A June 4, 1943, coup d'état was led by General Arturo Rawson against conservative President Ramón Castillo, who had been fraudulently elected to office. The military was opposed to Governor Robustiano Patrón Costas, Castillo's hand-picked successor, who was the principal landowner in Salta Province, as well as a main stockholder in its sugar industry.
As a colonel, Perón took a significant part in the military coup by the GOU (United Officers' Group, a secret society) against the conservative civilian government of Castillo. At first an assistant to Secretary of War General Edelmiro Farrell, under the administration of General Pedro Ramírez, he later became the head of the then-insignificant Department of Labor. Perón's work in the Labor Department led to an alliance with the socialist and syndicalist movements in the Argentine labor unions. This caused his power and influence to increase in the military government.
After the coup, socialists from the CGT-Nº1 labor union, through mercantile labor leader Ángel Borlenghi and railroad union lawyer Juan Atilio Bramuglia, made contact with Perón and fellow GOU Colonel Domingo Mercante. They established an alliance to promote labor laws that had long been demanded by the workers' movement, to strengthen the unions, and to transform the Department of Labor into a more significant government office. Perón had the Department of Labor elevated to a cabinet-level secretariat in November 1943.
Following the devastating January 1944 San Juan earthquake, which claimed over 10,000 lives and leveled the Andes range city, Perón became nationally prominent in relief efforts. Junta leaderPedro Ramírez entrusted fundraising efforts to him, and Perón marshalled celebrities from Argentina's large film industry and other public figures. For months, a giant thermometer hung from the Buenos Aires Obelisk to track the fundraising. The effort's success and relief for earthquake victims earned Perón widespread public approval. At this time, he met a minor radio matinee star, Eva Duarte.
Following President Ramírez's January 1944 suspension of diplomatic relations with the Axis Powers (against whom the new junta would declare war in March 1945), the GOU junta unseated him in favor of General Edelmiro Farrell. For contributing to his success, Perón was appointed Vice President and Secretary of War, while retaining his Labor portfolio. As Minister of Labor, Perón established the INPS (the first national social insurance system in Argentina), settled industrial disputes in favor of labor unions (as long as their leaders pledged political allegiance to him), and introduced a wide range of social welfare benefits for unionized workers. Leveraging his authority on behalf of striking abattoir workers and the right to unionize, he became increasingly thought of as presidential timber.
On September 18, 1945, he delivered an address billed as "from work to home and from home to work." The speech, prefaced by an excoriation of the conservative opposition, provoked an ovation declaring that "we've passed social reforms to make the Argentine people proud to live where they live, once again." This move fed growing rivalries against Perón and on October 9, 1945, he was forced to resign by opponents within the armed forces. Arrested four days later, he was released due to mass demonstrations organized by the CGT and other supporters; October 17 was later commemorated as Loyalty Day. His paramour, Eva Duarte, became hugely popular after helping organize the demonstration; known as "Evita", she helped Perón gain support with labor and women's groups. She and Perón were married on October 22.
Domestic policy and first term (1946–1952)
Perón and his running mate, Hortensio Quijano, leveraged popular support to victory over a Radical Civic Union-led opposition alliance by about 11% in the February 24, 1946 presidential elections.
Perón's candidacy on the Labor Party ticket, announced the day after the October 17, 1945, mobilization, became a lightning rod that rallied an unusually diverse opposition against it. The majority of the centrist Radical Civic Union (UCR), the Socialist Party, Communist Party of Argentinaand most of the conservative National Autonomist Party (in power during most of the 1874–1916 era), had already been forged into a fractious alliance in June by interests in the financial sector and the chamber of commerce, united solely by the goal of keeping Perón from the Casa Rosada. Organizing a massive kick-off rally in front of Congress on December 8, the Democratic Union nominated José Tamborini and Enrique Mosca, two prominent UCR congressmen. The alliance failed to win over several prominent lawmakers, such as Congressmen Ricardo Balbínand Arturo Frondizi and former Córdoba governor Amadeo Sabattini, all of whom opposed the Union's ties to conservative interests. In a bid to support their campaign, U.S. Ambassador Spruille Braden published a white paper accusing Perón, President Farrell and others of Fascist ties. Fluent in Spanish, he addressed Democratic Union rallies in person. Braden's move backfired, however, when Perón summarized the election as a choice between "Perón or Braden." He persuaded the president to sign the nationalization of the Central Bank and the extension of mandatory Christmas bonuses, actions that contributed to his decisive victory.
