We Sell Drugs: The Alchemy of US Empire Page 5
TABLE 2 COCAINE EXPORTS FROM THE UNITED STATES, 1936–1941 (in grams)
The international consumer market for American-manufactured pharmaceuticals expanded considerably as US officials worked with private companies to “help” fill a drug vacuum in Europe, the Soviet Union (USSR), and colonial markets formerly supplied by the British Empire. This was true not only with regards to cocaine, but also in relation to another exceptional coca-derived commodity: Coca-Cola.
Wartime drug control provided an opportunity for select US corporations with an investment in the coca market, such as Merck, Maywood, and the Coca-Cola Company, to align themselves closely with the interests of the US government and benefit from the collaboration. Much as government intervention prevented the importation of crude cocaine into the United States, when the Peruvian commercial chancellor tried to offer the Coca-Cola Company “de-narcotized” coca for sale, the company’s president contacted the head of the FBN, suggesting that Peruvian interest in the market might be exploited to pressure for compliance with “international control authorities.”49 Coca-Cola, the drink itself, became officially allied with the national cause. Following Pearl Harbor Robert Woodruff, the head of the Coca-Cola Company, declared that all men in uniform could get Coca-Cola for five cents wherever they were serving. With a Coca-Cola executive appointed to the sugar rationing board, by 1942, “Coca-Cola was exempt from sugar rationing when sold to the military or retailers serving soldiers,” while the rest of the soft drink industry was forced to reduce their consumption. Helping to fulfill Woodruff’s promise, sixty-four Coca-Cola bottling plants were established “on every continent except Antarctica” during the war, largely subsidized by the US government. Coca-Cola representatives were given the status of “technical observers”—civilians servicing the military—while the army paid for the transportation costs of Coca-Cola and for military technicians who helped construct Coca-Cola plants for the deployed troops. German and Japanese prisoners of war were even assigned to work in these newly constructed bottling plants.50 The collaboration between the United States and companies supplying American troops on the battlefront was accompanied by an equally striking government program to capitalize on wartime disruptions in neutral countries far from the battlefront. Nowhere was this more apparent than in US efforts to promote the expansion of its pharmaceutical industries into Latin America.
WARTIME MARKET DISRUPTIONS
The war-wrought transformations in the circulation and flow of raw materials destined for North American and European pharmaceutical manufacturers produced fundamental disruptions in the flow of finished drugs. The impact on Germany was particularly dramatic. The world’s longest established and most profitable pharmaceutical industry could not acquire drug raw materials, had its industrial production under attack, and confronted US economic warfare campaigns against Germany’s drug production and distribution networks in neutral and Allied territories. Entering the war, Germany dominated the international drug market, including an impressive presence in the Western Hemisphere. While Germany trailed behind England and the United States as the third “major trading partner with South America,” the country was the region’s largest supplier of pharmaceuticals.51 A report to the secretary general of the League of Nations in 1943 noted the wartime dramatic shift in pharmaceutical manufacturing clout. “Germany, the chief distributor of drugs before the war, now exports only insignificant quantities of narcotic drugs.”52 By the end of the war American military assessments were more blunt. “German Pharmacy Kaput!” reported the Chief of the Medical Branch, US Strategic Bombing Survey after reviewing the impact of bombing on the infrastructure of the once globally dominant German pharmaceutical industry.53
Early in the war, however, German dominance of the drug trade was a serious cause for concern. Writer and investigative journalist Charles Morrow Wilson lamented in 1942 that unlike American businessmen, the “Germans took pains to capture Latin-American markets for legitimate medicines and pharmaceuticals” during the first half of the twentieth century. “Even during the war years of 1939, 1940, and 1941 the German position has been maintained. Actually the Nazis have been making use of their drug trade with South America to provide a source of revenue for propaganda and fifth column activity.”54 These frustrations and fears echoed those expressed by US officials dispatched to South America in December 1941 under the auspices of the newly constituted Board of Economic Warfare (BEW). The “entire Latin American economy was part of [the BEW’s] concern” because, as the director of the Council on Foreign Relations explained, the region was “a storehouse of strategic raw materials.”55 However, agents rapidly discovered that while Latin American countries for the most part were willing to cooperate with US economic warfare initiatives in the region, they encountered significant obstacles when it came to limiting the flow of German pharmaceuticals. As the US ambassador to Bolivia confided to the Secretary of State in 1943, “Indeed, it is likely that the failure to eliminate the Nazi dominance in the drug field will assist Nazi interests to continue to have their way in other commercialized fields in which they remain powerful.”56
