the Western Hemisphere Subcommittee of the Senate Foreign Relations Committee October 5 1978 Financial Times 14 May 1979 22 Latin American Economic Report 27 July 1979 23 Quoted in Scheman ed Alliance for Progress 241 24 New York Times 2 February 1977 25 Prebisch Pudiera Hacer Crisis Antes del 2000 26 Ibid 27 El Sol de México 12 September 1976 28 Prebisch Pudiera Hacer Crisis Antes del 2000 29 For example Sidney Weintraub to Prebisch 9 February 1977 or L Harrison to Robert E Culbertson A Critique of the Prebisch Article Critique of Capitalism a la Periphery US State Department memorandum 27 January 1977 30 La Razon 13 June 1978 Washington Post 9 September 1979 31 Jack Anderson Argentina Reality Contradicts Image Washington Post 6 Septem ber 1979 See also Karen deYoung and Charles A Krause Our Mixed Signals on Human Rights in Argentina Washington Post 29 October 1978 32 Argentina Reality Contradicts Image Washington Post 6 September 1979 See also Financial Times 14 May 1979 33 Washington Post 29 October 1978 At the unctad IV conference in Nairobi in May 1976 there had been apparent progress in beginning the implementation of com modity agreements only the US and West Germany voted against the resolutions 34 The Independent Commission on International Development Issues chaired by Willi Brandt issued its North South Report in 1980 and its second Common Crisis Report in 1983 35 Washington Post 20 May 1979 Christian Science Monitor 21 November 1979 36 New York Times 18 May and 12 June 1981 37 Prebisch replied There is not the slightest danger in relation to my insertion into the Northern establishment nor in the establishment of the South and as to the Nobel Prize I will sign a piece of paper stating that I will not receive such distinc tion that does not correspond to an underdeveloped economist Raúl Prebisch to Abraham Mezarik 18 June 1981 38 New York Times 31 March 1977 After Milton Friedman was awarded the prize in 1976 Gunnar Myrdal suggested that it be abolished Notes to pages 47986 553 39 Sir Arthur Lewiss The Theory of Economic Growth had ironically preempted Prebischs scholarly recognition as the founder of structuralism See chapter 13 above 40 El Litoral Santa Fe 6 January 1982 La Caida de la Economia Latinoamericano Kuczinski The View from Latin America in the Mid1980s 22934 41 William J Barber Chile con Chicago A Review Essay Journal of Economic Literature 33 December 1995 1946 42 Presencia La Paz 29 April 1979 43 El Mercurio took up the crusade of inoperancia del análisis de la cepal 23 May 1981 until Prebisch felt compelled to set the record straight with a letter to the editor that pointed out that import substitution was a pragmatic response to the Great Depression and that he had already publicly warned about Latin govern ments excessive orientation toward the domestic market and their lack of stimuli for industrial exports isi had been merely a policy tool he had never sup ported it as an ideology Unfortunately he concluded this pragmatic policy ended by being transformed into dogma just as exportoriented development is be coming dogma It is necessary to export primary products and manufactured goods but at the same time to increase production for the home market 5 June 1981 44 El Mercurio 23 May 1981 and 15 February 1982 45 See for example Heraldo Muñoz to Raúl Prebisch 5 August 1977 or Sidney Dell to Raúl Prebisch 27 February 1979 46 See Mallorquín Raúl Prebisch before the Ice Age 101 including his reference to Armando Di Filippo Desarrollo y desigualidad social en América Latina 47 New York Times 12 June 1981 48 Prebisch to Weintraub 27 April 1981 49 Prebisch corresponded increasingly with Argentine scholars such as Guido Di Tella and Arturo OConnell on Argentine history in the 1930s 50 La Nacion 27 February 1972 51 Lewis Crisis of Argentine Capitalism 43557 Filipe Herrera who had resided in Rio since his retirement as coordinator general of an idbfinanced centre called eciel Programme of Joint Studies on Economic Integration in Latin America had re turned to Santiago as president of the Banco Español 52 Having lived in Washington for so many years Prebisch realized from the start that Galtieris dreams of US support were ridiculous But while opposing Galtieris overt aggression he both strongly supported Argentinas historic claim to the Malvinas and opposed the economic sanctions imposed by European and North American governments after the outbreak of war Between midMay and September 1982 he worked on a volunteer basis with sela the Latin American Economic System based in Caracas to limit the damage of sanctions But there was really nothing to be done Argentina had violated international law and Latin governments refused to go beyond rhetorical support Chile actually assisted Britain 53 Wall Street Journal 17 October 1983 Notes to pages 48691 554 54 Prebisch to Peter Dorner 1 March 1984 55 Prebisch Lineamientos de un programa 56 Raúl Prebisch Lineamientos de un programa 57 Bernardo Grinspun interview with the author 19 March 1992 58 Ambito Financiero 21 May 1984 59 Lewis Crisis of Argentine Capitalism 4801 60 Julio Garcia del Solar interview with the author 18 March 1992 61 What do you want to know Prebisch asked what age would you like me to say I told you that I am about to celebrate my 83rd birthday but I am working in the Church of the Merced where they baptized me and took ten years from me which they were able to do because they have burnt the archives and facts can be manipulated Raúl Prebisch Conferencia de prensa del Dr Prebisch en Casa de Gobierno 10 April 1984 26 62 Clarin 20 May 1984 63 Republic of Argentina Senate Record Buenos Aires 11 May 1984 64 sela coorganized the meeting with ecla to discuss ideas ranging from creating an oela an oas without the US to improve informal contacts among central bank ers Enrique Iglesias who had returned from ecla and been appointed Uruguays foreign minister a year earlier was named secretary pro tem of the Cartegena Group on 5 October 1985 65 Brokered by former US Treasury Secretary James Baker whereby middleincome debtor countries could access World Bank and commercial bank lending in ex change for growthoriented structural reforms 66 Garcia del Solar interview with the author See also US Department of State Embassy Buenos Aires to US secreetary of state 3 November 1984 67 Prebisch to David Pollock 10 September 1984 68 Department of Commerce US Embassy to US secretary of state Raúl Prebisch Resigns as Presidential Advisor 14 May 1985 c ha p ter twent yone 1 Eliana Diaz de Prebisch interview with the author 5 July 1989 2 The Contadora Group comprising Mexico Venezuela Colombia and Panama was formed in September 1983 to contain conflicts in Nicaragua El Salvador and Guatemala 3 The Rio Group was formally created in 1986 on the invitation of Brazil 4 The Treaty of Asunción was signed in 1991 by Argentina Brazil Paraguay and Uruguay 5 Hobsbawm Age of Extremes The Short Twentieth Century 6 Raúl Prebisch Renovar el pensamiento económico latinoamericano 5379 Notes to pages 492500 Bibliography Prebischs professional life was divided between the Argentine public service where he worked until 1943 and senior United Nations appointments dating from 1949 until his death in 1986 Many records were lost in the political turbulence af fecting Argentina and important ecla registry files in Santiago covering the years 194870 were also destroyed without copies The resulting challenge of assembling documentation required detailed attention to archival sources private collections and interviews as well as books articles and other printed materials d o c u m e n t c o l l e c t i o n s International Organizations united nations secretariat archives new york and santiago The documents assembled by these archives in the following categories are fully referenced individually in the notes with enquiries to be directed to the UN UN General Assembly records desa Department of Economic and Social Affairs records ecla Economic Commission for Latin America and the Caribbean Group 1 Registry and Personnel files Group 2 Creation of ecla Group 3 ecla Sessions 194986 Group 4 ecla and desa Group 5 eclaoas Relations Group 6 Evolution of eclaUS Relations Group 7 ecla and Regional Integration 556 Bibliography Group 8 ecla and the Alliance for Progress Group 9 ecla and unctad Group 10 Prebisch Departure from ecla un ctad united nations conference on tr ade and development archives geneva Each document provided by the unctad Secretariat in the following categories is fully referenced in the notes Group 1 unctad I Preparatory Conferences Group 2 unctadgatt Relations Group 3 InterAgency Memoranda 196468 ilpes latin americ an institute for economic and social planning santiago The ilpes documentation begins in 1960 and each document used is fully refer enced in the notes The files fall into the following categories Group 1 Birth of ilpes Group 2 ilpes in the unctad Years Group 3 The Joint eclailpes Office Group 4 InterOffice Correspondence 196972 organization of americ an stat es Alliance for Progress Documents Consulted oea SERHX3 Doc 227 Interamerican Economic and Social Council Address of Raul Prebisch to the Second Session of the First Annual Meeting of Ministers Mexico 23 October 1962 oea SER HX3 Doc 239 Interamerican Economic and Social Council Review of the First Plenary Session of the First Annual Meeting of Ministers Mexico 23 October 1962 oeaSERGII Cd 451 Interamerican Economic and Social Council Minutes of the Regular Session Washington 9 October 1962 oeaSERGV Cd 1001 The Secretary Generals Note accompanying a Proposal to fill the Committee of Nine Vacancy with Ing Jorge Grieves Biographical Background Washington 20 June 1962 oeaSERLVIII1 Doc 1 Inauguration Ceremony of the oasidbecla Ad Hoc Trilateral Committee Washington 7 December 1940 oeaSERHX2 Doc 41 InterAmerican Economic and Social Council Statement of the General Secretariat of the Organization of American States with reference to coordination and secretariat functions Washington 7 December 1961 oeaSERHX2 Doc 40 Interamerican Economic and Social Council Proposal to Establish the Group of Experts Washington NovemberDecember 1961 Bibliography 557 oeaSERHX2 Doc 60 Interamerican Economic and Social Council Official Documents of the Extraordinary Meeting of Experts Washington 29 November 1961 oeaSERHXII2 InterAmerican Economic and Social Council Official Docu ments Emanating from the Special Meeting at the Expert Level Washington 29 November to 9 December 1961 oeaSERHX2 Doc 67 Dr Raul Prebisch Closing Address to the Group of Experts of the Interamerican Social and Economic Council Washington 9 De cember 1961 oeaSERHX1 ESREDoc 8 Statements of the Secretary General of the Organi zation of American States of the Executive Secretary of the United Nations Economic Commission for Latin America and of the President of the Inter