When Perón became president on June 4, 1946, his two stated goals were social justice and economic independence. These two goals avoidedCold War entanglements from choosing between capitalism over socialism, but he had no concrete means to achieve those goals. Perón instructed his economic advisors to develop a five-year plan with the goals of increasing workers' pay, achieving full employment, stimulating industrial growth of over 40% while diversifying the sector (then dominated by food processing), and greatly improving transportation, communication, energy and social infrastructure (in the private, as well as public, sectors).
Perón's planning prominently included political considerations. Numerous military allies were fielded as candidates, notably Colonel Domingo Mercante who, when elected Governor of the paramount Province of Buenos Aires, became renowned for his housing program. Having brought him to power, the General Conference of Labour (CGT) was given overwhelming support by the new administration, which introduced labour courts and filled its cabinet with labor union appointees, such as Juan Atilio Bramuglia (Foreign Ministry) and Ángel Borlenghi (Interior Ministry, which, in Argentina, oversees law enforcement). It also made room for amenable wealthy industrialists (Central Bank President Miguel Miranda) and socialists such as José Figuerola, a Spanish economist who had years earlier advised that nation's ill-fated regime of Miguel Primo de Rivera. Intervention of their behalf by Perón's appointees encouraged the CGT to call strikes in the face of employers reluctant to grant benefits or honor new labor legislation. Strike activity (with 500,000 working days lost in 1945) leapt to 2 million in 1946 and to over 3 million in 1947, helping wrest needed labor reforms, though permanently aligning large employers against the Peronists. Labor unions grew in ranks from around 500,000 to over 2 million by 1950, primarily in the CGT, which has since been Argentina's paramount labor union. As the country's labor force numbered around 5 million people at the time, Argentina's labor force was the most unionized in South America.
During the first half of the 20th century, a widening gap had existed between the classes; Perón hoped to close it through the increase of wages and employment, making the nation more pluralistic and less reliant on foreign trade. Before taking office in 1946, President Perón took dramatic steps which he believed would result in a more economically independent Argentina, better insulated from events such as World War II. He thought there would be another international war. The reduced availability of imports and the war's beneficial effects on both the quantity and price of Argentine exports had combined to create a US$1.7 billion cumulative surplus during those years.
In his first two years in office, Perón nationalized the Central Bank and paid off its billion-dollar debt to the Bank of England; nationalized the railways (mostly owned by British and French companies), merchant marine, universities, public utilities, public transport (then, mostly tramways); and, probably most significantly, created a single purchaser for the nation's mostly export-oriented grains and oilseeds, the Institute for the Promotion of Trade (IAPI). The IAPI wrested control of Argentina's famed grain export sector from entrenched conglomerates such as Bunge y Born; but when commodity prices fell after 1948, it began shortchanging growers. IAPI profits were used to fund welfare projects, while internal demand was encouraged by large wage increases given to workers; average real wages rose by about 35% from 1945 to 1949, while during that same period, labor's share of national income rose from 40% to 49%. Access to health care was also made a universal right by the Workers' Bill of Rights enacted on February 24, 1947 (subsequently incorporated into the 1949 Constitution as Article 14-b), while social security was extended to virtually all members of the Argentine working class.
In 1949 Perón first articulated his foreign policy, the "Third Way", developed to avoid the binary Cold War divisions and keep other world powers, such as the United States and the Soviet Union, as allies rather than enemies. He restored diplomatic relations with the Soviet Union, severed since the Bolshevik Revolution in 1918, and opened grain sales to the shortage-stricken Soviets.
As relations with the U.S. deteriorated, Perón made efforts to mitigate the misunderstandings, which was made easier after Truman replaced the hostile Braden with AmbassadorGeorge Messersmith. He negotiated the release of Argentine assets in the U.S. in exchange for preferential treatment for U.S. goods, followed by Argentine ratification of the Act of Chapultepec, a centerpiece of Truman's Latin America policy. He even proposed the enlistment of Argentine troops into the Korean War in 1950 under UN auspices (a move retracted in the face of public opposition). Perón was opposed to borrowing from foreign credit markets, preferring to float bonds domestically. He refused to enter the General Agreement on Tariffs and Trade (precursor to the World Trade Organization) or the International Monetary Fund. Believing that international sports created goodwill, however, Perón hosted the 1950 World Basketball Championship and the 1951 Pan American Games, both of which Argentine athletes won resoundingly. His bid to host the 1956 Olympic Games in Buenos Aires was defeated by the International Olympic Committee by one vote.