Whatever success the United States achieved by dominating the drug raw materials market was undermined by its inability to dominate the consumer market for finished goods. As nations battled to control the flow of the world’s resources, raw materials and manufactured goods together constituted the critical inputs for maintaining overall societal health; both production and consumption mattered to this equation. Government planners embraced an economic calculus premised on balancing “the allocation of manpower and raw materials” in the service of war. The economic reasoning constituted an ideology that viewed humans and natural resources together as the raw material inputs to national power, and their healthy presence needed to be sustained for profit and national security. In the United States, before the war was over, “the nation’s economic machinery had been reorganized throughout, from the acquisition of materials to the final distribution of the end-products among our armed forces, our allies, and our civilians.” And to ensure a healthy flow of material inputs, as the US military explained, “it became necessary for us to exercise a stabilizing influence on the domestic economies of countries most affected, particularly in Latin America.”57 Thus economic warfare in the Andes grew out of this grand imperial vision where rivalries between the United States and Germany in the drug field were driven by the value these commodities held for cultivating human and natural resources in the global competition for national dominance.
The war marked a major economic turning point with the United States emerging as a net importer rather than exporter of raw materials.58 While the United States had always cultivated a hegemonic economic position in the Western Hemisphere, the war provided an unprecedented stimulus to trade when the conflict disrupted the flow of raw materials from Southeast Asia. As one observer commented, “we must have tropical products to win the war and to keep the peace . . . [which means] we are seeing the birth of an entirely new inter-American economy.”59 The Nation’s Business echoed this sentiment: “War needs of the United States have speeded up production in the South American countries . . . [and] we will help in adjusting the national economics of those which responded to the war effort.”60 Some saw the US effort to mold Latin American economic development toward US priorities as potentially coercive and unwelcome: “We must beware of the temptation to convert hemispheric defense into a new streamlined imperialism.”61 However, this did not slow the economic war, as the desire to undermine German power became firmly tied to the long-term development objectives of the United States in the hemisphere.
Battles over the drug trade in the Andes were waged in the context of the overall importance of these economies to the war effort. At the beginning of the war Bolivia and Peru had significant economic ties to both the Allied and Axis powers. As the United Nations would later report, “Before World War II there were substantial investments in Peru owned by German, Italian and, to a smaller ex
tent, Japanese nationals.” However, by the end of the war, “the only substantial foreign business investments” belonged to the United States and Great Britain. Even before the war US investments exceeded German, Italian, and Japanese investments, and by 1935 the US mining company Cerro de Pasco Copper was “by far the largest foreign-owned mining concern in Peru.” The United States was the primary source of capital behind Peru’s mining industry, which accounted for 20 percent of world production. More than half of the total labor force worked for foreign-owned companies, and Cerro de Pasco alone accounted for over a third of the total, producing “more than half the metallic mineral output of the country.”62 In an overview of its raw materials policy in Peru, the US military even drew a comparison with the British Empire’s monopoly over tin production in Thailand, noting that in addition to domestic production the United States was intimately involved in the “commercial control over production in other countries” such as the Vanadium Corporation of America, which controlled almost “the entire Peruvian output” of the steel alloy.63
