ENGLISH TRADE. ITS POSITION AND PROSPECTS.
It is always difficult to entice commercial men into giving information
of any value regarding their affairs. The seeker after more material
and solid things than figures--after instances and facts rather than
theories--is very apt to be disappointed. The value of the opinions
gleaned was rather impaired when experience showed that success and
complacency, despondency and comparative failure, usually went together.
It is pleasant to be told not to bother about British Trade, that
"British trade is all right." But it is not entirely reassuring when
such lessons as can be derived from statistics and the opinions of less
successful men are largely opposed to this view.
Some more definite information was, however, available, and from
conversation with people directly concerned with general trade, both
English and Argentines, it was possible to supplement to some extent
the statements, extremely valuable as they are, of our consuls in the
country, as well as the deductions from official statistics. With regard
to consular reports a word must be said. These are often abused by men
of position in trade, and, though their brevity is to be deplored, a
word of protest must be uttered against the inconsiderate and disdainful
criticism to which they are subjected. Moreover, one of the greatest
authorities on Argentine affairs, Dr. Francisco Moreno, an Argentine
delegate on Col. Holditch's arbitration expedition on the Chilian
Frontier, was emphatic in his approval of these reports, even going so
far as to say that he trusted their statements and figures in preference
to those of his own government.
On every hand there were indications leading to two conclusions, namely
that British trade is losing, or has lost considerable ground, and that
the greater part of the blame is due to the producer or merchant at
home. A superficial glance at import statistics would seem to give the
lie direct to any such assertion. Such strong influences, however, are
at work, that it is only after a careful study of all the circumstances
that anything like a true estimate can be formed.
Before, therefore, pronouncing judgment upon its present position and
its future, a short examination of the development of our trade viewed
in conjunction with the economic conditions of the country and with the
various interests in competition with ours, is necessary both to explain
how our conclusions were reached, and to assist in the formation of
a juster appreciation of our commercial relations with the country.
The following statistics give in brief the course of trade in the
Argentine according to official returns for the years 1890, 1895, and
1900 to 1905 inclusive:--
IMPORTS AND EXPORTS FROM AND TO DIFFERENT COUNTRIES.
1890 1895 1900 1901 1902 1903 1904 1905
$1000 $1000 $1000 $1000 $1000 $1000 $1000 $1000
Gold Gold Gold Gold Gold Gold Gold Gold
Antilles:
Imports ... 86 19 43 106 373 571 505
Exports 975 1,616 438 366 470 164 282 420
Belgium:
Imports 10,986 7,441 8,430 8,688 5,484 5,448 9,069 8,727
Exports 12,003 15,417 17,980 13,457 13,760 20,143 17,566 20,780
Bolivia:
Imports 85 72 122 138 122 125 108 126
Exports 296 591 578 541 600 450 392 539
Brazil:
Imports 3,354 4,095 3,741 4,386 4,583 5,350 6,032 5,328
Exports 8,442 8,096 6,185 9,702 8,368 8,545 10,727 13,039
Chili:
Imports 51 41 124 111 213 200 469 669
Exports 2,188 3,067 870 568 684 1,170 1,440 1,510
France:
Imports 19,875 9,116 10,897 9,959 9,243 12,708 17,109 21,248
Exports 26,683 20,337 19,007 28,637 29,587 34,294 30,596 37,594
Germany:
