CHAPTER I

FOREIGN TRADE

The important part played by the foreign trade of the Argentine—Table of imports and exports during recent years—Explanation of their respective movements—Favourable condition of the commercial balance.

Method of ascertaining the statistics of exports and imports—Errors in evaluation—Notes on the import duties on various articles—Variations of the customs duties—Export duties; their transitory character—The trade in bullion.

Imports—Their classification according to their countries of origin—Value of imports from each country, with indications of the principal articles imported—The Argentine dependent upon other countries for a large number of manufactured articles—Concentration of imports at Buenos Ayres.

Exports—Their classification according to origin—Value of exports from each district, with indications of the chief articles exported—Decadence of the French trade with the Argentine and its causes.

Tabulation, according to importance of the principal products exported by the Argentine—Remarkable increase in agricultural and pastoral exports—Search for new outlets.

Eventual denunciation of commercial treaties—Projected new treaty with France—Causes of the superiority of English, German, and North American trade in the Argentine over French trade.

“Dumping” in the Argentine—A new client for the Argentine—Japan—Elements which make for the development of commercial activity in the Argentine.

The commercial balance—Results of the commercial balance—Its prime importance in respect of the prosperity of the country—It is this balance which compensates the issue of capital for the benefit of the foreign debt.

The whole activity of the Argentine Republic is reflected in the statistics of its external commerce, which gives the true measure of its prosperity. All the vital forces of the country, its river traffic-ways, its railways, its ports, its business centres, all aid in the development of the commercial movement, which lives only by means of international exchange. We have thus reached one of the most important

points of our study: that from which we can best judge the place held by the Argentine among the great markets of the world.

Considered under its general aspect Argentine commerce may be summed up as follows: the exportation of raw materials and the importation of manufactured articles. We mention exportation first by design; for it is the exports, as we have already pointed out, that regulate the purchasing power of the country. There are no reserves in the Argentine which permit the country to preserve its power of purchase much in excess of the movement of capital produced by the sale of the harvest.

This situation cannot be clearly expressed in figures; for we can prove that as late as 1891 the sum of imports was greatly in excess of that of exports. In normal periods one must, in fact, take into account a new factor; namely, external credit, which allows the Argentine to increase her power of purchase above her actual resources. When, on the contrary, a crisis arises, the imports rapidly follow the movement of the exports, the country no longer being able to depend upon credit nor to cover by loans its unfavourable commercial balance.

We give below, taken from the publications of M. Latzina the statistics of foreign trade since 1861, which is the first year included in the official statistics.

The foreign trade of the Argentine has passed through two distinct phases; from 1861 to 1890 the imports were usually larger than the exports; while since 1891 the exports, except in 1893, have been considerably the larger.

It is curious to note that this reversal took place after the year 1890; that is, after the financial crisis which so violently shook the country, and deprived it of that external credit which had hitherto balanced the insufficiency of exportations. In 1891 the imports fell to £13,441,400, from £28,448,000, or a fall of more than 50 per cent. from one year to the next. Thenceforward the imports progressively increased to £37,400,000 in 1904, varying by a few millions each year, while the exports reached their present high state of development through the progress achieved by agriculture.

Year.	Population.	Imports.	Exports.		Commercial Balance.

1861	1,375,481	£4,488,224	£2,864,518	-	£1,623,706
1862	1,424,740	4,627,742	3,830,268	-	797,474
1863	1,477,042	5,473,939	4,317,689	-	1,156,250
1864	1,530,954	4,628,648	4,473,462	-	155,186
1865	1,387,101	6,056,861	5,225,288	-	831,573
1866	1,645,436	7,480,097	5,348,154	-	2,131,943
1867	1,706,159	7,758,439	6,639,223	-	1,119,216
1868	1,769,379	8,480,508	5,941,942	-	2,538,566
1869	1,836,490	8,239,140	6,489,637	-	1,749,303
1870	1,882,615	9,824,922	6,044,617	-	3,780,305
1871	1,936,569	9,135,821	5,399,360	-	3,736,461
1872	1,989,880	12,317,156	9,453,593	-	2,863,563
1873	2,045,028	14,686,807	9,479,658	-	5,207,149
1874	2,102,284	11,565,309	8,908,307	-	2,657,002
1875	2,161,639	11,524,896	10,401,822	-	1,123,073
1876	2,223,189	7,214,004	9,618,142	+	2,404,138
1877	2,287,005	8,088,684	8,953,988	+	865,304
1878	2,353,194	8,751,825	7,504,754	-	1,247,071
1879	2,421,827	9,272,718	9,871,511	+	598,793
1880	2,492,866	9,107,176	11,676,157	+	2,564,981
1881	2,565,040	11,141,185	11,587,654	+	446,469
1882	2,639,573	12,249,209	12,077,788	-	171,421
1883	2,716,836	16,047,165	12,641,595	-	4,045,570
1884	2,797,042	18,811,229	13,605,967	-	5,205,261
1885	2,880,111	18,444,394	16,775,820	-	1,668,574
1886	2,966,260	19,081,749	13,966,968	-	5,114,781
1887	3,056,835	23,470,425	16,884,164	-	6,586,061
1888	3,158,914	25,682,422	20,022,380	-	5,660,041
1889	3,265,577	32,913,976	18,029,071	-	14,884,960
1890	3,377,780	28,448,162	20,163,798	-	8,284,364
1891	3,490,417	13,441,556	20,643,800	+	7,202,244
1892	3,607,103	18,296,232	22,674,067	+	4,377,836
1893	3,729,105	19,244,725	18,818,032	-	426,694
1894	3,856,728	18,557,725	20,337,597	+	1,779,872
1895	3,984,911	19,019,287	24,013,560	+	4,994,270
1896	4,084,183	22,432,718	23,376,403	+	927,685
1897	4,186,267	19,657,789	20,233,859	+	576,070
1898	4,291,575	21,485,780	26,765,891	+	5,280,111
1899	4,400,226	23,370,134	36,983,506	+	13,611,152
1900	4,512,342	22,697,014	30,920,082	+	8,223,068
1901	4,625,150	22,791,949	33,543,220	+	10,751,271
1902	4,741,780	20,607,851	35,897,345	+	15,289,494
1903	4,860,324	26,241,320	44,196,905	+	17,955,585
1904	4,981,832	37,461,194	52,831,505	+	15,370,311
1905	5,214,974	41,030,884	64,568,768	+	23,537,884
1906	5,377,639	53,994,104	58,450,766	+	4,456,662
1907	5,546,106	57,172,136	59,240,874	+	2,068,738
1908	5,712,489	54,594,547	73,201,068	+	18,706,521
		—————	—————		—————
Totals		£887,142,003	£964,278,951	+	£77,136,940
		==========	==========		========

