  THE ARGENTINE FROM THE COMMERCIAL AND INDUSTRIAL POINT OF VIEW CHAPTER IFOREIGN TRADE The important part played by the foreign trade of the Argentine—Table of imports and exports during recent years—Explanation of their respective movements—Favourable condition of the commercial balance. Method of ascertaining the statistics of exports and imports—Errors in evaluation—Notes on the import duties on various articles—Variations of the customs duties—Export duties; their transitory character—The trade in bullion. Imports—Their classification according to their countries of origin—Value of imports from each country, with indications of the principal articles imported—The Argentine dependent upon other countries for a large number of manufactured articles—Concentration of imports at Buenos Ayres. Exports—Their classification according to origin—Value of exports from each district, with indications of the chief articles exported—Decadence of the French trade with the Argentine and its causes. Tabulation, according to importance of the principal products exported by the Argentine—Remarkable increase in agricultural and pastoral exports—Search for new outlets. Eventual denunciation of commercial treaties—Projected new treaty with France—Causes of the superiority of English, German, and North American trade in the Argentine over French trade. “Dumping” in the Argentine—A new client for the Argentine—Japan—Elements which make for the development of commercial activity in the Argentine. The commercial balance—Results of the commercial balance—Its prime importance in respect of the prosperity of the country—It is this balance which compensates the issue of capital for the benefit of the foreign debt. The whole activity of the Argentine Republic is reflected in the statistics of its external commerce, which gives the true measure of its prosperity. All the vital forces of the country, its river traffic-ways, its railways, its ports, its business centres, all aid in the development of the commercial movement, which lives only by means of international exchange. We have thus reached one of the most important Considered under its general aspect Argentine commerce may be summed up as follows: the exportation of raw materials and the importation of manufactured articles. We mention exportation first by design; for it is the exports, as we have already pointed out, that regulate the purchasing power of the country. There are no reserves in the Argentine which permit the country to preserve its power of purchase much in excess of the movement of capital produced by the sale of the harvest. This situation cannot be clearly expressed in figures; for we can prove that as late as 1891 the sum of imports was greatly in excess of that of exports. In normal periods one must, in fact, take into account a new factor; namely, external credit, which allows the Argentine to increase her power of purchase above her actual resources. When, on the contrary, a crisis arises, the imports rapidly follow the movement of the exports, the country no longer being able to depend upon credit nor to cover by loans its unfavourable commercial balance. We give below, taken from the publications of M. Latzina the statistics of foreign trade since 1861, which is the first year included in the official statistics. The foreign trade of the Argentine has passed through two distinct phases; from 1861 to 1890 the imports were usually larger than the exports; while since 1891 the exports, except in 1893, have been considerably the larger. It is curious to note that this reversal took place after the year 1890; that is, after the financial crisis which so violently shook the country, and deprived it of that external credit which had hitherto balanced the insufficiency of exportations. In 1891 the imports fell to £13,441,400, from £28,448,000, or a fall of more than 50 per cent. from one year to the next. Thenceforward the imports progressively increased to £37,400,000 in 1904, varying by a few millions each year, while the exports reached their present high state of development through the progress achieved by agriculture.
For the explanation of these data, we must remember that during the last twelve years the population has increased only by about one million inhabitants, and that in consequence the power of consumption of the Argentine could only become modified to a certain extent. If we except certain periods of exceptional importations, referring, for instance, to the entry in bulk of large amounts of raw material for the construction of new railways, we see that the imports, as compared to the bulk of the population, represent from £5, 5s. to £7, 18s. 7d. per head, while the same figure for exports is £7, 10s. 7d. to £10, 12s. 0d., according to the condition of agriculture. If we now examine the recent results of foreign trade, we find the situation summed up by the following figures for 1908, as compared with 1907, 1906, and 1905:—
The commercial balance in 1908 was thus £18,606,521 in favour of the exports, as against £2,068,738 in 1907, £4,456,662 in 1906, which latter sum was £19,081,222 less than in 1905. There is every reason to believe that the exports for 1909 will prove to have been fully as large as the year before, for the recovery of the wool market and the enormous maize harvest will have compensated certain deficits in the matter of corn and cattle, which suffered in the preceding year from frost or drought. As for the harvest of the current year, it is wiser not to say too much at present, as the lack of rain has deranged the sowing season. Before commenting in any way upon the figures relating to foreign trade, we must make one remark in respect of the method followed in making out our balance-sheets, etc. In the case of imports, the valuation of the customs is taken, and in the case of exports their current market price in gold. But this procedure has the demerit of yielding results which are not in strict correspondence with reality; the most we can say is that they enable us to make a strict comparison of one year with another. The valuations according to the customs are from 20 to 30 per cent. above the true values in the case of the majority of articles, and are sometimes merely fantastic. To gain some idea of the disturbing factor which arises from the calculation of imports upon the basis of customs estimates, which estimates are the basis of the figures of the National Statistics, we need only take the figures relating to coffee as an example. In 1899 it was valued at 30 centavos in gold; in 1900, at 20; and in 1902, at 12 centavos (7·2d., 4·8d., and 2d.). This decrease of over 5d. in three years only enables one to judge of the instability of this rate of valuation. Here are some examples of the tariff paid by certain imports into the Argentine. The 50 per cent. tariff strikes principally at the importation of woven stuffs, carriages, harness, furniture, perfumery, ready-made under-clothing, boots and shoes, hats, and similar articles not burdened by specific tariffs, for there is a host of articles which pays the entrance duty in this way. In practice this ad valorem tariff of 50 per cent. frequently becomes a tariff of 100 per cent. or more, on account of the arbitrary nature of the customs valuations. The 45 per cent. tariff affects stockings, socks, etc., exclusively. The 40 per cent. tariff affects bales of unbleached linen, all kinds of cotton cloth and calicoes, dressed leather, articles of lace made of pure silk or silk mixtures, or of thread; woollen blankets, and blankets of wool with cotton warp, or bound or bordered; also laces and silk thread or thread of mixed silk and woven stuffs and any other articles of silk or silk mixtures, including floss silk, etc. The 35 per cent. tariff applies to woollen stuffs in general, whether of pure wool or mixtures. The 25 per cent. tariff affects all merchandise not burdened by a special tax. That of 20 per cent. affects bar, strip and ribbon steel, and unbleached cotton cloths. The 15 per cent. tariff affects oak, cedar, pine, spruce, and tissues of silk intended for bolting flour. The 10 per cent. tariff affects certain chemical products, and also cocoa, tin, machinery in general, agave fibres, jute, and hemp fibre for making mats, etc. That of 5 per cent. which is the lowest, Besides the above there are some ninety-five articles or products on which specific duties are imposed. Since 1900 a legislative factor, at first sight unimportant, but in practice of the greatest advantage, has to a certain extent modified the vexatious character of the Argentine tariff. This factor consists in the relative stability imposed by Congress on the customs law, by the suppression of the annual revision to which the rate of valuation was subjected, which change has allowed commerce to establish its transactions on a definite basis; whereas they were formerly contingent upon the continual modifications of the said tariff. This step, like so many others, was initiated by the ex-Minister, SeÑor JosÉ Maria Rosa. Exaggerated values were always at the base of these tariffs, and the abuse became so notorious that the present Minister of Finance, Dr Terry, was himself obliged to recognise “that reform was essential in the matter of the rectification of all these valuations, in order that the Customs Administration should not strike indirectly at imported products by taxes far in advance of those intended by the legislative power.” A new tariff has been in force since the 1st of January 1905, and although it also has given rise to a certain degree of recrimination, it is none the less an improvement upon the former state of affairs. As for the export duties, here again we find notable discrepancies between the valuations and the market prices which ought, on principle, to serve as their basis. They were established after the crisis of 1890, and as they were now no longer justified by insufficient resources, they were suppressed by Congress reckoning from 1906. These customs duties on exported goods were established by the Argentine Constitution, but not in a permanent manner. The Charter enacted that they should be in force up to 1866; but at that time, the country being at war with Paraguay, a Convention was convoked, which postponed the settlement of the matter for some years. In 1887 the export duties were suppressed; but in 1900, after the terrible financial crash, they were once more established, in order to relieve the heavy burdens and engagements of the Treasury. These duties were from 4 to 100 per cent. ad valorem, and were principally directed against leathers and hides, wool washed or unwashed, ostrich plumes, tallow, fat, animal oil, horns, etc. As may be seen by this simple enumeration, these duties weighed upon the by-products of stock-raising as they left the country for the markets of foreign consumers, and this after they had already been subjected to other heavy charges, in the shape of land taxes, customs duties on wire for fencing, and many local taxes, while agricultural products escaped scot-free. For this reason it has always been considered that the export tariff had no equitable basis, and all the Argentine Administrations have for this reason endeavoured to suppress it, as the Congress finally did in 1905. Whether we are dealing with exports or with imports we always find, as we have seen, an inflation of prices on both sides, so that the figures of the official statistics have not so much an actual as a comparative value. There is still one important item to be remarked in respect of imports: it is that the import duties in recent years have been first raised then lowered. Additional duties amounting to 10 per cent. were established when the dispute with Chili seemed about to end in war—that is, on the 29th of January 1902—at which time a supertax of 5 per cent. was added to the tariff which had already been in force since 1899. Since then these duties have been finally suppressed (in January 1904). It is obvious that with these variations we have not always the same basis of valuation, as the imports are variously affected by these variations themselves, so that all exact comparisons are impossible. We must also take into account the value of the imports which are not controlled by the customs. Competent persons have estimated that these amount to about 20 per cent. of the goods passing through the customs, which represents a sum of about £2,000,000. Again, the figures we have quoted do not include the
