Still, the fact remains that, due largely to the popular conception of the Argentine as the new Eldorado for European manufacturers, enormous sums of money are annually being wasted by ill-advised efforts to secure business for which competition has suddenly become keen. Now, we have to remember that with a borrowing people an element of thriftlessness is inevitable, and that there is a necessarily high percentage of wastage in the heavy loans which the country has secured from Europe. Hence that general sense of prosperity and abundance which on closer examination is often found to be more apparent than real. Right through the Argentine this spirit of borrowing prevails. They are a nation of borrowers, and in all ranks of society—by which is meant the various divisions graded according to the supposed dimensions of their banking accounts or their credit—the one notion of doing business is by drawing on the Bank of the Future. The countless thousands of land-sales, which have brought unequalled prosperity to one class of the community and riches to the leading newspapers (daily crammed with advertisements of these auctions) have been and still are conducted on the principle of mensualidades, or monthly payments. The hire purchase system is universal. Mortgage banks abound and flourish on interest rates that range anywhere from 8 per cent. to 14 per cent., many such banks offering depositors 7 per cent. per annum for their money, which they lend out at 10 per cent. or 12 per cent. to help landowners in the development of their properties. You will be told by local residents that this high rate of interest is perfectly compatible with the capabilities of the country, and that the Englishman, with his time-honoured notions of 4½ per cent. on land mortgage, is a hopeless back number in the Argentine. There may be some truth in this, but it is difficult to get away from the feeling that there is the hectic flush of unhealthiness in any system that demands such high rates for its financial accommodation.
As one could fill a whole book discussing nothing else than the aspects of the various branches of commercial enterprise, all so different in their essentials from most of our home conditions, I am making no attempt to enter into detailed consideration of the subject, but to illustrate broadly the danger I have hinted at, arising from the almost uncanny feeling of prosperity which the peculiar conditions of the country have induced.
I may touch briefly on the motor-car business. Although, as I have already stated, there are few countries in the world less attractive from the point of view of motoring than the Argentine, where roads such as we know them in Europe, or even in North America, simply do not exist; and no large city so ill-adapted for motoring as Buenos Ayres, where the principal streets are extremely narrow and badly kept, while those of the suburbs are almost entirely unpaved; the popularity of the motor-car as an article of luxury and ostentation is supreme. The importation of expensive cars was proceeding in the most reckless manner during my stay there in 1912, with the result that I was informed by one of the leading automobile dealers whom I met in Chili some six months after leaving the River Plate, and who had come over to spy out the Transandine possibilities, that it was estimated by the various houses dealing in cars at the end of the 1913 season that there were no fewer than twelve hundred unsold cars in the store-rooms of the numerous agencies in Buenos Ayres. In the previous season, I think the highest number I saw on a motor-car was in the 4000’s. No wonder there was general talk of “the Motor Crisis” in 1913!
In my walks abroad during 1912, it was an endless source of wonder to me to contemplate the folly of the European companies in their mad scramble for this business. I saw dozens of establishments being opened at enormous cost, stocked with expensive cars and served by retinues of gorgeous youths who were to sell these to the fabulously wealthy Argentines. In eight months’ time, I saw more than one of those splendid establishments shut up, and doubtless since then many another has pulled down its shutters (the use of metal shutters which pull down from above is universal). Of one in particular I secured some inside information. It was a German concern, and it took a magnificent exposicíon in a fashionable quarter, paying a rent of $4,000 per month. In the first nine months, it had sold some thirty-five cars, the total value of which did not greatly exceed the rent of the show-room. In addition to the show-room, the concern in question required a large warehouse and repair shop in another part of the city, so that the man of business will be able to gather how such an enterprise was likely to end. Moreover, most of those cars were sold at so much “down,” and the remainder in ten monthly instalments. I suppose it is a safe assumption that more money has been lost in the motor-car business in Buenos Ayres than is likely to be made in it for some time to come.
One particularly astute foreigner with a large stock of unsold cars devised a most admirable selling scheme. He made a bargain with a number of willing scoundrels that each should go to a certain organisation which provided any conceivable article to its customers on the instalment system, exacting from the customer an increased price, and from the seller of the article a substantial discount. These accomplices of the motor agent, each through this medium of the purchasing agency, bought one of his motor cars, tendering the initial payment, the money for which had been supplied by him, and the buying agency in due course furnished the car, paying the vender his trade price for it. Each car sold in this manner immediately came back into the possession of the vender, and naturally the accommodating financiers soon discovered no second payments were forthcoming. I understand this enterprising motor-dealer had thus netted quite a respectable sum on his surplus stock before his good work was interrupted by an unwillingness on the part of the purchasing agency to continue!
