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.
CHAPTER II
THE GREAT ARGENTINE INDUSTRIES
The principal industries of the country are related to agriculture and cattle-breeding.