FOREIGN CAPITAL AND PUBLIC DEBT.
It is not the intention to deal in this work with the market
fluctuations, the arrangements made between provincial banks and
their creditors, nor with any of the financial aspects which these
questions have recently assumed. Such a course would not only be out of
place, but would be of little interest or value, owing to the unstable
state in which the negotiations are at present. The object will be rather
to indicate the part that foreign capital has played in the development
of the country and that played by politics in finance.
An important fact to realise is that the liberation of the country from
the Spanish colonial system is comparatively recent, and that a people
unfitted in every way for political independence was suddenly put in
possession of a country of quite exceptional richness but absolutely
undeveloped and almost unpopulated. Men with no political experience
nor education found the road open to responsible positions requiring
statesmanlike qualities in an unusually high degree--not only financial,
but diplomatic and administrative ability combined with absolute
integrity. It is sufficiently well known how far they came up to
the requirements. For it is only at the present day that political
morality has found a place in the national executive. In provincial
administration and in the ranks of the deputies it is doubtful whether
it will ever predominate.
It is a favourite complaint of Argentines that their country is
regarded in Europe as a hot-bed of revolution. They are never weary of
complaining that their claim to be a civilized power is disregarded. In
the absence of a definition of civilization the question must be left
open. But as regards revolutions the European idea is substantially
correct. Argentines have undoubtedly not yet realised a sane conception
of government.
If those in power fail to convince the country of any sincerity or
appreciation of their responsibilities, the people themselves do not
treat the authority of government with the respect that alone permits
the growth of those qualities of statesmanship whose absence is so very
obvious.
One improvement, however, must be noted, an improvement of the very
greatest importance. Whereas in former years little respect was paid
to non-partisans, the people have now learnt that it is to everyone's
interest to confine political differences to the actual disputants--to
fight their battles in their own garden, and to leave neighbours at
peace. Capital, therefore, is tolerably safe, especially as the federal
executive is a body which, if not possessed in every branch of the
greatest intelligence or even honesty, is at least controlled by men
who realise their position and have sympathies and knowledge beyond the
limits of their country.
The considerations just mentioned bear more especially on capital sunk
in land and its immediate connexions, or in industrial concerns. As
regards public debt, the question is more involved. The laxity of public
morality has here the disastrous tendency of making a party temporarily
in power regard the actions of its predecessors as invalid. The
temptation is certainly great. When a foreign loan has been contracted
in the name of a municipality or provincial government, at the expense
of the people at large, but is used purely for party or even private
ends, it is at least comprehensible that an opposing party should regard
the loan as an unwarrantable exploitation of the public, and should
think it justifiable to allow the creditors to suffer instead of their
own countrymen, who were no party to the transaction. The policy and
ethics of such a view are another matter. And it is, as usual, the
honest who suffer. For, if the succeeding party are possessed of higher
views in the sphere of political morality, owing to the necessity of
regarding their predecessors' really fraudulent contracts as binding on
themselves for fulfilment, the profit goes to the malefactors, while the
odium incurred in realising the money to cancel the obligation falls on
the unoffending upholders of honesty.
The extraordinary feature that impresses itself on the mind when looking
through the history of Argentine loans is the readiness with which
London financiers responded to the invitations. No more remarkable case,
probably, could be found in the whole history of finance than that of
the Buenos Aires Provincial Bank, its absolutely reckless mismanagement
and of the inevitable collapse which followed--resulting, as everyone
knows, in the failure of Messrs. Baring. This catastrophe set back
Argentine progress several years, and it is only now that the recovery
is at all complete.
But it can scarcely be emphasised too strongly that the recovery is
complete. Argentine national credit is as sound as that of any civilised
power. Indeed, the fact that the national Government undertook the
responsibility of so great a part of the debts of the provinces is in
itself sufficient indication of the Government's policy. With regard to
municipal loans, it must be admitted that as these are regarded nowhere
as other than a highly speculative investment, future irregularities
would fall on the heads of people who had full knowledge of their risks.
But the risks are extremely small compared with those which existed
formerly; and the national executive seems inclined to exert pressure on
recalcitrant bodies, compelling them to adhere to their agreements. In
a recent case, indeed, intervention was necessary, not in the interests
of the financiers, but in that of the municipality, the extraordinary
exactions of the French port-concessionnaires at Rosario, having had
very disastrous effects on that town's development. For once the
municipal authorities were not the only gainers and the people
themselves were the sufferers.
Before presenting figures of Argentine loans in detail it may be of
interest to show the proportion which was taken up in London. Of the
total raised by the Republic from its emancipation in 1822 until 1904,
amounting to £152,326,460, Great Britain supplied nearly four-fifths,
namely, £125,082,710. This total is made up of the National, Provincial
and Municipal external debts, which amount severally to $540,770,156,
$202,067,716, $24,868,480 gold, or roughly £108,000,000, £40,000,000
and £4,500,000 sterling, of which England provided approximately
six-sevenths, two-thirds and of the last, all. When it is remembered
that of the capital invested in the country commercially three-quarters
(or 250 out of 326 million pounds sterling) are also British, the
influence which this country has had on Argentine progress cannot be
over-estimated.
It is a point, by the way, that a preference on colonial produce would
be a preference against these interests of ours in the Argentine as well
as against the 30,000 people of British extraction resident there, of
whom at least one-half must be engaged or interested in the rearing or
exporting of cattle. In grain they would be affected but little.
In estimating the meaning of this tremendous debt it must be remembered
that much of it is repetition. Not only were many of the loans issued
for conversion of floating and other existent debt, but it will be
noticed that a considerable part of the national debt was contracted
to liquidate the various indebtedness of different provinces.