For the explanation of these data, we must remember that during the last twelve years the population has increased only by about one million inhabitants, and that in consequence the power of consumption of the Argentine could only become modified to a certain extent. If we except certain periods of exceptional importations, referring, for instance, to the entry in bulk of large amounts of raw material for the construction of new railways, we see that the imports, as compared to the bulk of the population, represent from £5, 5s. to £7, 18s. 7d. per head, while the same figure for exports is £7, 10s. 7d. to £10, 12s. 0d., according to the condition of agriculture.

If we now examine the recent results of foreign trade, we find the situation summed up by the following figures for 1908, as compared with 1907, 1906, and 1905:—

	1908	1907	1906	1905

Exports	£73,201,068	£59,240,874	£58,450,766	£64,568,768
Imports	54,594,547	57,172,136	53,994,104	41,030,884
	—————	—————	—————	—————
Excess of Exports	£18,606,521	£2,068,738	£4,456,662	£23,537,884
	========	========	========	========

The commercial balance in 1908 was thus £18,606,521 in favour of the exports, as against £2,068,738 in 1907, £4,456,662 in 1906, which latter sum was £19,081,222 less than in 1905.

There is every reason to believe that the exports for 1909 will prove to have been fully as large as the year before, for the recovery of the wool market and the enormous maize harvest will have compensated certain deficits in the matter of corn and cattle, which suffered in the preceding year from frost or drought.

As for the harvest of the current year, it is wiser not to say too much at present, as the lack of rain has deranged the sowing season.

Before commenting in any way upon the figures relating to foreign trade, we must make one remark in respect of the method followed in making out our balance-sheets, etc. In the case of imports, the valuation of the customs is taken, and in the case of exports their current market price in gold. But this procedure has the demerit of yielding results which are not in strict correspondence with reality; the most we can say is that they enable us to make a strict comparison of one year with another.

The valuations according to the customs are from 20 to 30 per cent. above the true values in the case of the majority of articles, and are sometimes merely fantastic.

To gain some idea of the disturbing factor which arises from the calculation of imports upon the basis of customs estimates, which estimates are the basis of the figures of the National Statistics, we need only take the figures relating to coffee as an example. In 1899 it was valued at 30 centavos in gold; in 1900, at 20; and in 1902, at 12 centavos (7·2d., 4·8d., and 2d.). This decrease of over 5d. in three years only enables one to judge of the instability of this rate of valuation.

Here are some examples of the tariff paid by certain imports into the Argentine.

The 50 per cent. tariff strikes principally at the importation of woven stuffs, carriages, harness, furniture, perfumery, ready-made under-clothing, boots and shoes, hats, and similar articles not burdened by specific tariffs, for there is a host of articles which pays the entrance duty in this way. In practice this ad valorem tariff of 50 per cent. frequently becomes a tariff of 100 per cent. or more, on account of the arbitrary nature of the customs valuations.

The 45 per cent. tariff affects stockings, socks, etc., exclusively.

The 40 per cent. tariff affects bales of unbleached linen, all kinds of cotton cloth and calicoes, dressed leather, articles of lace made of pure silk or silk mixtures, or of thread; woollen blankets, and blankets of wool with cotton warp, or bound or bordered; also laces and silk thread or thread of mixed silk and woven stuffs and any other articles of silk or silk mixtures, including floss silk, etc.

The 35 per cent. tariff applies to woollen stuffs in general, whether of pure wool or mixtures.

The 25 per cent. tariff affects all merchandise not burdened by a special tax. That of 20 per cent. affects bar, strip and ribbon steel, and unbleached cotton cloths.

The 15 per cent. tariff affects oak, cedar, pine, spruce, and tissues of silk intended for bolting flour. The 10 per cent. tariff affects certain chemical products, and also cocoa, tin, machinery in general, agave fibres, jute, and hemp fibre for making mats, etc. That of 5 per cent. which is the lowest,

is imposed on turpentines, steel wire for fencing, ploughs, jewellery, sulphur, cotton, whether raw or in the thread for industrial purposes, sewing-thread, sacks, and other various articles.

Besides the above there are some ninety-five articles or products on which specific duties are imposed.

