Booming Toward Elections

The grey haze of industry billowed up from Guatemala City on the valley floor below, andthe impatient tootling of traffic jams sounded far into the hills. "I remember when there were just two cars in Guatemala--both Packards," said Lee Whitbeck, 82, a U.S.-born dairyman who went to Guatemala in 1916 and now operates a farm outside the capital. "They used to drive down those cobblestone streets all alone." Nowadays, Whitbeck never goes into town unless he has to. "You can't find a place to park," he grumbles.

Nineteen months after the ouster of President Miguel Ydigoras Fuentes and the establishment of military rule, Central America's biggest capital is also its busiest. The streets are choked with autos--Mercedes-Benzes, Peugeots, Volkswagens. Ford Falcons.

Sidewalks are filled with bundle-laden shoppers, and store windows beckon with imported washers, steam irons, refrigerators and TV sets. Outside town, barefoot peasants pad along the dusty roads with $40 Sony transistor radios slung over their shoulders. "Prices are steep," admitted one merchant, "but that's what people are paying." New Experience. Prosperity is a new experience for Guatemala, which scraped along for years in the banana-republic image--without industry, unable to import what it wanted, or even pay for what it did buy. During the regime of cantankerous old Ydigoras, graft and inefficiency, those standard Central American ills, cut the country's dollar reserves from $72 million in 1957 to $28 million in 1962. The foreign investors who might have helped stayed away--which was hardly surprising, with student riots in Guatemala City and grumbling peasants in the countryside. Then, in mid-1963, Juan Jose Arevalo, 60, Guatemala's Communist-coddling onetime President (1945-51) and Yanqui baiter (The Shark and the Sardines), was allowed to return to stand for election. That was the final straw.

The military sacked Ydigoras. Into his place went Army Colonel Enrique Peralta Azurdia, 56, an austere career officer nicknamed "el Buddha." So far he has proved a pleasant surprise.

Peralta turned to the country's businessmen, asked them what to do, and took their advice. He promoted new trade agreements with his neighbors, offered low-cost credit to farmers, expanded cotton production on Guatemala's rich Pacific slope. "That land is so rich in nitrogen," says one cotton grower, "that you could sack it and sell it for fertilizer." This year's income from Guatemala's major crops--coffee, cotton and bananas--should reach $134 million, 35% more than 1962.

Basis of Democracy. Publicly obsessed with the need for industrial development, Peralta told everyone who would listen that free enterprise "is the basis for the democratic development of our national economy." He held out the lure of low taxes, cheap labor and liberal tariff treaties with Central American common market countries. Business responded. Arrow Shirts, Colgate-Palmolive, and General Mills, for example, plan expansion of their facilities. And there are newcomers. International Nickel hopes to set up a $60 million strip mine, Texaco is building a $10 million refinery, and Kern Foods is making Guatemala its distribution center for Central America.

Since the economy was already experiencing a slight boom, all this helped.

Last year the G.N.P. rose 7% to a high of $1.2 billion, and in the last eight months alone savings deposits climbed 26%. Some money is actually going begging. "There's one bank in Guatemala," says Banker Julio Veilman, "that has $5,000,000 in excess funds that it can't place." Certainly, Guatemala is not without social and political problems. Of its 4,500,000 people, 3,900,000 still live in the country's corrugated outback. They are mostly broad-faced descendants of the Maya Indians, and every year more and more of them drift into Guatemala City, creating new urban pressures. The military draws fire for its heavy-handed security checks. In one clumsy swoop last week, 200 men and women were arrested for failure to carry identification papers. Yet Peralta has promised elections before Sept. 15, 1965. Meanwhile, the boom keeps going.

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