The increase observed from one year to the other in the importation of bullion is in direct relation to the increase of exportations: it corresponds to the consignments of gold, coming especially from the London market, in order to expunge the commercial balance in favour of the Argentine. In the light of these observations we will now examine the commercial movement in itself, while noting its distribution according to the various countries which exchange their products with the Argentine. We will then give a list of the principal articles entering into the composition of this foreign trade. ImportsHere is a table of imports for the years 1906-1908, and for the first six months of 1909, classed according to their origin and in order of importance:
Great Britain is always at the head of the list of imports, the total of her products imported by the Argentine in 1908 being £18,674,279. Among these products one of the greatest importance is coal, of which 2,338,949 tons were imported in 1907, representing a value of £3,274,528. Woven fabrics of all kinds attained a value of £3,038,694; railroad material £2,703,945, and sacking for making up into sacks, £296,585. Germany now occupies the second place. The imports from Germany, worth £7,569,417 in 1908, are of all kinds, and include almost every kind of product consumed by the Argentine. On account of her various industries, metallurgical products holds the first place; then come woven fabrics and paper. The United States send principally agricultural material, petroleum, and pine timber; the imports for 1908 were £7,119,400 in value; or nearly twice the value of the Argentine exports to the States. This situation is explained by the fact that both countries export the same products—cereals and cattle, etc. France comes fourth, with £5,295,385 worth of produce in 1908. Her products, like those of Germany, are very numerous in kind. The largest imports are of woven fabrics, wines and spirits, metallurgical products, pharmaceutical specialities, and perfumery. Taking the item of wines and spirits alone, the Argentine imports £228,000 worth of bitters and vermouth and £202,560 worth of wines in the wood. Italy sent £4,982,649 worth of imports in 1908. From Italy the Argentine imports the largest quantity of wines and of bitters, valued at £922,938; olive oil accounts for £394,133, rice for £295,667, cheese for £181,949 (the weight of this import in 1907 being 2,274 tons); in short, all the articles most in demand among the Italian emigrants. Woven fabrics attained a value of £927,857. Far below the countries already named, with an amount of produce less than half that imported by France, comes Belgium (£2,550,674 in 1908); then Brazil (£1,457,189), and Spain (£1,723,622). Belgium sends principally metallurgical products; Spain her wines and oils and salt. Brazil sends only The table given below shows what are the principal products imported by the Argentine Republic, and show the considerable increase which has taken place in all branches of importation:—
We see from this table that the Argentine relies on foreign imports for the greater number of metallic, chemical, and textile products, and even for a great many food-stuffs. An essentially agricultural nation, she has not as yet developed her industrial equipment, nor has she been able to undertake the transformation of the raw materials at her disposal into manufactured products. The development of her agriculture is the object which has hitherto absorbed all the initiative and all the capital of the country. It is this dependence upon foreign countries for so many articles of prime necessity that makes the cost of living in the Argentine so high. All these articles have to pay customs dues varying from 5 to 50 per cent. ad On the other hand, these imports are by no means so decentralised as the exports; they are brought as near as possible to the centres of consumption, so that they shall not be forced to pay fresh freight dues in the interior. The Customs House of Buenos Ayres handles 84·9 per cent. of the imports; Rosario 9·2 per cent.; La Plata 1·9 per cent., and Bahia Blanca ·8 per cent. As we see by these figures, the Federal Capital almost monopolises the imports, whence arises its disproportionate development as compared with the rest of the country. ExportsHere is the table of the exports of the last three years, arranged according to their destination, in order of importance:—
In the matter of exports the first place is again held by England, with an exportation of £15,664,944 in 1908 as against £10,743,230 in 1907, an increase of £4,421,714. England is the Argentine’s largest client in the matter of agricultural produce, taking 16 per cent. of the whole amount exported. In 1907 she spent £3,739,509 on chilled meats; £1,843,954 on cereals—wheat, maize, and linseed; £1,212,471 on wools; £193,834 on butter, and £379,810 on sheepskins and cowhides, dried and salted. Australia also imports wheat and maize from the Argentine. The export trade to England is still capable of a far greater expansion, if England will only determine to allow cattle on the hoof to be imported once more; an import she denied herself some years ago, on account of anthrax, and one which the Argentine is eagerly begging her to resume, under proper sanitary regulations. It is England which has hitherto preserved the closest balance between her exports to and imports from the Argentine, and no other country has so far been able to oust her from her dominant position in the Argentine foreign trade. From this we see that the ties which unite the two countries have nothing factitious about them; a fact which is still further emphasised by the statistics of English capital employed in the Argentine. Germany holds the second place, with her £6,950,399 of imports from the Argentine (in 1908: £7,284,611 in 1907). After England, she is the greatest consumer of Argentine wool; the exports of this product in 1907 amounted in value to £2,846,213. Other articles absorbed by Germany are hides (to the value of £1,045,417), and cereal products—wheat, maize, linseed,and bran—(to the value of £1,013,426). The German imports from the Argentine do not, however, include cattle or chilled meats. France, up to 1876, occupied the first place on the scale of Argentine exports. To-day her imports from the Argentine amount to £5,782,750 only (1908), or nearly £10,000,000 less than the English imports (in 1907 they amounted to £7,552,409). Her purchases in the Argentine are confined to a very few products, of which the chiefest is wool, the value of the export in 1907 being £4,908,510, or a little less than half the entire Argentine production. Then come hides, to the value of £1,508,764; then linseed, maize, and wheat to The French system of Protection has so far stood in the way of the trade in Argentine cereals, and has absolutely prohibited the entry of animals or chilled meat. The interests of the French agriculturalists and cattle-breeders have hitherto come before the interest of the consumer, which is to obtain the products necessary to life in the cheapest market. But overtures are being made, by the common agreement of both countries, which may eventually open the French market to Argentine meats, in return for certain concessions granted to France, relative to the exportation of her own products—her wine, silks, woven fabrics, etc. The marked and progressive decadence of the Franco-Argentine trade ought to rivet the attention of French capitalists and statesmen. Hitherto numerous ties have connected France and the Argentine. The fundamental code and the legislative system of the South American Republic have been impregnated by the spirit of liberty, equality and fraternity proclaimed by the French Revolution. The Argentine mind is fed upon French thought, science, and literature. It is now, however, to be seen that the intellectual influence of France is losing ground, as well as her commercial influence, as to-day the sense of national fraternity is based upon solidarity of interest. Now the decadence of French trade with the Argentine is truly alarming. If we consult the publications of the National Department of Statistics, we find, for instance, that in the thirty-one years from 1876 to 1907 the German exports to the Argentine have increased by 2450 per cent.; the Belgian, by 1002 per cent.; those from the United States by 1898 per cent.; Italian exports by 907 per cent.; English by 992 per cent.; but French exports have increased only by 204 per cent. Compared with other nations, France has least been able to hold her own in the matter of trade with the Argentine. In 1876 the importations from France formed 23·2 per cent. of the total imports; while in 1908 they formed only 9·9 per cent. of the totals, making a proportional diminution of 13·3 We are thus justified in concluding that all our efforts to develop the current of Franco-Argentine exchange will contribute powerfully to fortify the influence of France, and the sense of confraternity between the two Latin nations. The causes of the decay of the French trade have been recapitulated in an official document despatched in 1904 by the French Chamber of Commerce in Buenos Ayres to the Minister of Commerce. These causes may be summarised as follows: 1. The exaggerated duties to which many of our products are subjected on entering the Argentine. 2. The competition of local industry with the imports of certain products. 3. The dearness of labour in France, and the consequent cost of manufacture, which in many cases no longer permits us to struggle against our competitors. 4. The imperfection of our equipment for making certain articles. 5. The persistence of our manufacturers in disregarding the tastes of their clientÈle. 6. The insufficiency of the credit granted by French manufacturers and merchants as compared with those of other competing countries. 7. The frequent lack of technical knowledge on the part of foreign commercial travellers; a lack which almost always prevents them from benefiting as they should from direct contact with their customers. 8. Finally, in the matter of navigation, the expensive character of our vessels, and the resulting dearness of freight. Belgium imports some £5,918,426 worth of produce from the Argentine (£7,155,637 in 1908). She receives much the same articles as Germany: £1,456,196 worth of wool, and £2,285,174 worth of cereals, of which £1,551,228 goes for wheat. We find a new item figuring in the Belgian imports—extract of beef—to the value of £173,885; this extract is made by Kemmerichs, the rivals of Liebigs, who manufacture their extract on the Uruguay. Of late years the Argentine has gained a new client—South Africa. During the Boer war an extensive export trade sprang up, in live animals, chilled meats, and cereals, and this trade has been maintained. The value of the exports to South Africa in 1908 was £172,088 (£303,418 in 1907.) Brazil also imports alimentary products from the Argentine: cereals, and especially wheat and flour. The value of the exports to Brazil in 1908 was £3,019,115. Between the two principal countries of South America—Brazil and the Argentine—economic relations are promoted by convenience; Brazil furnishing the produce of its prosperous and varied forms of agriculture—coffee, yerba matÉ, tobacco, etc.—in exchange for Argentine cereals and cattle. In North America, on the contrary, the Argentine finds few outlets for its products, as the two countries have almost the same products. The exports to the United States were £2,188,087 in value in 1907; £2,604,647 in 1908; consisting almost entirely of hides, wool, and extract of quebracho for tanning; while, as we have seen, the exports of the United States to the Argentine reach the value of £7,100,000. The Argentine Government has given much thought to the disadvantages of this commercial situation; it has sought means to remedy it, but so far has adopted no practical measures. It has also endeavoured to conclude a commercial agreement with Brazil, but without success, because in South American states questions of race-antagonism often give rise to the gravest problems. This fact also explains why the attempts to establish a commercial treaty have so far failed. In his last message, however, the President of the Republic Holding positions far inferior to the foregoing countries are: Italy, which in 1908 received £1,581,571 worth of Argentine products, principally maize and hides; Holland receiving £1,059,394 worth of imports, comprising linseed and cereals (maize and wheat); Uruguay, importing live-stock, meat, sugar, hides, etc., to the value of £154,891 in 1907 (£275,328 in 1908); Spain, importing maize, hides, and fats to the value of £387,121 in 1907 (£519,920 in 1908); and Chili, importing Argentine produce to the value of £370,133 in 1907 (£307,501 in 1908), consisting entirely of cattle and mules. Finally we must mention Austro-Hungary, although that country has very little commercial contact with the Argentine. The imports from Austria and Hungary amount to some £500,000 or £600,000 (£578,932 in 1907, £658,700 in 1908), and the Argentine exports, principally wheat, amounted to a value of £150,395 in 1907, and £214,227 in 1908. One department of the foreign trade of the Argentine cannot be precisely classified; namely, that of the products which are loaded on vessels which make seawards, and those which, coming from the river custom-houses, are transported to Buenos Ayres, there to be transhipped for foreign countries. The value of such exports was £19,252,891, in 1907, and £27,085,119 in 1908. This sum includes the value (£18,654,153 in 1907) of agricultural products, wheat and maize, despatched to order but without exact destination, whether to Saint Vincent in the Cape Verde Islands, Las Palmas in the Canaries, or Falmouth in England. The following table shows, in the order of their importance, the products exported by the Argentine during the three