Economic success was short-lived. Following a lumbering recovery during 1933 to 1945, from 1946 to 1948 Argentina gained benefits from Perón's five-year plan. The GDP expanded by over a fourth during that brief boom, about as much as it had during the previous decade. Using roughly half the US$1.7 billion in reserves inherited from wartime surpluses for nationalizations, economic development agencies devoted most of the other half to finance both public and private investments; the roughly 70% jump in domestic fixed investment was accounted for mostly by industrial growth in the private sector. All this much-needed activity exposed an intrinsic weakness in the plan: it subsidized growth which, in the short term, led to a wave of imports of the capital goods that local industry could not supply. Whereas the end of World War II had allowed Argentine exports to rise from US$700 million to US$1.6 billion, Perón's changes led to skyrocketing imports (from US$300 million to US$1.6 billion), and erased the surplus by 1948.
Perón's bid for economic independence was further complicated by a number of inherited external factors. Great Britain owed Argentina over 150 million pounds Sterling (nearly US$450 million) from agricultural exports to that nation during the war. This debt was mostly in the form of Argentine Central Bank reserves which, per the 1933 Roca-Runciman Treaty, were deposited in the Bank of England. The money was useless to the Argentine government, because the treaty allowed Bank of England to hold the funds in trust, something British planners could not compromise on as a result of that country's debts accrued under the Lend-Lease Act.
The nation's need for U.S. made capital goods increased, though ongoing limits on the Central Bank's availability of hard currencyhampered access to them. Argentina's pound Sterling surpluses earned after 1946 (worth over US$200 million) were made convertible to dollars by a treaty negotiated by Central Bank President Miguel Miranda; but after a year, British Prime Minister Clement Attlee suspended the provision. Perón accepted the transfer of over 24,000 km (15,000 mi) of British-owned railways (over half the total in Argentina) in exchange for the debt in March 1948. Due to political disputes between Perón and the U.S. government (as well as to pressure by the U.S. agricultural lobby through the Agricultural Act of 1949), Argentine foreign exchange earnings via its exports to the U.S. fell, turning a US$100 million surplus with the U.S. into a US$300 million deficit. The combined pressure practically devoured Argentina's liquid reserves and Miranda issued a temporary restriction on the outflow of dollars to U.S. banks. The nationalization of the Port of Buenos Aires and domestic and foreign-owned private cargo ships, as well as the purchase of others, nearly tripled the national merchant marine to 1.2 million tons' displacement, reducing the need for over US$100 million in shipping fees (then the largest source of Argentina's invisible balancedeficit) and leading to the inauguration of the Río Santiago Shipyards at Ensenada (on line to the present day).
Exports fell sharply, to around US$1.1 billion during the 1949–54 era (a severe 1952 drought trimmed this to US$700 million), due in part to a deterioration in terms of trade of about a third. The Central Bank was forced to devalue the peso at an unprecedented rate: the peso lost about 70% of its value from early 1948 to early 1950, leading to a decline in the imports fueling industrial growth and to recession. Short of central bank reserves, Perón was forced to borrow US$125 million from the U.S. Export-Import Bank to cover a number of private banks' debts to U.S. institutions, without which their insolvency would have become a central bank liability. Austerity and better harvests in 1950 helped finance a recovery in 1951; but inflation, having risen from 13% in 1948 to 31% in 1949, reached 50% in late 1951 before stabilizing, and a second, sharper recession soon followed. Workers' purchasing power, by 1952, had declined 20% from its 1948 high and GDP, having leapt by a fourth during Perón's first two years, saw zero growth from 1948 to 1952. (The U.S. economy, by contrast, grew by about a fourth in the same interim). After 1952, however, wages began rising in real terms once more.
The increasing frequency of strikes, increasingly directed against Perón as the economy slid into stagflation in late 1948, was dealt with through the expulsion of organizers from the CGT ranks. To consolidate his political grasp on the eve of colder economic winds, Perón called for a broad constitutional reform in September. The elected convention (whose opposition members soon resigned) approved the wholesale replacement of the 1853 Constitution of Argentina with a new magna carta in March, explicitly guaranteeing social reforms; but also allowing the mass nationalization of natural resources and public services, as well as the re-election of the president.
Emphasizing an economic policy centerpiece dating from the 1920s, Perón made record investments in Argentina's infrastructure. Investing over US$100 million to modernize the railways (originally built on a myriad of incompatible gauges), he also nationalized a number of small, regional air carriers, forging them into Aerolíneas Argentinas in 1950. The airline, equipped with 36 new DC-3 and DC-4 aircraft, also counted with a new international airport and a 22 km (14 mi) freeway into Buenos Aires. This freeway was followed by one between Rosario and Santa Fe.
