COMMERCE AND FINANCE
In dealing with this subject it will be necessary to make use of a
considerable number of statistics, for there is no other way by which
to express the unprecedented development of this great Republic.
Her genial climate, her fertile soil, her vast waterways, potent alike
to fertilise the country and bring produce to the sea, and now her
unequalled railways and excellent docks, have caused the trade of
Argentina to be surprisingly large in proportion to her population,
and, unfortunately, wealth seems likely to multiply more rapidly than
men. As has been said before, the importance of Argentina as a world
State is purely industrial and commercial; her politics, literature,
and people are interesting, but they still belong to the day of small
things. Her exports of wheat and pastoral products, her railway share
list and her bonds are scrutinised eagerly at every commercial centre,
and Buenos Aires is an increasingly important member of the delicate
system of international commerce.
In 1908[106] the imports were £54,594,547.
" exports " 73,201,068.[107]
The principal items of import were as follows:--
Textiles £9,980,267
Railway carriages and vehicles 6,140,067
Iron (including manufactures) 6,015,096
Pottery 4,979,580
Foodstuffs 4,709,819
Building materials 4,276,485
Agricultural implements 3,167,967
Wine, &c. 2,655,956
Oils 2,610,344
It is clear from this table that Argentina still relies on the
foreigner for most of her manufactures. Her policy of high Protection
has not yet enabled her to produce high-class goods, but it would be
rash to say that success will never come, when we consider the
position of the United States and the enormous advantage which an
industrial start of some fifty years gives a country. The imports show
a decline from the previous year of some two and a half million
sterling, doubtless in sympathy with the prevailing depression,
and the principal importing countries all sent slightly smaller
quantities. Of the imports England has 34·2 per cent., Germany 13·9,
the United States 13·2. The figures are:--
England £18,371,396
Germany 7,569,415
United States 7,119,400
France 5,295,383
Italy 4,982,649
Belgium 2,550,674
A remarkable feature in the history of Argentine trade returns is the
enormous advance of Germany. In 1874 she sent to Argentina £160,000, in
1882, £920,000. England's figures for those two years are £1,040,000 and
£1,480,000. Those of the United States are £380,000 and £580,000. But it
should also be remarked that the advance of our own country has been
even more rapid, and here, as elsewhere, the absurdity is demonstrated
of those who declare that English trade is vanishing. Everything has
been done to write down England and to write up Germany, and at the end
of it all John Bull can beat Germany with one hand, the United States
with the other, and has still an ample margin of strength to beat
Belgium as well. We are handsomely above the Two Power standard in the
Plate district. France makes steady progress, and Italy shows a large
increase, as is only to be expected, because the emigration from Italy
has long been very large. It may be added that French goods make their
way by sheer merit, for France has in her own land ample scope for her
scanty population. Some advantage may be obtained by her as the head of
the Latin race, but wherever there are women and luxury there will
French trade flourish, and further, in machinery of many kinds France,
if equalled by any other nation for excellence, is equalled by England
alone.
It is very interesting to see how Argentina has passed from small to
great things in matters of trade.
The following table shows in round figures her progress during a space
of more than a hundred years. They refer to her total foreign trade.
1795 £1,400,000
1837 2,400,000
1850 4,300,000
1870 15,300,000
1880 20,100,000
1883 27,200,000
1891 34,086,000
1900 53,617,000
1908 127,700,000
Thus, in eight years, the foreign trade has far more than doubled. In
former days the results of feverish development were by no means an
unmixed benefit. Immense sums had been invested in railways and other
enterprises, and the Mortgage Bank of the Province of Buenos Aires
recklessly lent money upon land and credit was inflated. Everybody
thought that unbounded riches were either in their possession or
within reach, and the inevitable collapse followed. The difficulties
were aggravated by the fluctuating state of the currency. At present
the paper dollar circulates with a tolerably steady value of about 1s.
9d. There is a scheme for establishing a gold currency, and the gold
held by the Conversion Office amounts to 132,769,134 dollars gold. The
note circulation is over 500,000,000 dollars paper. In December, 1891,
the Banco de La Nacion Argentina was opened with a capital of
50,000,000 dollars, now increased to 90,000,000. The Bank may lend
money to the National Government, but the total amount is not to
exceed 6,000,000 dollars, and it has no authority to place loans in
other quarters.