We see that agricultural products were responsible for the enormous increase in the trade statistics of 1908. They represented 66 per cent. of the total exports, and had increased nearly 50 per cent. in one year. The products of stock-raising have not increased; on the contrary, there is a falling off of more than £5,000,000 between 1905 and 1908, the value in 1905 being £28,208,597. We see from the preceding data how greatly agriculture has developed in the Argentine during the last few years. To realise precisely how great this development has been, we need only recall the fact that the exportation of corn is now 10,000 times greater than it was thirty years ago: maize has increased by 800 per cent.; fodder, by 80 per cent.: linseed, by 70,000 per cent.; flour more than 600 per cent. If we now consider the progress of external trade, not from year to year and in detail but as a whole, and over a large period, we can no longer doubt that this trade is destined to accomplish still greater development. Importation too, the field for which is somewhat restricted, may also realise a greater progress as the population increases. Again, once the Argentine develops her industries with greater energy, it is only natural that larger quantities of raw material will be imported, to be transformed into manufactured articles. As for the increase of exports, we have only to turn to the data already given concerning the annual increase in the area of sown land, and the importance of those lands which have yet to reach their true value, but will do so as soon as the stream of immigration supplies them with settlers and colonists. Moreover, the creation of a network of economical light railways, and the opening of new ports on the great rivers, will give the export trade new facilities, which will naturally result in an increased trade. In the first edition of this book we remarked that there was still an unknown factor in the future of the foreign trade of the Argentine. Now there is, in the Presidential Message, an allusion to the eventual termination of the commercial treaties with the principal nations, with the intention of suppressing the “most favoured nation” clause, and of opening up direct negotiations. Very fortunately this measure has had no practical consequences, for the revision of treaties is a delicate piece of work for a nation essentially tributary to the foreigner, if one wishes to avoid the risk of provoking reactions which might compromise the results already obtained. This “most favoured nation” clause, which the Republic inserts in all its treaties, has, for the rest, by no means impeded the enormous expansion of the Argentine export trade which we have already noted. We must conclude that the termination of commercial treaties, with the object of effacing this clause, has become, even in the case of distinguished statesmen, a continual obsession, although it is justified by no decisive argument, and might well expose the country to dangerous vicissitudes. On certain points, however, the customs laws of the Republic might well be revised in such a way as to stimulate foreign trade. Thus with regard to France official negotiations have already been opened, with the object of affording the Argentine certain facilities in the introduction of her chilled Taking a more general point of view, we are obliged to admit that if French commerce, and especially French industry, have not won the place which should be theirs in the Argentine Republic, when we consider the magnitude of Argentine exportation to France, it is because French men of business and manufacturers have started from a false principle, from whose consequences they and the Argentine are still suffering. Instead of following up the rapid evolution of the Argentine, the French have persisted in regarding it, from afar off, as a nation scarcely yet open to civilisation and progress. They used to seek to get rid of remainders, old-fashioned articles, and out-of-date equipments in the Argentine, as they do to-day in China and Africa. Such railways as are built with French material are an example of this practice; their installation left much to be desired, and it is only lately that they have made some efforts to support comparison with other lines. The English, Germans, and Americans of the States were better advised. Having studied with greater care the country and its tendencies, they were able to initiate it into the paths of material progress. Those railways which were built by English contractors or companies are models of perfect adaptation to the needs of the country. The equipment of the tramways, furnished by the United States, may be compared with that of the principal capitals of Europe. In the matter of electric lighting the great German companies have installed the best German plant. The same observations may be made of a large number of other products imported from abroad. There is nothing better in the United States in the matter of agricultural equipment than that possessed by the Argentine; as for stock-raising, we have only to remember that it is to South America that England sends her best bulls, rams, and stallions. But from these remarks it must not be concluded that All the nations we have cited are the actual consumers of Argentine products; but it is to be hoped that yet other markets will be opened, attracted by the abundance and the quality of these products. Among these countries disposed to trade with the Argentine we must mention the Japanese Empire, which is endeavouring to develop its trade upon a reciprocal basis, and has sent a commission of delegates to Buenos Ayres, who were instructed to obtain complete and practical data as to the possibility of establishing a mutual trade with the young South American nation. The Japanese commissioners have accomplished their trade with the earnest application characteristic of their countrymen, and after studying the question for more than a year they have arrived at the conclusion that many Argentine products, and among them wools, hides, and flour, might find an extensive outlet in Japan; but only if imported free from the expenses imposed by the European middleman. Pursuing their investigations, the Japanese Commissioners Flattering, however, as the prospects of this new market may seem, there is one item in the plan of the Japanese Government which gives rise to considerable reflection on the part of our Argentine statesmen: namely, the proposal to introduce Japanese agricultural immigrants into the Argentine; that is, immigrants whose presence would in many ways be inconvenient; against whose presence the United States and other countries have reacted, and whose very presence in the Argentine would be contrary to the sense of the Argentine Constitution, which imposes upon Congress the duty of encouraging European immigration. In concluding this study of the foreign trade of the Argentine Republic and its remarkable development, we cannot do better than quote the enthusiastic words by which an Argentine statesman terminated a study of the same question, thus summarising all the various elements which concur in the development of the commercial activity of the nation: “Despite the scanty population, and the small proportion of our agricultural resources which has as yet been exploited, the production of the Argentine is considerable. The herds grazing in our pastures show the state of progress which stock-raising has attained; the harvests which cover the plains of Santa FÉ and Buenos Ayres have made the name of the Argentine Republic known on the markets of Europe as that of a flourishing agricultural country; sugar, the product of the cane-fields of Tucuman, has enriched that Province and the national industry, and very shortly the vines grown in the valleys of the old Province of Cuyo will achieve a yet wider development, and will give still more abundant vintages. “The smoke-stacks of manufacturers overlook many of the cities of the Republic, and certain native products are now being transformed, as raw material, into finished articles by the nation’s labour. Industries based upon the vitality of our production, and supported by the public powers solely in a rational and equitable degree, are developing themselves without being forced to resort to the exaggerated and always mistaken assistance of an excessive protectionism. In short, our foreign trade, upon whose promising results we have already commented, will in its turn fortify the economic organism, which is the basis of the welfare and the power of nations.” The Commercial BalanceIn a country like the Argentine, which has no accumulated reserves, and has not become the creditor of foreign countries by investing its capital abroad, a favourable commercial balance (that is to say, the realisation of an excess of exports over imports) is a matter of considerable importance. Now this excess was £18,600,000 in 1908; a record, if we omit 1905, which proves clearly that the Argentine has entered upon a period of exceptional prosperity from the economic point of view. To understand the full significance of this commercial balance, we must bear in mind the financial situation of the Argentine, which has a foreign debt of £74,200,000, demanding a yearly interest of £3,907,200, payable, of course, in gold. In order, then, that the country may be able to keep its engagements, the total value of its exports must cover the amount due on the year’s imports and must also cover the interest to be paid on the foreign debt, the dividends earned by the railway companies, etc., and the expenses of maritime transport. All that we have considered up to the present shows that the productive capacity of the Argentine is limited to the results of agriculture and stock-raising. With the exception of these two elements we may say that the country produces nothing, transforms nothing. Industry is as yet in its Thus each bad harvest helps to increase the foreign debt, to say nothing of the financial disturbances which it may create. 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 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 IITHE GREAT ARGENTINE INDUSTRIES The principal industries of the country are related to agriculture and cattle-breeding. Sugar-planting, Boiling, etc.