Since 1900 a legislative factor, at first sight unimportant, but in practice of the greatest advantage, has to a certain extent modified the vexatious character of the Argentine tariff. This factor consists in the relative stability imposed by Congress on the customs law, by the suppression of the annual revision to which the rate of valuation was subjected, which change has allowed commerce to establish its transactions on a definite basis; whereas they were formerly contingent upon the continual modifications of the said tariff. This step, like so many others, was initiated by the ex-Minister, Señor José Maria Rosa.

Exaggerated values were always at the base of these tariffs, and the abuse became so notorious that the present Minister of Finance, Dr Terry, was himself obliged to recognise “that reform was essential in the matter of the rectification of all these valuations, in order that the Customs Administration should not strike indirectly at imported products by taxes far in advance of those intended by the legislative power.” A new tariff has been in force since the 1st of January 1905, and although it also has given rise to a certain degree of recrimination, it is none the less an improvement upon the former state of affairs. As for the export duties, here again we find notable discrepancies between the valuations and the market prices which ought, on principle, to serve as their basis. They were established after the crisis of 1890, and as they were now no longer justified by insufficient resources, they were suppressed by Congress reckoning from 1906.

These customs duties on exported goods were established by the Argentine Constitution, but not in a permanent manner. The Charter enacted that they should be in force up to 1866; but at that time, the country being at war with Paraguay, a Convention was convoked, which postponed the settlement of the matter for some years.

In 1887 the export duties were suppressed; but in 1900, after the terrible financial crash, they were once more established, in order to relieve the heavy burdens and engagements of the Treasury.

These duties were from 4 to 100 per cent. ad valorem, and were principally directed against leathers and hides, wool washed or unwashed, ostrich plumes, tallow, fat, animal oil, horns, etc.

As may be seen by this simple enumeration, these duties weighed upon the by-products of stock-raising as they left the country for the markets of foreign consumers, and this after they had already been subjected to other heavy charges, in the shape of land taxes, customs duties on wire for fencing, and many local taxes, while agricultural products escaped scot-free. For this reason it has always been considered that the export tariff had no equitable basis, and all the Argentine Administrations have for this reason endeavoured to suppress it, as the Congress finally did in 1905. Whether we are dealing with exports or with imports we always find, as we have seen, an inflation of prices on both sides, so that the figures of the official statistics have not so much an actual as a comparative value.

There is still one important item to be remarked in respect of imports: it is that the import duties in recent years have been first raised then lowered. Additional duties amounting to 10 per cent. were established when the dispute with Chili seemed about to end in war—that is, on the 29th of January 1902—at which time a supertax of 5 per cent. was added to the tariff which had already been in force since 1899. Since then these duties have been finally suppressed (in January 1904). It is obvious that with these variations we have not always the same basis of valuation, as the imports are variously affected by these variations themselves, so that all exact comparisons are impossible.

We must also take into account the value of the imports which are not controlled by the customs. Competent persons have estimated that these amount to about 20 per cent. of the goods passing through the customs, which represents a sum of about £2,000,000.

Again, the figures we have quoted do not include the

movements of currency or bullion, which during the last six years have been as follows:—

Year.	Metallic Imports.	Metallic Exports.	Balance.
1902	£1,781,817	£614,868	+£1,166,949
1903	5,217,237	239,230	+ 4,978,007
1904	4,983,590	320,858	+ 4,662,732
1905	6,511,908	163,875	+ 6,348,033
1906	3,642,464	301,124	+ 3,341,340
1907	4,710,545	626,777	+ 4,083,768
1908	5,730,243	8,963	+ 5,721,280
1909 (six months)	7,888,781	2,991	+ 7,885,789

The increase observed from one year to the other in the importation of bullion is in direct relation to the increase of exportations: it corresponds to the consignments of gold, coming especially from the London market, in order to expunge the commercial balance in favour of the Argentine.

In the light of these observations we will now examine the commercial movement in itself, while noting its distribution according to the various countries which exchange their products with the Argentine.

We will then give a list of the principal articles entering into the composition of this foreign trade.

Imports

Here is a table of imports for the years 1906-1908, and for the first six months of 1909, classed according to their origin and in order of importance:

Country of Origin.	1906.	1907.	1908.	1909. (Six months.)

Great Britain	£18,965,987	£19,587,148	£18,674,279	£9,416,405
Germany	7,683,252	9,162,234	7,569,417	4,305,742
United States	7,894,979	7,768,455	7,119,401	3,704,917
France	5,348,975	5,093,605	5,295,385	2,998,346
Italy	4,824,727	4,800,648	4,982,649	2,706,014
Belgium	2,425,608	3,179,370	2,550,674	1,309,920
Brazil	1,328,205	1,569,871	1,457,189	751,923
Spain	1,473,654	1,458,894	1,723,622	859,013
Uruguay	366,648	494,551	441,407	269,740
Holland	302,349	352,401	407,606	212,714
Paraguay	261,794	282,867	301,991	185,114
Cuba	135,916	115,396	136,137	59,607
Chili	105,643	110,965	145,398	39,756
Bolivia	26,822	25,375	31,212	13,443
Other Countries	2,829,544	3,170,354	3,758,181	1,414,952
	—————	—————	—————	—————
Totals	£53,994,104	£57,172,136	£54,594,547	£28,276,906
	========	========	========	========

Great Britain is always at the head of the list of imports, the total of her products imported by the Argentine in 1908 being £18,674,279. Among these products one of the greatest importance is coal, of which 2,338,949 tons were imported in 1907, representing a value of £3,274,528. Woven fabrics of all kinds attained a value of £3,038,694; railroad material £2,703,945, and sacking for making up into sacks, £296,585.

