1938: El Salvador

A Constitutional Congress, elected in October, began its sessions on Nov. 20. Rumors that it might extend the term of President Maximiliano Martínez, which expires in February, for another six years, were substantiated when the Congress took just such action on Jan. 4, 1939. A controlled press and the government-owned radio have been conducting a campaign to this end for several months. This is the third such instance of a 'constitutional' dictatorship in Central America, where President Ubico in Guatemala and President Tiburcio Carias in Honduras have continued in power by the same method. A state of siege has been in effect in El Salvador ever since General Martínez first rose to power. Requests that it be lifted during the session of the Constitutional Congress went unheeded. In an attempt to counteract fascist propaganda in this small Central American country, the lay teachers have formed a Salvadorean Teachers' Union, designed to limit the activities of foreign religious teachers. But the strength of German influence is indicated by the prominence of the German Consul, who is manager of the government-owned Farm Loan Bank, and of the director of the military schools and instructor of the army. In these key positions they are able to exercise considerable control.

German commercial expansion in El Salvador has been effective, too, German goods displacing United States merchandise in several lines, and German trade being second only to that of the United States. It is expected that this trend will be increased by the withdrawal of the Grace Line's service and a new contract with the North German Lloyd and the Hamburg American Lines. The mortgage bank, mentioned above, controls the sale of Aski marks and in May was making advance payments in coffee, henequen and sugar for export to Germany in German ships. Manchukuo, in November, approached El Salvador, the only Latin American country to recognize it, for a treaty of commerce and friendship, to replace a treaty with Japan which was never signed because of the unfavorable trade balance with that country. The 1937 trade with Japan was small. A reciprocal pact with France, extending to Dec. 31, 1938, granted reduction in the local tax on champagne in return for a guarantee to purchase 2,000,000 pounds of coffee.

El Salvador is a one-crop country, coffee in 1937 representing 91 per cent of its export values. The crop of that year was the largest in Salvadorean history. Agreement is now sought with the other coffee-producing countries over the crisis caused by Brazil's change in its coffee policy. The 30 per cent drop in coffee prices, followed by a reduction in the export tax on coffee, has meant a decline of approximately 2,000,000 colones in government revenues, and has led to a suspension of service on the foreign debt. The President has promised that payments will be resumed as soon as the coffee situation is cleared up. The 1937-38 budget estimated receipts at 24,083,533 colones, expenditures at 23,171,126 colones.