—Capital engaged—Tucuman the chief centre—Production and exportation—The sugar crisis—The Rosario Refinery. Flour Export Trade—Capital invested—Equipment, steam flour-mills, grain-elevators—Production and exportation. Refrigeration—At present the chief industry of the country—Number of establishments—Table of exports of frozen and chilled meats—Capital invested—Development of the industry. Dairy Industries—The large establishments devoting themselves to these industries—Butter; cheese—Exports of butter; the development of which the dairy industries are capable. Breweries—Chief establishments—Production and consumption of beer during the years 1902-1907—Suppression of imports of foreign beer. Spirits—Decreased production of spirits. Looms, Tanneries—Weaving and tanning are industries which at present exist in the Argentine only in a rudimentary condition, despite the conditions which are favourable to their development. Quebracho Wood—The centre of production—Applications—Companies engaged in the industry—Their results—Value of the products and the large profits to be expected. Timber Trade—Varieties of timber and hard woods. Fisheries—First results of this industry. The industry of the Argentine Republic is more or less independent upon its agriculture and stock-raising, which contribute the raw materials for the manufacture of various alimentary products. Among those industries which are thus dependent on the produce of the soil we must mention, as the more important, sugar-boiling, flour-milling, the chilled-meat industry, the making of butter, cheese, and oil, brewing, and distilling. Besides these industries, the majority of which are flourishing and suffice for the needs of the country, we must mention others which are still in a rudimentary state, but which seem to have an assured future, on account of the abundance of raw material; namely, the weaving of woollen and cotton fabrics, and the preparation of leathers. We Sugar Factories.—The sugar industry has fairly remote antecedents in the Argentine. Dr Latzina traces it back to the Jesuits; the inventory of their goods, drawn up at the time of their expulsion in 1767, proving the existence of a field of cane and a sugar-mill. Despite its respectable antiquity, the sugar industry only began to be of significance towards the middle of the nineteenth century, at which time it was established in Tucuman, whose soil appeared to be favourable to the cultivation of the cane. Since then it has developed gradually, but it is only during the last ten years that it has spread to any considerable extent. We have given the details of this development, together with figures, in the chapter dealing with the industrial branches of agriculture, in which we spoke of the laws affecting this industry. To-day the number of sugar-mills or factories is thirty-one; they belong to limited companies or to private persons, and represent a total capital of £4,224,000, to which sum we must add another of £2,640,000 as the value of some 160,200 acres planted with cane, at the rate of £16 to £17 per acre, and £369,600 as the value of the Rosario Refinery; which gives us a total of £7,233,600 invested in this industry. The largest undertakings used to be in the hands of SeÑor Tornquist and M. Hilairet, now both deceased, to whom the country is indebted for the great progress effected in this industry. To sum up the position of this industry, we must recall the fact that the area of Argentine soil planted with sugar-cane at the end of 1907 was 172,900 acres, which yielded an average crop of 12·4 tons of cane per acre, and produced about 130,000 tons of sugar. The sugar industry has been developed in this country, as in so many others, by the system of export bounties or premiums, which has since been suppressed. Twenty years ago the Argentine had to import nearly all her sugar from Europe—more than 100,000 tons per annum—while to-day she produces far more than she can consume, and has to export the surplus of her production. Although the progress accomplished was so rapid, it was not effected without certain misunderstandings, caused by excessive production. At the end of the sugar crisis of 1896-7, which occasioned the closing of a number of factories, attempts were made to regulate the industry, at the instance of the leading makers. To-day there is a syndicate which regulates production within the limits of exportation and production, and serves as a sales agency for all the factories. The sugar industry of Tucuman has the advantage as part of its equipment the Rosario refinery, which receives the raw sugar of Tucuman and subjects it to the various processes of crystallisation and bleaching. Its output during the agricultural year 1906-7 was 107,621,800 lb. of refined sugar; during the year 1907-1908 it was 120,552,220 lb. Flour-milling.—Flour-milling has had much the same history as the sugar industry. Although the industry was established in the Argentine as early as the sixteenth century, it has only been properly developed during the last twenty years. Before this period the Argentine was supplied partly from Chili, as its power of production had not kept pace with its population. To-day the situation has been completely transformed, since the enormous development of agriculture; not only does the flour produced suffice for the country, but since 1878 an export trade has sprung up, amounting to 39,000 tons in 1902, 72,000 in 1903, 107,000 in 1904, 144,700 in 1905, 129,000 in 1906, and 127,000 in 1907. Brazil is the Argentine’s best customer for flour, having imported 84,000 tons in 1904, 103,000 in 1905, 114,000 in 1906, and 118,300 in 1907. Great Britain was the second-best customer for flour, having imported 14,800 tons in 1904, 24,400 in 1905, 5400 in 1906, and 1200 in 1907; to-day the exportation is negligible. It is estimated that there are 600 or 700 flour-mills in the Argentine, representing a capital of from £2,200,000 to £2,640,000. Buenos Ayres has two, which have been lately installed on American models. They are situated on land belonging to Madero Harbour, and comprise a fine and powerful equipment, with grain-elevators, silos, and granaries. One is the property of the Belgian Steam Flour-mills Company, and has a capacity of from 12,000 to 14,000 tons. The other, The Refrigerating Industry.—Among all the Argentine industries the most important is that of chilling or freezing meat and other foodstuffs. It is gradually replacing, in the export markets, the salt meat or saladeros industry, which formerly was the only industry in the country dependent upon stock-raising. The latter industry is carried on principally in Buenos Ayres, Santa FÉ, Entre Rios, and CorrientÈs. The principal refrigerating establishments are the following:— The Sansinena Frozen Meat Co., with a capital of £600,000, and the warehouses known as La Negra, at Buenos Ayres and Bahia Blanca, in the quarter known as Cuatreros. The River Plate Fresh Meat Co., with a capital of £453,600, whose warehouses are in the Province of Buenos Ayres. The Palmas Produce Co., which is a component part of James Nelson & Co., and has a capital of £500,000, exploits the district of Campana. La Blanca, with a capital of £300,000, established at Buenos Ayres. The Plata Cold Storage Co., with a capital of £403,805, situated at La Plata. Recently another refrigerating establishment has been inaugurated at Zarate, the property of the Smithfield and Argentine Meat Co., with a mechanical equipment allowing 150 bullocks and 600 sheep to be killed per diem. Its capital is £200,000. To this list we may add the Kemmerich Products Co., which manufactures extracts of beef. Its capital is £480,000, and it is established at Santa Elena, in the Province of Entre Rios. This company owns 2700 square miles of land, 340,000 cattle, 20,000 horses, and 50,000 sheep. The exports of the refrigerating establishments for the last seven years are given in the following table, which shows the enormous increase in the export of quarters of beef during the last few years. Exports of Frozen Meat (1901-1908). +----------------------+----------------------+----------------------+-----------------------+---------------------------------+ " 1901 " 1902 " 1903 " 1904 " 1905 " +-----------+----------+-----------+----------+-----------+----------+-----------+-----------+-----------+---------------------+ " Whole " Quarters " Whole " Quarters " Whole " Quarters " Whole " Quarters " Whole " Quarters of Beef " " Sheep " of Beef " Sheep " of Beef " Sheep " of Beef " Sheep " of Beef " Sheep "-----------+---------+ " " " " " " " " " " Frozen " Chilled " +-----------+----------+-----------+----------+-----------+----------+-----------+-----------+-----------+-----------+---------+ Sansinena Frozen Meats Co. " 985,294 " 157,740 " 1,289,628 " 304,108 " 1,072,248 " 291,621 " 1,207,801 " 242,940 " 1,002,146 " 332,302 " 59,535 " River Plate Fresh Meat Co. " 927,648 " 170,123 " 1,120,263 " 301,881 " 1,000,562 " 370,663 " 855,039 " 335,136 " 680,836 " 204,436 " 174,242 " Las Palmas Produce Co. " 809,785 " 170,512 " 1,019,331 " 224,224 " 1,095,678 " 291,266 " 1,056,996 " 312,870 " 867,832 " 337,640 " 29,099 " La Blanca " " " " " 213,112 " 42,513 " 424,486 " 178,709 " 244,299 " 177,470 " 38,408 " The La Plata Cold Storage Co. " " " " " " " 129,456 " 140,343 " 369,299 " 350,096 " 100,423 " The Smithfield and Argentine Meat Co. " " " " " " " " " 33,830 " 30,300 " 24,304 " Rio Seco " " " " " " " " " 67,248 " " " The Frigorifique Uruguayenne " " " " " " " " " 96,846 " 14,876 " " The Frigorifique Argentine " " " " " " " " " 126,882 " 64,601 " " +-----------+----------+-----------+----------+-----------+----------+-----------+-----------+-----------+-----------+---------+ " 2,722,727 " 493,375 " 3,429,222 " 830,213 " 3,381,600 " 996,023 " 3,673,778 " 1,209,998 " 3,489,218 " 1,511,631 " 436,002 " +-----------+----------+-----------+----------+-----------+----------+-----------+-----------+-----------+-----------+---------+ +----------------------------------+----------------------------------+----------------------------------+ " 1906 " 1907 " 1908 " +-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+----------+ " Whole " Quarters " Quarters " Whole " Quarters " Quarters " Whole " Quarters " Quarters " " Sheep " of Beef " of Beef " Sheep " of Beef " of Beef " Sheep " of Beef " of Beef " " " Frozen " Chilled " " Frozen " Chilled " " Frozen " Chilled " +-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+----------+ Sansinena Frozen Meats Co. " 773,243 " 300,605 " 67,996 " 812,624 " 237,821 " 35,882 " 1,058,862 " 263,832 " 65,497 " River Plate Fresh Meat Co. " 553,589 " 249,071 " 163,624 " 419,186 " 221,009 " 128,359 " 476,569 " 263,673 " 185,294 " Las Palmas Produce Co. " 664,860 " 320,064 " 32,570 " 669,325 " 255,797 " 28,627 " 648,974 " 256,918 " 58,468 " La Blanca " 119,370 " 191,294 " 68,113 " 51,139 " 185,352 " 106,941 " 126,482 " 200,254 " 158,936 " The La Plata Cold Storage Co. " 454,879 " 245,045 " 84,476 " 537,451 " 207,548 " 99,129 " 317,252 " 259,073 " 218,083 " The Smithfield and Argentine Meat Co. " 14,172 " 110,579 " 38,705 " 34,679 " 118,041 " 40,675 " 32,385 " 136,009 " 81,302 " Rio Seco " 104,047 " " " 261,335 " 101,792 " " 134,595 " " " The Frigorifique Uruguayenne " 63,311 " 17,521 " " 142,070 " 76,475 " " 137,853 " 76,062 " " The Frigorifique Argentine " 252,918 " 146,410 " " 124,890 " " " 405,353 " 123,142 " 21,768 " San Gregorio " " " " " " " 133,835 " " " +-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+----------+ " 3,000,389 " 1,580,589 " 455,459 " 3,052,699 " 4,403,835 " 439,613 " 3,672,182 " 1,579,163 " 789,348 " +-----------+-----------+----------+-----------+-----------+----------+-----------+-----------+----------+ The capital invested in the refrigerating industry, including both share capital and loans, is estimated at £4,449,825. The profits obtainable may be judged by the dividends paid by the most important of the refrigerating companies: the Sansinena Frozen Meats Co., in 1902, paid 50 per cent. out of the exceptional profits realised by the sale of cattle in South Africa during the Boer war. Since then the dividends of this company have fallen to 10 per cent. Another cause of the development of this industry is the closing of English ports against cargoes of live cattle, for fear of anthrax. It is by the help of this prohibition that the refrigerating companies have conquered the English market, which to-day takes up the greater part of our frozen meat, as before it took our cattle. Steps have of late been taken with a view to re-opening the ports under a pledge of sanitary measures; but nothing decisive has been done, on account of the protests of English cattle-breeders, and also of the refrigerating companies, most of which have been created by English capital. The Dairy Industry.