The exports now demand our consideration. In 1908 the main items
were:--
Agricultural products £48,013,032
Pastoral products 27,023,691
Forest products 1,269,446
Fish and Game 99,726
A more detailed investigation of the figures shows that of wheat
3,636,294 tons were exported, of maize 1,711,804, of linseed 1,055,650,
of oats 440,041. The shipments of wool were 175,538 tons, of frozen beef
180,915, of jerked beef 6,650. Quebracho wood stood at 254,571 tons,
quebracho at 48,162, and hay at 32,078. Hides were largely exported.
For 1908 the following is the percentage of imports received by
various countries: England, 21·4; Belgium, 9·8; Germany 9·5; France,
7·9; Brazil, 4·1; United States, 3·6.
The following table shows our reciprocal trade with Argentina in
1907[108]:--
IMPORTS INTO ENGLAND.
Wheat £8,044,636
Maize 5,000,219
Fresh Mutton 2,360,565
Fresh Beef 4,308,273
Linseed 1,977,466
Wool 1,689,639
EXPORTS FROM ENGLAND.
Cotton £2,752,251
Woollens 1,080,795
Iron and Manufactures 3,511,803
Machinery 2,458,180
Railway Carriages 1,769,780
Coal 1,761,467
The various industries of this Republic, which supply the materials
for the rapidly increasing commerce, are dealt with in other chapters.
Buenos Aires from very early times has had a brisk trade. Even in the
seventeenth century the traffic in hides excited the admiration of
travellers, and at the end of the eighteenth century the new and
liberal commercial policy pursued by the Home Government resulted in a
promising development which was roughly checked by the Revolution.
From 1825 to 1842 the foreign trade per inhabitant positively
diminished, and by 1850 it was only £4 8s. per head as against £3 12s.
in 1795. Now it is some £20. Obviously the slow progress after the
Revolution was due to the sinister tyranny of Rosas, which stifled the
development of communications and all other progress. A traveller,[109]
who visited the Pampas in 1848, says: "The soil is good for agriculture,
yet flour is either imported from the United States, or obtained from
the northern provinces; and its price is enhanced by the cost of
land-carriage several hundred miles." He concludes his interesting work
with these words[110]: "But while our own colonies of Australia and New
Zealand offer such rich and boundless fields for the profitable
employment of capital among our own countrymen, there is less inducement
than ever for merchants to risk their capital and energies amongst a
race of people where the wealth of nature is wasted by the combined
operation of ignorance, unstable government, and interminable warfare."
Very different has been Argentina's commercial history for the last
sixty years, and the only check was afforded by the Celman crash.
Now[111] "the producing capacity of the country is steadily increasing,
and in cereal production its status is evidenced by the fact that as a
corn [_i.e._, maize] exporter the Argentine Republic took first rank in
1908, occupying the place formerly held by the United States. In the
production[112] of this foodstuff the country ranks third, and as a
wheat-grower fifth. It is first as an exporter of frozen meat, and
second as a shipper of wool. In the number of its cattle the Republic
holds third place among the nations, being ranked by India and the
United States. Russia and the United States exceed it in number of
horses, and Australia alone has a greater number of sheep."
As a complement to this description of the commerce, a few words
should be said about the industries which directly nourish it.
Elsewhere will be found an account of the foreign steamship lines
which connect Argentina with the outer world.[113] Here it is
necessary to give the figures of her modest mercantile marine as far
as they can be ascertained:--
Steamships 131 Tonnage 55,561
Sailing ships 161 Tonnage 40,581
---- -------
Total 292 96,142
It has already been said that the Argentines are not a seafaring
nation, but no doubt, in course of time, the exigencies of national
defence and the growth of her trade will turn the energies of her
people to the sea.
There are in Argentina four banks with their offices in London. First
comes the London and River Plate Bank, which was the only one of
the four doing business in the country at the time of the Celman
catastrophes, and this British Bank was the only banking firm of any
description that weathered the storm. It has branches in Buenos Aires,
Rosario, Mendoza, Concordia, Bahia Blanca, and Barracas. The other
three, though younger, are sound and prosperous. The Anglo-South
American Bank (formerly Tarapaca) has branches in Buenos Aires,
Mendoza, and Bahia Blanca. The British Bank of South America has
branches in Buenos Aires and Rosario, and the same is the case with
the London and Brazilian Bank. There are, of course, many foreign and
Argentine banks, and of these the Spanish River Plate Bank is said to
be the best. It was recently stated that the United States does not
possess a single bank in the whole of South America.
