The Argentine as a Market

by Nowell Lake Watson

The duties are as follows: On spun wool about 1½d. per lb., valued at about 7d. per lb., on washed wool 1s. 7d. per lb., the customs valuation being 7d.; on stockings and socks (all classes) about 50%, on woollen cloth (pure) about 40%, and on wool and cotton mixed, over 30%.

Passing over grain, the main manufactured product of which, flour, is not imported at all, and cattle, which in the frozen meat trade and its attendant industries form one of the main items of export, there are left wood and sugar. Of the former, the country produces little for constructional and industrial purposes, all the natural timber being employed either for railway sleepers, fencing posts, or for tanning extract. It is an extremely important business, but there could be no question of importation, except for intermediate fencing bars (those not planted in the ground) and for sleepers. Even so the only circumstances which could render it possible are the inability of the home supply to cope with the demand, and the consequent rise in price. Recently poplar has been planted on the islands of the Tigre near the mouth of the Paraná with great success. But the available space is limited there, though it is quite possible that planting might be continued on the Paraná and Uruguay rivers. The duty on imported soft woods is comparatively small.

The one article of home-production left, which was open to foreign competition, is sugar. The erratic development of this industry in conjunction with the tariff has been so eventful, and so instructive from the economic point of view, that a rather lengthy review may be pardoned. This is practically a paraphrase and condensation of the extremely interesting, though, at times, somewhat exclamatory article written by M. Ricardo Pillado, the head of the Division of Commerce in the Argentine Ministry of Agriculture, 1906. Unfortunately, in attempting to follow some of the author’s calculations it has been found quite impossible to verify his results or to see how he arrived at them. In some cases the figures are so obviously impossible in the light of the data that the only explanation seems to be a misprint. In order not to sacrifice the continuity of his account, these figures have been given as they stand. The fact that the article in question appears in a collection, derived from various sources, and republished officially at the Ministry of Agriculture, seemed to give additional justification for its presentation here without emendation.

Writing at end of 1903, when the Brussels Convention had just condemned Bounties, and when the original heavy import duties and export drawbacks were still in force, he makes this preface to a general discussion of the whole working of the exaggerated protection of the Sugar Industry.

“The fiscal protection of the Sugar industry, instituted in the year 1883, and maintained up to the present moment in all its intensity, has been the source of the gravest evils to the Republic, not merely through its immediate effect and its having admitted and secured the maintainance

of an economic system so detrimental to the country, but also, in the sphere of credit, through the complications of which it has been the indirect cause. Every effort, therefore, tending to destroy to their very foundations the fallacies which have been the mainspring and origin of its birth and continuance up to the present day ought to be considered, in my opinion, as an act of patriotism and duty.”

M. Pillado is far from being a free-trader in the accepted English sense. “The protection which reasonably may be and, I will even say, ought to be afforded to national industries cannot,” he goes on to say, “be identified with the favours which were lavished on the sugar industry.” Although he is in favour of a moderate and strictly protective Tariff, he cannot reconcile the prevailing system with any economic theory whatever.

The Sugar plantations and refineries are situated in the remote North West of the country, and the latter were practically in the hands of two powerful concerns. Owing to the expense of rail transport, under no circumstances could the sugar be transported to the coast to compete on equal terms with the imported ocean-borne article, and certainly not, with the additional freight, in European markets.

The initial error lay in the assumption that these Northern Districts round Tucuman were especially adapted by climate and other conditions to the cultivation of cane. No such natural privilege exists. The origin of the industry, on the contrary, is to be found in that very distance from a port which renders its present condition anomalous. Sugar-cultivation was instituted solely with a view to the satisfaction of local requirements, and the idea of competition with foreign produce in the capital was probably never dreamed of. This view is the more probable when it is remembered that Tucuman lies nearly a thousand miles from Buenos Aires, while railway communication was not established until 1888 or even later.

At that time, however, protection was already in full force. Although full communication was not established until 1892, and till then goods had to be transported by cartage, or whatever means the state of the roads (such as they were) permitted, so early as 1883 the duty was raised from the existing rate of 25% ad volorem, to a specific tax of 5 cents per kilo, at a time when there was only one currency. The impost being irrespective of quality, the actual burdens resulted as follows: On refined Sugar valued by the customs at 19 c. the kilo, 26½%; on white or granulated with a valuation of 14 c., 35¾%, on raw of 11½ c. per kilo, 43½%. It is obvious says the writer, that the greatest burden fell on the lower grades, the only ones which the local refineries were in a position to produce and to offer in competition with imported sugars.