We Sell Drugs: The Alchemy of US Empire Page 6
Similarly the US Embassy in La Paz reported its failure “to convince the Bolivian Government” to deny Proclaimed List nationals foreign exchange or to prevent the distribution of their drugs. The reason “that such efforts have so far proved fruitless is due, at least in part, to the fact the Germans control the drug trade in Bolivia and continue to import products essential to the country.” Cutting off foreign exchange to German importers would mean that the “country’s economy would be most seriously harmed.”86 By June 1942, German drug distribution had been disrupted by naval blockades and the closure of German Bayer and Schering drug firms in Brazil.87 And yet, as in Peru, by early 1943, “no replacement sources have appeared.” The US Embassy wrote explaining the gravity of the situation to the State Department: “The present drug situation is therefore most serious to Bolivia, as an absolute shortage of necessary drug products is dangerous to the general health of the country; and to the further prosecution of economic warfare policies because any dislocation of economy due to the war is immediately blamed upon the United States.”
Drugs had become critical to “national health” and critical symbols of the potential abuses and limits of US power. The US Embassy lamented, “German interests can effectively force the Bolivian Government to grant them the financial and other facilities they need.”88 The US government concluded: “in addition to being a matter concerning Bolivia’s public health, pharmaceutical products become a most important weapon of economic warfare.”89 Three months later, pharmaceuticals still remained the “knotty segment of the supply problem.”90
Two key objectives emerged in US drug warfare initiatives in the Andes.91 The first was the push for Latin American implementation of sanctions against Proclaimed List businesses involved in the drug trade. The second, a necessary accompaniment to the first, was the concerted effort to ensure a reliable replacement supply of US-manufactured drugs. The challenge was formidable as new agencies within the US government jockeyed for control over the program, as American drug companies had not yet penetrated the region, and as regional governments resisted taking action until public health (and by extension, economic production) was guaranteed. In his study of economic warfare and the pharmaceutical industry, historian Graham D. Taylor emphasizes bureaucratic wrangling between the State Department and the BEW as generating enormous inefficiency.92 In fact battles between the secretary of commerce and the vice president over delays in acquiring Latin American sources of quinine led President Roosevelt to dissolve the BEW in 1943 and replace it with the Office of Economic Warfare under new leadership.93 Despite the infighting, there was considerable agreement on the value of drugs to national security and a shared belief in the need for US intervention in nations across the hemisphere on this account. Government officials and pharmaceutical businessmen also reportedly shared skepticism “about the commercial benefits of contributing to local chemical manufacturing development in Latin America.”94 The program had to be driven by expanding both supply and demand for US-manufactured drugs.
To overcome these obstacles, staff at US embassies in the Andes worked with local governments and businesses to assess drug requirements and asked US pharmaceutical firms to compile and disseminate lists of comparable American drugs.95 Drug control brought together commercial and strategic interests while creating a network of public and private collaborators. The BEW mission reported, “Our whole program depended upon getting good commercial intelligence,” and informed the US commercial attaché in Peru that “he should use every means to get commercial information.”96 This “commercial intelligence” helped the United States gauge demand for pharmaceutical products and implement what it termed a “Drug Replacement Program,” a strategy to replace Axis products with US-manufactured drugs. Embodying a logic that continued to shape international drug regulation, it was not the chemical substance itself that made a drug desirable or undesirable, but rather the political and economic affiliations of its manufacturer. Obtaining information about national essential drug requirements was critical to the program since governments were hesitant to cut off German suppliers of pharmaceuticals until the United States was able to provide “Allied” goods—the very same drugs—as substitutes. While it began as a program initiated during the war, this market reconnaissance strengthened the US government’s desire and capacity to facilitate the ongoing expansion of US corporations into those markets.
