1940: Peru

Economic Condition.

A credit of $10,000,000 was granted by the Export-Import Bank to the Central Reserve Bank of Peru in December, to cover purchases in the United States. This may aid in the disposal of unsold surpluses of Peruvian cotton and sugar. For the last fifteen years Peru has maintained an average annual export surplus of some 110,000,000 soles, which in 1939 reached a high of 125,634,000 soles. This satisfactory trade balance is due chiefly to the fact that Peru is not heavily dependent on a single commodity, as are many Latin American countries. The fact that, except for gold, its mineral resources, petroleum, silver and copper, are exploited by foreign capital makes the export surplus misleading, however, since profits paid to foreign shareholders are an invisible drain on the country. Moreover, the value of metal and oil exports in 1939 was over double that of animal and vegetable shipments. The livelihood of 85 per cent of the population depends on agriculture, however, principally long-staple cotton, the bulk of which goes to England, and sugar, of which, with sheep's wool, Great Britain is the chief purchaser. The fact that in 1939 Germany and Great Britain combined took 30 per cent of Peru's exports (11 and 19 per cent respectively), as against 26 per cent to the United States, makes the War's inroads on the European market a matter of serious consequence to Peru. The United States is the principal market for Peru's metals, silver constituting almost one-half of total exports to the northern republic in 1939. The 1941 budget estimates revenues at 250,000,000 soles, compared with 216,000,000 in 1940. The close of the fiscal year reveals a deficit of 5,081,000 soles, as against a surplus in 1938 of 1,015,000 soles.

Political Matters.

Very little in the way of political developments has occurred since Manuel Prado assumed the presidency in December 1939. Without debate the Chamber of Deputies approved a law amending the Constitution so as to provide a six-year term for the entire Chamber and the election of all Deputies at the same time as the President. The lavish public works program of the Benavides administration has been radically cut, in view of the uncertain economic outlook, but the ambitious three-year highway program is about completed. In spite of the political disadvantage created by this inability to maintain the public works program. President Prado's personal popularity is increasing. Important pending legislation has made necessary extra sessions of Congress, one completed Dec. 31; another convoked for January 1941.

No reconciliation between the government and APRA is in sight. The point of view of Aprismo towards the United States has altered in the face of the fear of totalitarianism, and a reorientation towards cooperation with 'the United States of Franklin Delano Roosevelt,' in the form of an alliance with equals, has replaced earlier 'Yankee-baiting.' Anti-Nazi sentiment was indicated by a unanimous motion in the Senate, in March, condemning the intervention of foreign diplomats (the German Legation) in motion-picture censorship. The Minister of Education has refused a request of the German School in Lima to have its curriculum geared into the secondary school plan of the Reich. The plant of the Italian-operated Caproni factory in Lima has been nationalized, and the contract of the Italian military mission has been cancelled. The chief of Aeronautics, Col. Federíco Recavarren, who has been strongly suspected of Fascist tendencies, has been dismissed, and much of his work may be taken over by the United States air mission to Peru.

Social Security.

An Inter-American Social Security Gathering, held in Peru Dec. 8-11, was jointly sponsored by the government and by the Director of the International Labour Office, as a step towards better social conditions in the Western Hemisphere. The Peruvian Social Security Act of 1936 was to go into full operation at that time. This plan, financed by workers' and employers' contributions and a State subsidy, institutes compulsory insurance against old age, invalidity, illness and maternity disability. Hospitals and clinics conforming to North American standards are at the disposal of Peruvian workers.