All this will serve to suggest the general looseness of business methods and the accompanying wastage that is going on, which can be attributed to no other cause than the ease with which the country has been able to borrow, and the avidity with which foreign manufacturers have taken the bait by rushing into the market without due consideration of its risks and the characteristics of the people with whom business has to be done. In no wise do I wish to belittle the commercial possibilities of the country, for I am a firm and convinced believer that South America generally is “the Coming Continent,” and that Buenos Ayres is probably the most attractive of the newer business centres of the world to-day, with limitless opportunities for sound commercial expansion to European and North American manufacturers, but by reason of its very attractiveness, the freedom with which money circulates, and the readiness with which the people burden themselves with responsibilities, the desideratum in all business enterprise is not boldness, but caution.
One of the most experienced native business men assured me that in land speculation, which is even a more popular form of gambling than the public lottery—servants and street porters actually owning “lots” they have never seen, and never will see, and for which they are paying every month,—the venders never hesitate to make the number of instalments run into several years, in order to make the individual instalment as low as possible, because the purchaser, incapable of a “long view,” in no case realises the burden he is accepting, and merely looks at the amount he has to pay monthly. The sum total of payments is seldom mentioned, the accepted formula being a small initial payment and anything from twenty-four to sixty mensualidades, also of comparatively small amounts. The vast majority of the buyers never complete their purchases, surrendering, after a year or two, what they have paid, together with the land, to the seller, who will probably resell it to another purchaser, who will also make default, and in this way the land speculator grows rich.
Every day the newspapers contain particulars of some fresh scheme for relieving the public of their money; sharks abound, and their variety is endless. From the point of view of the foreign manufacturer, one of the most pernicious forms of unfair trading is that practised in connection with the registration of trade marks. The law grants the sole title in a trade mark to the first person who registers it, and exacts from him no evidence whatsoever that he is registering that which is his own property. The outcome of this delightful state of affairs is that a fraternity of longsighted speculators has grown up in Buenos Ayres, whose business is to keep in close touch with the commercial worlds of Europe and North America, and the moment a manufacturer places a new article on these markets and registers his trade mark, one of these gentry hastens to secure the proprietorship of that trade mark for the Argentine, registering it as his own. His next movement—which may be delayed for a year or so—is to write to the foreign manufacturer and to state that he shall be very pleased to act as agent for the article in question, which he thinks he can sell to advantage, and indeed so confident is he of being able to handle it successfully that he has taken the trouble to register the trade mark. The manufacturer, if he wishes to introduce the article in South America, must then either appoint this nimble gentleman his agent or pay him an extortionate price for the right to sell his own article under its original name.
One example of how this works will suffice. The Oliver typewriter is sold in the Argentine by its duly accredited agent as the “Revilo,” because an enterprising citizen had forestalled the owners by registering the name “Oliver” as applied to typewriters, and the company, neither caring to appoint him its agent nor to pay for the privilege of selling their typewriter there, adopted the plan of labelling their machines for sale in the Argentine with the name spelt backward! Some famous brands of Scotch whisky cannot be sold in the Argentine, as a Jewish gentleman is in possession of their trade marks, which he registered in anticipation, and thus the whisky drinker will discover all sorts of unfamiliar brands specially prepared for export, while it is possible that the purloiner of the familiar trade mark may arrange to bottle any sort of vile rubbish under the well-known label. This is a state of things, of course, that can easily be met by the foreign manufacturer, whenever he is introducing any new article of consumption, taking care to have it formally registered in the Argentine at the same time that it is placed on the home market, so that if in the future he should wish to export it, he will be able freely to do so.
Owing to the accessibility of legislators to influence and bribery, all sorts of abuses arise. In Montevideo, for instance, a typical case came under my personal knowledge. A large British manufacturing house, which for many years had been supplying an article of wide consumption throughout South America and in Uruguay particularly, suddenly discovered that an excessive import tariff had been placed upon it. A large consignment of the article in question arrived in the harbour of Montevideo two or three days after the passing of the Act, and a battle royal ensued between the representative of the British company and the Customs officials, who endeavoured to exact the new tariff, but who were eventually defeated on the ground that the tariff did not date from the passing of the Act, but from the signing of the same by the President, which, fortunately, had not taken place until two or three days after the arrival of the cargo. This increased tariff had been imposed solely on the initiative of an ambitious Uruguayan, who had determined to manufacture a competitive article locally and got his friends in the cámara to assist him by choking off the foreign competitor. The result was that the British firm had immediately to buy land and build a factory in Montevideo in order to get “inside the tariff,” which they did before the bungling native was able to work out his own plans, and so completely outwitted him. The probability is that the tariff will again be taken off, and the British company will be able to make the Uruguayan consumer pay for the inconvenience and expense which the unsuccessful trickery of their compatriot incurred.