The financial position of the Republic may be briefly stated. It is
generally believed that the fiscal management is somewhat wasteful,
and the competence of Congress to produce a satisfactory budget is
questioned. Men of eminent business ability are, of course, found in
the pursuits that make wealth rather than in Congress. But the
finances are flourishing, as the following figures[114] will show:--
ESTIMATES FOR 1909.
-----------------------------+--------------
Revenue. | Dollars Gold.
-----------------------------+--------------
Import duties | 51,930,000
Additional duties | 3,100,000
Port dues, &c. | 5,230,000
Consular dues, fines, &c. | 930,000
Buenos Aires Provincial Debt | 983,429
National Bank Service | 347,004
+--------------
| 62,520,433
-----------------------------+--------------
-----------------------------+--------------
Revenue. |Dollars Paper.
-----------------------------+--------------
Public works (in bonds) | 5,000,000
Spirits and beer | 19,800,000
Tobacco | 17,400,000
Sanitary works | 7,100,000
Stamps | 9,450,000
Posts and telegraphs | 9,700,000
Railways | 9,000,000
Various | 12,529,319
+--------------
| 89,979,319
-----------------------------+--------------
Below are given the figures since 1903:--
-----+-------------------------+-------------------------
| REVENUE. | EXPENDITURE.
+------------+------------+------------+------------
| Gold. | Paper. | Gold. | Paper.
-----+------------+------------+------------+------------
1903 | 46,615,855 | 65,466,010 | 32,139,160 | 93,072,572
1904 | 52,254,428 | 70,004,834 | 25,597,625 | 104,177,150
1905 | 53,076,067 | 84,778,282 | 82,813,587 | 136,065,516
1906 | 61,616,090 | 88,835,790 | 30,128,828 | 174,688,551
1907 | 64,527,983 | 97,153,870 | 25,521,412 | 186,107,107
-----+------------+------------+------------+------------
In conclusion, the important subject of tariffs demands notice. The
Republic has long adopted a highly protective fiscal policy. The
object is to create as many industries as possible, and therefore to
discourage foreign competition by the imposition of heavy duties. The
high cost of living is usually attributed to this system, and
undoubtedly many articles would be cheaper if the tariff was lower;
but its effect is probably exaggerated, and even under complete Free
Trade Argentina would still be a dear country. It is the comparative
lack of development and enterprise, and also the unwillingness to take
trouble over small things, which are the main causes of dearness; and
this is the characteristic of all new countries. That Protection is
unpopular it would be rash to affirm. It is the direct imposts, and
above all the municipal, that give rise to complaining in the
streets. The immigrants come from highly protected countries, and are
accustomed to heavy indirect taxes; they would, in all probability,
angrily resent direct taxation, even if it were much lower than the
present scale of imposts. As the table above shows, the customs are
the sheet-anchor of the Exchequer, and Ministers could not possibly
dispense with them, nor would manufacturers hear of such a thing.
"Every one," says an experienced resident in Buenos Aires, "as soon as
he starts a business, looks about for higher tariffs in his line."
A good many among the intellectual classes have academic leanings
towards Free Trade, and the opinion is sometimes expressed that in the
end the Government would raise more revenue by a general duty of about
20 per cent. But the manufacturing interest, which already complains
that it cannot compete with English and French goods, is an insuperable
obstacle.
The accomplished Dr. Martin Garcia Mérou remarks: "The situation of
the United States is unique in the world. The amazing prosperity of
this country is based upon the producing and consuming power of
her forty-five independent States, which stretch over an immense
continent, and of which some differ in climate and conditions as
widely as Spain differs from Norway, but they all have a single system
of land and river communication which is without rival and without
precedent. The absence of fiscal barriers between those different
States is the permanent and fruitful cause of their greatness and
prosperity. In this manner a country, which is apparently the most
Protectionist in the world, is the very one which demonstrates in the
most practical and visible fashion the incalculable benefits of free
commerce."
This conviction is gaining ground, and there are many persons,
intimately conversant with trade and industry, who wish for changes in
a liberal direction. Señor Ricardo Pillado, the able chief of the
Agricultural Department, has penned many minutes urging a reduction of
tariffs, but it is doubtful whether the opinions of a few men, however
accomplished, will ever penetrate among an ill-informed population;
and even if their views were understood it is most unlikely that they
would have power to eradicate the ingrained protective opinions of the
masses and to create a feeling among them powerful enough to overcome
the resistance of vast interests whose policy is now in complete
accord with the feelings of the masses.
