“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.