On the Andean government side, the US commercial attaché suggested that the Peruvian Ministry of Finance create a “Commercial Department” to facilitate “greater oversight and control over stocks of drug commodities and their distribution.” As of January 1942, this new department “now has a staff of approximately sixteen men who are devoting all their time to gathering information on essential requirements, stocks, prices and related matters.” But as they began their work, US representatives complained the estimates they provided were “greatly exaggerated and that the investigating and analytical ability of the Commercial Department is not high.” Believing the capacities of US personnel to be superior, and perhaps as a way of gaining greater access to information, the BEW successfully suggested that a US officer “be placed in the Commercial Department not just to advise with but in reality to organize and direct its work.”97 By March 1943 US economic warfare objectives were gaining ground in Peru, although German-manufactured drugs continued to circulate. The Peruvian government remained unwilling to shut down German drug distribution, but did help the United States gather commercial intelligence to facilitate the replacement program. A Supreme Decree required reports from all government agencies to determine essential drug requirements and medicinal needs, and instituted a system of controls to track stock quantities and direct distribution.98 The Peruvian Ministry of Public Health also delivered product sales information for various Proclaimed List firms, which the US Embassy handed over to US business interests. Despite these efforts some imports of Axis pharmaceuticals persisted until as late as November 1943.99 There was no law requiring the private sector to report its drug stocks, and the US Embassy remained frustrated in its efforts to “ascertain the present inventories in Peru of German Drugs.”100
This type of collaboration was harder in Bolivia. There too the United States believed essential requirement figures were “grossly exaggerated,” but unlike in Peru, the BEW lamented, “There is no American community on whom the Legation can rely for help.”101 In a panicked plea to expedite licensing of US drug shipments, an embassy official wrote the State Department in January 1943: “Scarcity of American pharmaceutical products in Bolivia reaching critical stage.”102 However, by April, the embassy in La Paz had a more optimistic assessment of the prospects for economic warfare coordination. Following a brief tour of the US Vice President through the region in an effort to shore up hemispheric solidarity, US Ambassador Henry Ramsey was confident: “It appears almost certain that Bolivia will declare war and if it does we should move quickly to present a comprehensive [drug] replacement program before the country’s initial and belligerent enthusiasm abates.”
The very next day, April 7, 1943, Bolivia officially declared war on Germany. Viewing war “enthusiasm” as a boon to US objectives, Ramsey went on to suggest that the financial aspects have to be handled “before we will have much bargaining power on the matter of adequate control.” To that end, he recommended the Export-Import Bank finance a Bolivian subsidiary bank to fund the drug replacement program, setting aside government funds to help US pharmaceutical firms distribute in the Bolivian market. The campaign to finance the replacement program was taken up by the Bolivian Development Corporation (BDC), established in 1943 to stabilize the Bolivian national economy through US-Bolivian financial arrangements. The BDC was governed by a board, half of whom, including the president and vice president, were appointed by the Bolivian government and the other half, including the manager and assistant manager, by the Export-Import Bank in Washington. In a letter addressed to the US vice president seeking support for the bank propos
al they explained, “[The BDC’s] most effective field of action lies in the program of economic warfare through which the democracies are attempting to eliminate the financial potency of commercial and industrial interests inimical to the democratic cause throughout the Hemisphere.” The BDC, invoking hemispheric solidarity, wanted to be able to “finance Bolivian firms” so that they might take the business of “distributing merchandise throughout Bolivia out of Axis hands and return it to Bolivians.”103
The United States was especially concerned that Proclaimed List firms were able to continue to operate by using intermediaries to disguise, or “cloak,” Axis involvement. As the United States pursued its replacement programs, dispatches continued to lament German use of business intermediaries. For instance, in November 1943 the US Embassy in Lima notified the State Department that a known “cloak for Schering interests” was importing drugs into Peru.104 In contrast, national affiliation with the United States offered legitimacy in a context where US economic warfare policies drew the line between legal and illegal participation within the economy, and by extension delineated the legal and illegal status of drugs from various origins. The embassy asked Washington for US corporations to devise a list of medicines to replace “undesirable brands” with the “names of American, British and other acceptable equivalents” as a necessary step “prior to the initiation of an offensive against these products.”105 Not only did the promotion of a “national” identity for a drug collapse the international supply networks of raw materials into the ideological property of “national” manufacturers but also, as a consequence, these manufacturers became key players in the field. The most readily available source of US pharmaceuticals necessary to replace German product lines were those manufactured by former subsidiaries of German firms in the United States, most of which had been severed from the parent company after World War I and transformed—via national affiliations—into legitimate, newly “American” companies.
In response to these worries about a German “cloak for Schering interests,” the State Department and US Embassy in Lima coordinated efforts to pass on information regarding the annual Peruvian importation of Schering’s drug products to its former US subsidiary: Schering Inc., based in Bloomfield, Indiana. The embassy deemed the information “particularly timely and helpful to it in adjusting its production and sales program to the needs of Peru.”106 These efforts clearly showed a process of criminalizing certain economic participants and select proprietary drugs premised on political and economic affiliations. To prevent German Schering from operating through “cloaks,” US Schering, a national “cloak” of sorts, was called upon to intervene. A similar policy was pursued in Bolivia. The embassy there notified the US secretary of state in 1943, “From the standpoint of enforcement of Economic Warfare policies, and realizing that the outright expropriation of German Drug interests is impractical at the present time, the only way to overcome the [Bolivian] Government’s inertia and to obtain the desired cooperation, is to actively encourage and increase the export of ethical products by United States Drug concerns. . . . Any comprehensive plan in this direction would necessarily also include an increase in exports of the American controlled Merck, Schering and other companies.”107
Expropriation reflected one wartime tactic for undermining the enemy’s economic power, a process that had already transformed both US-based drug houses, Merck and Schering, into legitimate drug providers. The effort to extend the distribution network of US pharmaceutical companies’ products (including “ethical” drugs, a contemporary term for drugs that required a doctor’s prescription to purchase) reflected another.