Imports 12,301 11,162 16,635 16,724 13,229 17,009 24,926 29,083
Exports 11,566 13,323 20,070 21,479 22,939 26,812 29,522 37,058
Holland:
Imports 850 103 173 573 622 790 1,007 1,288
Exports 160 92 3,906 1,753 2,834 4,546 3,500 3,761
Italy:
Imports 8,663 10,363 14,924 14,736 12,265 14,702 19,127 20,284
Exports 3,194 3,518 4,304 4,318 4,215 4,338 4,344 6,468
Paraguay:
Imports 1,724 1,824 1,860 1,767 1,469 1,059 1,569 1,616
Exports 336 100 161 216 213 173 216 330
Portugal:
Imports 110 58 78 68 89 213 271 300
Exports 456 138 369 7 113 101 88 23
South Africa:
Imports ... ... ... ... 4 62 126 34
Exports ... 8 3,240 2,891 8,285 9,170 4,941 5,524
Spain:
Imports 4,302 2,575 3,691 3,912 3,166 3,574 4,797 5,726
Exports 2,083 1,311 2,699 2,131 2,025 2,035 1,923 2,334
United Kingdom:
Imports 57,816 39,524 38,682 36,460 36,995 44,826 64,517 68,391
Exports 19,299 14,694 23,890 29,920 35,084 35,600 36,445 44,826
United States:
Imports 9,301 6,686 13,438 15,533 13,303 16,684 24,473 28,920
Exports 6,066 8,947 6,882 9,296 10,037 8,126 10,214 15,717
Uruguay:
Imports 5,885 736 520 679 744 760 862 1,023
Exports 5,506 3,290 2,302 3,710 3,673 4,188 5,020 6,705
Other Countries:
Imports 6,932 1,207 141 175 1,393 7,314 12,265 11,870
Exports 1,557 25,516 41,711 38,715 36,593 61,119 107,233 126,208
TOTAL ---------------------------------------------------------------
IMPORTS 142,240 95,096 113,485 113,959 103,039 131,206 187,305 205,154
EXPORTS 100,818 120,067 154,600 167,716 179,486 220,984 264,157 322,843
While a similar table (calculated in Spanish dollars) gives the following
figures for the principal exporting countries in the year 1822:--
United Kingdom $5,730,952
France 820,109
Germany, Holland, Sweden and Denmark 552,187
Gibraltar, Spain, and Sicily 848,363
United States 1,368,277
Brazil 1,418,768
China 165,267
Havana 248,625
Chile and Peru 115,674
-----------
TOTAL $11,267,622
The contrast between the two tables is sufficiently remarkable; but
before dealing with either, it is necessary to have clearly in mind the
growth and nature of demand. For this reason the immigration returns and
tables showing the development of the railway system are given at this
point:--
ARRIVAL OF IMMIGRANTS IN THE REPUBLIC FROM 1857 TO 1905.
Years. Number.
1857-60 20,000
1861-70 159,570
1871-80 260,613
1881-90 846,568
1891-1900 648,326
1901-1905 536,030
---------
2,461,107
Nationalities.
Italians 1,488,084
Spaniards 507,853
French 176,670
British 37,537
Austrians 42,983
Germans 33,686
Swiss 26,690
Belgians 19,990
Others 127,614
---------
2,461,107
Arrivals in 1905.
Italians 88,950
Spaniards 53,029
French 3,475
British 1,368
Austrians 2,793
Germans 1,836
Swiss 576
Belgians 263
Other nationalities 24,827
-------
177,117
The development of Argentine Railways is shown in following table[4]:--
Extent of Capital Passengers Freight Receipts Expenditure
Lines in $1,000,000 No. in 1,000 $1,000 $1,000
Years kilometres Gold thousands tons Gold Gold
1857 10 ·3 56 2 19 12
1865 240 5·3 747 71 563 438
1870 732 18·8 1,948 274 2,502 1,356
1875 1,956 40·9 2,597 660 5,178 3,009
1880 2,516 62·9 2,751 772 6,560 3,072
1885 4,502 121·7 5,587 3,050 14,298 8,616
1890 9,432 321·1 10,069 5,420 26,049 17,585
1895 14,116 485·3 14,573 9,650 26,394 13,846
1900 16,563 531·3 18,296 12,659 41,401 23,732
1901 16,907 538·3 19,689 13,988 43,866 24,128
1902 17,677 560·9 19,815 14,030 43,272 22,975
1903 18,404 573·0 21,025 17,024 53,569 27,766
1904 19,428 588·5 23,312 20,123 62,558 33,216
1905[5] 19,793 [6]626·3 26,634 22,283 71,341 39,155
[4] Direccion General de Vias de Communicacion.