Perón had mixed success in expanding the country's inadequate electric grid, which grew by only one fourth during his tenure. Argentina's installed hydroelectric capacity, however, leapt from 45 to 350 MW during his first term (to about a fifth of the total public grid). He promoted the fossil fuel industry by ordering these resources nationalized, inaugurating Río Turbio (Argentina's only active coal mine), having natural gas flared by the state oil firm YPF captured, and establishing Gas del Estado. The 1949 completion of a gas pipeline between Comodoro Rivadavia and Buenos Aires was another significant accomplishment in this regard. The 1700 km (1060 mi) pipeline allowed natural gas production to rise quickly from 300,000 m3to 15 million m3 daily, making the country self-sufficient in the critical energy staple; the pipeline was, at the time, the longest in the world. Oil production, however, rose only by about a fourth. As most manufacturing was powered by on-site generators and the number of motor vehicles grew by a third, the need for oil imports grew from 40% to half of the consumption, costing the national balance sheet over US$300 million a year (over a fifth of the import bill).
Perón's government is remembered for its record social investments. He introduced a Ministry of Health to the cabinet; its first head, the neurologist Dr. Ramón Carrillo, oversaw the completion of over 4,200 health care facilities. Related works included construction of more than 1,000 kindergartens and over 8,000 schools, including several hundred technological, nursing and teachers' schools, among an array of other public investments. The new Minister of Public Works, General Juan Pistarini, oversaw the construction of 650,000 new, public sector homes, as well as of the international airport, one of the largest in the world at the time. The reactivation of the dormant National Mortgage Bank spurred private-sector housing development: averaging over 8 units per 1,000 inhabitants (150,000 a year), the pace was, at the time, at par with that of the United States and one of the highest rates of residential construction in the world.
Perón modernized the Argentine Armed Forces, particularly its Air Force. Between 1947 and 1950, Argentina manufactured two advanced jet aircraft: Pulqui I (designed by the Argentine engineers Cardehilac, Morchio and Ricciardi with the French engineer Émile Dewoitine, condemned in France in absentia for collaborationism), and Pulqui II, designed by German engineer Kurt Tank. In the test flights, the planes were flown by Lieutenant Edmundo Osvaldo Weiss and Tank, reaching 1000 km/h with the Pulqui II. Argentina continued testing the Pulqui II until 1959; in the tests, two pilots lost their lives. The Pulqui project opened the door to two successful Argentinian planes: the IA 58 Pucará and the IA 63 Pampa, manufactured at the Aircraft Factory of Córdoba.
Perón announced in 1951 that the Huemul Project would produce nuclear fusion before any other country. The project was led by an Austrian, Ronald Richter, who had been recommended by Kurt Tank. Tank expected to power his aircraft with Richter's invention. Perón announced that energy produced by the fusion process would be delivered in milk-bottle sized containers. Richter announced success in 1951, but no proof was given. The next year, Perón appointed a scientific team to investigate Richter's activities. Reports by José Antonio Balseiro and Mario Báncora revealed that the project was a fraud. After that, the Huemul Project was transferred to the Centro Atómico Bariloche (CAB) of the new National Atomic Energy Commission (CNEA) and to the physics institute of theUniversidad Nacional de Cuyo, later named Instituto Balseiro (IB).
U.S. policy restricted Argentine growth during the Perón years; by placing embargoes on Argentina, the U.S. hoped to discourage the nation in its pursuit of becoming economically sovereign during a time when the world was divided into two influence spheres. U.S. interests feared losing their stake, as they had large commercial investments (over a billion dollars) vested in Argentina through the oil and meat packing industries, besides being a mechanical goods provider to Argentina. His ability to effectively deal with points of contention abroad was equally hampered by Perón's own mistrust of potential rivals, which harmed foreign relations with Bramuglia's 1949 dismissal.
The rising influence of theorist George F. Kennan, a staunch anti-communist, within U.S. foreign policy circles fed US suspicions that Argentine goals for economic sovereignty and neutrality were Perón's disguise for a resurgence of communism in the Americas. The U.S. Congress took a dislike of Perón and his government. In 1948 they excluded Argentine exports from the Marshall Plan, the landmark Truman administration effort to combat communism and help rebuild war-torn European nations by offering U.S. aid. This contributed to Argentine financial crises after 1948 and, according to Perón biographer Joseph Page, "the Marshall Plan drove a final nail into the coffin that bore Perón's ambitions to transform Argentina into an industrial power." The policy deprived Argentina of potential agricultural markets in Western Europe, to the benefit of Canadian exporters, for instance.