The Argentine as a Market

by Nowell Lake Watson

Turning next to the immigration returns, the predominating position held by the Latin races, and, especially, of the Italian, is at once apparent. Although in many cases the special requirements of these people can only be satisfied by the goods produced in their own several countries, the greater part of the demand for imported goods is for clothing, and, in the case of the country portion, for agricultural materials. In both these departments the market is open. On the other hand, while the greatest attention seems to have been paid to this market by foreign merchants, the wants of the inhabitants of British and other Northern extraction living in the far South have not been studied at all. In this context the following extract from a recent consular report is of interest. Writing from Puerto Gallegos in Patagonia the Acting Consular Agent declares:—

“German and French exporters are gradually securing the best part of the trade in consequence of the greater attention shewn by them to the large importing houses in Gallegos. It is said that the merchant prefers to order British goods to suit the taste of their farmer clients but so little attention is shewn to them by the British exporters that they are obliged to place their orders on the Continent. Many British firms refuse to attend to orders in Spanish, and their catalogues and price-lists are almost invariably printed in English.”

From the same report comes a remark of the Vice-Consul at Bahia Blanca emphasising the energy with which the Hamburg South American Company fosters the coasting trade. The Pacific Steam Navigating boats pass to and from the West Coast, but the local trade is scarcely touched by them. Although a German line does not imply nothing but German trade, the tendency must, of necessity, be in its favour.

The question of the nature of demand cannot be over-emphasised. It is owing to neglect of this that the greatest mistakes are made both in practice and in argument. Up to 1880 the nation’s demands were those of any immature nation. Subsequently to that date the country began to boom and the whole economic condition was altered. Whereas previous to that date the market was for articles for private use, whether domestic, agricultural, or personal, subsequent to the national awakening private needs became insignificant compared with those of public bodies. Not only was the construction of railways commenced in earnest but national and municipal contracts were issued broadcast. Harbours, sewage and water-works, lighting, tramways, and every other form of public enterprise, were initiated from that time onward. But, whereas the earlier works were largely executed by English firms, of recent years foreign (in particular Belgian) contractors have secured the concessions. The methods employed by the latter, however, have been such as rather to disgust the country with its experiment. The case which has been causing intense excitement is that of the Rosario Port-works. The French concessionnaires made a bad job there of a difficult undertaking. That, however, was little compared with the terms which by some means they managed to insert into their concession, terms by virtue of which they were enabled to make the most extraordinary exactions from everyone who entered the port, regardless of the fact that many of the wharves were the property of other concerns. On the other hand, the English firm that constructed the Rosario sewage system, and constructed it with the greatest thoroughness, were treated to a series of vexatious interferences culminating in a refusal on the part of the municipality to pay for the work.

Besides the above mentioned work, ports have been constructed at Bahia Blanca, La Plata, Buenos Aires, San Nicolas, Santa Fé, Paraná (not yet completed) and other places, so that some two hundred million sterling have been invested in works of public utility in a country with a population at the present time of about five million inhabitants. Apart from the importance of this development of public enterprises as regards the nature of imports, its importance is obviously no less in the matter of their extent. Adding to the capital of public undertakings the capital employed in trade, the total of commercially invested money was estimated at the end of 1904 at 326 million sterling; but, if national provincial and municipal loans are taken into account, the grand total of foreign capital in the country probably exceeds £450,000,000. This immense influx of capital naturally caused imports greatly to exceed exports, but the excess is not perhaps so large as might have been expected, owing to the high tariff which probably increased the import of bullion.

Recently, since the investments have begun to give returns, the balance of trade has turned, and, whereas in 1890 the sale of exports (in dollars gold) was to that of imports as 100·82 millions to 142·24, in 1905 the former had risen to 322·84 millions, and the latter only to 205·15. Even then it is hardly credible that exported interest should have equalled, much less exceeded, the new capital invested, and the alternative of gold shipments must be admitted.

We have then a rising tendency in the price of commodities, or a depreciation of money (quite irrespective, of course, of the depreciation of paper). The theory of rising prices is, as is well known a favourite in the States. But in this, as in almost every other case, the application of an economic theory is rendered very nearly impossible owing to conflicting influences.

To return once more to the details of Argentine trade, we found that the predominating demand had been that of the railways, and that of the railways by far the greater part is British.

Apart from inclinations of sentiment or personal partiality, it is only natural that engines and other material should be imported from England, as being of a type to which English engineers are accustomed. A very large proportion of our trade comes under this heading, and, it must be admitted, the market here is not free. Even so, however, the superiority or greater suitability—whether in material, construction, or price—of foreign work in some directions has ousted the British product. For example, in steel rails England’s quota went down one thousand tons in 1905, while that of the States went up fifty-three thousand. So, too, in such goods as axes and small tools the latter hold the market. On the other hand, American locomotives have not proved a success—the English system of running not being that for which they are designed.

English engineers seem to prefer a solid, well-finished engine, which can stand accidents, and innumerable repairs. The Baldwin engine is cheap, but apparently of indifferent finish, and is built on a rigid frame. The slightest accident to this incapacitates the whole machine, and, in any case, the locomotive is built for hard use over a short period, with subsequent scrapping. Neither the traffic nor the capital of Argentine railways justify such a course. The actual figures of imports of locomotives for 1905 are—United Kingdom 91, U.S.A. 16, Belgium 9, Germany 46—increases of 27, 8, 7, and 22 respectively. English engines are the most expensive. The German engines are largely those employed in construction. In railway material (not specified) although England exported to the value of $384,342 gold the increase over 1904 was $703,548 gold, yet America with an export of only $470,527, shows an increase of $411,876. Thus even in the privileged domain of the railway market, there are signs of very keen competition appearing. This may not prove effective for some time, the connection between the home contractors and the London board being intimate, and there is a danger of its possibility being overlooked.