American Development Bank regarding the Agenda of the Special Meeting 12 July 1961 7 p oeaSERHX1 ESREDoc 9 Prelininary List of Official Participants at Punta del Este Washington 14 August 1961 oeaSERHX1 ESREDoc27 Address by Jorge Sol Castellanos Executive Secretary of the Interamerican Economic and Social Council Washington 16 August 1961 International Financial Institutions imf international monetary fund archives wa shington Upon request the imf provided copies of interoffice letters and Prebisch corre spondence concerning imfecla relations 194863 Each document used is referenced fully in the notes For access to these files please contact the imf or author Group 1 imfecla Liaison 194856 Reports of Fund Missions to ecla Sessions and Office Memoranda on topics including postwar epuLatin America payments and Dr Prebischs Economic Report on Argentina 1955 Group 2 Prebisch the imf and the Latin American Common Market Inter office correspondence and office memoranda including the Latin American Common Market 195660 covering the period from eclas first Trade Committee meeting to the creation of the Latin America Free Trade Association world bank international bank for re constr uction and development wa shington dc As with the imf the World Bank provided its collection of documents concerning its relationship with ecla and unctad Each document specifically identified is referenced fully in the notes For access to these files please contact the World Bank Library 558 Bibliography Group 1 World Bankecla Liaison 194863 Topics include initial contacts and working relationships after 1958 joint activities and training programs before and after President Kennedys Alliance for Progress Group 2 World Bankunctad Liaison 196368 including World Bank collab oration in unctad particularly the issue of supplementary financing and ida replenishment the transition from George Woods to Robert McNamara and the calling of the Pearson Commission i b d in te rameric an deve lopment bank archive s Documents released in consultation with idb archivists by category with full indi vidual referencing in the notes and enquiries to be directed to the Bank Group 1 The Creation of the idb 195860 internal documents and correspon dence Group 2 Growth and Development Latin Americas Great Task 196870 Cor respondence and papers clarifying the initial contacts with Prebisch in 1968 through the completion and evaluation of the report National Archives un ited stat es national archives wa shington dc Department of State Record Group 59 Central Files Diplomatic Records Deci mal Files to 1963 3104 Communications with US Mission to the United Nations 3401 UN ecosoc Economic and Social Council 340210 ecla Economic Commission for Latin America and the Caribbean 361 oas Organization of American States 365 IA ecosoc InterAmerican Economic and Social Council 394 ito International Trade Organizaton 39441 gatt General Agreement on Tariffs and Trade 39813 imf International Monetary Fund 39814 ibrd Internation Bank for Reconstruction and Development or WorldBank 61120 Political Relations between Latin America and the United States 835 Internal Affairs of Argentina 83551 Financial Affairs of Argentina 835516 Banking in Argentina Security and Modern Military Branch Records of the Joint Chiefs of Staff Department of Justice Central Intelligence Agency and fbi Under US Freedom of Information Act Economic Series particularly the International Trade Administration ita for USArgentine Trade Policy and Negotiations 193943 Bibliography 559 US Treasury Freedom of Information Appeal foia denied Agency for International Development Department of Commerce Office of Multilateral Affairs Columbia University Butler Library Rare Book and Manuscript Collection argentina National Archives of Argentina Buenos Aires Central Bank of Argentina bca the Raul Prebisch Library Argentine National Congress Senate Debates selected years to 1985 La Nacion Buenos Aires Archives Torcuato di Tella University Oral History Project Private Collections p re bi s c h pap er s Besa García José F ed Dr Raúl Prebisch 190186 Archivo de Trabajo Santiago Chile eclac 2003 Also available at the InterAmerican Development Bank Washington DC and the University of Illinois Library Chicago This archive contains Adela Moll de Prebischs personal records on microfilm edited by Besa and is identified in the notes to this volume as Prebisch Papers It includes Reel 1 192044 folders 133 Personal and family correspondence from 1920 on wards documentary collections covering Prebisch official visits to Rio de Janeiro and Washington in 19401 key unpublished and previously unknown Prebisch manuscripts a complete file of Prebischs extensive newspaper work written for La Nacion during the 1930s documents on the evolution of the Argentine Cen tral Bank during the Great Depression and World War II Reel 2 194447 folders 3455 Prebischs correspondence with Robert Triffin Victor Urquidi Eugenio Gudin and other economists and associates in the years after 1944 Press clippings from the 1930s to 1950s Prebischs letters with key diplomats and officials in Argentina Washington London and Latin America be fore joining ecla in 1949 extensive manuscripts and notes and Prebischs work with the US Federal Reserve throughout Latin America from 1944 to 1947 Reel 3 194755 folders 5684 the early cepal years and Prebischs return to Argentina in 1955 Reel 4 195665 folders 85118 cepal and the first years of unctad Reels 57 196586 folders 11985 ilpes and the cepal Review Prebischs re turn to Argentina th e prebisch foundat ion in Buenos Aires also houses valuable archival materials with particular reference to Prebischs return to Argentina as advisor to President Raúl Alfonsín Eliana Prebischs succcessful initiative also produced 560 Bibliography Prebischs Collected Works Published in four volumes under the editorial direc tion of Gregorio Weinberg and Manuel Fernandez Lopez and guided by the Foundations publications committee headed by Enrique Garcia Vasquez the Obras 19191948 Buenos Aires Prebisch Foundation 1991 established the Foundation as an irreplaceable destination for Prebisch scholars krishnamurti pa pers Rangaswami Krishnamurti Some unctad Events and Reminiscences Geneva 30 April 1991 The Krishnamurti Papers deal primarily with the Prebisch era of unctad the early years from 1964 to his resignation in 196869 Their meticulous preparation together with Dr Krishnamurtis official position in Geneva within the unctad team make this private collection a valuable source for Prebisch scholars The documents are organized in two boxes and notes in the book from the Krishnamurti Papers include box references For access please contact the author Box 1 Krishnamurtis narrative in thirtytwo chapters of his unctad experience addressing key events and participants and the evolution of unctad from a con cept to permanent UN organization Special Topics include The unctad Secretariat Origins and Key Personalities NorthSouth Relations and the Group of 77 The unctadgatt Relationship Commodity Negotiations and the gsp Sydney Dell his Role in unctad Box 2 Annexes Internal memoranda and letters 196468 with eleven entries be tween 1970 and 1984 Listings include Note on Confidential Negotiations on the establishment of unctad convened by Dr Prebisch 314 June 1964 unctad InterOffice Memoranda 196668 Correspondence with the ecafe Economic Commission for Africa and the Far East Executive Secretary Correspondence concerning the Council of Europe 196667 Raul Prebisch Correspondence 196667 Letters and other papers on unctadgatt relations 196568 p oll ock pa pers David H Pollock eclacs Washington Office 195691 Ottawa 2001 The Pollock Papers comprise over 2500 internal documents and correspondence from the Washington Office of eclac between 1955 and 1980 personal letters and press clipping collections in English and Spanish and memoranda from special advisory assignments for Prebisch before and after unctad This im portant source material has been organized into the following boxes and all Bibliography 561 notes drawing on the Pollock Papers include box references For access to these papers please consult the author Box 1 eclac WashingtonSantiago Correspondence195560 Box 2 The Alliance for Progress Years 196063 Box 3 Prebisch and unctad 1964 Box 4 Prebisch in Washington 196872 Box 5 The UN Special Emergency Operation 197475 Box 6 eclac InterOffice Correspondence 197280 Box 7 Press Clippings Spanish and English Box 8 Other Correspondence Hans Singer Sidney Dell Wladek Malinowski Robert Muller R Krishnamurti Hernan and Alfonso Santa Cruz Anibal Pinto Maurice Strong Sidney Weintraub Osvaldo Sunkel etc i n t e rv i e w s major published interviews with prebisch Magariños de Mello Mateo J Diálogos con Raúl Prebisch Stockholm 8 Novem ber 1971 Published with same title Mexico Fondo de Cultura Económica 1991 Gonzalez del Solar Julio Conversaciones con Raúl Prebisch Buenos Aires 9 July 1983 Published as Un texto de Raúl Prebisch ed Carlos Mallorquín Revista Aportes Benemérita Universidad Autónoma de Puebla year V no 14 May August 2000 Pollock David Conversations with Raúl Prebisch Washington 2123 May 1985 Published by David Pollock Daniel Kerner and Joseph Love in three segments Aquellos Viejos Tiempos la formación teorica y practica de Raúl Prebisch en la Argentina Una entrevista con David Pollock Desarrollo Economico 41 no 164 Entrevista inédita a Prebisch logros y deficiencias de la cepal cepal Review 75 2001 924 Prebisch at unctad Raúl Prebisch Power Principle and the Ethics of Development ed Edgar J Dosman Washington and Buenos Aires idb intal 2006 3763 personal interviews All interviews were conducted by Edgar J Dosman andor David Pollock an asterisk indicates that an individual has been inter viewed several times beginning with the date listed Abakoumoff Alexis unctad Geneva 6 June 1989 Abramovic Dragoslav World Bank Washington 16 November 1991 Adebanjo MT unctad Geneva 6 June 1989 Agosin Manuel R unctad Geneva 7 June 1989 Alfonsin Raúl President of Argentina Washington 27 January 1992 Arendt Carmen Vera eclac Santiago 13 July 1989 Assael Hector eclac Santiago 8 March 1992 562 Bibliography Balboa Manuel eclac Santiago 8 March 1989 Bardeci Oscar ilpes Buenos Aires 7 July 1989 Bernstein Edward M imf Washington 28 November 1990 Bertholet Yves unctad Geneva 5 June 1989 Besa Garcia José eclac Santiago 8 July 1989 Brown Robert eclac Santiago 8 March 1992 Bunge Mario Prebisch Godson and McGill University Montreal 24 January 1992 Cardoso Fernando Henrique President of Brazil Belo Horizonte Brazil 21 May 2007 Casillas Luis A InterAmerican Development Bank Washington 8 March 1991 Cassorla Armando Organization of American States Washington 13 February 1992 Castro Neves Luis Augosto Brazil Diplomat Ottawa 13 June 1991 Cavallo Domingo Argentine Official Buenos Aires 10 May 1991 Cibotti Ricardo