—Among the industries connected with cattle-breeding there is one which, without having the same importance as the industry dealt with above, has yet a certain margin of development. This is the dairy industry, with its derivatives, butter and cheese-making. The Argentine breeders having imported excellent Durham or Dutch milch-cows, the dairy produce is of the finest quality. Large establishments, of which one, La Martona, belongs to a private company, have been installed for the purpose of supplying the city of Buenos Ayres with milk. It is estimated that the daily sale at the counters of La Martona amounts to 10,000 glasses; the sales of La Marina amount to 6000, and of La Granja Blanca to 10,000 glasses. All these approximate figures refer to the summer only, and the sales across the counter by the litre, for family consumption, and the house to house distribution, are not included in these figures. Besides the above establishments there are many cow-keepers in the city, as well as dairymen who receive their milk by rail. As for butter and cheese, it was estimated at the time of To give the reader some idea of the dimensions which the butter-making industry may attain in the future, we need only cite the following data:— According to the national census of 1895 there were 22,000,000 cattle in the Argentine Republic, of which only 1,200,000 figured as milch cows; the value of the latter being not less than £14,000,000. Butter-making and cheese-making were very restricted industries, especially the former, and the statistics of 1895 mention an export of only 500 tons. But the impulse was already given; and the combined efforts of agriculturalists and cattle-breeders, directed towards the improvement of the bovine species, were about to give an extraordinary impetus to the butter-making industry. Let us see how the situation has improved between 1895, the time of the last national census, and 1908, the year in which the agricultural and pastoral census was taken. This latter inventory has shown that in 1908 the Argentine Republic contained 29,119,625 head of cattle, of which 2,163,900 were milch cows and 12,825,904 were cows employed for breeding purposes. That is, considering the milch cows only, we do not find a very extraordinary increase since 1895, although all agricultural and pastoral industries have undergone such a remarkable development. It is extremely probable, however, that a certain number of milch cows are counted among the cows employed for breeding purposes, as the latter do produce milk, whether for consumption on the farm or for commercial purposes. Here are the figures of the exportation of butter from 1895 to 1908:—
These figures are sufficiently satisfactory, but they are far from representing the possibilities of the future, when the improvement of breeds and the establishments of new creameries will permit of the manufacture of butter on a far larger scale. Among the present stock of 30,000,000 cattle there ought to be a proportion of at least 45 per cent. of milch cows, or 12 millions; at the very least 8 millions. Counting upon a daily yield of 17·6 pints of milk per cow, valued, in its original state or in the form of butter or cheese, at 2d. per litre, or 1·136d. per pint, we obtain a sum of £64,000 per diem, or £23,000,000 per annum. But these calculations are purely theoretical. One thing, however, we can say to the credit of the country, and that is that its dairy industry is admirably adapted to the requirements of a great city such as Buenos Ayres, which must perforce obtain that essential aliment, milk, under the most favourable conditions of price and quality. An extremely perfect equipment enables the industry to utilise its by-products. The problem is not whether the Argentine can produce such a quantity of butter, but to whom it can sell it, for in America Brazil is its only customer, while in Europe it has to struggle against the competition of such countries as France or Switzerland, which countries it would be difficult to displace. As for cheese, we quote only from memory; its production is practically limited by local requirements. The most important establishment in this line is that belonging to SeÑores A. & R. Luro, on their estate, San Pascual del Moro. Here the “moro” cheese is made, an imitation of the Roman cheese, which is consumed in large quantities by the Italian colony. Breweries.—Although not directly dependent upon the produce of the soil, since the country produces no hops, and, Next, with a much smaller output, comes the Bieckert Company, with a capital of £362,880, and an output (in 1904) of 1,349,390 gallons; the Cerveceria Palermo, with a capital of £132,000, and an output of 1,264,690 gallons; the Rio Segundo, in the Province of CÓrdoba, with a capital of £80,000, and an output of 423,810 gallons; and the Fabrica Nacional de Cerveza, with a capital of £120,000, and an output of 540,540 gallons. Here are the statistics of production and consumption for the last six years of the thirty-two Argentine breweries:—
The national product has won a complete victory over the foreign article, the importation of which is now negligible; and it has also popularised the liquid dear to Cambrinus, which ten years ago was still a luxury. One can only regret that agriculture, whose development has of late been so enormous, has not as yet liberated the brewery from the necessity of going to the foreigner for his malt, a product of barley which is the principal raw material of beer. Hitherto, according to Girola, the native barleys have been very little used, as they are not appreciated as they deserve to be; and the growers, on the other hand, have not taken sufficient pains to produce a good brewer’s barley. We must hope that this situation will soon be changed, and that more pains will be taken in the numberless fertile valleys of the Argentine in the growing of barley and its improvement. Spirits.—The production of alcohol, unlike that of other industrial products, is rapidly decreasing. In 1907 only 3,823,336 gallons were produced, while in 1897 the production was nearly 6,600,000 gallons. But we must not forget that the duty, which was originally 7 centavos per litre (6·72d. per gallon), was in 1898 increased to 1 piastre per litre, or 8s. per gallon; nearly five times the prime cost of the spirits. Weaving.—In concluding this sketch of the chief industries of the country which are connected either with agriculture or stock-raising, it is not out of place to speak of those which, although so far scarcely developed, may do better in time under favouring circumstances. With the development of cotton-planting and a plentiful supply of wool, it seems that a large number of looms might be profitably established and operated in the Argentine. But hitherto this industry, of prime importance though it be, has been held in check by the expense of the necessary machinery and of coal, which has to be imported from abroad, and the scarcity of labour. Tanning.—This industry too, ought in time to occupy a place of far greater importance than it does now; for the raw materials—hides and quebracho, the best of tanning media, are present in abundance. To understand the stationary condition of this industry we must remember that it would require a considerable spare capital, as the hides have to remain in the vats for several months, during which time the tanner has need of capital at low terms of interest, which up to the present time has not been available in the Argentine. Quebracho Wood.—Considering its future prospects, we must give a special place to the industry which exploits quebracho timber; converting the balks into railway sleepers, or extracting their tannin. Red quebracho is found scattered profusely through the hundreds of square leagues of the country known as the Chaco, which is situated between 24° and 28° of south latitude, and 59° and 64° of west longitude, and also in the Provinces of Santa FÉ, Santiago de l’Estero and CorrientÈs. The Chaco quebracho is superior to that of Santiago, which has the misfortune to grow in nitrous Although quebracho wood is absolutely impervious to rot, and may thus be used in building, for piles, quays, sleepers, etc., it is exploited more especially for the production of tannin, as more profit is made by so treating it. A sleeper requires a good-sized log, considerable time, and much labour, to say nothing of the loss of wood; while the quebracho extract may be obtained from logs of any size. To-day the value of a sleeper, loaded on the track, is worth 6s. 2d., while three times as much may be made by extracting the tannin. For this reason the principal companies engaged in the quebracho trade have abandoned the manufacture of sleepers, so that certain railway companies—the Buenos Ayres Western, for example—have had to content themselves with iron sleepers. Until quite lately quebracho wood was sawn into large round or squared balks, which were then sent abroad, chiefly to Germany, where the tannin was extracted. During the five years, 1899-1903, 1,044,000 tons of logs were exported; in 1903, 200,201 tons; in 1904, 252,723 tons; in 1905, 285,897 tons; in 1906, 230,000 tons; in 1907, 246,514 tons; and during the first six months of 1908, 127,609 tons. Various foreign and native companies were formed, with large capitals, to convert the wood into extract of tannin, and to export it in this form. These companies are: the CompaÑia Industrial del Chaco, with a capital of £348,000 and two factories; one at Las Toscas, in Santa FÉ, with a monthly output of 1000 tons of extract, and one at Calchagin, in the same Province, which produces 600 tons per month. These factories are equipped with German plant. This company enjoyed a season of great prosperity in 1904; although its factories produced only 12,000 tons of extract instead of 36,000, as they could have done, a dividend Another tannin factory, able to produce 250 tons of extract, has been established by Herwig Brothers at PehuajÓ, Province of CorrientÈs. The CompaÑia Industrial del Chaco is also about to erect, at Resistencia, a factory with a capacity of 300 tons of extract per month. El Quebracho is the last of the companies established for the extraction of quebracho tannin, and this also began to work under the most auspicious financial conditions. Its factories are installed at Fives-Lille, Province of Santa FÉ, on land belonging to the “Kemmerich Products Co.”; these have been equipped with the most perfect machines of German make. The capital of this enterprise amounts to £32,000, which it is hoped will be repaid by the profits of the first few years. The monthly output is 450 tons. The Mocovi Tannin Co., floated with a capital of £60,000, has a factory some 60 miles east of Los Amores (Santa FÉ), and has a capacity of 300 tons per month. The firm of Hardy & Co., of Las Palmas, near Resistencia, own a factory which cost £50,000, and produces 200 tons of extract monthly. The Formosa company, which deals in timber and quebracho tannin, has a capital of £200,000. This company owns 96 square leagues of forest—some 880 square miles—which are estimated to contain 2 million tons of quebracho. This company intends to establish a factory capable of producing 15,000 tons of tannin yearly. The CompaÑia Azucarera de Resistencia, with a capital of £22,700, produces 80 tons of extract monthly, and the factory of M. Benito Pinasco, at GuaycurÚ, on the Santa FÉ railway line, produces 30 tons. Besides these factories, SeÑors Charles and Joseph Casado, the Argentine owners of 2800 square leagues of land (over 25,000 square miles), in the Paraguayan Chaco, have established two factories, one at Puerto Casado and the other at Puerto Sastre, which produce, respectively, 500 and 1000 tons of extract per month. The average yield of quebracho wood is 25 per cent. of extract; but as the extract contains a number of resinous and colouring matters, which must be eliminated during the process of manufacture, the net yield