1941: Peru

Anti-Axis Moves.

The most significant move taken during the year to weaken Nazi activity in Peru was the elimination, in April, of Lufthansa, established in that Republic in 1938 and an important link in the network of German air lines in South America. This line, which connected with Lloyd Aéro Boliviano (in turn, nationalized a few weeks later by the Bolivian Government) and, thence, with Condor in Brazil, has had its contract revoked and its funds confiscated. The German news-service, Transocean, was also shut down during the past year, and two Italian Fascist papers, Unit and Italia Nuova, have been closed. On June 1 the Government formally took possession of the Italian Caproni airplane plant in Lima.

Relations with the United States.

In spite of a strong pro-Axis influence in business and the press, and the existence of active Nazi and Fascist colonies, the majority of the Peruvians seem to be pro-United States, and the President, Dr. Manuel Prado, has given assurance of Peru's cooperation with the United States. Following the United States' entry into the War, the Government froze all Japanese assets and banned the importation of Japanese merchandise without special permits, thus giving tangible expression to its reaffirmation of Pan American solidarity. The influential El Comercio has urged a joint Pan American declaration granting the United States non-belligerent status in the present War.

Commerce and Trade.

In February 1941, Chile and Peru signed agreements coordinating their foreign and defense problems and setting up machinery for the negotiation of a bilateral trade agreement. The trend in Peru's foreign trade during the first seven months of 1941 was satisfactory, with an export balance totaling 107,941,000 soles, an increase of 68,582,000 soles over the corresponding 1940 period. The change is due to a marked increase in export values and to a small decline in imports, owing chiefly to the United States' priority system. The United States is Peru's chief customer, taking about 40 per cent of the Republic's exports. Some 20 per cent of the total represents shipments to neighboring states. The outstanding trade development of the year was the phenomenal increase in Japanese purchases, especially of cotton, 65 per cent of Peruvian cotton shipments in 1941 going to Japan. That country also took the entire output of molybdenum, a mineral vital in steel making. Peru will be more affected than most Latin American countries, therefore, by the War in the Pacific, and cotton, the commodity that accounted principally for the favorable trade balance, becomes the chief marketing concern of the Republic. In October the United States signed an agreement with Peru whereby all the exportable surplus of certain strategic materials would be reserved for the exclusive use of Western Hemisphere countries. Copper, lead, tungsten, vanadium, zinc and antimony are the principal metals included. The Republic has never drawn on the $10,000,000 loan from the Export-Import Bank, which was awarded to steady the national currency. The operation of the United States' priority system has cut off the material and equipment needed to launch a national steel industry, a project which is the key to Peru's industrial program. By expanding the operations of the Banco Industrial del Per£, the government has, this year, created machinery to finance other new industries, such as cement manufacturing, basic chemicals and the generation of low-cost electric power.

The latest census gives Peru 7,023,111 inhabitants, making it thus the fifth nation in Latin America as regards population.

For boundary dispute with Ecuador, see ECUADOR.