Germany now occupies the second place. The imports from Germany, worth £7,569,417 in 1908, are of all kinds, and include almost every kind of product consumed by the Argentine. On account of her various industries, metallurgical products holds the first place; then come woven fabrics and paper.

The United States send principally agricultural material, petroleum, and pine timber; the imports for 1908 were £7,119,400 in value; or nearly twice the value of the Argentine exports to the States. This situation is explained by the fact that both countries export the same products—cereals and cattle, etc.

France comes fourth, with £5,295,385 worth of produce in 1908. Her products, like those of Germany, are very numerous in kind. The largest imports are of woven fabrics, wines and spirits, metallurgical products, pharmaceutical specialities, and perfumery. Taking the item of wines and spirits alone, the Argentine imports £228,000 worth of bitters and vermouth and £202,560 worth of wines in the wood.

Italy sent £4,982,649 worth of imports in 1908. From Italy the Argentine imports the largest quantity of wines and of bitters, valued at £922,938; olive oil accounts for £394,133, rice for £295,667, cheese for £181,949 (the weight of this import in 1907 being 2,274 tons); in short, all the articles most in demand among the Italian emigrants. Woven fabrics attained a value of £927,857.

Far below the countries already named, with an amount of produce less than half that imported by France, comes Belgium (£2,550,674 in 1908); then Brazil (£1,457,189), and Spain (£1,723,622). Belgium sends principally metallurgical products; Spain her wines and oils and salt. Brazil sends only

a dozen or so of products; the most important being coffee, tobacco, and especially the yerba maté; a herb analogous to tea, and used as a beverage in the country districts. Brazil and Paraguay, which supply it to the Argentine, sent £1,046,183 worth of the herb in 1908.

The table given below shows what are the principal products imported by the Argentine Republic, and show the considerable increase which has taken place in all branches of importation:—

	1906.	1907.	1908.	1909. (1st six months)

Alimentary products	£3,532,509	£4,183,187	£4,709,819	£2,226,053
Beverages	2,358,808	2,526,748	2,655,956	1,155,965
Textile materials and fabrics	10,826,008	9,466,638	9,982,267	5,787,076
Mineral oils, and chemical and pharmaceutical products	3,092,766	3,254,653	4,048,175	2,174,871
Woods, furniture, etc.	1,122,444	1,272,008	1,262,573	728,178
Iron, machines, materials, implements, utensils, etc.	6,988,461	6,632,228	6,015,097	3,401,912
Coal and other mineral produce	4,182,160	4,126,910	4,979,839	2,229,224
Variousproducts [75]	21,890,946	25,709,763	20,960,820	10,544,272
	—————	—————	—————	—————
Totals	53,994,102	57,172,135	54,594,546	28,507,351
	========	========	========	========

[75] Under this heading of various products are included railway material—rails, chairs, locomotives, etc.—to the value of £4,672,486 in 1905, £7,011,072 in 1906, £10,464,150 in 1907, £6,015,097 in 1908, and £3,401,912 during the first six months of 1909. Building materials amounted in value to £4,400,339 in 1906, £4,604,078 in 1907, £4,236,485 in 1908, and £2,492,276 in the first half of 1909.

We see from this table that the Argentine relies on foreign imports for the greater number of metallic, chemical, and textile products, and even for a great many food-stuffs. An essentially agricultural nation, she has not as yet developed her industrial equipment, nor has she been able to undertake the transformation of the raw materials at her disposal into manufactured products. The development of her agriculture is the object which has hitherto absorbed all the initiative and all the capital of the country.

It is this dependence upon foreign countries for so many articles of prime necessity that makes the cost of living in the Argentine so high. All these articles have to pay customs dues varying from 5 to 50 per cent. ad

valorem; dues which still further increase the exaggerated valuations of the Customs Administration.

On the other hand, these imports are by no means so decentralised as the exports; they are brought as near as possible to the centres of consumption, so that they shall not be forced to pay fresh freight dues in the interior. The Customs House of Buenos Ayres handles 84·9 per cent. of the imports; Rosario 9·2 per cent.; La Plata 1·9 per cent., and Bahia Blanca ·8 per cent. As we see by these figures, the Federal Capital almost monopolises the imports, whence arises its disproportionate development as compared with the rest of the country.

Exports

Here is the table of the exports of the last three years, arranged according to their destination, in order of importance:—

Destination.	1906	1907	1908	1909 (1st six months)
Great Britain [76]	£8,644,807	10,743,230	15,644,944	10,207,653
France	7,152,671	7,552,409	5,782,750	4,761,514
Germany	7,883,439	7,284,611	6,950,399	4,280,523
Belgium	5,124,279	5,918,426	7,155,637	5,531,015
Brazil	2,378,263	2,803,686	3,019,115	1,729,824
United States	2,666,422	2,188,087	2,604,647	2,411,460
Italy	1,381,225	1,043,893	1,581,571	1,508,815
Holland	595,047	834,818	1,059,934	623,634
Spain	514,515	387,121	519,920	248,823
Chili	277,107	370,133	307,501	297,018
South Africa	791,606	303,118	172,088	24,662
Uruguay	1,006,880	275,328	154,891	112,329
Cuba	49,478	144,896	57,891	42,046
Bolivia	65,719	121,610	118,745	75,616
Paraguay	41,003	36,530	42,733	17,166
Other destinations	755,324	598,740	921,081	792,241
Shipments to order	19,122,949	19,252,891	27,085,119	17,710,457
	—————	—————	—————	—————
	58,450,766	59,240,874	73,201,068	50,354,688
	========	========	========	========

[76] It should perhaps be explained that the totals are correctly converted from the Argentine values, but are not the exact sums of the columns of figures, as these latter are for economy of space printed without the following decimals that result from conversion. The error in any one case is infinitesimal—from ¹⁄₁₀₀th to ¹⁄₁₀₀₀th of 1 per cent.—[Trans.]