ilpes Buenos Aires 10 May 1990 Cohen Issac eclac Washington 22 January 1990 3 March 1991 Cordovez Diego UN and unctad Quito 8 May 1997 Cox Robert ilo and York University Toronto 18 March 1989 Dagum Camilo Economist Ottawa University 28 October 1987 De Seynes Philippe UN undersecretary New York 20 May 1991 Devlin Robert eclac and InterAmerican Development Bank Santiago 3 March 1991 Diaz de Prebisch Eliana Buenos Aires beginning 5 July 1989 Di Tella Guido Torcuato di Tella University Ottawa 17 May 1991 Domike Arthur United Nations and Esquel Group Foundation Washington 8 March 1991 Dorfman Adolfo eclac Buenos Aires 13 March 1992 Emmerij Louis I United Nations and InterAmerican Development Bank Washington 30 March 1995 Fajnzylber Fernando eclac Santiago 13 July 1989 Ferrer Aldo eclac and Argentine official Buenos Aires 14 March 1992 Fones Marjery eclac 15 July 1989 Furtado Celso eclac Rio de Janeiro 10 July 1989 Ganz Alexander eclac Boston 12 May 1998 Garcia Vasquez Enrique Argentine Official Buenos Aires 13 March 1992 Garcia del Solar Julio Argentine official Buenos Aires 18 March 1992 Garritsen de Vries Margaret imf Washington 8 March 1991 Gonzalez Norberto eclac Buenos Aires 5 March 1989 GonzalezCofino Roberto oas Washington 12 February 1992 Gonzalez del Solar Julio imf and Argentine Central Bank Buenos Aires 1 May 1982 Bibliography 563 Gordon Lincoln US State Department Washington 6 March 1991 Grinspun Bernardo Argentine minister of finance Buenos Aires 19 March 1992 Gulhati Ravi unctad Geneva 5 June 1989 Gurrieri Adolfo eclac Santiago 14 July 1989 Heuis Pieter eclac Santiago 18 July 1989 Hopenhayn Benjamin ilpes Buenos Aires 311 May 1990 Iglesias Enrique eclac executive secretary Washington 8 March 1990 Izcue Joaquin InterAmerican Development Bank Bethesda MD 16 December 1987 Jull Luci eclac Santiago 15 July 1989 Kamenetsky Mario and Sofia World Bank Washington 25 February 1987 Krishnamurti Rangaswami unctad Toronto 16 July 1996 Levinson Jerome Author and journalist Washington 5 March 1991 Lleras Restrepo Carlos President of Colombia Bogota 19 November 1991 Lopez Fernando Prebisch Foundation Buenos Aires 6 July 1989 Lowenthal William ilpes Washington 10 February 1992 Machinea José Luis Argentine official Washington 15 April 1993 Malaccorto Ernesto Prebisch Brains Trust Buenos Aires 11 May 1990 Meller Patricio Economist Santiago 9 March 1992 Moll de Prebisch Adela Santiago beginning 11 July 1989 Nypan Erling unctad Geneva 7 June 1989 Nun José ilpes professor Toronto and Buenos Aires and Argentine secretary of culture 16 March 1989 OConnell Arturo Economist consultant and Argentine official Mexico City 25 January 1987 Pezoa Lillian eclac Santiago 15 March 1990 Pinto Anibal eclac Santiago 12 July 1989 Polak Jacques J imf Washington 5 March 1991 Pollner Marco eclac Washington 15 November 1991 Portales Carlos Chilean diplomat Santiago 9 March 1992 Pulit Francisco Argentine diplomat Ottawa 25 November 1987 Puppo José Maria eclac Buenos Aires 4 July 1989 Robichek Walter imf Washington 22 April 1990 Rodriquez Octavio eclac Montevideo 10 December 1999 Rogers William D US State Department Washington 7 March 1991 Rosenthal Gert eclac Santiago 15 March 1990 Royem Bodil eclac Santiago 15 March 1990 Santa Cruz Alfonso eclac Santiago 18 March 1990 Scott Norman unctad Geneva 4 June 1989 Singer Hans UN and Institute for Development Studies Sussex Washington 15 November 1991 564 Bibliography Sourrouille Juan Argentine finance minister Buenos Aires 13 March 1992 Sternfeld Ray US State Department Washington 8 March 1991 Sunkel Osvaldo eclac Ottawa 2 April 1991 Tomassini Luciano eclac Washington 22 October 1991 Thomson Brian Washington 11 February 1992 Tulchin Joseph Woodrow Wilson Centre Washington 4 March 1991 Uribe Manuel Bank of Mexico and diplomat Toronto 21 April 2004 Urquidi Victor Economist and Bank of Mexico official imf and economist Mexico City 28 January 1995 Vaky Viron P US State Department and InterAmerican Dialogue Washington 17 March 2003 Valenzuela Carlos Chilean diplomat 6 July 1989 Viteri de la Huerta Jorge unctad and eclac Santiago 17 May 1990 Weinberg Gregorio Prebisch Foundation Buenos Aires 10 May 1990 Weintraub Sidney US State Department Toronto 4 November 2006 Zamit Cutajar Michael unctad Geneva 7 June 1989 p r e b i s c h p r i m a ry p u b l i c at i o n s Collections and Bibliographies Most of Prebischs important works have been published in the following collec tions and the location will be indicated in parentheses in the next section eclac Raúl Prebisch Un Aporte al estudio de su pensamiento Santiago eclac 1987 ecla Raúl Prebisch Discursos declaraciones y documentos 195263 Santiago ecla 1963 Gurrieri Adolfo ed La obra de Prebisch en la cepal Mexico City Fondo de Cultura Económica 1982 Mallorquín Carlos Raúl Prebisch The Complete Bibliography Mexico City 2007 Prebisch Foundation Raúl Prebisch Obras 19191948 ed Manuel Fernández López 4 vols Buenos Aires Prebisch Foundation 1991 Core Writings Prebisch Raúl Cuestión social Revista de Ciencias Económicas no 7982 January April 1920 Prebisch Foundation Obras vol 1 Comentarios sobre el libro de Irving Fischer Stabilizing the Dollar New York 1920 Revista de Economía Argentina 3 vol 5 no 2728 SeptemberOctober 1920 Prebisch Foundation Obras vol 1 La Conferencia financiera internacional de 1920 Revista de Economía Argentina 4 vol 7 no 37 July 1921 Prebisch Foundation Obras vol 1 Bibliography 565 Comentarios sobre el trabajo de Juan B Justo Estudios sobre la moneda ter cera edición Buenos Aires Revista de Ciencias Económicas series 2 year 9 no 1 August 1921 Prebisch Foundation Obras vol 1 Anotaciones sobre nuestro medio circulante A propósito del último libro del Dr Norberto Piñero caps IIX Revista de Ciencias Económicas series 2 year 9 no 34 67 910 October 1921May 1922 Prebisch Foundation Obras vol 1 Información estadística sobre el comercio de carnes Primera parte el mercado británico Buenos Aires Sociedad Rural Argentina Oficina de Estadística 1922 Prebisch Foundation Obras vol 1 Anotaciones sobre la crisis ganadera Revista de Ciencias Económicas series 2 year 10 no 17 December 1922 Prebisch Foundation Obras vol 1 La sociología de Vilifredo Pareto Speech given at the Faculty of Economic Sciences in honour of the memory of Vilfredo Pareto 2 October 1923 Revista de Ciencias Económicas Series 2 year 11 no 27 October 1923 Prebisch Founda tion Obras vol 1 El problema de la tierra Address given at the Henry George Club Melbourne April 1924 Prebisch Foundation Obras vol 1 Primer informe del Dr Raúl Prebisch sobre sus estudios financieros y estadísticos en Australia 14 de agosto de 1924 Revista de Economía Argentina year 7 vol 13 no 7576 SeptemberOctober 1924 Prebisch Foundation Obras vol 1 Anotaciones a la estadística nacional Revista de Economía Argentina year 8 vol 15 no 86 August 1925 Prebisch Foundation Obras vol 1 Anotaciones demográficas A propósito de la teoría de los movimientos de la población Parte I y II Revista de Economía Argentina year 910 vol 1819 no 105 and 106 MarchApril 1927 Prebisch Foundation Obras vol 1 De cómo discurre el profesor Olariaga Revista de Ciencias Económicas Series 2 year 15 no 75 October 1927 Prebisch Foundation Obras vol 1 Régimen de pool en el comercio de carnes informe técnico Revista de Ciencias económicas Series 2 year 15 no 77 December 1927 Prebisch Foundation Obras vol 1 Anuario de la Sociedad Rural Argentina Estadísticas económicas y agrarias 1928 Anu ario de la Sociedad Rural Argentina no 1 Buenos Aires Establecimiento Gráfi co Luis L Gotelli 1928 La posición de 1928 y las variaciones económicas de la última década Revista Económica 2 no 1 January 1929 Prebisch Foundation Obras vol 1 El Estado económico Revista Económica 3 no 13 JanuaryJune 1930 Prebisch Foundation Obras vol 1 Proyecto de Creación de un Banco Central 1931 In La creación del Banco Central y la experiencia Argentina Buenos Aires Banco Central de la República de Argentina 1972 Prebisch Foundation Obras vol 2 566 Bibliography La Acción de emergencia en el problema monetario Revista Económica 5 no 2 FebruaryMarch 1932 Prebisch Foundation Obras vol 2 La Conferencia Económica y la crisis mundial Revista Económica 6 no 1 Janu ary 1933 Prebisch Foundation Obras vol 2 El convenio con Gran Bretaña La Nación Buenos Aires 2 May 1933 Prebisch Foundation Obras vol 2 El momento presente de nuestra economía Revista Económica 7 no 14 Janu aryApril 1934 Prebisch Foundation Obras vol 2 La inflación escolástica y la moneda Argentina Revista de Economía Argentina Buenos Aires 1934 Prebisch Foundation Obras vol 2 Reglamento Provisional del Banco Central de la República Argentina Buenos Aires Banco Central de la República ArgentinaGotelli 1935 Prebisch Foundation Obras vol 2 Memoria Anual Primer a Octavo Ejercicios 19351942 Buenos Aires Banco Central de la República de ArgentinaGotelli 1942 Ciclo de conversaciones en el Banco de México SA ofrecidas por Raúl Prebi sch entre el 24 de enero y el 7 de marzo de 1944 Buenos Aires Banco Central de la República de Argentina 1972 Prebisch Foundation Obras vols 3 and 4 Panorama general de los problemas de regulación monetaria y crediticia en el continente americano América Latina and Responsabilidad de los países de la periferia palabras pronunciadas en la Mesa Redonda sobre Problemas Actu ales y Futuros y Reformas Monetarias y Bancarias Recientes Memoria de la Prim era Reunión de Técnicos sobre Problemas de Banca Central del Continente Americano Mexico City Banco de México 1530 August 1946 Prebisch Foundation Obras vol 4 Proyecto de Ley Organica del Banco Central de la Republica Dominicana Santa Do mingo 1946 Introducción a Keynes Mexico City and Buenos Aires Fondo de Cultura Económi ca 1947 Apuntes de Económica Politica Buenos Aires Faculty of Economic Sciences 1948 The Economic Development of Latin America and its Principal Problems New York United Nations 1950 Gurrieri cepal Decálogo económico de Montevideo Revista de economía Argentina year 33 vol 48 no 386387 AugustSeptember 1950 Growth Disequilibrium and Disparities Interpretation of the Process of Eco nomic Development New York United Nations 1951 Theoretical and Practical Problems of Economic Growth Mexico City ecla May 1951 ECN12221 Gurrieri cepal La cepal y el desarrollo económico Revista de Economía Mexico City June 1951 Bibliography 567 Notas sobre el desarrollo económico la inflación y la política monetaria y fis cal Memoria de la Tercera Reunión de Técnicos de los Bancos Centrales del Continente Americano 37793 Havana Banco Nacional de Cuba 1952 El programa de integración Informe preliminar del Director principal a cargo de la Secretaría ejecutiva de la cepal sobre Integración y reciprocidad económica en el Istmo Centroamericano el 1 de agosto de 1952 Revista de la Integración Centroamericana no 6 1952 Introduction to the Technique of Programming and Preliminary Study of