[5] Approximate figures.
[6] £125,274,000 approximately.
The relative importance of the various lines with their nationalities is
as follows:--
Length of line Special
1904. (Kilometres) Engines Coaches Vans Waggons Waggons
_State-owned Railways:_--
Andine (5ft. 6in.) 339 18 16 16 504 5
Central Northern (Metre) 1,122 85 51 43 1,418 74
North Argentine (Metre) 563 15 26 13 250 27
----------------------------------------
TOTAL 2,024 118 93 72 2,172 106
Southern (5ft. 6ins.) 3,980 290 344 261 9,533 426
Buenos Aires Western 1,197 129 136 148 3,711 --
B. A. Rosario 1,997 146 188 154 4,982 111
Central Argentine 1,785 162 208 109 5,199 76
B. A. Pacific 1,261 100 80 60 2,523 15
Great Western (5ft. 6ins.) 714 90 54 37 1,258 56
Bahia Blanca and N.W.
(5ft. 6ins.) 385 20 8 8 286 3
East Argent. (4ft. 8½ins.) 161 14 21 8 279 5
N.E. Argent. 662 36 42 16 340 7
Entre Rios 758 30 38 19 492 --
Prov. Santa Fé (French)
(Metre) 1,392 81 112 47 1,852 48
Centr. Córdoba (N.) 885 80 76 56 1,606 74
" " (E.) 210 13 20 12 654 --
Córdoba and Rosario 289 29 55 32 654 21
N.W. Argentine 196 20 14 8 520 2
Córdoba and N.W. 153 9 12 4 86 --
Transandine 175 14 10 10 130 8
Central Chubut 70 2 6 3 57 --
-----------------------------------------
TOTAL 16,270 1,265 1,424 998 34,162 852
In "The Review of the River Plate" the growth of British-owned Railways
is given as follows:--
Kilometres.
1864 25
1874 860
1884 1,748
1894 10,785
1904 15,315
For the total kilometrage of the year 1904 the same authority gives
18,412 kilometres, a considerable discrepancy from the official figures.
Of the two authorities the government statistics are generally regarded
as the less trustworthy. But whatever the true figures may be, the
proportion owned by British interests will not be lessened by the total
of the more optimistic estimate, which is based largely on unrealised
concessions. And in any case, the economic point to be emphasised is not
weakened, namely the overwhelming preponderance of British influence in
this direction. Moreover, not only has this influence been increasing
relatively to that of competitors, but, absolutely, the increase is
exceedingly great.
We have, then, in this department of industry a market for goods of
proportions that quite exceed those of any other in the country, the
greatest impetus to its development being given by the admission
into the country of all railway material duty-free. In any estimate
therefore, of the true position of any country's trade, this privileged
demand must be considered. And in estimating future conditions, the
tendency noted in the chapter on railways must be borne in mind, viz.,
the tendency to discourage the continuance of the quasi-monopoly of
one country.
Turning next to the immigration returns, the predominating position
held by the Latin races, and, especially, of the Italian, is at once
apparent. Although in many cases the special requirements of these
people can only be satisfied by the goods produced in their own several
countries, the greater part of the demand for imported goods is for
clothing, and, in the case of the country portion, for agricultural
materials. In both these departments the market is open. On the other
hand, while the greatest attention seems to have been paid to this
market by foreign merchants, the wants of the inhabitants of British
and other Northern extraction living in the far South have not been
studied at all. In this context the following extract from a recent
consular report is of interest. Writing from Puerto Gallegos in
Patagonia the Acting Consular Agent declares:--
"German and French exporters are gradually securing the best part of the
trade in consequence of the greater attention shewn by them to the large
importing houses in Gallegos. It is said that the merchant prefers to
order British goods to suit the taste of their farmer clients but so
little attention is shewn to them by the British exporters that they
are obliged to place their orders on the Continent. Many British
firms refuse to attend to orders in Spanish, and their catalogues and
price-lists are almost invariably printed in English."
