I

The New Deal stabilized US capitalism by making unprecedented promises of welfare and security to workers in key sectors of the economy and electorate, especially unionized workers in capital-rich mass-production industries. It financed the costs of fulfilling those promises by excluding other people from its programs. It is well known that the disproportionately black, Hispanic, and Asian workers who manned the agricultural food chain were not protected under the minimum wage and maximum hour bill Franklin Roosevelt signed into law as the Fair Labor Standards Act (FLSA) in 1938. Yet it is also true, though it has been overlooked, that the FLSA was specifically designed to exclude workers abroad, an exclusion that was hotly contested in Congress and anything but assured at the time, and which had important consequences. Through the opening that exclusion created, the FLSA linked into a complex of New Deal foreign and domestic policies that began to transform the position of the United States in the world economy. This transformation supported the ascendant domestic political economy and culture of mass consumption, in part by expanding the flow of cheap consumer imports into the United States.

This essay works from the FLSA to the trade in manufactured consumer imports to connect New Deal domestic economic and social policy to a key innovation of New Deal Latin American policy: multilateral international development, which reshaped foreign economies in line with evolving US strategic and economic goals and became a central pillar of the formally liberal postwar world order that secured US hegemony by recasting particular US interests as universal.Footnote ¹ Institutionalized in New Deal diplomacy as one panel of the umbrella “Good Neighbor Policy,” international development comprised an evolving matrix of industrial, agricultural, and infrastructural projects conceived and coordinated by a multinational corps of diplomats and bureaucrats, supported by a raft of financial, social, and cultural programs, and justified by an explicit promise to increase the standard of living across the Americas.Footnote ² Undertaken in countries from Haiti to Brazil and in collaboration with even “nationalist” Latin American governments, these projects and programs were variously bi- and multilateral in principle, but in practice they depended entirely on US approval and capital.Footnote ³

Like the Reciprocal Trade Agreements Act (RTAA) Roosevelt pushed through in 1934, international development turned the wealth accumulated in the US home market into a foreign policy tool. But unlike the RTAA, development gave this tool a real shaping edge. The reciprocal trade program was based on a conventional assessment of economic complementarity. It was designed to restore and expand international commerce by bargaining down tariffs on commodities that were already important US exports and imports, securing outlets for the surplus domestic product and sources of products that could not be produced domestically on any practical basis. Naturally it was easiest to seal agreements on these terms with countries exporting tropical commodities. In its early stages, the trade agreements program centered on the Western Hemisphere, as the United States wielded its power as the world's leading market for Latin America's leading export, coffee, to refine Latin American markets for its own staple exports, agricultural and industrial.Footnote ⁴

In contrast, the developmental program was organized around a broadened concept of complementarity that was social as well as environmental, a normative thesis that there were products the United States should not produce for itself, products that did not suit the changes New Deal programs—including the FLSA—were making in the US economic and social structure. Shaped by this idea, development worked simultaneously to enhance Latin American markets for favored US exports and to create Latin American sources of two kinds of US imports. On the one hand, along traditional lines, there were strategically important products, especially tin, rubber, and hemp for naval rope; and, on the other hand, along new lines, there were labor-intensive mass-market consumer manufactures, especially handicrafts, housewares, novelties, accessories, gifts, and toys similar to those previously imported from Asia and Europe but also competitive with certain domestic industries. Leather purses, wallets, work gloves, and shoes from Argentina; imitation Oriental rugs, artificial flowers, rubber galoshes, and hand-embroidered curtains from Brazil; baskets, wooden spoons, salad sets, blown wine glasses, pitchers, hand-loomed cotton tablecloths, pottery tableware, household tinware, and silver jewelry from Mexico—as the Department of Commerce put it, “the spice of the department store.”Footnote ⁵ In these products a new strategy of international relations was distilled into so many private, domestic diversions. They appeared on department store shelves as expressions of the metabolism between the rise of the United States as a “consumers' republic” and the “new imperialism” refined in Latin America in the thirties and forties and deployed globally after the war.Footnote ⁶

More than 25 years ago, Thomas Ferguson sketched the connections between those developments, outlining the ascendant “hegemonic bloc” of multinational, liberal, capital-intensive business interests—including large retail interests—vested in “the unorthodox combination” of free trade, collective bargaining, and social welfare at the heart of the late New Deal.Footnote ⁷ But what sort of social relations did that new congress of interests require to establish and sustain its dominance? Meg Jacobs, Lizabeth Cohen, and others have filled in the domestic picture, arguing that this combination of policies, tending toward high wages and low prices, appeared less “unorthodox” from a “consumers' point of view,” but they have overlooked the important international dimension.Footnote ⁸

Using “the spice of the department store” as evidence, I show how New Deal foreign and domestic policy worked in concert to produce mass-consumer prosperity in the United States. In effect, the new developmental programs globalized the New Deal by vesting elites and governments in Latin America (and later worldwide) in the “domestic” New Deal order. Work remains to be done on the particular contexts and consequences of early developmental programs across Latin America; here I simply emphasize how development shaped a international order that supported the rehabilitation of US capitalism. I argue that the New Deal succeeded in accommodating millions of mobilized workers within US capitalism, as Ferguson put it, in part by beginning after 1936 to export labor-intensive basic consumer goods industries under the sign of international development, displacing the social pressures characteristic of those industries—their reliance on low wages, long hours, unskilled labor, and closely supervised, often violently enforced compliance—onto workers abroad. At the same time, reimporting the produce of these industries effectively expanded the set of affordable and desirable products available in department stores and subsidized the consolidation of an economics, politics, and way of life organized around mass consumption.