Señor Pillado says[115]: "For a considerable number of years
Protection has been a heavy obstacle to the progress and expansion of
our country. Most sincerely do I declare that we all ought to use our
utmost efforts to reform a financial system which is grounded in such
fundamental errors as protective tariffs."
It was in 1883 that the Republic first decided upon Protection. By the
tariff of 1884 a duty of 50 per cent. was imposed upon arms, powder,
alcohol, cards, perfumery, tobacco, snuff, and wax matches. A duty of
40 per cent. was imposed upon clothing, hats, shoes, harness,
carriages, furniture, rockets, and wooden matches. Many articles
necessary to production, such as coal, thread, ploughs, wire,
agricultural machinery, printing presses, books, sacking, steam engines,
iron, lumber, rock-salt, and paper, were taxed only 5 or 10 per cent.
Similar articles, which were even less likely to be produced at home or
were still more urgently needed as the raw material of industry, were
admitted free. Among these were machinery for factories or shipping,
live cattle or fish, plants, seeds, railway material, metal pipes of at
least 30 inches diameter, blasting powder, and sheep-wash. It will be
seen, therefore, that an attempt at a scientific tariff was made, and it
has proved so acceptable to the Argentines that it has been greatly
elaborated and extended. Nor does the nominal figure of the duty
represent the whole of the increased cost, for the customs officials are
required to add to the declared value of the articles the freight and
other expenses, and to raise the duty in proportion. Consequently the
imposts are subject to large and arbitrary enhancements. The following
summary will give a rough notion of the present fiscal system:--
_Free._--Most industrial materials, such as railway, mining, or
electrical plant and most kinds of machinery; also herbs and
seeds. Books and magazines are free.
_Five per cent. ad valorem._--Other forms of industrial material,
as mercury, crude sulphur, china clay, jute, lead, &c. Several
kinds of machinery. Jewellery comes under this section.
_Ten per cent. ad valorem._--Various chemicals for industrial use.
_Fifteen per cent. ad valorem._--Certain kinds of timber.
_Twenty per cent. ad valorem._--Steel in bars, plates and sheets;
tissues of unbleached cotton or coarse linen cloth.
_Twenty-five per cent. ad valorem._--All articles not elsewhere
specified or exempted.
_Thirty per cent. ad valorem._--Tissues of wool of any kind, pure
or mixed.
_Thirty-five per cent. ad valorem._--Blankets, jewel cases, iron
screws, bolts and nuts.
_Forty per cent. ad valorem._--Most fancy articles as trunks,
perfumery, furniture, boots, and many kinds of clothes.
_Fifty per cent. ad valorem._--Arms and saddlery.
Comestibles are specially dealt with, usually by a duty per kilo. The
intention and effect, it is needless to say, are protective--_e.g._,
the duty on fruits in syrup is over 5d., that on bacon over 4d. per
kilo, that on refined sugar, polarising over 96 degrees, is a little
less than 2d., that on sugar below that grade is nearly a half-penny
less. A little more than 5d. is the duty on wines per bottle, that on
soda-water is the same per dozen bottles, while that on beer is over
2d. per bottle. But it must not be inferred from these figures that
the kindly State does not take good care of vintners, brewers, and the
like, for the system of enhancements aforesaid adds handsomely to
these and all duties. The case of tobacco will illustrate this. The
preliminary duties are as follows:--
s. d.
Havana cigars in cardboard boxes, about 3 11½ per kilo
" " in wooden boxes " 2 7½ "
Cigarettes " 1 9 "
Tobacco leaf from about 2½d. to 1 2 "
But all tobacco that enters Argentina is "evaluated" at a certain sum,
and then 20 per cent. _ad valorem_ duty is charged in addition.
There is also a miscellaneous "per kilo" section, which includes
matches, paper, and hats, all heavily taxed.
Export duties are insignificant.