From the same report comes a remark of the Vice-Consul at Bahia Blanca
emphasising the energy with which the Hamburg South American Company
fosters the coasting trade. The Pacific Steam Navigating boats pass to
and from the West Coast, but the local trade is scarcely touched by
them. Although a German line does not imply nothing but German trade,
the tendency must, of necessity, be in its favour.
The question of the nature of demand cannot be over-emphasised. It is
owing to neglect of this that the greatest mistakes are made both in
practice and in argument. Up to 1880 the nation's demands were those of
any immature nation. Subsequently to that date the country began to boom
and the whole economic condition was altered. Whereas previous to that
date the market was for articles for private use, whether domestic,
agricultural, or personal, subsequent to the national awakening private
needs became insignificant compared with those of public bodies. Not
only was the construction of railways commenced in earnest but national
and municipal contracts were issued broadcast. Harbours, sewage and
water-works, lighting, tramways, and every other form of public
enterprise, were initiated from that time onward. But, whereas the
earlier works were largely executed by English firms, of recent
years foreign (in particular Belgian) contractors have secured the
concessions. The methods employed by the latter, however, have been such
as rather to disgust the country with its experiment. The case which
has been causing intense excitement is that of the Rosario Port-works.
The French _concessionnaires_ made a bad job there of a difficult
undertaking. That, however, was little compared with the terms which by
some means they managed to insert into their concession, terms by virtue
of which they were enabled to make the most extraordinary exactions from
everyone who entered the port, regardless of the fact that many of the
wharves were the property of other concerns. On the other hand, the
English firm that constructed the Rosario sewage system, and constructed
it with the greatest thoroughness, were treated to a series of vexatious
interferences culminating in a refusal on the part of the municipality
to pay for the work.
Besides the above mentioned work, ports have been constructed at Bahia
Blanca, La Plata, Buenos Aires, San Nicolas, Santa Fé, Paraná (not yet
completed) and other places, so that some two hundred million sterling
have been invested in works of public utility in a country with a
population at the present time of about five million inhabitants. Apart
from the importance of this development of public enterprises as regards
the nature of imports, its importance is obviously no less in the matter
of their extent. Adding to the capital of public undertakings the
capital employed in trade, the total of commercially invested money was
estimated at the end of 1904 at 326 million sterling; but, if national
provincial and municipal loans are taken into account, the grand total
of foreign capital in the country probably exceeds £450,000,000. This
immense influx of capital naturally caused imports greatly to exceed
exports, but the excess is not perhaps so large as might have been
expected, owing to the high tariff which probably increased the import
of bullion.
Recently, since the investments have begun to give returns, the balance
of trade has turned, and, whereas in 1890 the sale of exports (in
dollars gold) was to that of imports as 100·82 millions to 142·24, in
1905 the former had risen to 322·84 millions, and the latter only to
205·15. Even then it is hardly credible that exported interest should
have equalled, much less exceeded, the new capital invested, and the
alternative of gold shipments must be admitted.
We have then a rising tendency in the price of commodities, or a
depreciation of money (quite irrespective, of course, of the depreciation
of paper). The theory of rising prices is, as is well known a favourite
in the States. But in this, as in almost every other case, the
application of an economic theory is rendered very nearly impossible
owing to conflicting influences.
To return once more to the details of Argentine trade, we found that
the predominating demand had been that of the railways, and that of the
railways by far the greater part is British.
Apart from inclinations of sentiment or personal partiality, it is only
natural that engines and other material should be imported from England,
as being of a type to which English engineers are accustomed. A very
large proportion of our trade comes under this heading, and, it must be
admitted, the market here is not free. Even so, however, the superiority
or greater suitability--whether in material, construction, or price--of
foreign work in some directions has ousted the British product. For
example, in steel rails England's quota went down one thousand tons in
1905, while that of the States went up fifty-three thousand. So, too,
in such goods as axes and small tools the latter hold the market. On the
other hand, American locomotives have not proved a success--the English
system of running not being that for which they are designed.
