“Gave us back our businesses, got the English out.”

I’m catching up this week. I have always been interested in Juan and Eva Peron. I’ve read lots of biographies and history books about them. Plus, who doesn’t love Evita? (The title of this blog comes from the song She’s a Diamond from the musical.) Juan Peron became president of Argentina in February of 1946, winning 56% of the popular vote. (Mc, Ghann, T., 2018) Peron came to power with a vision of industrialization and nationalization. (McGhann, T., 2018) Peron’s idea was to run the Argentinian economy somewhere between capitalism and communism. (McGhann, T., 2018) The centerpiece for Peron’s nationalist movement was to purchase all of the railroads in Argentina that were owned by foreign investors. Some of the investors were French, but the bulk of the investors were English. (Columbia University, 2018)

Peron knew that Argentina was in a good position to purchase the railroads. Argentina had remained neutral during World War II. None of Argentina’s abundant resources went to a war effort, plus Argentina accumulated a large foreign trade balance with Great Britain, totaling about $1.6 billion in 1946. (Columbia University, 2018) With the backing of most Argentinians, Peron purchased and nationalized the railroad in Argentina in March 1947 for $600 million. (Columbia University, 2018) This purchase nationalized 65% of Argentina’s rail lines. (Columbia University, 2018) In a proud spirit of nationalism, train cars were adorned with the Argentine flag. The railroad workforce grew by 60%. (Columbia University, 2018) Workers under Peron received a minimum wage, paid holidays, sick and maternity leave, disability pay, and low income housing. (Columbia University, 2018) Workers also had access to government owned resorts for very little money. (Columbia University, 2018) Students not only received a free education, they received paid time off during finals week. (Columbia University, 2018)

But things were not as good as they seemed. The railroads were in worse repair than Peron realized.  Most of the tracks had been laid prior to 1914. (Pahowka, G., 2005) By 1955, some trains were in such bad repair that they only ran at half the speed they should have. (Pahowka, G., 2005) As automobiles became more common, less people used the railroad and passenger travel stagnated. (Pahowka, G., 2005) The railroad was originally installed for $600, Peron bought it for $600 million, and by the early 1950’s it was estimated that the cost to update the nationalized railroad would be $1.2 billion. (Pahowka, G., 2005) The bulk of foreign reserves had been spent purchasing and running the railroad, leaving very little capital to update. (Pahowka, G., 2005) Peron had overmanned the workforce and offered too many social benefits. He put those loyal to him in charge of running the railroad operation instead of experienced businessmen. (Pahowka, G.,) Peron’s business model was completely upside down, it ruined the railroad, and had become a drain on government resources and the economy.

Inflation caused the cost of living to skyrocket under Peron. Under his leadership, inflation went from 3.6% in 1947, to 15.3% in 1948, to 23.2% by 1950. (Pahowka, G., 2005) The railroad union that had once put Peron in power turned on him and began to strike in 1950. (Pahowka, G., 2005) One striking worker, Arturo Echangue, said, “Peron has not done so much for the workers as he makes out that he has done…and insofar as wages are concerned, they may have gone up, but prices have gone up even faster, and so the worker is the loser.” (Pahowka, G., 2005) Any benefits the Argentine working class would have gotten from economic growth was thrown away on inflation. Peron pushed industrialization over agriculture. Agriculture was a huge source of export revenue for Argentina and the loss was huge. (Pahowka, G., 2005) Without agricultural export revenue, Peron was not able to maintain investment in industrialization and the railroad. (Pahowka, G., 2005) The Argentine economy suffered. In 1955 Peron was overthrown by the military. (Pahowka, G., 2005)

References

McGhann, T., (2018)  Juan Peron: President of Argentina. Retrieved October 20, 2018 from www.britannica.com.

Pahowka, G. (2005) A Railroad Debacle and Failed Economic Policies: Peron’s Argentina. Retrieved October 20, 2018 from www.cupola.gettysburg.edu.

The Legacy of Juan Peron. Retrieved on October 20, 2018 from www.columbia.edu.