The sum total of all these items is $460,000,000 gold, so that we have
| $ Gold. | |
|---|---|
| Assets | 580,000,000 |
| Liabilities | 460,000,000 |
| Total balance | 120,000,000 |
in favour of the Argentine Republic, a sum which can be increased if the harvest is very good and imports are less than I estimated, and decreased if the harvest is bad and imports greater than $246,000,000 gold. From this it will be seen that if my calculations are confirmed Argentina will receive from abroad the sum of $120,000,000 gold for balance of accounts for the commercial year of 1914-15. To demonstrate the importance of this fact I will mention that for the year 1913-14 the balance was $185,000,000 against Argentina; in 1912-13 it was $200,000,000 in contra, and in 1911-12 $202,000,000 in contra, so that compared with the three previous years Argentina will have a difference in its favour in the balance of payments of $300,000,000 gold!
What do these figures signify?
$120,000,000 gold is equivalent to the service of the National Debt for two and a half years, and is more than half the amount actually deposited in bullion in the Caja de Conversión. It also represents the half of all that the country owes abroad for mortgages. On the other hand, $300,000,000 are three-fourths of all our national external debt, are two annual national budgets, as well as the total value of a good harvest. Practically speaking, it results that the Argentine Republic will receive with these $120,000,000 gold a sum which exceeds the average of the new foreign capital which has come to the country in the last few years, which will compensate for the absence of capital which formerly came to the country seeking investment, and will contribute to develop the economic forces of the country. Outside of this $120,000,000 gold it is logical to imagine that some capital will come, as some railways and other foreign companies have recently made issues abroad and others will place their profits here. There are also the various financial operations of the National and Provincial Governments and the Municipality of the capital for the payment of debt services or to consolidate the floating debt, for although money does not come to the country this will diminish by these operations the emigration of capital in respect of items b, d and e of the balance of payments, that is to say, the dividends and interest on foreign capital placed in commercial enterprises and railways, and thus also the service of the external debt, which otherwise would have to be remitted and all of which I have not taken into account. Besides, where will Europeans place their savings? In European bonds which continue to depreciate on account of the issue which will have to be made for the war debt and to consolidate the monetary situation? Assuredly more money will come here than many believe in search of investment. The United States with its new monetary law does not require as much as before. To Brazil and Chile it will not go for some time, neither to Mexico or the Balkans.
An interesting point is the manner in which these $120,000,000 will come into the country.
It should come in the form of Argentine bonds (“Cedulas” principally), and in coined gold all that is not employed to cover debts payable to our commerce and industry to European banks and manufacturers, which sums cannot be very considerable, although it is difficult to fix them. … The reaction will bring about the investment of savings in Argentine revenue-producing bonds instead of in purchases of land on monthly payments; it will bring about a reduction in interest and as a consequence of this an abundance of money which will stubbornly withstand speculation in land. The movement of the Stock Exchange will reawaken—it has been dead since 1906—and there will be money for mortgages and business, replacing that which came from abroad and which has to be repaid. All of this will bring in time an immigration of Cedulas of our external debt bonds and of railway and industrial shares. What will probably not take place for several years, perhaps for many, is what I mentioned at the commencement, namely, that land and other objects of speculation which do not produce anything will rise to prices which their owners dream about and pretend to obtain, as neither banks nor capitalists will invest their money in such objects, neither will they stimulate speculation, all of which are circumstances which will contribute to develop the economic forces of the country and to foment its industries and its commerce until there arrives for the Argentine Republic the psychological moment of being able to produce all that it consumes, that is to say, become self-supporting, without having to fall back on European industry, a situation at which the United States of North America have arrived after great efforts.
Remains only to be added that Mr. Tornquist appears to have omitted consideration of the possibility of money being withdrawn from South America by European investors, not on account of any lack of confidence, but simply because such investors may under existing conditions have actual need of all the pecuniary resources they are able to realize.
For the getting in of the 1914-15 harvests there has been sufficient labour available; because of the stoppage of much municipal and building work, on account of retrenchment rendered necessary by the situation. But for the future, if, indeed, they are to occupy the prominent place in the world’s economy for which Nature appears to have destined them, the River Plate Republics will have to increase their agricultural populations greatly and speedily.
The need of this is now fully realized in both countries, but, strange to say, it is in Uruguay where there are no fiscal lands that proposals for probably useful legislation to this end have attained the greater maturity. It is there proposed, in effect, that the Government should purchase, at least portions of, the present holdings of the large landowners and colonize the land so purchased on systems similar to that obtaining in, for instance, Canada.