English engineers seem to prefer a solid, well-finished engine, which
can stand accidents, and innumerable repairs. The Baldwin engine is
cheap, but apparently of indifferent finish, and is built on a rigid
frame. The slightest accident to this incapacitates the whole machine,
and, in any case, the locomotive is built for hard use over a short
period, with subsequent scrapping. Neither the traffic nor the capital
of Argentine railways justify such a course. The actual figures of
imports of locomotives for 1905 are--United Kingdom 91, U.S.A. 16,
Belgium 9, Germany 46--increases of 27, 8, 7, and 22 respectively.
English engines are the most expensive. The German engines are largely
those employed in construction. In railway material (not specified)
although England exported to the value of $384,342 gold the increase
over 1904 was $703,548 gold, yet America with an export of only
$470,527, shows an increase of $411,876. Thus even in the privileged
domain of the railway market, there are signs of very keen competition
appearing. This may not prove effective for some time, the connection
between the home contractors and the London board being intimate, and
there is a danger of its possibility being overlooked.
Another important demand is that for tramway material. In this it is
satisfactory to see that there is a favourable tendency in favour
of English goods. Previously, no doubt, the greater knowledge and
experience in the States enabled them to supply cars and material more
readily than in England, and the possession by Germany of the Buenos
Aires electric works favoured its exportation of the latter. But
recently some Preston cars have been put on the road which give the
greatest satisfaction. The increase in electric traction in England
ought to furnish the experience necessary for the successful development
of this branch of trade.
In Agricultural machinery the market is absolutely open, and where there
is any opportunity, English firms have undoubtedly succeeded. It is
unreasonable to expect that we should be able to compete with the States
in sowing, reaping, ploughing, and similar machinery, provided as
they are with an experimental field with conditions similar to those
prevalent in the Argentine. But in traction engines the Lincoln firms
outstrip all their competitors. Rushton, Proctor and Co., Clayton and
Shuttleworth, Ransomes, Sims and Jefferies, are names that may be seen
all over the country. The genuine solidity of construction in their
engines, combined with adaptability to the country's requirements, has
for once overcome the overwhelming attraction of cheapness. Considerable
success has also attended their threshing machines, in spite of their
comparatively greater expense and of various other factors in favour of
American machines.
The case of Agricultural implements is curious. While in axes the
United States have increased their already large export, though under
the heading of spades, picks, &c., their export of 680 tons in 1905 is
8 tons greater than in 1904, the value is £1900 less, while the English
590 tons is 167.5 tons more than in the previous year with an increase
in value of £8080.
In cotton goods there is again a natural monopoly--the preponderating
Italian influence among the working classes encouraging the trade with
that country in the special line of goods which appeals to them.
But perhaps the most important factor in international trade is the
nationality of the importers. In 1823 nearly all the merchants in Buenos
Aires were Scotch, and the preponderance of British houses continued
until recent years. Then, however, for various reasons--the development,
perhaps, of the wool trade on the Continent and the allurements of
finance, owing to which many British merchants invested in land and
other enterprises, in preference to the less congenial uncertainties of
trade--a large number of foreign, especially German, houses appeared,
turning the current of trade more in the direction of that country.
Whatever the reasons may have been, at the present moment Germany
is firmly established in the country, and its trade is continually
increasing. It must be added, that although German firms have a natural
preference for dealing with their own country, they are always ready
to do business with English houses provided that the latter make it
profitable for them to do so.
It will be convenient to deal here with the complaints made by importers
in the Argentine, of English exporters, and the faults that the latter
have to find with the conditions of trade in that country.