In Bolivia “the basis of the country’s economy was tin mining.”64 Before WWI, the “Germans [had] acquired a virtual monopoly in several branches of commerce and had made themselves almost indispensable to the economic life of the country.” Yet like Peru, the United States was also a formidable power in Bolivia before the war. The Bolivian tin mining industry was the main source of internal tax revenue in the country and the largest company, Patiño Mines and Enterprises, Inc., registered in the United States and financed by US capital, was responsible for 40–45 percent of the national output. Prices for Bolivian tin, which accounted for three quarters of the country’s exports, suffered during the Great Depression. “Foreign exchange receipts decreased sharply,” and increasing national debts acquired from “substantial borrowing abroad . . . practically all of it from the United States” placed the United States in a position of considerable economic influence. Tin prices recovered throughout the 1930s and shot up further during World War II. In 1940 the United States negotiated a five-year tin contract with Bolivian tin producers, and secured the country’s entire output of tungsten and surpluses of antimony, tin, and zinc.65
US investments in Bolivia and Peru in extracting antinomy, tungsten, tin, quinine, rubber, and petroleum were heavily influenced by the logic of economic warfare. When American policymakers devised wartime economic policy in the region, ensuring the conditions necessary to sustain these industries was paramount. For instance in Bolivia the United States launched public health programs that specifically targeted rubber and quinine producing regions in the hopes of maintaining a healthy workforce to extract resources essential for US war making.66 As the Bolivian ambassador to the United States explained, “Tin and rubber were needed for planes and tanks; the factories producing cannons and ammunition needed Bolivian tungsten; and other commodities, mainly foodstuffs for American soldiers, were required. In this way, the manual work of the Bolivian Indians of the Andes suddenly acquired a transcendental dimension for the life and the defense of that great nation.”
Minerals including tin, antimony, and tungsten accounted for 98.3 percent of the country’s exports, and demand for such metals was “always large during war periods.”67 Bolivia possessed the only hemispheric source of tin and, spurred by war-induced global tin shortages, the United States built a tin smelter specifically for Bolivian ores.68 Before the war the British had been the primary smelters of Bolivian tin, which they then sold to the United States. The war facilitated the emergence of a US smelting industry and the end of American dependence on British manufacturers.69 During the war the United States became the sole purchaser of Bolivian minerals, replacing the United Kingdom as Bolivia’s primary tin export market, which gave the United States considerable diplomatic leverage particular since wartime US stockpiling meant “that market power had shifted decisively from producers to consumers.” While there were rumblings among Bolivian nationalists (particularly strong among the mine-workers organizations) that the “country had become a virtual colony of the United States,” Bolivian officials also sought to capitalize on their newfound importance.70 The BEW mission reported in December 1941 that “Bolivian authorities feel that since Bolivia is contributing to the defense effort by making available vitally important minerals, it is a responsibility of the United States Government to see to it that the mining industry (eighty percent of Bolivia’s import needs) is promptly provided with whatever equipment may be necessary.”71 As the Bolivian ambassador emphasized to his US colleagues, the Indian mine worker “was a true soldier of the cause, whose function ran parallel to that of the soldiers who fought in the trenches, defending the ideals and interests of the Allies.”72
Such appeals gained traction in the wake of what came to be known as the Cataví Massacre in December 1942, when a tin miners’ strike demanding “better housing, wages and medical care” was violently repressed by the government, leaving many dead.73 Historian Laurence Whitehead suggests American officials saw their subsequent intervention as “Good Neighborly” rather than imperial, when they determined that “labor peace in the mines was of urgent concern for those in charge of Allied procurement” and helped organize an investigation headed by a Joint US-Bolivian Labor Commission.74 The Assistant Secretary of State invited Judge Calvert Magruder to chair the commission, describing its goal as being the “double end of improving conditions of labor in Bolivia and assuring a steady production of strategic materials for the United States.”75 The investigators found the “standard of living is notoriously low” among the mine workers and recommended changes in labor policy, which ultimately led to the insertion of labor clauses into the US tin contract. The report also noted one raw material input (coca leaves) that might be a contributing factor to the paltry conditions: “These leaves contain a small amount of cocaine and their chewing is claimed to deaden sensory nerves, quiet hunger pains, temporarily stimulate energy, increase the power of endurance, but do constitute a degenerating force that markedly reduces efficiency.”76 The issue was set aside as something needing further study (and would be taken up after the war by the United Nations), but the problem of labor efficiency and its dependence on healthy consumption was of central concern to US officials, and the circulation of drugs—deemed healthy or harmful—became central to questions of national security.
