The wars of independence in Spanish America interrupted the Atlantic and Pacific trade networks that had sustained the region’s colonial economies. Amid the political instability that followed independence, investment dried up and trade networks collapsed. Civil war and rule by caudillos delayed the consolidation of liberal regimes in Spanish America. In the first decades of independence, Latin America’s economic integration with the world decreased. For rural peasants and indigenous communities, this was a benefit in disguise: the decline of trade made lands less valuable. The rents landowners could charge tenant farmers decreased, making it easier for peasants to gain access to land.

By the second half of the nineteenth century Latin American elites reached a compromise that combined liberal political ideas about the way national government should be structured with liberal economic policies that favored large landowners. Political stability and economic growth returned. Foreign investment intensified. By the turn of the twentieth century Latin American countries were firmly tied to the world economy. Indigenous and rural communities paid a high price for this return to economic growth: as the value of agricultural exports increased, so did the value of land. Governments, foreign investors, and large landowners seized lands through war, legal action, or coercion at a dizzying rate.

As Latin American governments stabilized, they consolidated control of national territory in part by eliminating, subjugating, or displacing indigenous communities. Through this process, Latin American governments opened new lands for private ownership much as the United States did along its expanding frontier, but with very different results. In the United States the 1862 Homestead Act made over 500 million acres available for settlement, often on lands forced from Indian communities. The Homestead Act had two objectives: to promote white settlement of western territories to integrate those territories into the nation, and to make those regions economically dynamic by creating an extensive class of small farmers.

After the Conquest of the Desert in the 1870s and 1880s, the Argentine government sold off lands it took from indigenous communities. The land was inexpensive, but because it was sold in such large parcels, the few who could purchase it did so by mortgaging existing landholdings. Though Domingo Sarmiento, too, had imagined the creation of a class of small farmers, the result was the opposite: more than 20 million acres were sold to just 381 landowners who created vast estates known as latifundios. In contrast, the Brazilian Land Law of 1850 restricted landownership by prohibiting anyone from gaining title to land by settling it, as the Homestead Act allowed. The law was a response to pressure from Britain to end the slave trade: planters used the law to keep slaves or free workers on their plantations by preventing them from setting out to farm on their own.4

Liberal economic policies and the intensification of foreign trade concentrated land in the hands of wealthy exporters. Governments represented the interests of large landowners by promoting commodity exports and industrial imports, following the liberal economic principle of comparative advantage (that countries should export what they could produce the most efficiently and import what other countries could produce more cheaply and efficiently). Brazil became the world’s largest exporter of coffee and experienced a brief but intense boom in rubber production. Argentina’s conquests on the frontier and economic modernization made it one of the most efficient and profitable exporters of grains and beef. Chile and Peru served the international market for fertilizers by exporting nitrates and bat guano.

These export booms depended on imported capital and technology. In the Circum-Caribbean this came mostly from investors in the United States, while in South America it often came from Britain. (See “Individuals in Society: Henry Meiggs, Promoter and Speculator.”)

British capital and technology built Argentina’s network of railroads and refrigerated meatpacking plants. Chile’s nitrate-mining industry was expanded through the War of the Pacific (1879–1883), a conflict in which Chile seized territory in bordering Peru and Bolivia. In the process, Bolivia lost its access to the Pacific and became a landlocked nation. The war and its outcomes revealed British influence as well: the Chilean government issued bonds bought by British investors in order to finance the war. The bonds were repaid with concessions for mining the nitrate-rich lands that Chile conquered from Bolivia. In 1878 British companies controlled 13 percent of nitrate mining. By 1890 they controlled 90 percent.

The rise in the quantity and value of primary commodity exports concentrated wealth in the hands of oligarchs. Large landowners, such as Brazilian coffee planters, relied on cheap labor provided by slaves until 1888 and, increasingly, by tenant farmers and free laborers who worked for little pay. The exported coffee produced by these workers garnered profits so great that although coffee planters were the main slaveholders, they could afford to give up slavery and pursue immigrant labor from Europe. In the late nineteenth century planters united to create colonization companies in southern European cities that promoted and subsidized immigration to Brazil. The planters combined economic liberalism with Social Darwinism: they believed that free workers were more efficient than slave laborers and that white workers were more productive than black ones.