US economic warfare initiatives depended on US collaboration with Andean governments, but also on US government and business coordination. The largest obstacle the BEW confronted was the failure of American firms to supply the adequate quantity of legal substitute drugs or “acceptable equivalents.” As the US Embassy in Bolivia reported, “The general lack of interest in the Bolivian market which is being shown by American exporters of drugs and pharmaceutical supplies is encouraging continued purchase of German products of this nature.” The embassy repeatedly observed that the efforts of Bolivian importers to do business with US firms were thwarted by American pharmaceutical houses “not interested in the Bolivian market.”108 And the lack of American drug replacements undermined US efforts to exert pressure on Andean governments to comply with economic warfare initiatives: “As the [State] Department is aware the Embassy has been promising local merchants an acceptable product to replace German drugs for some time and the Embassy’s failure to do so is becoming increasingly embarrassing as the available supply of German drugs dwindle.”109
To deal with this problem, the embassy called for government intervention and asked the State Department to put pressure on US drug companies to distribute their products as a wartime imperative.110 The government’s outline for overcoming the drug replacement problem seemed to be a combination of a business plan and a national security directive:
1.That American pharmaceutical firms be induced as a patriotic duty to enter the Bolivian market.
2.That American firms already having representatives in Bolivia change to representatives who will push their products.
3.That the Board of Economic Warfare, War Production Board, and War Shipping Administration be shown the critical importance of American pharmaceutical products to the economy of Bolivia and to the economic warfare of the United States, so that provision may be made for shipments of these commodities.111
Behind such economic appeals to “patriotic duty” lay the coercive capacity of the state. Just before the formal US declaration of war, the State Department had issued its “Instructions of September 20, 1941,” amended on December 13, 1941 after Pearl Harbor, that set out a standard of conduct for US firms that instructed them to stop doing business with Proclaimed List firms and warned them that “strict compliance with such standard was required.” The BEW mission brought these “Instructions” with them to the Andes and gave them to US embassies for distribution to “All American concerns.” The State Department asked to be kept informed of US companies not cooperating with economic warfare policy, explaining the government was in a “position to exercise a number of sanctions against any American concerns not cooperating.”112
The US government could force US businesses to comply with economic warfare initiatives; however, there was in fact a considerable degree of collaboration between the government and the private sector in implementing the pharmaceutical replacement program in the Andes. This collaboration came in a number of forms. The US government worked with other governments and industry players in the Andes and the United States to compile lists detailing national medicinal needs, current drug stocks, and competitors’ products and delivered this “commercial intelligence” to American pharmaceutical companies.113 To improve US drug distribution networks, for instance, the government distributed to US manufacturers a list of “firms, organizations, and individuals,” including government offices, the Pan-American Sanitary Bureau, and the Peruvian military, that were “interested in importing drugs and pharmaceuticals from the United States.”114 When US firms refused to work with distributors who also handled competitors’ products, the embassy tried to get more local distributors to enter the market (in striking contrast to the comparable refusal to diversify drug importers on the US end).115 Fostering business relations between American and Andean firms was paired with coordination among agencies of the US government. The BEW and the State Department together tracked reductions in German drug sales and kept US companies abreast of increased demand. Government agencies also expedited licensing and drug shipments to tackle the replacement problem.
American companies also coordinated with one another to advance US economic warfare initiatives. In Bolivia, one of the oldest US merchant businesses in South America, WR Grace, offered to transport Parke, Davis & Company drug products to parts of the country where they traveled for their own b
usiness. As WR Grace representatives explained, they were “happy to haul” pharmaceuticals “if such would aid the replacement program.”116 Pharmaceutical companies also worked to expand drug sales by cultivating ties with local physicians. Parke, Davis & Co., for instance, hired a “resident representative . . . [for the] sole purpose of acquainting the medical profession with Parke, Davis products,” and the US Embassy prodded other US pharmaceutical houses to do the same: “American manufacturers of ethicals will be encouraged to compile and distribute such compendiums . . . [in] Bolivia and other Latin American countries.”117