Guano dreams

In 1856, American president Millard Fillmore threatened the country of Peru with war, stating that the United States government would “employ all means properly in its power” to force Peru to sell the US… bird poop.

Yes, bird poop, folks. Also known as guano. A fertilizer so rich in nitrogen that it could double the production of valuable crops like wheat and corn just about anywhere. And there was lots of it on islands just off the coast of Peru, where Inca rulers had carefully managed the resource for hundreds of years prior to the arrival of Europeans, even forbidding the hunting of the birds who produced it and doling out a portion every year to farmers for their fields.

The United States wanted this guano and wanted to force Peru to give it to them. But Peru had already made an agreement with Great Britain, giving the powerful British Empire authority over its guano trade. President Fillmore threatened Peru with violence to try to get them to change their policies.

This guano disagreement seems mildly amusing at first, but it was deadly serious. The fight to control this rich fertilizer illustrates an important development of the late nineteenth and early twentieth centuries. Industrialized, imperialist nations like Great Britain and the United States exerted economic power over Latin America by using investments, infrastructure projects, and control over key natural resources to gain profit and influence. At the same time, some Latin American elites, including both politicians and companies, cooperated with foreign empires for their own economic benefit. In the process, Latin American economies came to serve foreign interests and a small elite rather than the majority of their own populations. Let’s look at how this worked.

Economic imperialism in global context

We often think of modern colonialism in terms of highly visible examples. We talk a lot about settler colonialism—settlers move to an occupied country and take control of its land and its people. Or we talk about formal colonialism—an industrialized power takes over a region and its people, usually through violence, and then formally claims it as a colony, with or without settlers moving in. In both cases, the imperial power claims sovereignty over the colony: they declare their legal and exclusive right to rule it.

However, empires can also exert their power over other people and countries without formally claiming to rule them. We sometimes call this an informal empire, and it can be harder to see than a formal empire. Informal empire happens when a powerful state exerts pressure that shapes the culture and economy of other countries, sometimes violently but without claiming to rule them. When these powerful states use trade, investment, and business control—not armies—to dominate the economies of weaker countries for their own benefit, we call it economic imperialism.

In the decades following Latin American independence, industrialized nations came to exert control over the economies of many Latin American countries. They used political pressure, financial assistance through loans, the threat of violence, and alliances with some local elites rather than outright formal colonization. Britain was the first major power to use this strategy in Latin America in the mid-nineteenth century, a time when Britain had few serious rivals. With the decline of Spanish and French power after years of war and revolution, Britain was uniquely positioned to dominate global trade, especially after becoming the first industrialized nation. British factories needed cheap raw materials like wool, meat, and minerals, while also searching for new overseas markets in which to sell their textiles and manufactured goods. Latin American countries met both these needs, so much so that British investment in Argentina eventually matched or even exceeded that in formal colonies like Australia and South Africa.

While Britain’s economic dominance peaked in the mid-1800s, by the late nineteenth and early twentieth centuries, the United States had begun to replace Britain as the leading imperial force in Latin America. The US used similar methods—loans, investment, and military threats—to control access to raw materials and markets. As a result, while political independence had been achieved decades earlier, economic sovereignty remained elusive for the many Latin American nations that were caught between foreign investors, export economies, and imperial ambitions disguised as free trade.

Latin American perspectives

The power of Great Britain and then the United States was one important factor in the rise of economic colonialism in Latin America. But to understand this transformation, we also need to look at factors within Latin America. After gaining independence from Spain and Portugal, many Latin American nations were looking for investment. However, they were often both politically unstable and economically dependent on exporting raw materials. When European and North American merchants and diplomats rushed in to sign trade treaties and invest in infrastructure, they often found governments eager to use these investments to help them develop industries such as textiles, railways, banks, utilities, and ports.

In many ways, this decision seemed to make sense. The wealthy Creole elite—landowners, merchants, and politicians of European descent—were eager to modernize their countries. But they lacked the money and technology to do so on their own. Looking to foreign investors, particularly those from Britain, seemed a logical way to fund infrastructure projects that could support the growth of exports to generate money for their governments.