In the matter of exports the first place is again held by England, with an exportation of £15,664,944 in 1908 as against £10,743,230 in 1907, an increase of £4,421,714.

England is the Argentine’s largest client in the matter of agricultural produce, taking 16 per cent. of the whole amount exported. In 1907 she spent £3,739,509 on chilled meats; £1,843,954 on cereals—wheat, maize, and linseed; £1,212,471 on wools; £193,834 on butter, and £379,810 on sheepskins and cowhides, dried and salted. Australia also imports wheat and maize from the Argentine.[77]

[77] These figures are for 1907 except where otherwise stated.—[Trans.]

The export trade to England is still capable of a far greater expansion, if England will only determine to allow cattle on the hoof to be imported once more; an import she denied herself some years ago, on account of anthrax, and one which the Argentine is eagerly begging her to resume, under proper sanitary regulations.

It is England which has hitherto preserved the closest balance between her exports to and imports from the Argentine, and no other country has so far been able to oust her from her dominant position in the Argentine foreign trade. From this we see that the ties which unite the two countries have nothing factitious about them; a fact which is still further emphasised by the statistics of English capital employed in the Argentine.

Germany holds the second place, with her £6,950,399 of imports from the Argentine (in 1908: £7,284,611 in 1907). After England, she is the greatest consumer of Argentine wool; the exports of this product in 1907 amounted in value to £2,846,213. Other articles absorbed by Germany are hides (to the value of £1,045,417), and cereal products—wheat, maize, linseed,and bran—(to the value of £1,013,426). The German imports from the Argentine do not, however, include cattle or chilled meats.

France, up to 1876, occupied the first place on the scale of Argentine exports. To-day her imports from the Argentine amount to £5,782,750 only (1908), or nearly £10,000,000 less than the English imports (in 1907 they amounted to £7,552,409). Her purchases in the Argentine are confined to a very few products, of which the chiefest is wool, the value of the export in 1907 being £4,908,510, or a little less than half the entire Argentine production. Then come hides, to the value of £1,508,764; then linseed, maize, and wheat to

the value of £309,956, £322,473, and £271,488 respectively, the whole imports from the Argentine in 1907 being £7,552,419.

The French system of Protection has so far stood in the way of the trade in Argentine cereals, and has absolutely prohibited the entry of animals or chilled meat. The interests of the French agriculturalists and cattle-breeders have hitherto come before the interest of the consumer, which is to obtain the products necessary to life in the cheapest market. But overtures are being made, by the common agreement of both countries, which may eventually open the French market to Argentine meats, in return for certain concessions granted to France, relative to the exportation of her own products—her wine, silks, woven fabrics, etc.

The marked and progressive decadence of the Franco-Argentine trade ought to rivet the attention of French capitalists and statesmen. Hitherto numerous ties have connected France and the Argentine. The fundamental code and the legislative system of the South American Republic have been impregnated by the spirit of liberty, equality and fraternity proclaimed by the French Revolution. The Argentine mind is fed upon French thought, science, and literature. It is now, however, to be seen that the intellectual influence of France is losing ground, as well as her commercial influence, as to-day the sense of national fraternity is based upon solidarity of interest.

Now the decadence of French trade with the Argentine is truly alarming. If we consult the publications of the National Department of Statistics, we find, for instance, that in the thirty-one years from 1876 to 1907 the German exports to the Argentine have increased by 2450 per cent.; the Belgian, by 1002 per cent.; those from the United States by 1898 per cent.; Italian exports by 907 per cent.; English by 992 per cent.; but French exports have increased only by 204 per cent.

Compared with other nations, France has least been able to hold her own in the matter of trade with the Argentine. In 1876 the importations from France formed 23·2 per cent. of the total imports; while in 1908 they formed only 9·9 per cent. of the totals, making a proportional diminution of 13·3

per cent. in thirty-two years. Our imports from England, however, which in 1876 were 24·9 per cent. of the total, had increased to 34 per cent. by 1908; representing a proportional increase of 9 per cent.

We are thus justified in concluding that all our efforts to develop the current of Franco-Argentine exchange will contribute powerfully to fortify the influence of France, and the sense of confraternity between the two Latin nations.

The causes of the decay of the French trade have been recapitulated in an official document despatched in 1904 by the French Chamber of Commerce in Buenos Ayres to the Minister of Commerce.

These causes may be summarised as follows:

1. The exaggerated duties to which many of our products are subjected on entering the Argentine.

2. The competition of local industry with the imports of certain products.

3. The dearness of labour in France, and the consequent cost of manufacture, which in many cases no longer permits us to struggle against our competitors.[78]

4. The imperfection of our equipment for making certain articles.

5. The persistence of our manufacturers in disregarding the tastes of their clientèle.

6. The insufficiency of the credit granted by French manufacturers and merchants as compared with those of other competing countries.

7. The frequent lack of technical knowledge on the part of foreign commercial travellers; a lack which almost always prevents them from benefiting as they should from direct contact with their customers.

8. Finally, in the matter of navigation, the expensive character of our vessels, and the resulting dearness of freight.[79]

[78] The case of France is especially interesting, because her tendency is towards self-sufficiency—the reverse of the policy of nearly all other countries.