the Technique of Programming Economic Development New York United Nations 1955 ECN12 292 and ECN12363 Gurrieri cepal A mística do equilibrio espontáneo da economia Santiago 9 September 1953 ecla Discursos International Cooperation in a Latin American Development Policy New York United Nations 1954 Gurrieri cepal The Stimulus of Demand Investment and Acceleration of the Rate of Growth ecla Economic Survey of Latin America 1954 New York United Nations 1955 The Relationship between population growth capital formation and employment opportunities in underdeveloped countries Proceedings of the World Population Con ference Rome 1954 vol 5 695711 New York United Nations 1955 The Prebisch Report Review of the River Plate Buenos Aires 118 nos 3235 and 3236 October and November 1955 ecla Discursos Comentario del informe económicofinanciero del Dr Raúl Prebisch Boletín de la Bolsa de Comercio de Buenos Aires 51 no 2642 26 December 1955 Economic Recovery Program and Final Report Sound Money or Uncontrolled Inflation Review of the River Plate 20 June 1956 Theory and Practice in Economic Development the Case of Argentina Panorama Económico Santiago 10 no 147 June 1956 ecla Discursos Principales tendencias del desarrollo económico en Latinoamérica Panorama Económico 10 no 148 June 1956 Soviet challenge to American leadership Americas role in helping developing countries Problems of United States Economic Development vol 1 New York Com mittee for Economic Development 1958 ecla Discursos Commercial Policy in the Underdeveloped Countries from the point of view of Latin America American Economic Review 3 1959 Gurrieri cepal La crisis estructural de la economía argentina y la orientación de sus solu ciones cepal Desarrollo económico de la Argentina Mexico City United Nations 1959 ECN12429Rev 1 ecla Discursos The Latin American Common Market and the Multilateral Payments System ecla The Latin American Common Market New York United Nations 1959 ecla Discursos Gurrieri cepal vol 1 568 Bibliography El Mercado Comun Latinoamericano Montevideo Academia Nacional de Economia del Uruguay 1960 The Structural Crisis in Argentina and its Prospects of Solution Economic Growth Rationale Problems Cases ed Eastin Nelson Austin University of Texas Press 1960 10424 ecla Discursos Panoramas y perspectivas de la industria siderúrgica en América Latina Comer cio Exterior Mexico City 10 no 1 January 1960 Economic Development or Monetary Stability The False Dilemma Economic Bulletin for Latin America Santiago 6 March 1961 Latin America the Challenge and the Task Ahead Office of Public Informa tion The United Nations and Latin America New York United Nations 1961 El principio de la reciprocidad Revista de Ciencias Económicas São Paulo June 1960 Vamos a tener más recursos exteriores en América Latina pero estamos pre parados para aprovecharlos al máximo United Nations Review New York Octo ber 1960 cepal y sus tres principales problemas Mercado Común América Latina Monte video 2 no 11 February 1961 La Marcha hacia el Mercado Común Latinoamericano Santiago ilpes 1961 Economic Development Planning and International Cooperation Santiago ecla 1961 Gurrieri cepal Memorándum presentado al presidente John F Kennedy en marzo de 1961 Washington 8 March 1961 Los obstáculos estructurales y la necesaria revisión de la política de desarrollo y de cooperación internacional Comercio Exterior Mexico City 11 no 5 May 1961 The Alliance for Progress Joint Responsibilities for Latin American Progress Foreign Affairs July 1961 Una política de estabilidad monetaria compatible con el desarrollo económico Economía y Finanzas Santiago Year 25 no 300 October 1961 Reflexiones sobre la integración latinoamericana Comercio Exterior Mexico City 11 no 11 November 1961 Towards a Dynamic Development Policy for Latin America New York United Nations 1963 ECN12680 Gurrieri cepal vol 2 Planning of Economic Growth in Latin America Review of the River Plate Buenos Aires 11 June 1963 Towards a New Trade Policy for Development Report by the SecretaryGeneral of the United Nations Conference on Trade and Development New York unctad 1964 Gurrieri cepal vol 2 Hacia la integración acelerada de América Latina Proposiciones a los Presidentes lati noamericanos Document prepared at the personal request of José Antonio Bibliography 569 Mayobre Felipe Herrera and Carlos Sanz de Santamaría Mexico City Fondo de Cultura Económica 1965 Economic Problems of Developing Countries the Structural Reforms Needed to Solve Them Commerce Annual Geneva unctad 1966 The Impact of Technological Progress on developing countries Gustav Pollak Lecture the John Fitzgerald Kennedy School of Government Harvard Univer sity 17 October 1966 Toward a Global Strategy of Development Report of the SecretaryGeneral of the United Nations Conference on Trade and Development at the second session of the Conference New York United Nations 1968 TD3Rev 1 Gurrieri cepal vol 2 Reflections on International Cooperation for Latin American Development Document prepared the personal request of Messrs Galo Plaza Felipe Herrera Carlos Sanz de Santamaría and Patricio Rojas Washington 1969 The System and the Social Structure of Latin America Latin American National ist Movements eds Irving Louis Horowitz et al New York Random House 1969 Change and Development Latin Americas Great Task Report Submitted to the Inter American Development Bank New York Praeger 1971 Gurrieri cepal Latin America a Problem in Development Hackett Memorial Lecture Institute of Latin American Studies University of Texas Austin 5 April 1971 Desarrollo económico planeamiento y cooperación internacional Serie Con memorativa del XXV Aniversario de la cepal Santiago eclac 1973 Gurrieri cepal A Critique of Peripheral Capitalism cepal Review 1 1976 Gurrieri cepal Desarrollo y política comercial internacional Pensamiento Político Mexico City 22 no 88 August 1976 unctad and the New International Economic Order Address by Raúl Prebisch on re ceiving the Dag Hammarskjöld Honorary Medal Berlin 1978 The New International Order and Cultural Values Madrid Institute of International Cooperation 1978 Socioeconomic Structure and Crisis of Peripheral Capitalism cepal Review 6 1978 The Neoclassical Theories of Economic Liberalism cepal Review 7 1979 Towards a Theory of Change cepal Review 10 1980 Biosphere and Development cepal Review 12 1980 Capitalismo periférico crisis y transformación Mexico City Fondo de Cultura Económica 1981 The Latin America Periphery in the Global System of Capitalism cepal Review 13 1981 Dialogue on Friedman and Hayek from the Standpoint of the Periphery cepal Review 15 1981 570 Bibliography Capitalism The Second Crisis Report of the Third World Prize Presentation Ceremony 2 April 1981 Third World Quarterly 3 no 3 July 1981 Monetarism OpenEconomy Policies and the Ideological Crisis cepal Review 17 1982 A Historical Turning Point for the Latin American Periphery cepal Review 18 1982 Crisis in Peripheral Capitalism Increasing Inequality in Latin America Distinguished Lecture Series Madison University of Wisconsin 1983 The Crisis of Capitalism and International Trade cepal Review 20 1983 Hacia la recuperación económica y la equidad social Estudios Internacionales Santiago year 16 no 64 OctoberDecember 1983 Lineamientos de un programa inmediato de reactivación de la economía majora del empleo y los salaries reales y ataque al obstáculo de la inflación Santiago cepal 1984 The Global Crisis of Capitalism and Its Theoretical Background cepal Review 22 1984 Five Stages in My Thinking on Development Pioneers in Development eds GM Meier and Dudley Seers New York Oxford University Press 1984 The Latin American Periphery in the Global Crisis of Capitalism cepal Review 26 1985 Crisis del desarrollo argentino de la frustración al crecimiento vigoroso El Ateneo Buenos Aires 1986 Renovar el pensamiento económico latinoamericano un imperativo Comercio Exterior Mexico City 36 no 6 June 1986 b o o k s a rt i c l e s a n d o t h e r s o u r c e s s e l e c t e d Abós Alvaro ed El libro de Buenos Aires cronicas de cinco siglos Buenos Aires Montadori 2000 Abreu Marcelo De Paiva Foreign Debt Policies in South America 19291945 Brazilian Journal of Political Economy 20 no 3 79 JulySeptember 2000 Adelman Jeremy ed Essays in Argentine Labour History 18701930 Basingstoke Macmillan 1992 Alemann Roberto T El pensamiento económico de Prebisch Selección Contable Buenos Aires April 1956 Alexander Robert J Juan Domingo Perón A History Boulder CO Westview Press 1979 Alhedeff Peter The Economic Formulas of the 1930s A Reassessment Oxford St Anthonys College July 1981 Baer Werner The Economics of Prebisch and ecla Economic Development and Cultural Change X January 1962 Bibliography 571 Bailey Samuel L Immigrants in the Land of Promise Italians in Buenos Aires and New York Ithaca NY Cornell University Press 1989 Baldinelli Elvio Comercio exterior Argentino en el ultimo medio siglo Buenos Aires isen Instituto del Servicio Exterior de la Nacion 1996 Ball George The Past Has Another Pattern New York Norton 1982 Barber William J Chile con Chicago A Review Essay Journal of Economic Literature 33 December 1995 1946 Barone Enrico Studi di economia financiaria Giornale degli Economista II Journal of Economics 1912 Bejarano Manuel Inmigración y estructuras tradicionales en Buenos Aires 18541930 Los fragmentos del poder eds Torcuato S Di Tella and Tulio Halperin Donghi Buenos Aires Editorial Jorge Alvarez 1969 Belassa Bela Regional Integration and Trade Liberalization in Latin America Journal of Common Market Studies September 1971 Bello 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Theory in the usa International Organization 321 1978 and Enzo Faletto Dependency and Development in Latin America Berkeley Univer sity of California Press 1979 Chenery Hollis The Structuralist Approach to Development Policy American Eco nomic Review May 1975 Collier Ruth Berins and David Collier Shaping the Political Arena Critical Junctures the Labor Movement and Regime Dynamics in Latin America Princeton Princeton University Press 1991 Cordovez Diego The Making of unctad Institutional Background and legisla tive history Journal of Trade Law 1 MayJune 1967 unctad and Development Diplomacy Journal of Trade Law 1971 572 Bibliography Corea Gamani unctad and the New Internacional Economic Order Interna tional Affaire 53 1977 Cornejo Benjamín The Social Doctrine in Prebischs Thought Internacional Eco nomics and Development Essays in Honor of Raúl Prebisch ed Luis Di Marco New York Academia Press 1972 Cortés Conde Roberto Raúl Prebich Los años de gobierno cepal Review 75 2001 and Ezequiel 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Perón Argentina in Depression and War 193045 Berkeley University of California Press 1975 Felix David Monetarists Structuralists and Import Substituting Industrialization Inflation and Growth in Latin