This argument raises a secondary point. William Appleman Williams, Lloyd Gardner, and their followers in diplomatic history long ago took apart Roosevelt's much-mythologized Good Neighbor Policy. They readily exposed the distance between its rhetoric of a unitary inter-American interest and its perpetuation of the old Open Door Policy—which always opened out toward export markets, foreign investments, and sources of raw materials more easily than in toward the home market—and judged the Good Neighbor Policy a failure by its own standards, another tragic case of noble ideals undercut at the bottom line of business.Footnote ⁹ The accounting supporting that analysis is indisputable. Undoubtedly the United States continued in the thirties and forties to take more from Latin America than it gave in return. But such a dismissal of the Good Neighbor Policy misses the long-run implications of the material and stylistic shift in the exercise of international power pioneered in the New Deal's foray into Latin America. As the history of the early developmental program makes clear, that shift was halting, limited by war, and proved vulnerable to postwar retreat from both sides. Yet over time it has come to look less like a failure and more like the experimental beginning of an economic, political, and strategic realignment with broad global implications.

II

Doing their best to calibrate that realignment, moving freely between offices in the capital, the high-rise blocks of Manhattan, and Cambridge, were Roosevelt's “corporate liberals” and technocrats.Footnote ¹⁰ Two bureaucracies with overlapping mandates are of particular interest here: the Executive Committee on Commercial Policy and the Office of the Coordinator of Inter-American Affairs. Roosevelt created the Executive Committee—chaired by Assistant Secretary of State and former Harvard law professor Francis Sayre—in 1933 to manage the “intricate task of judging how best a sound domestic situation may be attained and retained by a proper marking off and fitting together of the field of American economic activity and the field of foreign economic activity.”Footnote ¹¹ The Coordinator's office, chartered in 1940 and run by Nelson Rockefeller, worked within the outlines of commercial policy established by the Executive Committee, using “not-so-hidden hands” to maximize the returns from international relations—economic, strategic, military—available in the Western Hemisphere.Footnote ¹² Under Rockefeller, the Inter-American Development Commission, staffed by men at ease submitting their reports on Westinghouse Electric letterhead, would manage the trade in new imports from Latin America.Footnote ¹³

Charged as they were with “fitting together” domestic and foreign economic policy, the members of the Executive Committee looked on anxiously as the wage and hour bill wound its way through the legislative process. The bill had important implications for New Deal commercial policy, and they were contested from the moment of its introduction into the House and Senate in May of 1937.

The Senate version had evolved over several years under the pens of the President's chief legal fixers, Tom Corcoran and Ben Cohen. They worked directly under Roosevelt, with the guidance of Harvard law professor Felix Frankfurter and Associate Supreme Court Justice Louis Brandeis, and in close cooperation with Secretary of Labor Frances Perkins and Senator Hugo Black, Democrat of Alabama, who sponsored the legislation in the Senate.Footnote ¹⁴ As introduced, the Black bill claimed jurisdiction over “interstate commerce,” defined as “trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof,” where “State means any state of the United States or the District of Columbia.”Footnote ¹⁵ Syntactically, that definition of scope covered commerce between states and foreign countries. At the same time, within that broad jurisdictional framework, the Black bill narrowly defined the processes of production to which the bill would apply as those that took place “in any State,” and it defined the workers to be covered by the bill as those engaged in production “in any State.” Under Black's bill, goods produced domestically for export into foreign commerce would be covered; goods produced abroad for import into interstate commerce would not.

The version of the bill introduced simultaneously into the House aimed at a different outcome. The legislation's sponsor there, William Connery, Democrat of Massachusetts—born in the shoemaking town of Lynn, and whose district included a swath of the old Massachusetts mill belt—made one substantive alteration to Black's bill. He removed the words “in any State” from the clause that identified the production processes and workers to which the bill would apply, creating an opening in the legal framework for the extension of any new US labor standards to workers outside “any State” and to imported products.Footnote ¹⁶ Predictably, given this divergence, foreign labor and imported goods became a point of contention in the legislative wrangling that followed.