[79] See Rapport à M. le Ministre du Commerce sur les causes de la diminution du commerce française dans la République Argentine, 1904.

Belgium imports some £5,918,426 worth of produce from the Argentine (£7,155,637 in 1908). She receives much the same articles as Germany: £1,456,196 worth of wool, and £2,285,174 worth of cereals, of which £1,551,228 goes for wheat. We find a new item figuring in the Belgian imports—extract of beef—to the value of £173,885; this extract is made by Kemmerichs, the rivals of Liebigs, who manufacture their extract on the Uruguay.

Of late years the Argentine has gained a new client—South Africa. During the Boer war an extensive export trade sprang up, in live animals, chilled meats, and cereals, and this trade has been maintained. The value of the exports to South Africa in 1908 was £172,088 (£303,418 in 1907.)

Brazil also imports alimentary products from the Argentine: cereals, and especially wheat and flour. The value of the exports to Brazil in 1908 was £3,019,115. Between the two principal countries of South America—Brazil and the Argentine—economic relations are promoted by convenience; Brazil furnishing the produce of its prosperous and varied forms of agriculture—coffee, yerba maté, tobacco, etc.—in exchange for Argentine cereals and cattle.

In North America, on the contrary, the Argentine finds few outlets for its products, as the two countries have almost the same products. The exports to the United States were £2,188,087 in value in 1907; £2,604,647 in 1908; consisting almost entirely of hides, wool, and extract of quebracho for tanning; while, as we have seen, the exports of the United States to the Argentine reach the value of £7,100,000.

The Argentine Government has given much thought to the disadvantages of this commercial situation; it has sought means to remedy it, but so far has adopted no practical measures. It has also endeavoured to conclude a commercial agreement with Brazil, but without success, because in South American states questions of race-antagonism often give rise to the gravest problems. This fact also explains why the attempts to establish a commercial treaty have so far failed.

In his last message, however, the President of the Republic

admitted that negotiations were in progress with a view to opening up new markets and to increase the mutual trade of the Argentine and other countries. He even announced that a commercial treaty with Chili was almost completed. On the other hand, as arbitration treaties have just been concluded with Brazil and the United States, we may infer that these countries are not systematically opposed to any understanding with the Argentine.

Holding positions far inferior to the foregoing countries are: Italy, which in 1908 received £1,581,571 worth of Argentine products, principally maize and hides; Holland receiving £1,059,394 worth of imports, comprising linseed and cereals (maize and wheat); Uruguay, importing live-stock, meat, sugar, hides, etc., to the value of £154,891 in 1907 (£275,328 in 1908); Spain, importing maize, hides, and fats to the value of £387,121 in 1907 (£519,920 in 1908); and Chili, importing Argentine produce to the value of £370,133 in 1907 (£307,501 in 1908), consisting entirely of cattle and mules.

Finally we must mention Austro-Hungary, although that country has very little commercial contact with the Argentine. The imports from Austria and Hungary amount to some £500,000 or £600,000 (£578,932 in 1907, £658,700 in 1908), and the Argentine exports, principally wheat, amounted to a value of £150,395 in 1907, and £214,227 in 1908.

One department of the foreign trade of the Argentine cannot be precisely classified; namely, that of the products which are loaded on vessels which make seawards, and those which, coming from the river custom-houses, are transported to Buenos Ayres, there to be transhipped for foreign countries. The value of such exports was £19,252,891, in 1907, and £27,085,119 in 1908. This sum includes the value (£18,654,153 in 1907) of agricultural products, wheat and maize, despatched to order but without exact destination, whether to Saint Vincent in the Cape Verde Islands, Las Palmas in the Canaries, or Falmouth in England.

The following table shows, in the order of their importance, the products exported by the Argentine during the three

years 1906-1908 and the first six months of 1909, so that we may see at a glance what branches of production have most rapidly increased:

	1906.	1907.	1908.	1909. (1st six months)

Products of Stock-raising	£24,827,397	£24,764,041	£23,023,691	£16,213,533
Products ofAgriculture [80]	31,530,938	32,818,324	48,335,432	32,986,430
Forestal products	1,184,372	1,068,471	1,269,447	794,772
Various	908,168	590,037	272,497	359,952
	—————	—————	—————	—————
Totals	£58,450,875	£59,240,873	£72,921,067	£50,354,687
	—————	—————	—————	—————

[80] The agricultural exports for 1906 wore sensibly lower than those of 1905, on account of a decrease of £3,864,392 in the exports of wheat.

We see that agricultural products were responsible for the enormous increase in the trade statistics of 1908. They represented 66 per cent. of the total exports, and had increased nearly 50 per cent. in one year. The products of stock-raising have not increased; on the contrary, there is a falling off of more than £5,000,000 between 1905 and 1908, the value in 1905 being £28,208,597.

We see from the preceding data how greatly agriculture has developed in the Argentine during the last few years. To realise precisely how great this development has been, we need only recall the fact that the exportation of corn is now 10,000 times greater than it was thirty years ago: maize has increased by 800 per cent.; fodder, by 80 per cent.: linseed, by 70,000 per cent.; flour more than 600 per cent.[81] These figures show how rapid the growth of the Argentine has been, and what progress has been realised in spite of temporary crises.

[81] Latzina, work already cited, p. 510.

If we now consider the progress of external trade, not from year to year and in detail but as a whole, and over a large period, we can no longer doubt that this trade is destined to accomplish still greater development. Importation too, the field for which is somewhat restricted, may also realise a greater progress as the population increases. Again, once the Argentine develops her industries with greater energy, it is only natural that larger quantities of raw material will be imported, to be transformed into manufactured articles.

