As a result of domestic policies and the international situation, the Colombian economy diversified and developed at the turn of the century. In the early 1900s, the industrial sector became an increasingly important part of the economy. Between 1900 and 1910, textile industries developed in Bello and Medellín, pottery plants in Caldas, and breweries in Itagüi and Bogotá. New economic groups emerged with the development of import substitution industrialization and of a larger financial sector.

During the 1910s and 1920s, the Colombian economy became more integrated into the global financial and commercial markets. Renewed relations with the United States during the administration of Marco Fidel Suárez (1918-21) opened the door for foreign exchange and investment. The United States replaced Britain as Colombia's key financial and commercial partner. Most of the foreign exchange came from the coffee trade, which at this time represented nearly 80 percent of exports. Foreign exchange also came in the form of loans and an indemnity paid by the United States for Colombia's loss of Panama. Money coming into the country was invested in industry, consumption goods, and public works and enterprises. Public works, such as building communication networks, accelerated under the Conservative Pedro Nel Ospina administration (1922-26). Investment in industry came primarily from the private sector, including foreign interests. By 1929 private foreign investment totaled US$400 million, with some US$45 million having been invested by oil companies. The Nel Ospina administration also oversaw the reorganization of the banking and financial sectors, creating the Bank of the Republic (Banco de la República).

The growth in industry and construction, supported by both public and private funds, led to the emergence of a genuine working class that soon learned to unionize. In 1918 Colombia experienced its first major strikes. The union movement also came to be influenced by European syndicalism and socialism; in 1919 the first workers' conference, which was fostered by socialist ideas, was held. These activities were a backdrop to the launching of the Colombian Socialist Party. During the 1920s, the union movement expanded and stimulated the growth of socialist-oriented groups. In 1928 a strike against the United Fruit Company was put down violently by armed forces. In the following year, Congressman Jorge Eliécer Gaitán criticized the rough handling of the strike and became a prominent speaker for the working class.

Growing popular discontent with the Conservative governments and divisions within Conservative ranks eventually resulted in the rise of the PL to power. The growth in the industrial and construction sectors that fueled the union movement also drained the countryside of agricultural workers, encouraging rural workers to petition for higher wages. In 1928 the government began importing food and as a result drew protests from agriculturists. Workers and artisans protested the rise in inflation that resulted from the influx of foreign loans and protectionist trade policies. Social tensions increased throughout the Conservative administration of Abadia Méndez (1926-30) and ultimately led to the fall of the PC after its forty-five years in power. The Liberals gained the upper hand in the political arena and retained it during the fifteen years (1930-45) of global crisis.

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Source: U.S. Library of Congress