The broad outlines of the prevailing line-up of interests are well known. Seeking to preserve their positions in the economic order, unionized skilled workers in the North and low-wage manufacturers in the South opposed the wage and hour bill; social reformers and advocates of consumer purchasing power as a cure for depression supported it.Footnote ¹⁷ But there was also a sizable group of northern manufacturers on the fence. They supported national minimum wage legislation to counter the advantage of southern industries but also stood to lose business—in the domestic market as well as export markets—to low-cost foreign competition, especially if the trade agreements program continued to erode the tariff wall.Footnote ¹⁸ Hedging, they argued that legislation lifting wages and cutting hours should be paired with some form of protection for US manufacturers against competition from foreign producers not obliged to meet the same labor standards.

From their perspective, that argument was both reasonable and realistic. Clearly basic industries could “runaway” from high wages and regulation: They had done just that from the North to the South. With more countries moving into basic consumer-goods industries, especially textiles, in which they enjoyed a labor-cost advantage over the United States and suffered from a comparatively small technological disadvantage, there were fewer obstacles stopping US manufacturers from running away abroad. Moreover, the type of protection this group of manufacturers was after had a clear precedent. Four years earlier, the National Industrial Recovery Act (NIRA) had explicitly authorized import limitations necessary to insulate the balance of wages and prices it attempted to strike against the fluctuations of world markets.

Yet the protectionist interest was not as strong as it might have been. Generally favoring the lower prices and increased consumer purchasing power promised by freer trade, the leaders of the Congress of Industrial Organizations (CIO), representing many workers in northern manufacturing industries, opposed import controls.Footnote ¹⁹ Also in the could-have-been camp was a group of manufacturers who decided that the threat of increased imports didn't merit handcuffing the wage and hour bill to complicated trade restriction. The upholstery and drapery lobby, for example, interpreted the apparently contradictory action of the Roosevelt administration—pushing at once for higher domestic wages and lower tariffs—as a lack of coordination, “the right hand” in State Department falling out of sync with “the left hand” in the Labor Department, rather than a real shift in economic strategy.Footnote ²⁰

They were exactly wrong on this count. The members of the Executive Committee on Commercial Policy, empowered precisely to coordinate foreign and domestic economic policies, were paying close attention to the scrum over imports, primarily because they were hoping to stay out of it. The debate over the wage and hour bill coincided with a push to capitalize on the Roosevelt landslide of 1936 (interpreted in the State Department as an endorsement of trade liberalization) by negotiating new trade agreements with industrialized European countries. Sealing these agreements would entail accepting increased imports of consumer manufactures—including textiles, shoes, and pottery—in exchange for agricultural exports.Footnote ²¹ With this in mind, and thinking it best not to stir protectionist interests any more than necessary, the Executive Committee wanted a wage and hour bill altogether free of language about foreign labor or imported products.Footnote ²² But as amendments to restrict imports were repeatedly raised in Congress, the committee was compelled to act. Assistant Secretary of State Francis Sayre and his colleagues began to look into drafting a “clarifying provision” that would exempt imports without mentioning them specifically.

The issue held interest at the highest levels. Import restriction threatened to interfere with the larger project of rebuilding an international system of exchange around the U.S. economy to support its recovery and long-term stability and prosperity. A subcommittee, including Sayre, went to “discuss the question of tactics with the Secretary of State.”Footnote ²³ Cordell Hull suggested some changes to the draft clarifying provision. The committee worked them up, and Sayre and company brought the revisions to Senator Black. Black was “favorably impressed,” but the resulting draft was not the seamless exemption of imports the Executive Committee had envisioned. It read:

The language could hardly have been less subtle—it was only to be used as a last resort.

In the event, clarification wasn't needed. The ambitious architects of the wage and hour legislation had envisioned working standards that would not only address social problems, but also stimulate consumer spending. Yet striking the compromises necessary to muster sufficient votes behind the bill degraded it from a purchasing-power program into, in effect, a modest domestic sweatshop-eradication program that would apply only to selected sectors and help only the lowest earners. As the bill's scope narrowed, the threat it posed to the international competitiveness of U.S. business diminished, and the push for intertwined import regulation failed to win broader support. The final text of the FLSA included no mention of tariff adjustment among its explicit provisions or imports among its explicit exemptions.Footnote ²⁵ Workers in and products of foreign export industries were exempted instead through a peremptory jurisdictional clause: The new law applied to “trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof,” where the definition of “State” was expanded to include US territories.Footnote ²⁶ By extending the new wage and hour standards to industrial operations across the territorial US empire while exempting imports, the FLSA opened new space in the domestic market for cheap manufactured consumer goods. It would be part of the job of the developmental program to cultivate Latin American sources to supply that demand.

III

The silence on the topic of foreign labor written into the Fair Labor Standards Act did not mean that the Roosevelt administration lacked a foreign labor policy. To the contrary, the final form of the FLSA grew exactly out of New Deal foreign labor policy and permitted its advancement. The stated foreign labor policy of the Roosevelt administration, trumpeted before meetings of the International Labor Organization, was to raise the standard of living of workers around the world.Footnote ²⁷ In one respect, this policy helped to insulate Roosevelt's foreign economic programs from the shrill criticisms of isolationists and protectionists, for a rising global standard of living would in principle help to guard workers in US industries against foreign competition in the domestic and world market. But at the same time, this commitment to raising global living standards was necessarily limited, for trade was to be the means of achieving it.