As for the increase of exports, we have only to turn to the data already given concerning the annual increase in the area of sown land, and the importance of those lands which have yet to reach their true value, but will do so as soon as the stream of immigration supplies them with settlers and colonists.

Moreover, the creation of a network of economical light railways, and the opening of new ports on the great rivers, will give the export trade new facilities, which will naturally result in an increased trade.

In the first edition of this book we remarked that there was still an unknown factor in the future of the foreign trade of the Argentine. Now there is, in the Presidential Message, an allusion to the eventual termination of the commercial treaties with the principal nations, with the intention of suppressing the “most favoured nation” clause, and of opening up direct negotiations.

Very fortunately this measure has had no practical consequences, for the revision of treaties is a delicate piece of work for a nation essentially tributary to the foreigner, if one wishes to avoid the risk of provoking reactions which might compromise the results already obtained.

This “most favoured nation” clause, which the Republic inserts in all its treaties, has, for the rest, by no means impeded the enormous expansion of the Argentine export trade which we have already noted. We must conclude that the termination of commercial treaties, with the object of effacing this clause, has become, even in the case of distinguished statesmen, a continual obsession, although it is justified by no decisive argument, and might well expose the country to dangerous vicissitudes.[82]

[82] One may with profit consult a notable report on La clause de la nation la plus favorisées, presented to the Minister of Agriculture by the Divisional Chief, Richard Pillado.

On certain points, however, the customs laws of the Republic might well be revised in such a way as to stimulate foreign trade.

Thus with regard to France official negotiations have already been opened, with the object of affording the Argentine certain facilities in the introduction of her chilled

meats; while in return French wines and woven fabrics, etc., were to be given a preferential treatment. Just as the basis of this arrangement appears, we have as yet no reason to suppose that it will be ratified by the two nations concerned, or that it will soon be put into execution.

Taking a more general point of view, we are obliged to admit that if French commerce, and especially French industry, have not won the place which should be theirs in the Argentine Republic, when we consider the magnitude of Argentine exportation to France, it is because French men of business and manufacturers have started from a false principle, from whose consequences they and the Argentine are still suffering. Instead of following up the rapid evolution of the Argentine, the French have persisted in regarding it, from afar off, as a nation scarcely yet open to civilisation and progress. They used to seek to get rid of remainders, old-fashioned articles, and out-of-date equipments in the Argentine, as they do to-day in China and Africa. Such railways as are built with French material are an example of this practice; their installation left much to be desired, and it is only lately that they have made some efforts to support comparison with other lines.

The English, Germans, and Americans of the States were better advised. Having studied with greater care the country and its tendencies, they were able to initiate it into the paths of material progress. Those railways which were built by English contractors or companies are models of perfect adaptation to the needs of the country. The equipment of the tramways, furnished by the United States, may be compared with that of the principal capitals of Europe. In the matter of electric lighting the great German companies have installed the best German plant.

The same observations may be made of a large number of other products imported from abroad. There is nothing better in the United States in the matter of agricultural equipment than that possessed by the Argentine; as for stock-raising, we have only to remember that it is to South America that England sends her best bulls, rams, and stallions.

But from these remarks it must not be concluded that

the Argentine has bought too dearly the glory of an equipment which is modern as compared with that of the old European nations. Of late years it is rather the reverse that has been true. The leading industrial countries, being anxious to sell off their stock on account of an almost general over-production, have been propelled towards the markets of exportation in order to get rid of their surplus. From this has resulted a competition from which the Argentine has in many cases profited, by obtaining industrial products under particularly advantageous conditions. Such has been the case in the matter, for example, of rails; the German trade offered them at £4, 16s. per ton, at a time when the European prices were considerably higher; Germany, however, was supplanted by the factories of the United States, which supplied them at £2, 8s. per ton. This is an application of the new economic process known as dumping, which consists in developing production as far as possible, in order to lower the net cost of production, and then to sell at this net cost price, in foreign markets, all that the producing country fails to absorb.

All the nations we have cited are the actual consumers of Argentine products; but it is to be hoped that yet other markets will be opened, attracted by the abundance and the quality of these products.

Among these countries disposed to trade with the Argentine we must mention the Japanese Empire, which is endeavouring to develop its trade upon a reciprocal basis, and has sent a commission of delegates to Buenos Ayres, who were instructed to obtain complete and practical data as to the possibility of establishing a mutual trade with the young South American nation.

The Japanese commissioners have accomplished their trade with the earnest application characteristic of their countrymen, and after studying the question for more than a year they have arrived at the conclusion that many Argentine products, and among them wools, hides, and flour, might find an extensive outlet in Japan; but only if imported free from the expenses imposed by the European middleman.

Pursuing their investigations, the Japanese Commissioners

discovered that the great difficulty in the way of a direct trade between the Argentine and Japan consists in the fact that there is no direct line of steamers; but this obstacle might be overcome by an arrangement with the Toyo-Yusen-Kaisha Company, which would establish a direct service to Buenos Ayres via Cape Town in forty-five days; at present the voyage takes seventy days. This arrangement would lead to a reduction of 75 per cent. on the freights.

Flattering, however, as the prospects of this new market may seem, there is one item in the plan of the Japanese Government which gives rise to considerable reflection on the part of our Argentine statesmen: namely, the proposal to introduce Japanese agricultural immigrants into the Argentine; that is, immigrants whose presence would in many ways be inconvenient; against whose presence the United States and other countries have reacted, and whose very presence in the Argentine would be contrary to the sense of the Argentine Constitution, which imposes upon Congress the duty of encouraging European immigration.