America eds Baer and Kerstenetzky New York Richard D Irwin 1964 Ferguson Yale H ecla and the Alliance for Progress Washington State Depart ment 1962 ecla Latin American Development and the United States A Broad View Unpublished manuscript Columbia University Fall 1962 Fishlow Albert Rich and Poor Nations in the World Economy New York McGraw Hill 1978 Fordor Jorge and Arturo OConnell La Argentina y la economia Atlántica en la primera mitad del siglo XX Desarrollo económico Buenos Aires 13 no 49 AprilJune 1973 Frankenhoff Charles The Prebisch Thesis A Theory of Industrialism for Latin America Journal of InterAmerican Studies 4 April 1962 Fredeberg AS The unctad of 1964 Rotterdam University Press 1969 Furtado Celso Economic Development in Latin America Cambridge Cambridge University Press 1970 A fantasia organizada Rio de Janeiro Editora Paz e Terra 1985 Os Ares do Mundo Rio de Janeiro Paz e Terra 1991 Fajnzylber Fernando Comentario sobre el articulo de Raúl Prebisch Hacia una teoría de la transformacion Revista de la cepal 11 1980 574 Bibliography GarciaHeras Raúl World War II and the Frustrated Nationalization of the Argen tine BritishOwned Railways 19391943 Journal of Latin American Studies 17 May 1985 Gibson Edward L Class and Conservative Parties Argentina in Comparative Perspectiva Baltimore Johns Hopkins University Press 1996 González Norberto Las ideas motrices de tres procesos de industrialización cepal Review 75 2001 González Fraga La Vision del Hombre y del Mundo en John M Keynes y en Raul Prebisch Documentos de Trabajo Pontificia Universidad Católica Argentina Buenos Aires March 2006 González N and David Pollock Del ortodoxo al conservador ilustrado Raúl Prebisch en la Argentina 19231943 Desarrollo Económico Buenos Aires 30 no 120 1991 Gordon Lincoln 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New York Praeger 1988 Scobie James R Argentina A City and a Nation New York Oxford University Press 1971 Buenos Aires From Plaza to Suburb 18701910 New York Oxford University Press 1974 580 Bibliography Seers Dudley Why Visiting Economists Fail The Journal of Political Economy 70 August 1962 What Are We Trying to Measure Journal of Development Studies August 1972 Shaw John D Sir Hans Singer The Life and Work of a Development Economist Basing stoke Palgrave Macmillan 2002 Sikkink Kathryn Ideas and Institutions Developmentalism in Brazil and Argentina Ithaca NY Cornell University Press 1991 The Influence of Raúl Prebisch on Economic Policy Making in Argentina 19501962 Latin American Research Review 23 no 2 1988 Singer Hans Comments on Raúl Prebisch The Continuing Quest The Legacy of Raúl Prebisch ed Enrique V Iglesias Washington InterAmerican Development Bank 1994 The Distribution of Gains between Investing and Borrowing Countries Ameri can Economic Review May 1950 The Terms of Trade Controversy and the Evolution of Soft Financing Early Years in the UN Pioneers in Development eds GM Meier and Dudley Seers New York Oxford University Press 1984 Smith Peter H Argentina and the Failure of Democracy Conflict among the Political Elites 19041955 Madison WI University of Wisconsin Press 1974 Smith William C Authoritarianism and the Crisis of the Argentine Political Economy Stanford Stanford University Press 1991 Solís L Raúl Prebisch at ecla Years of Creative Intellectual Effort Occasional Paper no 10 San Francisco International Centre for Economic Growth 1989 Spraos J The Statistical Debate on the Net Barter Terms of Trade between Pri mary Commodities and Manufactures Economic Journal 90 no 357 1980 Sprout R The Ideas of Prebisch cepal Review 46 1992 Tanzi V and K Chu Fiscal Policy for Stable and Equitable Growth in Latin America imf working paper no 1 93 Washington DC International Monetary Fund 1989 Teichman Judith Interest Conflict and Entrepreneurial Support for Perón Latin American Research Review 16 no 1 1981 Streeten Paul Development Ideas in Historical Perspective Regional Development Digest 1 1980 Sunkel Osvaldo National Development Policy and External Dependence in Latin America Journal of Development Studies October 1969 Big Business and Dependencies A Latin American View Foreign Affairs 1972 Thorp Rosemary Progress Poverty and Exclusion An Economic History of Latin Amer ica in the 20th Century Washington Johns Hopkins University Press and idb 1998 Tinbergen Jan Reshaping the International Order A Report to the Club of Rome New York Dutton 1976 Bibliography 581 Toye John and Richard Toye From New Era to NeoLiberal era US Strategy on Trade Finance and Development in the United Nations 196482 Forum for De velopment Studies 1 5 June 15455 The Origins and Interpretation of the PrebischSinger Thesis Journal of Politi cal Economy 35 2003 Political Economy for a Divided World Trade Finance and Development Bloomington Indiana University Press 2004 Raúl Prebisch and the Limits of Industrialization Raúl Prebisch Power Principle and the Ethics of Development ed Edgar J Dosman Washington and Buenos Aires idbintal 2006 The UN and Global Political Economy Trade Finance and Development Bloomington Indiana University Press 2004 Triffin Robert Central Banking and Monetary Management in Latin America Washington US Federal Reserve 4 March 1944 The World Money Maze Nacional Currencies in International Payments New Haven and London Yale University Press 1966 United Nations Relative Prices of Exports and Imports of UnderDeveloped Countries Lake Success New York Department of Economic and Social Affairs 1949 Urquidi Victor L The Challenge of Development in Latin America Praeger 1962 The Montevideo Treaty A Comment on Mr Sumbergs Views InterAmerican Economic Affairs 14 no 1 September 1960 United States Department of State Foreign Relations of the United Status 193945 2 vols Millwood New York Kraus International Publications 1980 Uribe Armando The Black Book of American Intervention in Chile Boston Beacon Press 1975 Valdez Juan Gabriel Pinochets Economists The Chicago School in Chile Cambridge Cambridge University Press 1995 Villanueva Javier El origen de la industrialización argentina Desarrollo Económico 12 OctoberDecember 1972 Viner Jacob International Trade and Economic Development Glencoe IL Free Press 1952 International Trade and Economic Development Lectures Delivered at the National Uni versity of Brazil Oxford Clarendon Press 1953 Some Reflections on the Concept of Disguised Unemployment Leading Issues in Development Economics ed Gerald Meier Oxford Oxford University Press 1964 Walter Richard J Politics and Growth in Buenos Aires 19101942 Cambridge Cam bridge University Press 1993 The Socialist Party of Argentina 18901930 Austin University of Texas at Austin 1977 Walters Robert S International Organizations and Political Communication The Use of unctad by Less Developed Countries International Organization 24 no 4 1971 582 Bibliography Weiss Thomas G International Bureaucracy An Analysis of the Operation of Functional and Global International Secretariats Lexington Books 1975 Multilateral Development Diplomacy in unctad London Macmillan 1986 Whigham Thomas L and Barbara Potthast The Paraguayan Rosette Stone New Insights into the Demographics of the Paraguayan War 186470 Latin American Research Review 341 1999 Williams John H Argentine International Trade under a Nonconvertible Exchange Re gime Cambridge MA Harvard University Press 1920 Wionczek Miguel The Latin American Free Trade Association International Con ciliation January 1965 Index AbdelGhani AH 389 Absolute Imperative New Economic Thinking in Latin America 500 Acheson Dean 2578 265 Act of Bogotá 356 359 Ahumada Jorge 27980 333 355 Alende Oscar 310 Alemann Max 36 623 70 76 101 173 Alfonsín Raúl 4912 Alfonsín Government Argentina 4917 Algiers Charter 427 Ali Amjad 4078 Allende Hortensia 4645 Allende Salvador 447 4578 4648 and Prebisch 468 Alliance for Progress 350 35760 366 369 396 533n2 waning US support for 36971 539n40 See also Kennedy administration oas Panel of Experts Punta del Este Conference Altgelt Oswaldo 175 Alvear Marcelo T 41 65 74 1612 Anaya Elbio 165 Aramburu Pedro Eugenio 3067 4556 Aramburu Government Argentina 3067 31013 317 319 See also Plan for Economic Restoration Sound Money or Uncontrolled Inflation Aranha Osvaldo 1257 133 140 147 Argentina and Brazil 14650 222 499 economic relations with Britain 256 45 72 82 11820 129 159 60 See also RocaRunciman Treaty economic relations with Brazil 125 7 economic relations with the US 56 11925 12830 1336 141 149 155 157 economy 18961914 1112 26 economy during the Great Depression 70 967 economy during World War II 11721 136 15961 economy just before World War II 109 114 economy under Aramburu 31213 economy under Frondizi 367 economy under Perón 21317 Exchange Control Commis sion 72 FalklandsMalvinas War 48990 history 1516 and the imf 22930 317 4945 Independent Socialist Party 67 Industrial Credit Fund 170 the meatpacking industry 447 589 1027 military coup of 584 Index 1930 68 military coup of 1943 163 5 and Nazi Germany 11112 135 1378 152 the Nazi menace 149 55 neutrality during World War II 1459 politics in the 1970s 489 re turn of democracy in 1983 490 the Uriburu Government 71 and the US 1478 155 169 1745 196 203 206 World War II diplomacy 13940 See also Alfonsin Govern ment Marcelo T Alvear Aramburu Government Argentine Central Bank Argentine Export Promotion Corporation capi Argentine Industrial Union uia Argentine Rural Society sra Argentine So cialist Party ArgentineUS Trade Agreement 1941 Buenos Aires Ramon S Castillo the Concordancia Fabricaciónes Militares Farrell Gov ernment Arturo Frondizi General Confederation of Workers cgt Group of United Officers gou Institute for Production and Trade iapi Lonardi Government Na tional Bank of Argentina bna National Statistical Office Roberto Ortiz Radical Party Ramirez Government Argentine Central Bank 95 105 109 124 1312 199 2056 and the Farrell Government 2056 and the military coup of 1943 163165 op position to 137 152 1656 and Perón 210 217 and proNazi groups in Argentina 1378 and the Ramirez Government 168 1704 structure 979 and the US Federal Reserve 1312 186 and World War II 11721 1445 1524 157 159 See also Argentine Export Promotion Corporation Consignee Control Pinedo Plan Resolution V of the Rio Declaration Argentine Export Promotion Corpora tion capi 12930 135 149 159 186 513n16 Argentine Industrial Union uia 26 44 111 See also Luis Colombo Argentine Rural Society sra 435 47 579 203 Argentine Socialist Party 234 335 67 74 93 ArgentineUS Trade Agreement 1941 1401 Armour Norman 122 137 1512 156 175 Balbin Ricardo 306 Balboa Manuel 212 Baldwin Gerald 248 Ball George 394 at unctad I 400 Bank of Mexico 1856 1902 211 21415 220 Bardeci Oscar 449 Barone Enrico 28 40 Barrientos René 440 Batista Fulgencia 285 351 Bay of Pigs invasion 353 360 Bell Daniel W 128 Berger René 72 96 108 11314 Berle Adolph 132 175 357 515n18 Bernstein EM 230 234 Berthaud