After 1936, trade moved from the margins toward the center of the New Deal.Footnote ²⁸ This was in line with a shift in New Deal liberalism more broadly, and it resulted from the same circumstances that shaped the broader shift: the failure of the NIRA and its attempt at centralized domestic economic planning, which heightened the need for planning in foreign economic policy; the increasing pressure, culminating in the recession of 1937, to balance the budget and find ways to promote prosperity that did not entail deficit spending by the federal government; and the growing influence of a bloc of capital-rich industries that enjoyed a global advantage and had weathered the depression and the early New Deal comparatively well.Footnote ²⁹ For all these reasons, within the executive branch—not only Hull's State Department but also Perkins's Department of Labor—foreign trade was increasingly seen as the natural complement to efforts to increase consumer purchasing power within the United States. As Perkins put it before the ILO in 1937, the United States was “contributing … to an increase in the income of its people and of the world through its domestic policies, as well as through its trade agreements program.”Footnote ³⁰

Lifting global living standards through foreign trade was an inherently limited goal, for profitable trade required international inequality. New Deal foreign economic policy blended the classical logic of liberal international exchange—which assumed that mutually beneficial trade depended on the differences between countries, including differences in labor standards—with the belief that those differences and the system of production and exchange they constituted could be orchestrated from above.Footnote ³¹ The legitimacy of those differences as the basis of policy flowed in part from the repudiation of armed intervention and reaffirmation of the juridical equality of sovereign states characteristic of Roosevelt's foreign policy generally and of his Latin American policy—branded as the Good Neighbor Policy—especially. This emphasis on sovereignty helped to isolate from history and within national boundaries the substantive inequalities that had resulted from centuries of European and US imperialism, sovereignty's practical opposite. By instantiating liberal international law, the Good Neighbor Policy sanitized those historical inequalities, permitting their arrangement as so many formally equal pieces into an untainted system of exchange. In the international division of labor envisioned by the planners of New Deal foreign policy, the whole was only as great as the sum of the differences of the parts.Footnote ³² For the whole to continue to grow, differences would have to remain. In theory, overall growth would muffle conflicts that resulted.Footnote ³³

The program for Latin American development tailored this global project to the hemispheric context. It aimed to raise the standard of living across the Americas by expanding inter-American trade, but it did so in a way that preserved the essential advantages of the United States, especially its capital ownership and its technological superiority. More precisely, Latin America development was designed to manage the international inequalities, including differences in labor standards, on which profitable trade relied and to contain the problems that arose from them.Footnote ³⁴ In the late 1930s, the principal problems were three.

First, Latin American governments were increasingly dissatisfied with their traditional roles as producers of raw tropical commodities for the world market and were pushing for industrialization. The Depression had vividly demonstrated the disadvantages of their traditional exports, virtually all of which were produced across the global tropics on a volume basis that tended to clog consumer markets, weigh down prices, and exact high social costs. The price of coffee, especially—the leading export of seven Latin American countries and a principal export of seven more—stayed low even after the prices of other commodities had begun to recover. In fact it continued on a downward trajectory from 1928 until it hit an historic low in 1940 with the final closure of the European market to war.Footnote ³⁵ Ten million bags a year of the Latin American crop, about 1.5 billion pounds, foundered on the world market as surplus.Footnote ³⁶ With losses from coffee and added to losses from other products, Latin American countries together saw fifty-five percent of their annual export revenue ready to evaporate.Footnote ³⁷

This posed two additional problems. First, decreasing revenue from traditional export commodities not only limited the ability of Latin Americans to buy the exports of the United States but also made it impossible to pay down existing debts. And second, it was clear to US analysts that in Latin America this loss of commerce meant “not merely business depression, but actual hunger,” which could “be turned into political instability.”Footnote ³⁸ Political instability invited fascist influence. For that reason, collaborating in the development of new industries in Latin America to create viable new sources of revenue was for the United States not only an economic, but also a political priority. The odds had “the political line-up” following “the economic line-up” if and when war arrived in the Western Hemisphere.Footnote ³⁹

Formatted by these problems and priorities, one set of developmental projects initiated in the late thirties investigated sources of strategic raw materials. The United States had no hemp for naval rope, no cinchona for quinine, no tin, no rubber of its own. All could be produced in Latin America, with time.Footnote ⁴⁰ A thousand acres of hemp in Panama showed promise.Footnote ⁴¹ Sixty to eighty thousand acres of rubber was planned for Haiti.Footnote ⁴² Engineers reconnoitered Bolivian tin.Footnote ⁴³