It may be observed that the 40 per cent. section and the miscellaneous
section between them include almost all the articles likely to be
purchased by the ordinary shopper, and they are extremely dear. But
English and French goods appear to monopolise the best shops. The
following clause embodies the principle which we know as "the most
favoured nation clause": "The import duties established by the
present Law shall be deemed to be the _minimum tariff_, and shall be
applicable to products and goods of all countries which apply their
minimum tariff to exports from the Argentine Republic, which do not
increase the previous duties, which do not establish a duty on
exempted articles, which do not exceptionally reduce their present
tariff for similar goods of any other origin, and which do not impede
by restrictive measures the importation of Argentine products."[116]
As an example of Protection both rigorous and effective the case of
sugar may be given. Not long after the first tariff of 1883 the sugar
duties were enormously increased with the following effect:--
IMPORT OF SUGAR.
1883 24,000 tons
1884 35,000 "
1889 34,400 "
1890 29,500 "
1895 5,600 "
1900 458 "
The production of sugar, which was also 24,000 tons in 1884, leaped
to 75,000 in 1894. Señor Pillado remarks that this legislation
converted Tucuman into an El Dorado. He concludes an able work
by quoting the appeal which he made in his minute to the Minister
of Agriculture[117]:--
"The trade of the Republic is at present in a condition thus
favourable, the wealth hidden in her soil is thus great. She owes this
situation to the maintenance of exterior peace, the elimination of
fluctuations in paper money, and the establishment of those institutions
by which she advances with gigantic strides. We watch her progress, and
see her offering to the rest of the world the products of her fertile
territories, without restrictions and without preferences that take
their rise in grasping tariff laws. Our country thus wins a reputation
which corresponds to her pastoral and agricultural wealth and the
excellence of her products.
"What, sir, would be our rate of progress if the law of our
custom-house, which sets up a prohibitive tariff wall against the
goods which our people demand and which act as a stimulus to our great
industries, were more lenient, more just, and more in accordance with
the principles of liberty which we have inherited with our charter of
independence!"
But, in fact, all influences of to-day seem to be on the side of
further restrictions in trade as they have long been on the side of
further restrictions in social matters. The principles of liberty are
considered by most people as very excellent for themselves but hardly
suitable to the rest of the world; but from Manchester to Shanghai the
ideal of every trader is Free Trade for the whole world and Protection
for himself. As all pull one way, the result is almost everywhere the
same, and no country seems less likely to abandon Protection than
Argentina.
FOOTNOTES:
[106] For 1909 the figures were--
Imports £60,551,219
Exports 79,470,102.
[107] I have divided the figures, which are given by all authorities
in American gold dollars, by five. It is greatly to be regretted that
the splendid private enterprise of Englishmen in Argentina receives so
little help from English statisticians or the English Government. The
statistics are best set forth by an excellent publication, the
_Bulletin of the International Bureau of the American Republics_,
published at Washington. Even the _Statesman's Year Book_ (Macmillan)
gives totals in American dollars. We have far more trade in South
America than the United States, but we cannot, in view of the
approaching completion of the Panama Canal and the intelligent efforts
of American statesmen, hope to retain our position indefinitely if our
own Government continues to trust to the policy of "muddling through."
[108] According to the _Statesman's Year Book_, the figures appear to
be too high.
[109] MacCann, "Two Thousand Miles' Ride," i. 160.
[110] Ibid. ii. 304.
[111] _Bulletin of the American Republics_ (July, 1909), p. 14.
[112] As opposed to exportation.
[113] The table given below shows the tonnage of the chief ports in
1908:--
--------------+---------------------
| TONNAGE.
PORT. +----------+----------
| Entered. | Cleared.
--------------+----------+----------
Rio Gallegos | 41,266 | 42,239
Bahia Blanca | 799,198 | 783,272
Puerto Madryn | 19,921 | 12,666
C. de Uruguay | 603,818 | 646,411
La Plata | 855,950 | 840,548
Diamante | 375,779 | 449,492
Santa Fé | 440,466 | 481,948
Parana | 636,091 | 635,064
Erquina | 374,037 | 373,596
Goya | 404,917 | 377,227
Bella Vista | 399,667 | 402,235
Empedrado | 306,136 | 309,635
Correntis | 504,433 | 494,693
Rosario |1,924,808 |2,029,596
Buenos Aires |7,555,574 |7,562,055
--------------+----------+----------
[114] The various authorities almost always differ slightly, sometimes
considerably, in their figures. Thus the _Statesman's Year Book_ gives
the tonnage of Buenos Aires in 1908 as 4,760,316, while the _Bulletin_
states it at 4,888,741.
[115] "Politica Comercial Argentina," p. 42.
[116] Art 74 of the Custom Law of 1905.
[117] "Politica Comercial Argentina," p. 367.