Paul 389 Blanco Eugenio 307 Bohan Merwin 153 1589 175 and ecla 2701 278 and economic warfare against Argentina 157 Bolivia 127 Bosch Ernesto 44 47 60 69 75 99 100 107 152 1723 1867 205 Boti Regino 255 3512 Index 585 Botto Carlos 65 Boyle Sir Edward 437 Braden Sproule 203 206 Brazil and Argentina 14650 222 499 Castelo Branco military govern ment and US mncs 413 and ecla 262 271 2804 3256 41114 eco nomic relations with Argentina 125 7 and gatt 422 opposition of Castelo Brancos military government to ilpes funding 41113 and unctad 412 540n49 and the US 281 287 536n52 See also João Goulart Juschelino Kubitchek BrazilArgentine Economic Conference 1940 1267 BrazilUS Joint Commission 281 287 Brebbia Carlos 83 85 108 11316 121 141 Argentine loan negotia tions in Holland 115 Bretton Woods Conference 190 196 Britain See Great Britain Broide Julio 36 64 Buenos Aires 78 24 96 history 1516 Bulhões Otavio 126 222 234 Bunge Alejandro 26 30 54 80 163 Bunge Augusto 24 32 51 94 1656 and Adelita 767 and the Argentine coup of 1930 678 73 break with Prebisch 945 gatherings at his home 345 63 67 influence on Prebisch 345 40 Bunge Cesar 303 Bunge Mario 35 63 94 166 Buron Robert 246 Bushnell John 482 Bustillo José Maria 169 196 206 Cairo Conference on the Problems of Economic Development 1962 379 3812 Campos Roberto 282 332 and ilpes 41214 and the Pearson Commis sion 437 Caputo Dante 496 Carcano Miguel Angel 83 Cardoso Fernando Henrique 547n11 and ilpes 41213 448 mncs and Latin American development 413 Carter Jimmy 273 and Prebisch 478 Carter administration 4734 4789 4823 552n16 Cassel Gustav 80 Castillo Eugenio 229 239 242 255 275 Castillo Ramon S 1224 133 135 139 144 146 148 1501 155 163 Castro Fidel 351 353 3556 Caustin Harold 237 253 cecla See ecla Special Coordinating Committee of Latin America Central Intelligence Agency cia involvement in overthrow of Arbenz 290 centre and periphery See Prebisch centre and periphery Centre for Economic Projections celade 346 cepal See ecla Chamberlain Neville 86 Change and Development Latin Americas Great Task 4506 terms of reference 4502 Chicago School and Chile under Pinochet 4645 Chile 1478 in the Allende period 4578 military coup of September 1973 4645 and the oas Panel of Experts 3689 sponsorship of UN resolution for creation of ecla 236 ciap See InterAmerican Committee for the Alliance for Progress 586 Index Ciboti Ricardo 303 classical economic theory See Prebisch and classical economic theory Cochran Merle 336 Cohen Benjamin 194 2289 Cold War 215 2345 2579 2679 278 28490 33840 3523 3767 See also détente Colombo Luis 912 102 136 169 186 196 203 207 Concordancia Argentina 74 See also Aramburu Government Ramon S Castillo Agustin P Justo Lonardi Government Roberto Ortiz Conference of InterAmerican Foreign Ministers 1942 1459 Prebischs role 145 148 US reaction to the outcome 149 See also Resolution V of the Rio Declaration 1942 Consensus of Viña del Mar 446 Consignee Control 154 1569 169 Contadora Group 554n2 Cordovez Diego 390 Cornejo Julio 9 21 Cosío Villegas Daniel 191 193 195 214 238 517n5 Croire Francisco 142 151 23940 242 Cuba Revolution of 1959 3513 rela tions with the ussr 3523 See also Bay of Pigs invasion Cuban Missile Crisis Eisenhower administration Kennedy administration Cuban Missile Crisis 376 and USLatin American relations 3757 See also Kennedy administration de Estrada Tomas 65 de la Torre Lisandro 24 33 59 67 71 74 1027 510n32 attack on Prebisch 106 de Seynes Philippe 246 270 295 330 336 348 372 and Prebisch 417 and preparations for unctad 386 3889 and Raúl Jr 410 support for unctad and unctad II and unctads relationship with desa de Silveira Azeredo 422 4334 de Tomaso Antonio 24 34 67 74 88 del Canto Jorge 215 3434 Dell Sidney 3889 392 415 Department of Economic and Social Affairs UN desa turf war with unctad 386 4056 41415 541n7 détente 3912 Diaz Alejandro Carlos 459 Diaz de Prebisch Eliana 366 41011 439 443 Dillon Douglas 337 33941 356 371 396 and the oecd 381 and the Pearson Commission 437 Dorfman Adolfo 288 309 31516 Dreier John C 258 Duhau Luis 5561 73 88 90 93 95 6 1037 Dulles John Foster 286 31516 329 3389 525n34 528n15 Echavarria José Medina 481 Eckenstein Christopher 389 Eckhard June 232 ecla First Session Santiago 1948 2378 ecla Second Session Havana 1949 2469 Economic Survey of Latin Amer ica 23840 2467 importance of 2401 See also The Economic Develop ment of Latin America and its Principal Problems ecla Third Session Montevideo 1950 2602 Economic Decalogue 2634 Economic Survey 2567 2623 Index 587 ecla Fourth Session Mexico City 1951 26972 See also Theoretical and Practical Problems of Economic Growth ecla Sixth Session Bogotá 1955 2956 324 Trade Committee 325 ecla Seventh Session La Paz 1957 323 32930 ecla Eighth Session Panama City 1959 335 343 352 the ecla Thesis 269 2734 ecla Trade Conference 1956 See ecla and regional integration Economic Commission for Africa eca 4045 Economic Commission for Africa and the Far East ecafe 265 289 4045 Economic Commission for Europe ece 265 289 Economic Commission for Latin Amer ica ecla the cepal Review 475 and Chilean politics 447 4578 464 and the Cuban Revolution 351 3545 and desa 239 28990 and ecosoc UN 25189 and the fbi 287 and iaecosoc 25460 and the idb See Tripartite Commission and the imf 329 lack of support in Latin America 324 mandate 238 and Mexico 3312 and new ideas 3313 and the oas See Tripartite Commission origin 2367 position of strength in the UN 2889 and the Punta del Este Charter 362 and re gional integration 3256 32830 See also Latin American common market and Santiago 250 Special Coordinating Committee of Latin America cecla 446 540n49 546n5 546n6 staffing 2667 2789 288 training program for economists 27980 and unctad I 4045 540n49 Washington and Mexico City offices 254 See also Quintandinha Conference Truman administration and ecla The Economic Development of Latin America and Its Principal Problems 2435 248 9 251 reactions of economists 248 Economic Journal Revista Económica 63 4 66 75 Economic Recovery Plan 1933 Argentina 903 96 ecosoc UN Economic and Social Committee and the origin of unctad 382 and the structure of unctad 4056 Eisenhower Dwight D See Eisenhower administration Eisenhower Milton 286 339 Eisenhower administration 2856 33740 351 355 534n17 Commit tee of 21 3556 and Cuba 3523 and Prebisch 33941 See also Act of Bogotá Latin American common market project Espil Felipe 129 ExportImport Bank US 287 309 525n30 Fabricaciónes Militares FM Argen tina 16980 Faculty of Economic Sciences uba 256 Faleto Enzo 448 A Fantasia Organizada 242 See also Celso Furtado Farrell Edelmiro Julian See Farrell Gov ernment Farrell Government Argentina 196 203 2057 210 588 Index Father Mendivel 166 Fernandez Anibal 85 Ferrer Aldo 212 303 4901 Fischer Irving 39 Fondo de Cultura Económica Mexico 214 235 Ford administration 478 Ford Foundation 45960 Frank Isaiah 3401 396 Frankel Enrique 212 297 Fraser Malcolm 48 54 Frei Eduardo 292 447 466 Friedman Irving 421 434 543n25 552n38 Frondizi Arturo 338 344 361 3645 367 369 532n62 535n30 535n33 and ilpes 374 and the Plan Prebi sch 313 532n63 Furtado Celso 255 27980 528n19 528n21 disagreements with Prebi sch 315 322 3302 and ilpes 374 41213 and isi 331 resignation from ecla 330 G77 Group of 77 391 393 483 crit icism of Prebisch 4089 425 and gatt 423 and unctad I 4049 418 See also Towards a New Trade Policy for Development Gagneux Edmundo G 64 96 101 108 205 Gandhi Indira 427 Ganz Alex 2667 309 31516 332 Garcia Alizon 307 Garcia Teodoro 21 Garcia Vasquez Enrique 4923 Gardner Richard at unctad I 4068 gatt General Agreement on Trade and Tariffs attempts to undermine unctad 4213 creation of 37980 and developing countries 3801 influence of unctad I on 421 Kennedy Round 421 423 and Latin American common market project 343 See also Eric WyndhamWhite General Confederation of Workers cgt Argentina 3067 Generalized System of Preferences gsp 4267 4356 GeorgesPicot Guillaume 289 324 Gerest Abraham 64 70 101 Getulio Vargas Foundation 222 Global Strategy for Development 42830 438 544n46 Gomez Rodrigo 18891 254 334 Gonzalez Enrique 168 Gonzalez Norberto 212 303 Gonzalez del Solar Julio 142 149 195 210 212 491 Good neighbor policy 11920 12732 285 Goodwin Richard 358 361 371 Gordon Lincoln 357 359 396 Goulart João 376 536n52 Great Britain 89 and Argentina 256 45 72 82 11820 129 15960 See also Imperial Economic Conference RocaRunciman Treaty The Great Depression 7980 Grinspun Bernardo 4927 Group of United Officers gou Argentina 139 Grumbach Eduardo 128 Guani Alberto 127 Guatemala military coup of 1954 2901 Gudin Eugenio 126 2214 234 283 and public vs private sector roles 283 Guevara Ernesto Che 354 361 440 535n25 at unctad I 401 Guido José Maria 369 Gurrieri Adolfo 475 Index 589 Guth Wilfried 437 Gutt Camille 2302 Haberler Gottfried190 219 223 248 Halle Louis B Jr 258 Hammarskjold Dag 345 347 Hanson Simon G 237 The Havana Manifesto See The Economic Development of Latin America and its Principal Problems Heath Edward at unctad I 402 408 Helms Richard 466 Herrera Felipe 349 358 372 440 445 452 530n50 547n15 553n51 Hitler Adolf 113 Hoffman Paul G 372 and ilpes 3479 536n42 support for unctad 4234 Holland Henry 286 309 Hoover J Edgar 1512 155 517n14 Hopenhayn Benjamin 367 372 447 Hueyo Alberto 745 88 90 Hueyo Ernesto 85 Hull Cordell 86 128 130 1334 147 169 antiArgentine crusade 149 and Prebisch 1567 Humphrey George 2867 294 337 Iglesias Enrique 450 469 479 and the cepal Review 475 secretary general of ecla 462 Illia Arturo 401 489 ilpes See Latin American Institute for Social and Economic Planning imf International Monetary Fund 190 4245 and ecla 329 and Latin American common market project 343 Imperial Economic Conference 83 import substitution See Prebisch and import substitution Institute for Production and Trade iapi Argentina 217 513n16 InterAmerican Committee for the Alli ance for Progress ciap 430 463 InterAmerican Conference Bogotá 1948 237 InterAmerican Development Bank idb 2945 377 and ecla see Tri partite Commission idb Commission on Latin American Development 440 4423 see also Change and Devel opment Latin Americas Great Task formation 339 341 InterAmerican Economic Conference 1957 337 InterAmerican Economic and Social Council iaecosoc 2367 See also oas International Coffee Agreement 339 International Commodity Agreement ica for cocoa 41820 International Cooperation for a Latin Amer ican Development Policy 2914 International Organizations Employees Loyalty Board US 332 International sugar agreement 436 International Trade Organization 379 Latin America and 381 International Wheat Conference 87 Irazusta Rudolfo 31415 Ivanisevich Oscar 224 Jacobsson Per 336 343 531n55 532n67 Jayawardena Lal 389 Jevons Stanley 39 Jeze Gaston 31 50 Johnson administration 396 and the gsp 4267 and the ica for cocoa invasion of Dominican Republic 451 and Latin America 396 and the 590 Index Presidents of America