Briefly, the chief complaint made of the English manufacturer and
merchant is lack of adaptability--the well-worn objection that appears
in every Consular report, and is repeated even by tradesmen in this
country. The ways in which he shows his stubbornness may seem trifling,
but their importance is sufficiently great in practice. Price-lists
published solely in English, with those measures and prices which are a
continual nightmare to the foreigner, get-up packing that do not quite
meet local taste, all these are apparently trivial, but they affect the
balance of trade nevertheless.
In cutlery, English goods have been entirely ousted from the popular
market. The large British population in the country, however, as well as
the wealthier Argentines themselves, who as a rule are extremely partial
to English goods, from socks to agricultural machinery, still insist
on Sheffield blades, which in the best shops are often the only ones
procurable. But the popular demand is for a cheaper article, often
manufactured in the country. This the English manufacturer has
consistently refused to supply, his reasons being, firstly, that he does
not make it, and secondly, that if he did, it would ruin his reputation
for good work. The plan adopted abroad of not fixing the maker's name to
an inferior article would safeguard the reputation which the English
producer undoubtedly does possess. In this connection it is a strange
anomaly that the impression still holds good in England, and seems to
prevail even in other countries, that German goods are of inferior
quality. This erroneous idea does not, of course, apply to such things
as armour plates and machinery. But in the popular mind the impression
created by toys "made in Germany" has spread to all small articles
emanating from that country. If the work of any country deserves this
stigma it is that of America. The undeniable ingenuity and neatness
of American products is, unfortunately, very often combined with bad
workmanship. In Argentine, according to some authorities, disappointed
buyers of American goods are returning to more solid work. Undoubtedly
the field for cheap goods is favourable in that country, the moneyless
colonists being compelled to buy them irrespective of quality. Besides,
there is a delight, to which the Italian is peculiarly susceptible, in
always having something new. A bright and new thing pleases most people
more than a solid article many years old. And in many directions the
yearly improvements and inventions soon reduce the latter to a position
of economic inferiority.
Turning to the exporters' complaints, there are two which must be
admitted reasonable. In the first place, the economic conditions of the
country as well as the inclinations of the people require exaggerated
credit.
Nothing, apparently, will alter this, and the merchant who refuses to
take business on these terms must expect to lose it altogether. The
other is one that is capable of removal. The English merchant frequently
complains that he cannot come into touch with his ultimate customers.
The taxes levied on commercial travellers are exorbitant, each province
vying with the other in preventing their entrance. From this it follows
that few firms can afford to send representatives further afield than
Buenos Aires or Rosario, and practically all business is conducted
through the larger importing houses of the capital. This is an
absolutely prohibitive system that is bound to have the most disastrous
effects on the expansion of trade. The intention is no doubt protective.
But in a country that is naturally incapable of any industrial
development, the policy cannot be considered as anything but unwise.
As regards the travellers sent out by English firms, they are often
inadequately equipped for the work they have to perform. Knowledge of
the language, coupled with knowledge of the article whose sale they have
come to promote, and an ability to quote credit terms offhand in terms
of dollars and kilos, are important. Too much reliance is often
placed on written matter which a busy merchant has no time to read.
A descriptive pamphlet or book is an extremely valuable adjunct to an
obvious price list and an intelligent traveller. But by itself it is of
little value.
A further point, and one of some importance, is that Argentines expect
immediate delivery of orders. Recently a large English motor car firm
opened an agency in Buenos Aires. The cars were much admired, and as
they were well boomed at an opportune moment, a great many orders were
secured. Owing, however, to considerable delay in delivery, these were
withdrawn, and the orders were transferred to French firms.
Finally, a word must be said of proprietary articles. In these no fault
can be found with British manufacturers. Soap, lime juice, whisky,
mustard, jam, and even soda water and ginger beer, are among the special
products that may be seen almost anywhere throughout the country,
and this branch of trade is capable of even greater development with
judicious advertising. In particular, jam is invariably liked by
Argentines of all classes, and were it pushed a very large consumption
might follow. At present there is only one firm of any note whose
products are seen in the shops. The same may be said of biscuits,
although both in this and in the former case, the high tariff (about
50% to 60% of the value) would be a great restriction.