is 22 to 23 per cent. of solid extract containing 20 per cent. of water, which contains 70 to 73·5 per cent. of tannic oxide—that is, pure tannin. The system employed in extracting the tannin is based upon diffusion. Firstly, the wood is reduced to powder by means of machines which cut or saw the wood, into which the logs are fed entire. Then, when the wood is converted into sawdust or fine chips or shavings, it is passed through extractors or diffusers, which separate the cellulose from the tannin, which is finally concentrated to the degree demanded by the market by means of vacuum pans. During five years, from 1904 to 1908, the exports were: 20,111 tons in 1904; 29,408 tons in 1905; 30,839 tons in 1906; 28,190 tons in 1907; 48,160 tons in 1908. Germany and the United States are the chief buyers of this valuable product, which forms the principal wealth of the northern part of the Argentine. In the first edition of this book we prophesied a rapid and prosperous development for this industry, which had already received a considerable impetus; unhappily this prediction has not been realised in practice, and the quebracho industry has suffered, not precisely a crisis, but a diminution of its outlets which has seriously prejudiced its interests. This trouble is due to various causes. Firstly, the ruinous competition between the various firms producing quebracho tannin; a competition which has now happily disappeared, thanks to an arrangement concluded between the principal companies, on the initiative of M. Hermann Schlieper; secondly, to the almost prohibitive duties which the German Government has imposed upon the importation of the product; thirdly, the indifference shown by the railway companies in using on their permanent way sleepers of steel rather than of quebracho, although the latter is more durable. It is to be hoped, however, that in course of time these The Timber Industry.—Another industry which is equally dependent upon the forestal wealth of the Argentine is that whose object is the exploitation of the various and valuable kinds of wood to be found in various parts of the country, especially in the forests of the Chaco and of Formosa. The variety of costly woods to be found in these forests is astonishing. Recently more than thirty-three species have been classified, all of industrial value; the best known, besides the quebracho, being the acacia, algarrobo, button-tree, lapacho, bay, the smaller cedar, and many other varieties, black, white and red. To exploit this forestal wealth a limited company has lately been formed with a capital of £352,000, which proposes to erect two important saw-mills in the Chaco. This company already owns about 2300 square miles of forest, and is thinking of increasing its domain by further purchases. Fisheries.—Finally, quitting the forests for the seas, we must mention one other industry, at present unimportant, but apparently capable of considerable development: namely, the sea fisheries. Owner of an immense coast-line bathed by the southern seas, the Argentine has an appreciable store of wealth at her disposal; which so far has been drawn upon only in a modest and almost secret manner, but which is now beginning to attract attention, to the great benefit of the country and of those who have entered upon this industry. Since Prof. Nordenskjold wintered in Antarctic waters, Captain Larsen has been able to report a source of great wealth, which can be easily and profitably exploited, in the fishing of these waters; and upon his arrival in Buenos Ayres he put himself in communication with a group of Argentine capitalists, who decided to form a limited company by the name of La Pesca, with a capital of £32,000. The results of the first season’s fishing was so productive, and the number of whales harpooned and “cut in” so large, that, according to a report which has been sent us, this company was able, at the end of the first year, to return the capital sunk in the firm of dividends. Naturally such results cannot fail to draw new adventurers into this industry, which in turn will increase and develop the wealth of the country, at the same time procuring for the country a class of men formed by the strenuous labour of Antarctic life; a class of which the young Argentine navy has the greatest need. CHAPTER IIIMINES, ELECTRICAL AND OTHER INDUSTRIES The Argentine has not entered the industrial age—She has no coal-mines in operation, no natural motive forces of any importance. Mines—Symptoms of the awakening of the mining industry—Numerous lodes in the Andes—The mines of La Rioja and Catamarca—Mines in other provinces and territories—Mining legislation. Electric Industries—Tramways; their development, their perfected equipment, and their profits—Progress of electric lighting—Telegraphs—Telephones. Various Industries—List of various industries established in Buenos Ayres, according to the last census, with the value of their products. Comparison between the statistics of 1895 and those of 1904—Progress realised in 1908—Workshops and factories. The Argentine Republic, as we have already on various occasions explained, has not yet entered upon the industrial phase. All its capital and all its energies tend toward the exploitation of the soil, and as the results are greater than the boldest speculator could have predicted, the country has no need at present, with its small population, to launch itself into the unknown by entering the province of industry. Moreover, the Argentine does not so far possess coal or iron measures easily workable, and has very little labour at its disposal, and therefore should not disperse its activities among too many objects. It is its best policy to limit itself to producing articles that it can make more cheaply than the foreigner; not artificially to develop its industries in the shelter of an ultra-protectionist tariff. It would fall to the consumer to pay for such products of the national industry, and the state would lose a serious portion of its revenues. In other words, we may well ask whether the Argentine, in addition to its agricultural wealth, should pretend to a great industrial future, like that of the United States. So far we cannot reply in the affirmative; not, at least, under present conditions. However rich the subsoil of the country may be, a matter at present uncertain, especially in respect of coal and iron measures, which are the basis of all industries, we must remember that the majority of these measures are situated in the region of the Cordillera, 4000 to 5000 feet above sea-level, over 900 miles from the coast, far from roads or waterways, and are consequently very badly situated for the establishment of industrial centres. What coal and iron the Argentine may possess is distributed over a region of some thousands of miles in extent, which does not appear to contain continuous lodes or measures, and in which there are no real valleys or river-basins. Putting all questions of tariff aside, but considering the constant lowering of freights, we think the Argentine will always find it cheaper to obtain its supplies from abroad, except such as it can produce economically, rather than attempt to embrace all industries in its dreams of greatness. Neither can we expect from the utilisation of natural motive forces a development which might in some degree compensate for the absence of fuel. There are a few waterfalls in CÓrdoba and in Tucuman, but such energy as they might furnish would hardly allow one to hope much from their adaptation to industrial uses. One of the most important of these falls is that below the Barrage San Roque, in the Sierra de CÓrdoba; it belongs to the North American Company, “Luz y Fuerza” (Light and Force). The company’s plant gives a yield of about 3000 horse-power, which is employed, for the greater part, in providing light and motive power to the town of CÓrdoba, and also for the production of carbide of calcium. Another installation, belonging to the Molet Company, has a capacity of some 700 or 800 horse-power, which is employed in the same manufacture. The falls of the Yguassu, on the upper Parana, some 230 miles above CorrientÈs, on the confines of Brazil, Paraguay and the Argentine, have been described as a marvel of nature. It would seem that these falls represent a force three times greater than Niagara; their width is 12,000 feet, or more than two miles, with a fall of 212 feet. Unfortunately this Mines.—Although the industrial future of the Argentine is as yet by no means clear, we must admit that during the last four years there has been a livelier movement in favour of gold, silver, and copper mining, which has resulted in the flotation of several important limited companies. It was to support these first steps that the Government built an aerial railway—one of the boldest works ever attempted in the whole world—to exploit the rich mines of Famatina. “Over the whole stretch of the eastern slopes of the Andes,” says an important official publication There are many villages which ever since the Spanish Conquest have drawn their sustenance from the gold and silver which their inhabitants obtain, by rudimentary processes, from the beds of stream or river, and by plain mining. Also, despite the difficulties of transport, various well-organised companies have obtained very fair results from their workings, since they obtained their concessions a few years ago. Now that the feelers of the railway systems have reached these districts, and the mining companies have established aerial cable-ways to connect them with the mines, we can already perceive a greater vitality in this industry. In addition to the wealth of the Cordillera, prospectors are discovering new lodes in the interior of the country; but, as always happens, miners prefer to gather in already familiar The best-known mines of the Argentine are distributed as follows:— In the Province of Mendoza there are mines of copper, silver-bearing galena, gold-bearing quartz, coal, alabaster, slate, and marble, and wells of petroleum; in the Province of San Juan, of gold-bearing quartz, silver, copper, antimony, coal, sulphur, and amianthus. The Province of La Rioja has been known for a long time for its rich mines of metallic silver, and also for its copper mines, whose ores contain a high percentage of gold and silver; and for its gold “placer” mines. It is to facilitate the working of these mines that the aerial cable-way is being constructed, which will unite Cerro de Famatina and the mining centre of Chilecito with the railways. Here, as everywhere, skilled miners are somewhat scarce. The Province of Catamarca, the centre of the Capillitas mining country, possesses copper mines with a high percentage of silver and gold, which have been worked for more than thirty years. These mines, which are, it appears, very rich in minerals, have been acquired by a foreign company, and will be the object of an important enterprise; here, too, an aerial cable-way will be built to transport the ore from the mines to a lower level. There are also in this region two important smelting works; “Le Pilcian” and “La Constancia,” which are buried in the depths of the forests of carob-trees, which furnish abundant fuel. In other parts are found surface veins of copper, silver-bearing galena, bismuth, antimony, mica, gold-bearing quartz, as well as “placer” mines and coal-measures. The Provinces of Salta and Jujuy, which possess rich veins of auriferous quartz, argentiferous galena, copper, borate of In former times silver mines were worked in the Province of Tucuman. In Aconquija also we find mines of copper which must be a continuation of those of Catamarca. The Provinces of CÓrdoba and San Luis, besides ascertained veins of gold-bearing quartz, galena and copper, contain mines of manganese and wolfram, and well-known quarries of marble, and of onyx, both green and of other shades. In the Territories of Tierra del Fuego and Santa Cruz the sands along the Atlantic coast contain, especially after storms, an abundance of gold in powder and small nuggets, whose extraction gives employment to numbers of workers. The River Chubut, in the Territory of Chubut, brings down fine gold along its bed, as do its numerous small tributaries, which rise in the Andean slopes. The presence of gold more than 100 miles from the