And this relationship was not purely practical—it was also cultural and ideological. Many Latin American elites admired European (especially British) ideas about free trade, modernization, and “civilization.” They saw foreign capital as a way to insert their countries into the modern global economy, and many believed that adopting British-style values—including economic liberalism and even British fashion and sports—would help stabilize their societies and promote prosperity. By the 1860s, collaboration with British investors was not just tolerated but often celebrated by ruling elites.

As Germany and other European countries industrialized, some investment and cultural practices came from these countries as well. In places like Argentina and Uruguay, this led to a situation in which almost all major industrial and financial enterprises—railroads, tramways, ports, banks—were owned and operated by Britain, while in Chile they were mostly owned by US-based companies.

The Port of Buenos Aires

Two examples serve to illustrate these trends. The first is British investment in Argentina. In the late nineteenth century, Argentina’s economy was booming thanks to its exports of beef, wheat, and wool. But to keep that growth going, the country needed a modern port to handle large ships and increasing trade. That’s where the British came in. Their firms financed, designed, and built the Port of Buenos Aires, which was completed in 1897. However, while the port helped Argentina grow, it also made the country more dependent on Britain. British companies controlled the shipping lines that moved goods out of the ports, and they controlled the railways that linked the Argentinian countryside to the port. And British banks handled much of the financing for these projects.

In general, upper-class Argentine businesspeople and politicians supported this arrangement. Wealthy landowners profited from exporting goods, while politicians often saw British investment as a sign of progress. But there were trade-offs. The new infrastructure focused on exports, not on developing internal markets or industry. High freight charges hurt local producers, and British firms kept most of the profits. In other words, the port made Argentina richer—but on terms that favored Britain and its investors and without that wealth filtering down to the urban or rural poor.

Copper extraction in Chile

Another good example of economic imperialism is copper mining in Chile. Chile has one of the richest copper reserves in the world, and this discovery once promised great wealth to the country. But instead of being controlled by Chileans, the biggest copper mines came to be owned by US companies like Anaconda and Kennecott. These firms built massive open-pit mines such as Chuquicamata, and extracted billions of dollars’ worth of copper. Most of the profit—and all of the copper—was sent back to the United States. Workers in the mines often lived in poor conditions and had little say over wages or safety.

Chilean political and business elites generally allowed this foreign dominance, in part because it brought jobs, tax revenue, and international investment. Like Argentine leaders before them, many believed that cooperating with a powerful industrial nation would help modernize the country. But over time, resentment grew. Chilean nationalists made it widely known that their most valuable resource was controlled by foreigners. By the 1960s and ‘70s, this anger would lead to calls for nationalization, which culminated in President Salvador Allende’s efforts to take back control of the mines in 1971. This example shows how economic imperialism could generate long-term political tensions—even when it began with the support of the elite.

Conclusion

As the two examples above clearly show, economic colonialism came at a great cost, and the Latin American elites who supported it generally did little to help their own countries. By prioritizing exports and foreign markets, they deepened economic dependency and inequality. Railroads were often designed to move goods from the countryside to ports, not to connect cities or support internal development. High freight charges and the dominance of imported British goods made it harder for local producers and manufacturers to thrive. Yet the ruling classes often benefited personally from these arrangements: they made profits from exporting cattle, wheat, or minerals, and maintained their political power through alliances with foreign investors. In short, economic imperialism succeeded not just because of British or American pressure, but because many Latin American elites believed it aligned with their own goals of profit, prestige, and national development—even if it meant giving up some control over their economies.

To understand the costs of these policies, we can look again to guano as a good example. Fortunately, President Fillmore’s threatened war never happened, but dispute over the control of bird poop did lead to two other wars in the region—one between Spain and Peru, from 1864 to 1866, and another that involved Peru, Bolivia, and Chile, in 1879. These wars were costly, and the winners only got control of a product that was mainly exported to help European and North American farmers, rather than their own. The citizens of Peru, Chile, and Bolivia may have been employed as underpaid workers harvesting guano, but they didn’t otherwise benefit. More important, when European scientists figured out how to make synthetic fertilizers, the market for Latin American guano collapsed. This collapse helped cause an economic bust in the region, proving that dependence on investment from industrialized countries came at great cost to Latin Americans.