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Perón's First Presidency, 1946-51

On February 24, 1946, Perón won the presidential elections in a climate of order and fairness. Peron's political allies won almost all the governors' posts and Senate seats, as well as two-thirds of the seats in the Chamber of Deputies. Before Peron's inauguration in June, President Farrell, under Perón's advice, nationalized the Central Bank and its foreign assets and created the Argentine Trade Promotion Institute (Instituto Argentino de Promoción del Intercambio—IAPI) and empowered it to fix agricultural prices and to use the assets and revenues generated by agricultural exports to promote small- and medium-sized industries. He also established a state-owned commercial airline.

Both US Secretary of State Byrnes and Ambassador Braden were concerned about what they perceived as Peron’s links to the Nazis and they regarded him as a serious obstacle to the effective de-Nazification of Argentina. To Braden, Peron was "a typical Fascist," who had facilitated Nazi penetration of Argentina during his tenure as Minister of War and then Vice President under Farrell.

After the war Argentina became a refuge for escaping Nazis, such as Adolf Eichmann, and those that had collaborated with them, such as Ante Pavelic. From 1946 onward a Nazi escape operation was based at the presidential palace in Buenos Aires, harboring such war criminals as Josef Mengele. An elaborate network relied on the complicity of the Vatican, the Argentine Catholic Church, and the Swiss authorities.

At the end of the war Argentina had accumulated over US$1.4 billion in gold and hard currency, which amounted to 70 percent of all Latin American reserves at the time. Soon after his inauguration Peron signed the Eady-Miranda Treaty, which regulated the acquisition of all British-owned railroads in Argentina. The treaty was highly controversial because of the age of the rolling stock and because the purchase encompassed several other related British-owned enterprises—hotels, meat-packing plants, transportation companies, bonds of several companies, and large tracts of land. Although it did serve to recover some of the capital that had been held in Britain during the war in the form of revenues generated by the Argentine export sector, it also depleted Argentina's postwar reserves.

A positive trade balance following World War II allowed Argentina to embark on a rapid industrialization program. Prosperity reigned throughout the country and gave rise to the aphorism that "God is Argentine." The concept of economic emancipation was expanded beyond the purchase of utility concessions. Industrial activity was encouraged by the IAPI: textile production grew by 100 percent, chemicals by over 300 percent, and the production of plastics, food products, and leather by significant amounts as well. A major handicap to industrial growth was the limited energy capacity of the country. Perón's first state of the union address in 1947 emphasized industrialization and the need for full cooperation from the CGT.

Between 1945 and 1948 the real wages of industrial workers rose by 50 percent, those of government officials by 30 percent, and the overall level of consumption by 20 percent. Perón transformed all decrees enacted by the Ministry of Labor and Social Welfare into laws; 34 percent of all government expenditures were labor related, including a program to build inexpensive housing for workers.

The first signs of the country's inability to continue such increases in real income for the work force surfaced in 1948. Foreign reserves were exhausted, and the prices for Argentine primary products began to fall relative to imports of fuel, capital goods, and industrial raw materials. The government resorted to printing more money and borrowing abroad. An inflationary spiral led to the fall of real wages in 1949.

The reform-minded administration intensified its pursuit of stronger mechanisms to exercise political control. In order to mobilize popular support, a new Peronist party was organized under the banner of Fairness (Justicialismo). To circumvent the provisions of the 1853 Constitution regarding presidential reelection, a constitutional reform was undertaken and promulgated in March 1949. In the elections of 1951 Perón won 4.6 million votes against 2.3 million cast for his opponent, Ricardo Balbin of the UCR.

The mythical aspects of Perón's regime were embodied in Eva Duarte de Perón (popularly known as Evita), who personified the confused revolutionary aspirations of the Argentine masses. Evita came from a poverty-stricken family and was constantly reminded of her origins by the Argentine elites, whom she despised and antagonized with her public displays of wealth and power. Her main activities between 1948 and 1951 took place at the Ministry of Labor and Social Welfare, where she met daily with hundreds of people who came to ask for help, to thank her for previous bequests, or to bring her a contribution for the Eva Peron Foundation, a private institution established in 1948 that provided services to the needy.

The foundation had political significance and was a branch of Peron's social programs. Although Evita did not participate in the campaign for women's suffrage — granted in 1947 — she was politically active in the 1949 establishment of the Women's Peronist Party and encouraged women to participate in politics.

Evita was the standard-bearer of her husband's following. Acknowledging her debt to Peron, she incited the people to adore him. Evita occupied a preeminent position in the Argentine political hierarchy during her husband's rule, and she acquired the skills of an emotive public speaker.

On the eve of Perón's second term, Argentina had made important strides in foreign relations and in internal social policies, whereas economic conditions had deteriorated. In a bipolar world split between the United States and the Soviet Union, between capitalism and communism, Argentine foreign policy moved after 1946 to a position of nonalignment that was called a Third Position. Argentina adopted this approach to the Cold War in order to establish itself as a leading nation in the hemisphere.

The economic policies of Perón's first term had concentrated on import-substitution industrialization in order to supply a growing domestic market. The increasing purchasing power of wage earners stimulated the growth of consumer goods industries, whereas basic industries were largely neglected. One exception was the beginning of a steel industry in 1945-47 under the auspices of the General Directorate of Military Manufactures, which had been created in 1941. This consumption-oriented model of industrialization, however, eventually led to an unanticipated dependence on imported capital goods and to the decapitalization of the economy.

The transfer of resources from agriculture to industry provoked a reaction from the landed interests, which began to undermine production by reducing the acreage of land under cultivation. This in turn generated a drop in exports and created a trade deficit. In 1950, as the Korean war began, United States purchases of grain doubled, and Argentina was able to secure a US$125 million loan from foreign private interests to shore up its foreign reserves. This bonanza was to be shortlived, however.

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