Summit 1967 4267 and unctad I 400 9 and unctad II 427 Journal of Economic Sciences 28 31 36 47 Journal of Economic Theory 2245 Judd Percival 389 415 419 Justo Agustin P 67 71 74 91 95 99 105 107 11112 161 Justo Dr Juan B 234 35 Kafka Alexandre 282 Kaldor Nicholas 333 Keenleyside Hugh 2645 Kemmerer Edwin W 39 97 Kennan George 258 Kennedy David M 453 455 Kennedy John F 350 35761 365 367 assassination 3967 and the Panel of Experts 395 See also Ken nedy administration Kennedy administration 3689 375 and the Bay of Pigs invasion 360 and Brazil 536n52 and Latin America 371 376 and unctad 392 396 See also Alliance for Progress Cuban Missile Crisis Keynes John M 36 85 92 195 213 14 21819 Kindleberger Charles 219 243 248 Kissinger Henry 4456 and Chile un der Allende 458 and the nieo 474 Klein Walter 101 Knibbs Sir George 50 Korean War 285 and USLatin Ameri can relations 268 278 284 Korry Edmund M 460 Krieger Vasena Adelberto 310 Krishnamurti R 38990 392 417 539n39 at unctad I 4067 Krushchev Nikita 3523 360 Kubitchek Juschelino 33940 3556 Kybal Milic 255 lafta Latin American Free Trade Association 34445 Lanusse Gen Alejandro 489 Lara Cristóbal 385 447 Latin America in the 1970s 4801 in 1986 499500 antiAmericanism 4501 debt crisis 486 importance to the US 525n27 social and politi cal instability 196870 4512 Latin American common market proj ect 3336 concept of 1268 140 150 gatt position on 343 and Frondizi 344 imf position on 335 6 343 obstacles to 334 US position on 329 335 3403 532n67 See also lafta Latin American regional inte gration Latin American identity 241 266 296 378 Latin American Institute for Social and Economic Planning ilpes 3724 3489 372 44550 45662 547n15 and Chilean politics 447 4578 funding problems 46061 Latin American reservations about 373 548n36 morale problems 446 7 4589 and the Tripartite Commit tee 373 and undp 45961 Latin American regional integration 334 343 339 comparisons with Eu rope 3248 See also ecla and Latin American regional integration Le Breton Tomas 523 56 85 Leguizamon Guillermo 834 LeithRoss Sir Frederick 801 106 Lewis Sir Arthur 322 437 553n39 Lie Trygve 229 246 253 265 and the Havana Manifesto 251 Index 591 Linares y Sansetena Segundo 8 14 Lleras Restrepo Carlos 194 292 334 440 Lobos Eleodoro 267 434 478 53 235 Lonardi Government Argentina 296 298304 National Advisory Board 306 overthrow by Aramburu 306 Lowenthal William 449 458 Lurie Samuel 389 Maizels Alfred 389 419 Malaccorto Ernesto 36 624 6971 76 138 164 168 173 297 307 Malbran Manuel 83 85 Malinowski 237 253 265 290 301 3479 41617 542n11 attempt to get Prebisch to head unctad 382 384 encouraging Prebisch to attend the Cairo Conference 379 381 and the origin of unctad 382 at unctad I Mann Thomas 337 3403 356 371 and unctad 396 539n40 and US multinationals 3423 Manoilescu Mihail 80 El Maqui 2778 321 411 488 Margolin Robert E 437 Marshall Alfred 25 Martin Edwin 371 396 MartinezCabañas Gustavo 234 2389 245 2512 257 Martinez Zuveria Gustavo 171 Max Herman 194 Mayobre José Antonio 215 3323 355 461 McCarthyism 2878 See also Interna tional Organizations Employees Loy alty Board McNamara Robert and the Pearson Commission 4378 Medina José 412 447 461 Meier Gerald 248 MendèsFrance Pierre 2634 2678 mercosur 499 Mexico in the 1970s 4812 compared with Argentina 189 1912 debt cri sis 486 police violence against stu dents 1968 440 and World War II 189 and the US 18990 Mill John Stuart 25 Miranda Miguel 217 Mikesell Raymond 333 Molina Sergio 460 Moll Carlos 77 121 167 202 Moll de Prebisch Adela Adelita 176 7 212 253 299 in Allendes Chile 465 468 courtship and marriage to Raúl 769 and her family 767 79 121 131 152 167 516n14 fbi alle gations against her 151 loyalty to Raúl 411 and Raúl after his remar riage 4434 and Raúls parents 77 91 165 Monnet Jean 81 289 528n15 Montagu Norman 81 Mora José Antonio 358 Moreau Alicia 23 312 Morgenthau Henry 128 1312 Mosak Jacob 289 and the future of unctad 4056 and preparations for unctad 3869 and unctads relationship with desa 41415 Moscoso Teodoro 366 Muñoz Heraldo 487 Muschietti A 102 Myrdal Gunnar 240 see also ece Narasimhan CV 406 National Bank of Argentina bna 61 634 See also Prebisch at the Office of Economic Research 592 Index National Statistical Office Argentina 30 50 535 57 National University of La Plata unlp 301 New International Economic Order nieo 473 483 Niemeyer Sir Otto 90 978 104 122 Nierenstein Mauricio 278 53 58 Nixon Richard 3379 3501 442 533n1 Nixon administration 453 455 478 and Chile 457 466 and Latin Amer ica 4456 54950n58 See also Henry Kissinger NonAligned Movement 382 4823 550n1 See also G77 Notes on Demography 545 Notes on our Money Supply 369 Notes Regarding the Beef Crisis 47 Noyola Juan 322 351 3545 and in flation 527n1 Nun José 448 oas Organization of American States 3567 451 and ecla see Tripartite Commission formation 237 and the Guatemala coup 2901 See also iaecosoc InterAmerican Eco nomic Conference 1957 oas Panel of Experts Quintandinha Con ference 1954 Truman administra tion and the oas oas Panel of Experts 36572 430 545n49 Ocampo Victoria 23 oecd Organization for Economic Co operation and Development 381 Okito Saburo 437 Olariaga Luis 601 Ongania Juan Carlos 489 Operation PanAmerica 339 3556 Oria Salvador 27 50 100 Orradre Pedro 142 492 Ortega y Gasset José 305 Ortiz Roberto 111 118 1223 128 162 Osorio de Almeida Miguel 271 Owen David 2289 237 253 265 and the Havana Manifesto 251 Palacios Alfredo 24 33 172 PanAmerican Conference Chapulte pec 1945 236 PanAmerican Union 236 Panel of Nine See oas Panel of Experts Paraguay 127 197201 518n16 Pareto Vilfredo 401 51 Paris Club 527n46 Parsons ML 2312 Partners in Development See Pearson Commission PatronCostas Robustiano 1 75 1624 Pazos Filipe 215 2756 351 354 Pearson Lester B 4378 Pearson Commission 4378 Pedretti Carlos 198 200 202 Perez Enrique S 6971 PerezGuerrero Manuel 215 441 PerezJimenez Government Venezu ela 315 Peripheral Capitalism Crisis and Change 487 Perón Juan Domingo 678 139 164 5 1701 196 203 fall from power 296 298 prelude to taking power 20710 See also Perón Government Perón Government Argentina 213 21617 225 and Argentine Central Bank 210 Peru 440 Peterson Rudolf 459 Pierson Lee 123 Index 593 Pinedo Federico 24 67 88 901 94 5 99100 1047 122 124 128 1323 158 162 175 See also Pinedo Plan Pinedo Plan 1246 1289 failure of 133 opposition to 1323 Pinero Norberto 36 Pinochet Augusto 486 Pinto Anibal 447 Plan for Economic Restoration 303 309 12 Plan Prebisch 3035 ecla staff re sponse 315 322 opposition to 312 Plaza Galo 334 445 Pollock David 385 390 392 417 419 502 Prebisch Adelita See Moll de Prebisch Adela Prebisch Alberto 19 21 39 51 62 1078 457 Prebisch Albin business ventures 11 death 93 expectations of his chil dren 13 and his inlaws 1011 mar riage to Rosa 10 second family 14 29 and the Tucumán German Club 1314 Prebisch Ernesto 108 Prebisch Julio 19 21 Prebisch Raúl acceptance of leadership of unctad 3834 address on re gional integration at ecla Trade Con ference 1959 3434 adolescence 19 advisor to Tomas Le Breton 52 and Raúl Alfonsin 4912 498 and the Alfonsín Government 4927 and Salvador Allende 4657 and the Alli ance for Progress 3589 375 378 See also oas Panel of Experts Punta del Este Conference and the Alvear Government Argentina 478 50 anticommunism 33 3505 antipatria criticism in Argentina 150 152 173 305 4956 appointed Executive Secretary of ecla 2645 and the Aramburu Government Ar gentina 307 31213 See also Plan for Economic Restoration Sound Money or Controlled Inflation and the Argentine central bank concept 73 90 95 and the Argentine economic crisis during the Revolución Libertadora 31819 and the Argentine media 92 300 3056 3089 31112 495 526n33 and the Argentine Rural Society 44 7 559 and the Argentine Socialist Party 32 335 94 at the bna See Prebisch at the Office of Economic Research bna bohemian streak 29 249 274 323 411 and the Bret ton Woods Conference 1967 and Alejandro Bunge 301 and Augusto Bunge 345 63 69 734 78 945 and the business cycle 378 656 17980 2267 244 and the Cairo Conference 1962 381 and Roberto Campos regarding ilpes 41314 and the Cartagena Consensus 4967 and the Carter administration 473 47980 centre and periphery 38 21415 244 276 and the cepal Review 475 551n7 charisma 4 247 451 262 274 399 childhood home 1214 and the Chilean coup 4645 and ciap 463 and classical economic theory 601 87 17983 244 2489 2823 comparisons between Argen tina and the British dominions 40 4850 57 conceptual struggles 194 5 2412 and conditionality in for eign aid 42931 479 and the Consen sus of Viña del Mar 4467 consultancy to the oas 465 549n40 consultancy 594 Index in Paraguay 197201 consultancy in Venezuela 21415 and converging measures 398400 courtship and marriage to Adelita Moll 779 and the creation of the InterAmerican De velopment Bank 3412 and the Cu ban revolution 351 3535 death 502 and debtled growth 481 deci sion to study economics 1920 and desa 3868 41415 and depen dency theory 4767 dismissal as gen eral manager of the Argentine Central Bank 168 1724 divorce from Adel ita 443 and the Dominican Republic 21516 221 and John Foster Dulles 290 early views of Argentine political parties 33 and ecla during the Lon ardiAramburu period 301 30910 ecla farewell speech 375 and eco soc 2678 and elephantiasis of the state 481 and the ethics of develop ment 477 4867 500 and the Falk landsMalvinas War 553n52 and his father 14 29 58 90 93 and the fbi 151 515n18 financial difficulties 176 1845 444 463 469 first con sultancy for ecla 1949 2289 234 240 See also The Economic Development of Latin America and Its Principal Prob lems first visit to the Andean region 194 flight from Buenos Aires after dismissal from the Central Bank 175 6 and Eduardo Frei 466 funeral 4 and Celso Furtado 322 3312 549n40 and gatt under Wyndham White 4223 general manager of the Argentine Central Bank 1002 108 9 11221 152 German relatives 79 and the gold standard 35 39 61 65 72 and his grandfather 1417 and the Great Depression 646 702 967 112 and the Group system in unctad 4367 and Che Guevara 401 and Harvard University 197 2034 health issues 107 184 220 2234 384 442 26970 honours 473 485 and Alberto Hueyo 75 and the idb Commission on Latin Ameri can Development 440 4423 450 See also Change and Development Latin Americas Great Task and ilpes 347 9 3724 378 41114 44250 456 63 536n47 and the imf 22934 3357 3434 4946 and import sub stitution industrialization 92 3278 453 5301n54 534n21 548n23 553n39 See also Prebisch and in warddirected growth and the im portance of statistics 46 54 and the independence of unctad in the UN 4078 541n6 and indigenous cul tures 201 and inflation 322 4934 5278n2 and inwarddirected growth desarrollo hacia adentro 160 180 and Agustin P Justo 162 and the Kennedy administration 357 359 534n21 and land reform 33 49 and the Latin American common market project 3334 3367 3424 5301n54 and Latin American re gional