Dollars to Peanuts

The western countries of South America are running out of the blue chips of international exchange.Chile's war-won pile of U.S. dollars has shrunk. The dollar balances of Bolivia and Peru, never impressive, now look like peanuts. Ecuador's hoard, despite a bin-busting rice crop, has leveled off at $6,000,000.

The effect on trade with the U.S. is already noticeable. To husband its dollars, each country has clapped on stiff import controls. Chile's Foreign Exchange Control Board, for instance, has decreed that only essential items, such as machinery for new industry, can get import permits. By such close-to-the-vest trade, Chile hopes to offset her $100,000,000 deficit for 1947.

General Motors was one of the first to read the signs. It closed its Santiago agency (except for the spare parts department) and canceled plans to build an assembly plant there. Ford officials in the U.S. also admitted that they were unable to get back funds and profits blocked in Chile.

In Peru, where nothing can be imported without a license, restrictions are just as drastic. Every request for a permit must be published in the official El Peruano (including the intention to spend $8.50 from a U.S. bank account for a subscription to TIME). Even so, Peruvians' funds are so tight that half the applications to import machinery, locomotives, lathes, trucks, etc. are turned down. Since last March, the Government itself has spent 14% of Peru's foreign exchange, mainly for food bought in Chile and Argentina and sold to the public at a loss.

Peron's Meat. The west coast countries reaped a fat profit from such wartime exports as copper, tin and nitrates, but when war ended they well knew that they would have to find trade items to replace the war babies. The Chileans had big plans for ending their dependence on copper and nitrates by industrialization. But building fisheries, power plants, and developing transportation is a long-term process, and it will cost more than Chileans can find. Like their Pacific neighbors, they need help from abroad. The question is, where will it come from?

Into Lima last week flew special Argentine Ambassador Diego Luis Molinari, with seven gaudily uniformed granaderos de San Martin and some of South America's finest rhetoric. He was met by Argentine commercial technicians. Molinari and his grenadiers had already splashed grandiloquently through the halls and plazas of most of Latin America. Peruvians were impressed. Said Apra Chief Victor Raul Haya de la Torre: "We need their wheat and meat." Peron has already promised Chile $175,000,000 to tie her to Argentina in bonds of trade. Bolivia's new Government got another $62,500,000. Peru might be due for the next lift.

Earlier in the week Peru's Congress voted to resume payment on long-defaulted bonds held in the U.S., in hopes of getting a U.S. Export-Import Bank loan. But both Chile's and Peru's prospects for new U.S. loans are poor. Perhaps, in the long run, the Strong Man will be a bigger help than the U.S.

This file is automatically generated by a robot program, so reader's discretion is required.