But the largest, least poor, most strategically important Latin American countries had begun to turn toward state-led import-substitution industrialization, and for them raw materials and export agriculture, whether new products or old, held little attraction. Mexico was “definitely facing towards industrialization of all kinds.”Footnote ⁴⁴ Argentina, Brazil, and Chile were expanding textile, footwear, and other basic consumer-goods industries.Footnote ⁴⁵ The drive to secure export markets for US-made consumer manufactures had shaped an earlier era of hemispheric relations, but by 1938 the United States had begun to subsidize consumer-goods industries in Latin America.Footnote ⁴⁶

This was not only a short-term strategy of accommodation, appeasement, stabilization, and containment. The developmental program also promised long-term gains. For industrialization would help “certain of the American republics … free themselves from dependency on Europe and Asia for articles which they consume in everyday life.”Footnote ⁴⁷ The intention was not to wall off the hemisphere—isolation on that scale “would obviously be stupid” no matter who won the war.Footnote ⁴⁸ But by promoting Latin American consumer-goods industrialization rather than trying to compete with Japan and Germany for the “low-priced field” of consumer exports (especially unlikely after the FLSA) the United States would free up space in Latin American budgets for the export industries the New Deal favored: staple agriculture, high-value-added consumer goods, and the capital goods that would be required to get Latin American consumer-goods industries off the ground.Footnote ⁴⁹ In other words, through the developmental program, the United States in effect authorized and subsidized the early stages of import-substitution industrialization in Latin America in order to bring about more favorable patterns of international exchange.Footnote ⁵⁰

From the perspective of the Executive Committee on Commercial Policy and the Office of the Coordinator, “the spice of the department store” was an ideal class of imports. The appeal of such goods, their spice, grew out of the hand labor congealed in them, the traces of human touch that brightened their surfaces. Precisely for that reason, they could no longer be mass-produced to any advantage in a relatively high-wage economy such as the United States.Footnote ⁵¹

Two other factors compounded the need for a fresh supply of cheap manual labor: War cut off exports of consumer manufactures from Europe and Asia, and changes in the structure of the formal US empire put the old unincorporated territories in flux. The Philippines, a volume supplier of hand-embroidered clothes and cottons, was set to lose the preferential tariff status through which these goods had moved into the United States when it gained independence in 1946.Footnote ⁵² On the other side of the world, Puerto Rico's textile industries, “predicated on poverty,” had boomed during the First World War to replace US imports from Europe.Footnote ⁵³ But the FLSA applied to the 70,000 Puerto Rican factory and home workers who had previously earned a few pennies an hour embroidering the “wreaths and spays of leaves, petals and flowers” that adorned clothes destined for bargain bins at US department and chain stores. Even though the new minimum wage was eventually pegged lower in Puerto Rico than on the mainland, the net bump cut into the multi-million dollar industry.Footnote ⁵⁴ The flipside of the need for a new Latin American export industry was the need in the United States for a new source of spice.

In theory then there was “undoubtedly a great market in the United States for articles manufactured in Central and South America.”Footnote ⁵⁵ But as a matter of practice there were significant obstacles, including the tariff. Though the RTAA had begun to lower the tariff and open the US market wider to manufactured consumer imports, its concessions, tuned to benefit established European industries, didn't help Latin American manufacturers much.Footnote ⁵⁶ One developmental project proposed to cultivate needlework industries in the Dominican Republic, shipping unfinished textiles from the United States, hand-embroidering them there, and re-exporting them back, but the enterprise seemed unlikely to pay at going tariff rates, so the idea was shelved.Footnote ⁵⁷ Export manufacturing in Latin America still needed a preliminary boost to get within striking distance of the lowered tariff wall.

At the high end of the consumer market, the tariff wall had never been impenetrable. Behind the expansion of US imperial power in the late nineteenth and early twentieth centuries, the trade in exotica boomed. Knick-knacks from Latin America found a place alongside tchotchkes from Europe and baubles from Asia in better homes across the country. Dressing up their domestic lives with everything from “Argentine lamp shade covers to Aztec relics, Belgian linen, Bohemian glass, Brazilian hammocks, German cooking ware, Hungarian pitchers, Javanese batiks, Norwegian pottery, Puerto Rican drawn work, Singapore Malacca, and Zulu baskets”—and all manner of “Oriental” rugs, screens, fans, and pottery—the white upper-middle classes marked their relative sophistication and wealth, fended off the dullness of everyday comfort by indulging in the fantasies of imperial power imports conjured, and shored up at once their self-image and their particular racial, ethnic, and national prejudices.Footnote ⁵⁸

But this type of exotica was of little interest to the New Deal strategists working on the developmental program. The charm of such items came “mainly from the fact that they are few and far between and uneven in size and design.” By definition they “could not be developed to a large enough volume to make any appreciable difference in trade balances.”Footnote ⁵⁹ In contrast, developmental programs were designed to cultivate, a Latin American mass-consumer goods manufacturing sector tuned to the quantitative, substantive, and stylistic expectations and desires of US shoppers.