Cordillera tempted some colonists to organise an expedition; at the foot of the mountain they found gold in nuggets. Another company exploits the salt pits of the Valdez Peninsula, and another the quarry of flat granite slabs, known as the Atlas Quarry. For many years now large quantities of gold have been found in the rich “placers” of the Territory of Neuquen, where copper also has been discovered, silver-bearing galena, coal, and petroleum. The gold taken out of the washers of Villa MichicÓ and the neighbourhood is estimated at 330 lb. avoirdupois annually. In the Territory of Rio Negro there are abundant quarries of gypsum, limestone, and other building materials; in that of the Pampa Central copper has been recently discovered and is being worked; in that of MisionÈs there is native copper, iron, and manganese; in that of the Andes (PuÑa de Atacama), there are immense deposits of borate of lime, as well as veins of quartz and “placers.” Considering the vast extent of these territories, which have never been seriously explored except at a few points, we have every reason to believe that it will be many years before we have even an approximate knowledge of the mineral wealth they contain; but the data gathered up to the present time augur well for the future of the mining industry in the Argentine. We will add finally, as a further reason for success, the fact that the law regarding mines is remarkably liberal; the State may not exploit them on its own account, but concedes them to any adult applicant capable of administering his own property. The same mining laws are in force throughout the country. To acquire a claim it suffices to present a written demand, containing an exact indication of the position and nature of the claim demanded, the details of its discovery, and all other useful information, accompanied by a sample of the mineral. Immediately upon the presentation of this demand the administration enters it with the date of deposition, in order to prove the right of priority; and directly the concession has been surveyed and delimited, the claimant has full rights in his mine and may dispose of it as he wills. The mine is untaxed, and so are the mineral products, whether sold at home or abroad. The only obligation imposed upon the miner is that he shall work his mine with at least four miners during 230 days of the year; if this condition be not fulfilled, any other person may demand the concession of the abandoned mine. The Electrical Industry.—It is greatly to the credit of the Argentine that everything that makes for progress, for an increased welfare or greater convenience, is immediately applied by the Republic. The latter quickly absorbs all improvements and, profiting by the experience of older nations, immediately puts new procedures into practice, instead of lingering in the rut of outworn systems. Thus it was, for example, in the case of the electrical industry. The Argentine has no need, in this respect, to envy the most advanced nations. In Buenos Ayres—for only the large centres can be progressive to this extent—all the tramway and electric lighting concerns are most excellently equipped, and are in this matter equal to the best installations of England or the States. The electric tramway companies, whose tracks cross Buenos Ayres in every direction, are seven in number, forming a network of lines which are distributed as follows:— The “Anglo-Argentine” Company, 18·8 miles; the “Capital” Company, 34·7 miles; the “Metropolitan” Company, 19·8 miles; the “Grand National,” 76·9 miles; the “Compagnie Lacroze de Buenos Ayres,” 44 miles; the “Southern Electric Tramways,” 49 miles; and the “Harbour and City of Buenos Ayres,” 6·8 miles. The great event of 1908 was the amalgamation of these companies by the “Anglo-Argentine,” which proposes to unite these lines under a single management, in order to form a vast network, comprising all the principal lines, with the exception of the “Compagnie Lacroze” and the “Harbour and City of Buenos Ayres.” The total capital invested in this important undertaking amounts to not less than £14,000,000. It is to be hoped that this great financial operation, which will place the Anglo-Argentine Company at the head of the most important tramway companies of the world, will not fail to benefit the public, and that the Company will also turn its attention to improving its equipment and to lowering its fares to a uniform rate. On the other hand the number of passengers carried by
These figures go to confirm all we have said as to the enormous development of capital in the Argentine, and of its commercial activity. Electric Lighting.—In the matter of illumination, Buenos Ayres was early discontented with the old methods; electricity is now preferred both for public and private purposes. Today there are 721 miles of gas pipes and 233 miles of electric cables. The capital of the electric lighting companies is estimated at nearly £2,000,000, and their output at 30,905 horse-power. The electrical supply is chiefly in the hands of the German Electricity Company, with a capital of £1,850,000, which has already absorbed the two companies previously in existence. Its equipment was furnished by the famous firm of Siemens Halske, which stands in the front rank of German electrical manufacturing firms. Telegraphs.—Another mark of progress is the continual extension of the telegraphic system. The national, provincial, and private lines together represent to-day a length of 31,215 miles, of which 15,125 belong to the State; twenty years ago the mileage was barely half this figure. As for telegraphic communication with the exterior, there are two foreign cable companies, one possessing the cable running to the United States via Galveston, and the other that communicating with Europe via Madeira. Communication between London and Buenos Ayres is now established in about forty-five minutes, while a few years ago the average was five hours. Telephones.—The telephone is used in the capital and the principal towns—Rosario, CÓrdoba, Santa FÉ, Tucuman, Mendoza, etc. Buenos Ayres is connected by telephone with Montevideo (124 miles), Rosario (190 miles), and will shortly be connected with Bahia Blanca (437 miles). The two companies established in Buenos Ayres, the “Telephonic Union of the Rio de la Plata” and the “Co-operative Telephonic Company,” represent a capital, respectively, of £243,963 and £582,032. All these data, which we merely mention in passing, go to prove that the Argentine has assimilated all the details of industrial progress, even in their most improved forms. Experiments in wireless telegraphy are now being made with a view to communicating at long distance with the steamers leaving or approaching Buenos Ayres. Various Industries.—At the end of 1908, according to the statistics of the official industrial census of that year, which was undertaken by the Department of Commerce in the Ministry of Agriculture, there were, in the city of Buenos Ayres, 10,349 factories or workshops, representing a capital of £23,443,144. The sales of these factories, etc., for 1908, amounted to £47,048,773. The raw material consumed was worth £25,223,681. The motive power employed in these factories was equivalent to 105,575 horse-power, and the number of workers employed was 118,315. Of the owners, 14·8 per cent. were of Argentine nationality. If we compare these figures with those of the municipal census of 1904, we obtain the following results:—
We see that even in four years there has been a remarkable development of the industries of Buenos Ayres. This development is especially demonstrated by the increase of This progress is certainly remarkable, but it does not perhaps truly represent the actual progress achieved. The Director of the Census, SeÑor Ricardo Pillado, declares that “the general opinion prevalent in the offices of the census department is that certain important items of information, relating to matters of great interest, have been concealed by interested persons. Among such we may cite the value of output, the amounts of sales, the capital employed, the number of employÉs, etc.; as the manufacturers are anxious, above all, to shelter themselves from a possible increase of taxation or licences.” So that in spite of the satisfactory results of the last census, in spite of the notable increase of wealth and industry recorded, the figures given are far from representing the true significance of the industries of the capital city. The results already given may be classified as follows, under the headings of the kind of industry, capital employed, value of produce, motive power, and employÉs engaged:—
The establishment of large electric works which furnish current at very moderate rates, as well as the advantages of Among those industries which are still in a state of infancy we must mention the chemical industry; this is limited to a few candle and soap factories, sulphuric and nitric-acid works, scent distilleries, dye factories, etc., whose produce is insufficient to the needs of the country. The match factories, on the other hand, furnish a good article and are sufficient to the country. The consumption at present exceeds 200 million boxes per annum. We must also mention the existence of a few paper-mills, glass furnaces, and various works where certain agricultural necessities are produced: such as iron wire, fencing, etc., and also certain wheel factories; but here again importation furnishes a great proportion of the articles consumed. CHAPTER IVBANKS, THE BOURSE OR STOCK EXCHANGE, AND LIMITED COMPANIES Banks—International character of Argentine banking—Evolution of banking machinery—List of the principal banks, with amount of capital and business done—Conditions peculiar to Argentine banking; the lack of moveable reserves—Rates of interest on account, on deposit, and on advances—Statistics of the deposit accounts of the principal banks—Exchange operations: their decrease since the determination of a fixed monetary ratio—The Clearing House; the importance of its operations. The Bank of the Nation—Its history—The formation of its capital—Political interference in the nomination of its Directors—Statistics of its accounts—Rapid increase of deposits—Difficulty of realising capital—The resumption of payments. The Bank of the Province of Buenos Ayres—Its reorganisation—Its present prosperity. Mortgage and Loan Banks—History of the Banque HypothÉcaire of the Province of Buenos Ayres—Bankruptcy—Arrangement between the bank and its creditors—Proposal of reorganisation—Laws relating to mortgage in the Argentine—The National Mortgage Bank; statistics of business done—Joint-stock loan companies; their capital and amount of business done. The Stock Exchange (Bourse)—History of this institution—Its importance; its functions; amount of business done—The decrease in its transactions since the cessation of speculation in currency or the monetary ratio. The Bourse is a private establishment—Its membership and its regulations—Statistics of business done during the last ten years—Securities quoted on the Buenos Ayres Bourse—Decrease in the total amount of business done during the last five years—The monetary reform of 1901 as a factor of this decrease—The place occupied by the Stock Exchange in the life of the nation. Joint-stock Companies—The development of joint-stock companies—Legislation affecting such companies—Abuses committed in the formation of such companies, due to speculation—Statistics of capital invested in joint-stock companies before and after the speculative crises of 1890—Revival of such companies, in a sense more consistent with the development of the country. In any sketch of the commercial life of the Argentine, we must include the Bourse and the banks, which play an important part in the business life of the community, owing to the facilities which they afford to all kinds of commercial transactions. To-day such transactions represent a considerable figure, and involve a movement of capital amounting to scores of millions. There is obviously need of an organised body designed to simplify this movement, and to place at the disposal of trade the means of effecting its exchanges with the least possible displacement of capital. Banks.