In concluding this study of the foreign trade of the Argentine Republic and its remarkable development, we cannot do better than quote the enthusiastic words by which an Argentine statesman terminated a study of the same question, thus summarising all the various elements which concur in the development of the commercial activity of the nation:

“Despite the scanty population, and the small proportion of our agricultural resources which has as yet been exploited, the production of the Argentine is considerable. The herds grazing in our pastures show the state of progress which stock-raising has attained; the harvests which cover the plains of Santa Fé and Buenos Ayres have made the name of the Argentine Republic known on the markets of Europe as that of a flourishing agricultural country; sugar, the product of the cane-fields of Tucuman, has enriched that Province and the national industry, and very shortly the vines grown in the valleys of the old Province of Cuyo will achieve a yet wider development, and will give still more abundant vintages.

“The smoke-stacks of manufacturers overlook many of the cities of the Republic, and certain native products are now being transformed, as raw material, into finished articles by the nation’s labour. Industries based upon the vitality of our production, and supported by the public powers solely in a rational and equitable degree, are developing themselves without being forced to resort to the exaggerated and always mistaken assistance of an excessive protectionism. In short, our foreign trade, upon whose promising results we have already commented, will in its turn fortify the economic organism, which is the basis of the welfare and the power of nations.”[83]

[83] See Memoria del Departamento de Hacienda, by T. M. Rosa, 1899, vol. i., p. 170.

The Commercial Balance

In a country like the Argentine, which has no accumulated reserves, and has not become the creditor of foreign countries by investing its capital abroad, a favourable commercial balance (that is to say, the realisation of an excess of exports over imports) is a matter of considerable importance. Now this excess was £18,600,000 in 1908; a record, if we omit 1905, which proves clearly that the Argentine has entered upon a period of exceptional prosperity from the economic point of view.

To understand the full significance of this commercial balance, we must bear in mind the financial situation of the Argentine, which has a foreign debt of £74,200,000, demanding a yearly interest of £3,907,200, payable, of course, in gold. In order, then, that the country may be able to keep its engagements, the total value of its exports must cover the amount due on the year’s imports and must also cover the interest to be paid on the foreign debt, the dividends earned by the railway companies, etc., and the expenses of maritime transport.

All that we have considered up to the present shows that the productive capacity of the Argentine is limited to the results of agriculture and stock-raising. With the exception of these two elements we may say that the country produces nothing, transforms nothing. Industry is as yet in its

infancy; internal trade is undeveloped; the mercantile marine is of no importance. For this reason the Argentine must perforce employ the results of its agricultural exportation in procuring what it lacks—objects of prime necessity, or raw materials of all kinds. We can thus understand what an influence a change for the worse in the commercial balance may exercise on the destinies of the country. If there is a bad harvest the deficit must somehow be made up; and as Argentina has not as yet saved enough capital to allow her to live on her own reserve funds, it is at such times that a loan becomes necessary.

Thus each bad harvest helps to increase the foreign debt, to say nothing of the financial disturbances which it may create.

It may be asked why, after a certain number of years of abundant harvests, the Argentine has not as yet established this financial reserve, which would serve to lessen the blow of a bad agricultural year, and compensate the deficient exportation of a year of lean cattle. The answer will be found in the figures which we print further on, relating to the amount of foreign capital invested in the Argentine; in Government bonds, shares in railway companies, or other undertakings, public or private. According to our estimate, this sum amounts approximately to £317,200,000, representing an annual drain of £18,400,000 in the shape of interest, dividends, or redemption money. This is assuredly the outlet by which much of the country’s savings escape, for we may truly say that the Argentine, which is in a sense so much international territory, works more for other countries than for itself.

Again, as we shall see, this exodus of capital takes place also by other means; notably by the emigration of those natives or foreigners who leave the Argentine to settle in Europe. It is not rare, among Argentine families, to see certain members, having made their fortunes, emigrate to enjoy their incomes under other skies. This applies yet more frequently to foreigners. The Italian, for example (and more Italians come to the Argentine than natives of any other country), the Italian is given to transforming his savings into money of his own country; either with a view

to returning, or because he cannot on the spot find security or facility for the accumulation of personal property.

So at the present time there are two distinct movements of capital; two movements of contrary direction and absolutely distinct. Firstly, money flows into the country in payment of exports; secondly, money flows out of the country in payment of imports; and also in consideration of foreign capital invested in the Argentine. From these two movements, in times of prosperity, a third movement arises; a movement which brings foreign capital into the Argentine, where it finds employment in important undertakings, due to Governmental or to private initiative. But although this influx of capital may mean further national progress, it does not permanently affect the commercial balance of the country, as the revenue deriving from it benefits the foreigner.

Whatever point of view we assume, we must always arrive at the same conclusion; that the whole economic life of the Republic depends upon its agricultural exports; its commercial balance has no other counter-weight to help it to overcome the burden of debts contracted abroad by the importation of merchandise or of capital. For ten years now the sense of this commercial balance has been constantly in favour of the exports, and there has even been a remarkable progress, scarcely interrupted at critical moments. But ten years is only a brief period in the life of a people; and however favourable the future outlook may appear, we must always be prepared for a possible deficit, for a minus balance, as the result of a bad harvest or some grave political crisis. These, in a country without reserves of capital, are contingencies of which we must never lose sight, and which force us to express our appreciation of the financial or economic system of the Argentine with a certain reserve.