Put another way, the plan was to circumvent the tariff wall by bridging the information gap. Highly routinized and formalized practices facilitated the trade in raw materials from Latin America—standardized contracts, predictable freight rates, published grading scales, hedgeable futures markets. But the trade in consumer goods, “heretofore unknown,” lacked these basic institutions of communication, insurance, and security.Footnote ⁶⁰ US distributors had no working idea of what could be manufactured in Latin America.Footnote ⁶¹ For their part, Latin American producers had never studied the US mass-consumer market.Footnote ⁶²

This last part was critical. Separating US consumers from the latent foreign exchange in their pockets required transmitting their preferences back along the commodity chain and recalibrating production to match. For example, one US importer explained, “Mexicans make very fine blankets.” But to the US blanket shopper they were too heavy and not warm enough:

Making consumer goods in Latin America that were imbued with precisely those qualities of spice appealing to US consumers often meant making Latin American products look like they had come from somewhere else.

In 1939, the Department of Commerce opened an effort to get retailers from Macy's, Sears Roebuck, and W.T. Grant, among other major stores, in the same room and on the same page with diplomats from Mexico, El Salvador, Venezuela, and Haiti, among other countries. The Inter-American Development Commission took over the project in 1940, creating the Merchandising Advisory Service to channel demand information to suppliers in Latin America and supply information to buyers in the United States.Footnote ⁶⁴ Once pushed together, it didn't take long for Latin American producers and US distributors to coordinate their steps. Before the war, New York commission agents D. Roditi & Sons had moved European imports through department stores all over the Northeast. They closed their Vienna and Prague offices as German armies menaced central Europe in the spring of 1939.Footnote ⁶⁵ To replace the lost business, Roditi turned to Latin America. They sent a specialist in European fashions to scout sources of products and locations for buying offices.Footnote ⁶⁶ They exhibited Latin American merchandise in their Broadway showroom.Footnote ⁶⁷ And they gave the products they once bought in Europe to Latin American producers to copy.

For one exhibition, Roditi set up the “European originals” and the “South American copies” on adjacent tables. “[The Latin American manufacturers] have not only done a very good job,” an agent from the Coordinator's office reported, “but the articles can be delivered in New York for much less than the prices paid for similar goods from Europe.” Mexican-made French casseroles, “using French pastel colors instead of Mexican reds and greens, and with modern designs substituted for the cactus and donkey motifs … much cheaper than French importations ever were.” Knock-off Dutch upholstery: “exact copies.” Peccary gloves from Brazil and Mexico: “cheaper than similar American gloves, even counting the low cost of Puerto Rican workmanship.” Belts for men and women: “a dollar a piece, with hand workmanship and good designs. The French imports used to cost from five to ten dollars.” Brazil-made Calais lace: “cheap lace … but the original was too.” French Lisle socks, from Brazil: “an excellent job … never duplicated in this country.” Even when the copies were inferior, the upside was undeniable. Molded Brazilian glass, “copied from Lalique designs,” was “good but … less delicate than the French.” The price was also eighty percent lower than the original: “astounding.”Footnote ⁶⁸

In addition to intricate copies, there were plenty of simpler things available, too. These were among the most promising items. Wooden salad spoons: “Macy's has placed very large orders.” Straw beach mats and beach bags made in Mexico, “very effective and inexpensive—a vogue for this could be created easily.” Straw and wicker market and laundry baskets from Mexico were already in mass production: “the orders … are very large.”Footnote ⁶⁹

Latin American industries that got a boost from exiled European labor, skill, and capital showed particularly well. Such was the case with leather. Imports from Mexico, Brazil, Cuba, and Argentina made significant gains in US stores after 1939. Handbags, gloves, wallets, luggage: not the “expensive” and “prestige” products that had traditionally come from England and France, but mass-market items as cheap as domestic products. The new imports had a clear advantage over domestic merchandise, though, and it underscored the potential significance of the new trade in manufactured consumer goods from Latin America: At identical prices, “imported gloves… contain more hand labor and are superior in design to the domestic.” Because the low cost of hand labor in Latin America made possible “more embellishment” at less cost, spice for the price of plainness, imports from Latin America seemed likely to continue to grow even after European factories came back online.Footnote ⁷⁰

IV

The Merchandising Advisory Service generated a million dollars of new business in 1941.Footnote ⁷¹ Its success proved that “there is an unlimited potential demand in the United States for many new non-competitive lines of commodities from Latin America” and that “Latin Americans have ample skill and materials for making them.”Footnote ⁷² But if “astounding” prices on labor-intensive consumer goods from Latin America promised to put the spice of the department store within reach of more shoppers, they also highlighted the thorny political issue raised in the debate over foreign wages and the Fair Labor Standards Act.Footnote ⁷³ New Deal developmental planners were keenly aware that the substance of astounding prices on imported merchandise was the difference in the wages US and Latin American workers were in position to demand. Wary of bad publicity at home and abroad—from conservative protectionists and liberal free-traders alike—they anxiously guarded developmental programs against the stain of sweated labor even as they eagerly took advantage of these wage disparities. Negotiating development's pitfalls to ensure its political cleanliness, they revealed its inner workings.

