From the beginning of the 1940s, and especially after creation of the wage councils, real wages increased, which meant an improvement in the living standards of the working class and dynamism in the internal market. The period of increased industrial development lasted from 1945 to 1955; total production practically doubled during this time. Agriculture also experienced a boom. Social legislation was improved, the pension system was expanded, and the state bureaucracy grew. Resorts near Montevideo were developed through the sale of lots on the installment plan, and Punta del Este became an international tourist attraction. Gold reserves in BROU reached their highest level ever. In 1950, when Uruguay again won the World Cup in soccer, it was already known as the "Switzerland of South America."

Batllism returned to power with the victory of the presidential ticket of Tomás Berreta (1947) and Luis Batlle Berres (1947-51) in the 1946 elections. Berreta's administration was brief--he died six months after taking office and was succeeded by his vice president, Batlle Berres.

Batlle Berres, a nephew of José Batlle y Ordóñez, represented the most popular faction of Batllism, later to be known as Unity and Reform (Unidad y Reforma), or List 15 because of the list number under which it would participate in successive elections. He gradually became estranged from his cousins--Lorenzo and César, Batlle y Ordóñez's sons--who promoted a more conservative vision from their newspaper, El Día, and who would later form a new Colorado Party faction--List 14. Batlle Berres founded his own newspaper (Acción) in 1948, bought a radio station, and surrounded himself with young politicians. His ideological-political agenda, adapted to the changes in his country and the world, became known as neo-Batllism. He rejected the communist and populist-authoritarian experiences of other Latin American countries, especially that of Juan Domingo Perón in Argentina. Batlle Berres formed a multiclass movement that promoted compromise and conciliation. He believed the state's role was to safeguard social peace and to correct, through adequate measures, the "unfair differences" created by the socioeconomic structure. In contrast with Peronism, neo-Batllism respected the political autonomy of the workers' movement, accepted social cooperation, and rejected the kind of corporative structure that characterized Mexico's governing party.

Batlle Berres was an enthusiastic supporter of economic development based on import-substitution industrialization and agricultural expansion. He applied interventionist and statist economic measures to promote such development and did not abide by the IMF's austerity recommendations. He supported agriculture and industry through credits and subsidies, as well as control over the nation's currency, a fact that brought him into conflict with ranchers. BROU, which controlled sales of foreign currency, paid less for foreign currency earned from livestock raising to favor industrial requirements for raw materials and machinery. This differential exchange rate policy stimulated the development of light industry, more than 90 percent of which was directed toward the internal market. Nevertheless, the state guaranteed profitable prices for agriculture and stimulated imports of agricultural machinery. New crops were developed to supply industry with raw materials, and surpluses were exported. By contrast, livestock raising continued to stagnate.

An earlier agreement with Britain obliged the government to acquire some British enterprises to cancel its outstanding debt to Britain. The state's economic role was thus increased through the creation of new public service enterprises, including Montevideo's tramways, railroads, and water system.

Another potentially significant event in the socioeconomic realm was the creation of the National Land Settlement Institute in 1948. It was designed to stimulate land subdivision and agricultural and livestock settlements and was authorized to purchase and expropriate land. But action was limited because of a lack of funds, and significant agrarian reform never took place. However, in order to favor lower-income groups, subsidies were set for various basic food items, and in 1947 the National Subsistence Council was created to control the price of basic items.

The traditional parties maintained their differences, which were reflected in the significant variations in their platforms. The Political Parties Law, which allowed party factions to accumulate votes, guaranteed the predominance of the Colorado Party. Together, the Colorados and Blancos continued to capture almost 90 percent of the votes. But because of the splits in his own party, Batlle Berres was forced to seek political support from other factions. Paradoxically, he sought a "patriotic coincidence" with Herrera and gave cabinet posts to some leading figures of Terrism, past enemies within his own party.

Conservative sectors, particularly landowners, opposed or distrusted the growing bureaucracy, the expansion of social legislation, and the policy of income redistribution that favored the industrial sector to the detriment of the rural sector. In 1950 Benito Nardone--an anticommunist radio personality supported by Juan Domingo R. Bordaberry, one of the directors of the Rural Federation (and father of Juan María Bordaberry Arocena; president, 1972-76)--created the Federal League for Rural Action (Liga Federal de Acción Rural--LFAR). The Ruralist faction thus created attempted to unite the disenchanted rural middle-class constituencies, especially wool producers, from both traditional parties. He proposed a free-market economic model in contrast to Luis Batlle Berres's statist model.

Unity and Reform won the 1950 elections. Its presidential candidate was a Batllist, Andrés Martínez Trueba (1951-55), who quickly put forward a new constitutional amendment, this time to make good on Batlle y Ordóñez's dream of a purely plural executive, the colegiado. He was supported by Herrera, who was seeking to enhance both his personal power and Blanco political power and to recover the ground lost in the 1942 coup. He was also supported by conservative Colorado factions who feared Batlle Berres's becoming president again.

The new constitution was approved by plebiscite in 1951 and went into effect in 1952. It reestablished the colegiado as the National Council of Government (Consejo Nacional de Gobierno). The council had nine members, six from the dominant faction of the majority party and three from the party receiving the second highest number of votes--two from its leading faction and one from it second-ranking faction. The presidency was to rotate each year among the six members of the majority party. The constitution mandated coparticipation in directing autonomous entities and ministries, using a three-and-two system (three members appointed by the majority party on the council and two by the minority party). Uruguay enjoyed unprecedented prosperity at this time, and the establishment of a purely collegial, Swissstyle executive reinforced the country's title as the "Switzerland of South America."

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Source: U.S. Library of Congress