integration 3268 330 544n42 at the League of Nations Pre paratory Commission for the World Economic Conference 1933 778 802 leave of absence from ecla 1955 3012 and the Lonardi Gov ernment Argentina 298306 See also the Plan Prebisch loss of faith 28 and MartinezCabañas 252 265 and Marxism 28 maternal ancestry 89 and McCarthyism 2878 marriage to Eliana Diaz 443 and Mexico 1889 Index 595 and the military coup of 1930 Argen tina 678 military service 523 and mncs 340 41213 464 46970 and Jacob Mosak 3878 and his mother 14 165 and multilateralism 1812 2934 3613 4069 and the National Statistical Office Argen tina 535 578 510n29 and the need for structural reforms in Latin America 363 375 4545 488 as ne gotiator 406 409 433 436 and the nieo 429 435 and the Nixon ad ministration 4456 and the Nobel Prize in Economics 4856 552n37 and the oas Panel of Experts 3659 372 at the Office of Economic Re search bna 61 636 69 75 open ing address at unctad I 3989 opening address at unctad II 428 31 and the PerezJimenez dictator ship Venezuela 215 and Perón 1701 206 208 21718 275 and the Perón Government Argentina 233 298 and populism 453 4656 and the position of UN secretary general 544n39 and the Pearson Commission 4389 and progressive capitalism 339 and the Quintand inha Conference 2914 and the presidency of the Argentine Central Bank 2056 primary education 18 professor at uba 53 58 60 75 108 177 184 1945 21213 216 220 2246 299 proUS position during World War II 1456 and the Punta del Este Conference 3624 and Raúl Jr 41011 439 443 and the Reagan administration 4835 488 relation ship with Eliana Diaz 366 41011 439 research on the Argentine beef trade 447 59 resignation from unctad 441 546n78 and the Roca Runciman Treaty 103 and the role of the public and private sectors 179 1812 283 and WW Rostow 3967 rumours of resignation from unctad 43940 secondary school education 1819 secretarygeneral of unctad 384411 41441 seminars at the Bank of Mexico 185 1925 517n21 seminar at unam 232 and service to his country 16 18 3940 42 102 21112 and social crisis in Latin America 481 social life 60 62 3 108 142 5001 special advisor to Lonardi 3012 special relationship with the US during World War II 1213 145 151 1589 1667 and Standard Oil 304 31516 340 and structuralism 183 2435 2479 273 student jobs 2930 support for private enterprise 181 2823 2934 31819 33940 target of Nazi sympa thizers 138 and tax reform in Argen tina 50 73 and technocratic elites 402 64 76 89 95 174 273 and terms of trade See PrebischSinger Theory thumbnail biography 5 and the trade gap 395 418 and Trif fins offer of advisory work in Latin America 204 2068 and unctads purpose 417 unctad secretary general 384409 41011 41441 undersecretary of finance in the Uriburu military government Argen tina 6974 university education 2531 36 39 unpopularity in Argen tina 2089 31315 489 See also Prebisch and the Argentine media and the US Federal Reserve 57 and US journalists 285 370 and Gabriel Valdes 4467 460 462 view of the 596 Index US 484 visit to Australia and New Zealand 19234 4850 visit to Brazil 1951 2804 visit to Cuba 1951 2757 visit to Czechoslova kia 436 visit to Europe 1924 51 visit to the US and Canada 1926 567 visit to Washington 19401 12734 and George Woods 394 400 437 work habits 22 623 108 world tour preceding unctad I 392 3 538n31 Prebisch Manifesto See The Economic Devel opment of Latin America and Its Princi pal Problems Prebisch Memorandum 1940 1289 Prebisch Raúl Jr 41011 439 443 Prebisch Rosa See Uriburu de Prebisch Rosa Linares PrebischSinger Theory 2434 521n29 Presidents of America Summit 1967 4267 Princeton Institute for Advanced Study 219 Prio Socarras Carlos 2756 Proclaimed List of Axis Companies See US Board of Economic Warfare Punta del Este Charter See Punta del Este Conference Punta del Este Conference 1961 3614 535n31 Quintana Carlos 4612 Quintandinha Conference 1954 2915 See also International Co operation for a Latin American Develop ment Policy Radical Civic Union Argentina See Radical Party Argentina Radical Party Argentina 223 401 647 71 1323 1612 Ramirez Gen Pedro Pablo 172 Ramirez Government Argentina 16870 191 1956 Ravndal Chris 108 128 136 142 154 197 234 2602 Rawson Gen Arturo 163 Reagan administration 4846 Regional integration see Latin Ameri can regional integration Repetto Nicolas 24 74 Resolution V of the Rio Declaration 1942 148 1501 1534 Revista Económica See Economic Journal Revolución Libertadora Argentina See Aramburu Government Lonardi Government Ricardo David 25 Rio Conference 1940 See Brazil Argentine Economic Conference Rio Conference 1942 See Conference of InterAmerican Foreign Ministers Rio Group 554n3 Roca Julio A 74 823 1245 127 1323 162 RocaRunciman Treaty 34 92 102 112 119 See also Argentina eco nomic relations with Britain Rockefeller John D 3701 Rockefeller Nelson 128 135 258 446 Rockefeller Commission 446 4501 Rogers William 466 Roosevelt Franklin D 86 1279 156 18990 See also Roosevelt administra tion Roosevelt administration and Argen tina 1301 1334 14559 169 196 203 209 and Mexico 18990 See also Good Neighbor Policy RoqueGondra Luis 27 53 RosensteinRodan Paul 357 368 469 547n20 Index 597 Rostow WW 371 and Latin American development 480 meeting with Prebisch about unctad 3967 at unctad II 4278 431 Royem Bodil 367 390 411 444 Rubottom Roy R 340 RuizGuiñazú E 139 1458 Runciman Walter 72 834 Saadi Vicente 496 Saavedra Lamas Carlos 601 10910 160 162 165 511n24 Saenz Peña Luis Roque 22 Samuelson Paul 243 Sanchez Luis Alberto 241 Santa Cruz Alfonso 474 Santa Cruz Hernan 236 260 Sanz de Santamaria Carlos 16971 430 445 463 Savio Gen Mario A 169 Scalabrini Ortiz Raúl 311 Schumpeter Joseph 190 Seers Dudley 333 551n11 Shapiro Louis 242 Shevchenko S 389 Siewers Enrique 27 36 77 Silva Julio 36 177 Silva Patricio 459 461 Singer Hans 2423 256 521n29 Smith Reginald 415 Social Progress Trust Fund 356 Socialist Party of Argentina See Argen tine Socialist Party Sociedad Rural Argentina See Argen tine Rural Society Sound Money or Uncontrolled Inflation 303 30910 Sourrouille Juan 492 497 Soviet Union and Cuba 3523 and Czechoslovakia 436 and the space race 338 352 360 370 and unctad 416 at unctad I 4012 at unctad II 427 and the US détente 3912 See also Cold War Statistical Yearbook 1927 579 Storni Segundo V 164 169 Structuralism See Prebisch and structur alism Sunkel Osvaldo 4478 487 Supplementary Financing Mechanism 418 4201 424 Swenson Louis 255 279 3289 Taborda Damonte 1378 Taussig FW 39 Terms of trade See PrebischSinger Theory Thant U 416 and the position of unctad in the UN 407 415 and Prebisch 384 43940 and Raúl Jr support for unctad 4234 Theoretical and Practical Problems of Eco nomic Growth 279 theory of comparative advantage 256 von Thermann Freiherr 1378 Thomas Josiah B 135 Tinbergen Jan 419 485 Treaty of Asunción 554n4 Treaty of Montevideo See lafta Triffin Robert 193 195 1978 2025 208 211 Trimestre Economica 219 Tripartite Committee 357 3646 448 and ilpes 373 marginalization 377 Truman administration 234 and Ar gentina under Perón 233 and ecla 2367 254 25964 26971 2846 530n46 and Latin America 215 235 2401 2578 278 and the oas 25862 270 See also Quintandinha Conference 1954 598 Index Tucumán history 1516 social condi tions 1718 UN Advisory Committee on Administra tive and Budgetary Questions acabq 541n7 UN Development Decade 365 382 428 437 UN Development Program undp 459 UN Emergency Operation 19745 4702 UN Mission to Argentina 1956 315 31718 527n46 UN Panel of Eminent Persons on mncs 464 46970 UN Special Fund formation of ilpes 3479 unctad United Nations Committee on Trade and Development and desa386 4056 and gatt 4234 Group of Experts 3878 390 loca tion of permanent headquarters 416 origin 3812 Preparatory Com mittee meetings 3845 3878 390 1 3978 selection of Prebisch as sec retarygeneral 3834 staffing 3834 41517 541n7 541n8 5412n10 structure 541n9 successes 435 See also ica for cocoa Supplementary Financing Mechanism Towards a New Trade Policy for Development unctad I unctad II unctad I 398409 committees 401 3 406 divisions over future of unctad 4058 G77 response to Prebischs compromise 4089 group system 391 540n48 growth of G77 solidarity 4045 polarization between rich and poor countries 4035 Prebischs compromise on structure 4068 US position 400 unctad II 42734 coolness of Group B countries 426 evaluation of the conference 4345 last ditch negotia tions 4334 preparations 425 See also Algiers Charter Generalized Sys tem of Preferences Global Strategy for Development Union of Argentine Industrialists See Argentine Industrial Union United States anticommunism 234 259 and Brazil 281 287 and Cuba under Castro 3513 35762 and ecla See Truman administration and ecla economic relations with Argentina 56 11925 12830 133 6 1401 149 155 157 and the Latin American common market project 329 335 3403 532n67 and Latin American free trade 127 136 and Mexico 18990 strategic importance of Latin America for 525n27 and unctad See Johnson administration and unctad Ken nedy administration and unctad See also Alliance for Progress Bay of Pigs invasion Carter administration Cold War Consignee Control Cuban Missile Crisis Eisenhower administra tion ExportImport Bank Interna tional Organizations Employees Loyalty Board Kennedy administra tion Korean War McCarthyism Nixon administration Rockefeller Commission Roosevelt administra tion Truman administration US Board of Economic Warfare US Fed eral Reserve Bank Upton T Graydon 341 Uriburu Enrique 44 47 56 71 73 90 142 Uriburu Francisco 17 Index 599 Uriburu José Evaristo 17 99 Uriburu José Felix 17 668 71 73 75 Uriburu de Garcia Luisa 21 28 Uriburu de Prebisch Rosa Linares 8 influence on Raúl 14 marriage to Albin 10 Urquidi Victor 191 193 195 214 21821 238 332 343 485 Uruguay 127 US Board of Economic Warfare 1534 159 See also Consignee Control US Federal Reserve 1978 links with Argentine Central Bank 1312 142 ussr See Soviet Union Vaky Viron P 478 482 Valdes Gabriel 446 and ilpes 447 45962 Vance Cyrus 474 Vargas Getulio 10910 1256 151 156 222 2801 284 293 Venezuela 211 Verrier Roberto 1023 128 303 Villaseñor Eduardo 188 191 211 Viner Jacob 190 219 248 2823 5345n23 Vining Rutledge 219 Viola Gen Roberto 484 Viteri de la Huerta Jorge 390 Volcker Paul 497 Waldheim Kurt 464 470 Wallich Henry 190 235 Waugh Samuel 309 Welch Leo 108 130 135 175 211 Welles Sumner 1278 130 135 145 148 White Henry Dexter 128 Williams John 2 36 122 131 Woods George D 437 and unctad 394 397 420 4245 at unctad I 400 World Bank and ecla 3723 and ilpes 3723 and Supplementary Fi nancing Mechanism 418 420 424 and unctad 394 397 400 4245 See also Pearson Commission World Economic Conference 1933 857 World War II 1212 1345 prelude to 11315 WyndhamWhite Eric 37980 4213 and Latin American integration 343 530n50 5301n54 at unctad I 400 Yearbook of the Rural Society Economic and Agrarian Statistics Young Andrew 474 479 Yrigoyen Hipolito 223 33 648 82