So George Urlaub found out. He was the head of the Throwsters Research Institute, representing US silk hose manufacturers who were looking to get out from under the pressure of a decade's worth of strikes, boycotts, and New Deal regulation. In 1941 he went to the Bureau of Foreign and Domestic Commerce with a colleague, Milton Schiffer, for information about producing needlework in Latin America. Apparently Urlaub and Schiffer “gave the impression that what they were looking for in South America was cheap labor that could be compared with the Chinese.” The Department of Commerce refused to have anything to do with them, despite the fact that both were active on an industry committee that had worked closely with the Roosevelt administration. A friend in Commerce thought they had been treated too harshly and referred Urlaub and Schiffer to the Inter-American Development Commission and the Merchandising Advisory Service to see if they couldn't work something out.Footnote ⁷⁴

The men in charge of the Merchandising Advisory Service didn't scare so easily. The developmental mandate required an imaginative approach to the business of connecting buyers and sellers and producers and consumers across the hemisphere. Anyway, they weren't planning to “connive at sweatshop practices” either. They didn't have to. They took for granted that the “usual wages would be paid” and that all applicable labor laws would be respected. But that didn't mean the manufacturers couldn't find an advantage in Latin America. For in some countries “the local money is so cheap in terms of the dollar that regular wage scales, which represent a decent living locally, seem very small in our money.” So they were happy to work on behalf of Urlaub and Schiffer, “with the understanding that talk of local labor costs will not enter into the picture.” They would simply “give information regarding regions where this work might be done” and let the two “make their own deals through local concessionaries.”Footnote ⁷⁵

Urlaub's experience encapsulates the way US planners of multilateral Latin American development managed the question of imports and foreign labor. Low wages abroad were the necessary condition that made their developmental programs pay, but they operated behind an “understanding that talk of local labor costs [would] not enter the picture.” Negotiating this contradiction required a double move: a particular kind of nonaction with one hand, and a particular kind of action with the other.

First, the institutions that administered international development were set up to defer the question of wages to “local” factors and markets, just as the Merchandising Advisory Service had. For example, at an inter-American labor conference in Havana in 1939, the CIO called for “fair labor standards” to apply on Latin American development projects financed by international loans. Planners in the State Department's Office of American Republic Affairs brainstormed plausibly deniable evasions. Their final answer: Loans from the US Export-Import Bank—the capital of which would be increased from $200 to $700 million in the summer of 1940, and which was the only public source of development financing operating at the time—required that payroll be raised locally.Footnote ⁷⁶

At the same time, on the ground, the United States intervened extensively in “local” Latin American labor markets to ensure the viability of developmental projects. The Office of the Coordinator managed two types of multilateral social welfare programs considered to be of “direct consequence” to Latin American development.Footnote ⁷⁷ The first type allocated existing resources in new ways, matching surpluses to scarcities within the hemisphere with military preparedness, solidarity, and social quietism in mind. For example, programs sent food to construction companies building the Pan-American Highway and to areas producing strategic materials, holding down “local” prices and wages at critical points.Footnote ⁷⁸

Developmental social programs of the second type aimed for long-term changes that would enlarge the “producing power of the people” in Latin America.Footnote ⁷⁹ Most broadly conceived, this included breeding a demographic expansion, since Latin America “could usefully support a much larger population.”Footnote ⁸⁰ To that end, inter-governmental agencies extended the work of private foundations on issues from illiteracy to the familiar “public health” complex of disease control, sanitation, and diet.Footnote ⁸¹ Meanwhile, educational exchanges brought Latin Americans to study medicine, social policy, and industrial relations in the United States.Footnote ⁸² In sum, these programs not only helped to maximize the “producing power” of Latin America—and in turn its potential contribution to consuming power in the United States—but also laundered the proceeds from development, smoothing over the contradictions between its imperative for low wages, its perpetuation of international inequalities, and its explicit promise to raise the standard of living abroad.Footnote ⁸³

The ways in which developmental programs went about improving the standard of living in Latin America matched, supported, and, in some cases, connected directly to the scheme of economic, political, and social organization favored by Latin American governments pushing for industrialization in the late thirties and afterward. To foment industry, to precipitate modernity, in response to workers' demands and in the name of populist nationalism, governments across the region introduced social security and welfare programs in the thirties and forties: subsidized housing, health care, maternity leave, legal defense, vacations, pensions, and funerals, as well as outright food distribution.Footnote ⁸⁴ Together with dominant state-authorized unions, state-run social welfare programs effectively centralized control of labor markets and smoothed the forward progress of industrialization in the consumer goods sector.Footnote ⁸⁵ In the aggregate, these programs elevated population, life expectancy, and literacy rates across Latin America. Overall Gross Domestic Product (GDP) rose, but GDP per capita remained at one-third of the US level.Footnote ⁸⁶ Moreover, the gains were not evenly distributed. Inequality intensified.Footnote ⁸⁷ Industrialization always cost the most for those who had and made the least. Authoritarianism, operating not only through terror but also with a new battery of incentives, held them in place.Footnote ⁸⁸