In this way, the war highlighted the already intimate connection between the mining and pharmaceutical industries. Increasingly a vital part of sustaining the “transcendental” contribution of Bolivian Indians to the war effort entailed steady supplies of pharmaceuticals. For instance, as part of a Bolivian effort to secure national benefits in an industry dominated by foreign capital, companies like Patiño Mines were subject to the Bolivian “Mineral Code.” The code stated that foreign “mining enterprises employing more than 200 workers and located more than ten kilometers from the nearest town must provide living quarters, health services and food to the workers.”77 A healthy industry required healthy workers, and here Germany’s early competitive dominance was stark. In the Andes the mining industry constituted the largest “consumer” market for pharmaceuticals and doctors working for the “large mining companies” continued, despite economic warfare proscriptions, to place orders with German pharmaceutical manufacturers. In January 1942, the US Embassy in La Paz lamented, “Bayer, Merck and Schering products had been specifically requested by the doctors working for these organizations.”78
ECONOMIC WARFARE AND PUBLIC HEALTH
US economic warfare initiatives encompassed a range of practices including the establishment of a blacklist forbidding trade with people and firms deemed to be enemy nationals or cooperating with the enemy, the preclusive buying of raw materials to prevent them from falling into enemy hands, a system of import and export controls designed to maximize trade in strategic goods, and programs geared toward developing new supplies of raw materials, such as the concerted effort to “revive a practically extinct quinine industry in La
tin America” after Japanese military advances cut off Southeast Asian sources of supply.79 Thus, the BEW pursued two primary goals: weaken the enemy’s strategic materials arsenal and financial power, and reorient “Latin America’s economic activity . . . toward fulfillment of the war needs of the United States.”80
In the weeks after Pearl Harbor, the foot soldiers of the BEW traveled through Peru and Bolivia to “familiarize members of the Legation staff with the procedure in Washington for handling Proclaimed List problems.”81 In July 1941, Roosevelt had issued a Presidential Proclamation calling for the compilation of a list of people and firms who directly or indirectly aided the “enemy war machine” and participated in trade “deemed detrimental to the interests of national defense.” Between 1941 and 1945 the “Proclaimed List of Certain Blocked Nationals” was compiled and US firms and citizens were prohibited from doing business with those listed. In practice the blacklist impacted many enterprises regardless of national origin if they were accused of doing business deemed detrimental to the “national defense.”82 When the Peruvian minister of finance asked (perhaps nervously, being of Italian ancestry) for clarification on who should be put on the Proclaimed List, the BEW personnel explained it included “persons who, by their action and not by birth and such, were deemed to be nationals of Germany or Italy, and persons whose activities were inimical to the hemisphere as a whole.”83 In the effort to gain Andean cooperation, the United States framed its economic warfare policies as encompassing Axis agents, but also as a broad and flexible category that could target anyone deemed vaguely threatening to hemispheric defense.
While largely successful in relation to securing control over drug raw materials, the United States had a harder time intervening in a consumer market that until the war had been dominated by German drugs. The BEW agents discovered that manufactured drugs constituted a difficult front in US economic warfare initiatives in the Andes. Eliminating German business competition could only be effective if national governments—like Peru and Bolivia—were willing to target companies accused of ties to Axis powers, even if this entailed immediate short supplies of medicines deemed essential to public health and the smooth running of the countries’ economies. The goal of implementing the Proclaimed List in the Andes was complicated further by the fact that as of mid-1942, US pharmaceutical manufacturers had not yet extensively penetrated the South American market. Drug diplomacy therefore cut both ways. As public health was increasingly seen as a component of national security, allies like Peru could invoke the public interest to resist limitations on their trade with German manufacturers until “legitimate” substitutes could be provided. The Peruvian government refused to prevent the distribution of German and Italian “pharmaceuticals and medicinals,” and insisted an exception to the implementation of the US vision for economic warfare made sense “for such operations as might be necessary in the interest of public health and sanitation.”84 As late as February 1943, the US Embassy reported that the Peruvian government refused to cut off foreign exchange to German distributors “until we can supply American products to take the place of German preparations.”85