significantly, policy makers lost sight of the crucial distinction between
merchant shipping and shipbuilding.

The merchant shipping of Latin America did grow dramatically during the
decades of the 1960s and the 1970s, but a lot of the growth consisted of a
flimsy frame loaded down with fat. Governments had poured many resources
into the shipping industry and now had to tend to the demands of other
pressure groups on land. At this vulnerable moment, containers appeared to
shatter Latin American merchant shipping, in spite of its size. Containers, al-
though a simple technology easily mastered, came to hit Latin America at the
weakest link of capital scarcity. Containers required large amounts of in-
vestment and thus shifted the competition to access to capital. Foreign firms
with their multiple ways to tap capital enjoyed the comparative advantage, and
only those Latin American firms able to raise local, government, or foreign
capital in a comparable amount could remain as competitors. Shortage of capi-
tal was nothing new to Latin America, and this endemic weakness should have
warned governments not to make excessive investments in merchant shipping.
Indeed, the urgent need to raise capital in the 1950s had sparked the first major
protectionist measure, cargo preference, whose origins form the subject of the
opening chapter.

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