With the blessing of the State Department and the Coordinator of Inter-American Affairs, one group of US businessmen got a close-up view of this emergent configuration of Latin American political economy. Some members of the group that toured the continent in 1941 to survey the prospects for investment in industry were dismayed, while others were surprised and impressed. Those in the first category were put off by the fact that the Latin American system seemed to “give labor everything but money,” a strategy “completely opposed” to the emphasis in the United States on high wages and a strong domestic market. By their thinking, “instead of working out so many complicated social laws, what they should do is try to increase their rates of pay so that they could look for some support in their economy from the people whom they employ, which people today obviously cannot contribute very much beyond bare necessities.”Footnote ⁸⁹

Those businessmen in the second category saw it differently; they saw industrialization in Latin America as part of a broader transformation of US capitalism. One member of the group reported a conversation with a “very high Peruvian official,” who put it this way: Social welfare programs were “the cheapest way of handling a ticklish situation.”Footnote ⁹⁰ For behind social welfare, wages remained “fantastically low” in Latin America, raved an executive with North Carolina-based Cannon Mills—probably the largest manufacturer of towels in the world at the time—after the trip.Footnote ⁹¹ His enthusiasm belied any presumption that Latin American workers should necessarily consume the new industrial products they made. He clearly had different buyers in mind, buyers who could afford a bathroom-full of his marked-up finished product. Given the direction in which US industrial and trade policy had evolved since 1934, he could have been forgiven for thinking that Latin America had begun to seem like a commodious future home of the US textile industry.

V

Then, after 1945, the developmental program shifted to adapt to the new bipolar world order. The Soviet Union had no significant position in Latin America, so the competition for resources and influence that had given urgency to the development cooled. Latin America was certainly never outside the Cold War, but Europe and Asia were the first open fronts. The United States focused on reconstruction and redevelopment there—sending resources and capital to rebuild consumer goods industries in Western Europe and Japan, which quickly recovered their respective positions in the US import market—rather than on creating a hothouse for new industries Latin America.Footnote ⁹²

The trade and aid programs that enthroned and extended U.S. power and interests globally after the war built on the commercial, political, social, and cultural strategies, projects, and institutions tested in Latin America in the thirties and forties.Footnote ⁹³ Yet Latin America got nothing like a Marshall Plan. Instead, it got an invitation to help the rebuilding effort by taking a step back into export agriculture—coffee and the old tropical staples could again be sold around the world.Footnote ⁹⁴ That slight fed into a backlash by expanded urban and industrial sectors in Latin America against the dictators who had served US interests during the thirties and the war. But as soon as economic reality set in, many Latin American governments, to pay for the industrialization they were still determined to achieve, turned to international loans, high tariffs, imposed social austerity, and virulent nationalism and anticommunism.Footnote ⁹⁵ The developmental crackdown was on.

Yet despite the anti-imperial rhetoric deployed by Latin American governments to justify the socialized belt-tightening that often went along with import-substitution industrialization, the outcome was not unfavorable to US interests, from “the business point of view.” Whether proceeding in step with US foreign policy or in opposition to it, industrialization in Latin America offered US firms opportunities for sales and investment.Footnote ⁹⁶ In the nineteen fifties, private direct investments from the United States were on the way up in Latin America, especially in the manufacturing sector, but the region's industries were still lagging behind in the global competition for consumer markets.Footnote ⁹⁷

The developmental program for Latin America that emerged in the late thirties and early forties was calibrated to a particular set of short- and long-run problems and prospects. So it can be no surprise that the same calculations, executed with a new set of variables, produced a new result after the Second World War that made Latin American development seem less exigent—nor that, in the sixties, when Latin America again emerged as a critical US priority, the developmental program was reactivated, fortified, and entrenched. As the Central Intelligence Agency liquidated opposition and the Kennedy Round of trade talks opened the US consumer market wider to the world's manufactures, the new US Agency for International Development researched and coordinated economic, technical, and social programs; the Inter-American Development Bank, stalled on the brink of creation in the early forties, finally came to life to supplement the World Bank; and targeted bilateral projects, such as the Border Industrialization Program, perforated the line between the United States and Latin America with holes through which mass-consumer manufactures flowed in unprecedented quantities. Just as blankets, artificial flowers, wallets, and embroidered handkerchiefs were not the ultimate goals of New Deal Latin American policy, neither were maquilas the end of Cold War Latin American policy—but they were one of its modalities, international power in production. And as development has extended its reach in Latin America and around the world, so have the material forms through which empire is experienced as a way of life proliferated.