—It was inevitable that in the Argentine the evolution of banking should be towards an international character, since the trade of the Republic is almost entirely with foreign countries. Moreover, this trade is very largely in the hands of foreigners: French, English, Germans, Italians, Spaniards, Belgians, or Americans from the States; which fact has resulted in the formation, in the city of Buenos Ayres, of various groups of banks, corresponding, in respect of their founders or their capital, to these various nationalities. Each of these establishments is in constant communication with the country of its origin, and seeks to gather round it clients of its own nationality. Both in the matter of importance and that of organisation the banks doing business in the Argentine leave nothing to be desired. As we shall presently see, the sum of the capitals of all these banks amounts to a total of nearly £26,000,000; a sum which appears to be amply sufficient for all the present requirements of trade. Working under a system of free competition, and handling a considerable capital, they have been induced to offer greater and greater facilities to trade, in order to increase the number of their clients and the volume of their operations. Moreover, the suppression of the gold premium has removed one of their chief sources of profit; so that they have been forced to obtain, through the extension and perfection of their ordinary banking operations, the compensatory increase of business which allows them to maintain the volume of their profits and their dividends. One cannot subject these banks to a rigid comparison; each of them conducts its business for the benefit of clients of its own nationality, and in consequence must accede to The Banco EspaÑol del Rio de la Plata, which has branch establishments in Paris, London, Genoa, and Madrid, is in direct relation with the financial circles of those cities, and facilitates all banking operations between the various Spanish-speaking countries. Founded by the financiers of Buenos Ayres, and afterwards enlarged by French capital, the Spanish bank, which has admirable premises, has succeeded in surrounding itself with a clientÈle of great landed proprietors, by offering them all kinds of facilities for the conduct of business operations connected with the sale of national produce. Their branch establishment in Paris is the favourite bank of the numerous Argentines who go yearly to Europe on business or for pleasure. In this congeries of banks the Argentine is represented by two great establishments: one of these, the Banco de la Nacion Argentina, is a State institution which, in addition to the business transacted with the Government, runs cash and deposit departments like other banks; the other is the Banco de la Provincia de Buenos Ayres, whose origin was in the reconstruction of the historic bank of the same name, the collapse of which was provoked by the terrible financial crisis of 1890. The excellent results of the last three years which we shall presently consider in detail, allow us to predict a brilliant future for this institution. We shall give, in the following table, a list of these banks, in the order of their establishment, with details as to their capital, reserves, transactions, and dividends. As lately as the year 1907, it was extremely difficult to All these banks work with a relatively large capital, which is mostly deposited. To understand the situation we must remember that banks are obliged, in the Argentine, to keep going by their own means, and are not allowed the resource of mobilising their turnover by rediscounting at the Bank of the Nation. The latter, indeed, is rather a competitor than a prop; since it also seeks the custom of private clients. Thus the funds at the disposal of the banks consists of their own capital and their deposit accounts—these latter varying greatly from one period to another—and they cannot benefit by the supplementary force arising from a credit at the National Bank.
This lack of fluidity as affecting their capital is doubly inconvenient; it forces the banks always to keep their cash reserves at a high level, and also prevents their finding employment for their deposited funds—at any rate in the case of accounts at sight. Without this faculty of rapid mobilisation they cannot enlarge, by operations of short As for the rates of discount, these have fallen considerably in the last few years; partly on account of the increasing competition between the various financial groups, and partly on account of the abundance of capital after several years of good harvests. After standing for a long time at 7 and 8 per cent., the average rate for first signatures tends nowadays to settle at 6 per cent. This is a fact which may surprise those who believe that the monetary situation of a country is always affected by the premium on gold, but we shall see, in the chapter on finance, that there is, as a matter of fact, an influx of gold into the country, and that its movable resources have never been more abundant. The circulation of notes is now guaranteed by a cash reserve of more than 65 per cent. The banks receive deposits at sight, at thirty, sixty, ninety, and one hundred and eighty days. They also receive deposits on the “savings-bank” system: that is they pay 31/2 or 4 per cent. upon deposits not exceeding 5000 to 10,000 piastres in paper money, or 3000 to 5000 in gold (according to the particular bank)—that is, £440 to £880 in notes, £600 to £1000 in gold—on condition that if the money is withdrawn under sixty days no interest will be allowed. After the lapse of sixty days the money may be withdrawn at the will of the depositor, and the interest is added since the day of deposit. Small savings deposited on this system attain to considerable proportions, and the public is becoming more and more familiarised with business of this kind. One item that differs very sensibly from European usage is the rate of interest charged on current debit accounts. As the Argentine has no law regulating this rate, there have been times, happily now past by, when this rate has been as For private individuals conditions are also easier, on account of competition, and 7 per cent. has become practically the average rate. In certain banks the rate on debit accounts has even fallen as low as 6 per cent. The following table indicates the movements of the principal accounts, during the years 1906-1908, in the case of the various banks which publish their balance-sheets, in the Argentine. On an international market like that of Buenos Ayres exchange operations are naturally most attractive. Since the suppression of the gold premium, which has reduced the risks to a barely sensible amount, these operations no longer retain their old speculative character; but, on the other hand, the profits to be drawn from operations of this kind have greatly diminished, so that business has gained only in safety and extent. We may here recall the fact that speculations in gold, which amounted to 1,234,000,000 piastres paper (£108,592,000) in the year 1899, had fallen to 211,000 piastres in 1904, and have now entirely ceased. Moreover, in order still further to avoid all risks, such business is now done by means of cable transfers, instead of by cheques at one month from date as formerly; thus avoiding as far as possible any variation in the rate of exchange. It is chiefly during the period of exportation that these drawing transactions become of great importance. Exchange business is transacted on a gold basis; that is, on the basis of the gold piastre, which is equivalent to a dollar, or to 5 francs of French money, or 4s. of English; as for settlements, they are made indifferently in gold or paper, on the basis of 44 centavos, or ·44 of a piastre in gold, for one piastre in paper. Formerly the rate of exchange used to vary very perceptibly with the seasons. The banks used to buy during the export season, which for grain and wool lasts from December to March, and consequently profited by the abundance of the market to discuss the price. They then sold to import houses during the slack season, sometimes making a profit of 6 to 10 centimes. Now competition has greatly reduced these margins, which scarcely vary at all, in a normal season, except to the extent of an insignificant fraction.
Again, the sales of money are now extended over a far longer period than before, as the export season itself has been extended by new products, such as maize, chilled and frozen meats, etc., which do not necessarily find their outlet at the same time as the rest of the harvest. Thus the banks have no longer any incentive to hoard reserves of money, as they are no longer certain of selling them a few months later. All these conditions here enumerated are of course subject to certain small variations, according to the kind of trade or industry. The large landowner, the grazier, the farmer, the cattle-breeder, who has no money at his disposal but that coming from the sale of his products, can only procure credit, no matter what his wealth may be in land, at a rate far higher than that which is demanded of the large commercial houses of Buenos Ayres. But as we have especially attempted to demonstrate, the Argentine banks are to-day splendidly equipped with capital, so organised as to assist commerce by services of many kinds, and, finally, their charges have been abated, by the action of competition, to rates which one would hardly expect to find in practice in a new country. As the latest sign of progress we may mention the establishment of the Clearing-House, which commenced operations in 1893, upon the model of the London Clearing-House, under the able management of the under-manager of the Bank of London and the Rio de la Plata, Mr Hogg. This institution, as its name indicates, serves to strike the balances of the sums which the various banks may owe one another, the balances only being actually paid over. The total sum represented by the operations of the Clearing-House in 1908 was over £352,000,000. This figure includes Between 1893 and 1899 the business done at the Clearing-House underwent a notable and continual increase, and in 1899 amounted to more than £350,000,000. Since that time its operations temporarily decreased in value, owing to the suppression of the gold premium, which put an end to exchange speculations, which formerly kept the Clearing-House busy; so that in 1903 and 1904 the total amount of the operations was barely £264,000. Since 1904, however, these figures have gradually increased, and in 1907 and 1908 they once more exceeded £350,000,000. To-day the business is purely commercial, rendering any exact comparison with the times when speculation played the principal part extremely difficult. But if we could subtract this latter element we should certainly find that the compensations based on commercial operations have greatly increased, since the figures of 1899, although less by those representing speculative transactions, have not appreciably diminished. The Bank of the Nation.—To complete this account of the banks of Buenos Ayres and their operations, we must give an account of the working of the most important of them all: the Banco del Nacion. This bank is of especial interest, on account of its relations with the Argentine Government, which guarantees all its liabilities. The Bank of the Nation came to birth at an extremely critical moment in the history of Argentine credit and finance. In 1890, after the double political and financial crisis which was then affecting the country, as a consequence of the errors and abuses committed by the Governments, at a time when all the official credit establishments in the country lay moribund, disorganised, and discredited, the Government of Signor Pellegrini, called in to inherit the confusion of that which had just fallen, found itself faced with terrific problems. It attempted to solve the banking problem by founding a new institution, to which it assigned a capital of 50,000,000 of piastres—£4,400,000—the shares to be offered for public subscription. To the subscribers it promised a certain intervention in the At another time there was much discussion as to whether the Government of Signor Pellegrini, whose patriotic intentions no one doubted, would not have done better to rescue the old National Bank, which was tottering amid the ruins of the crisis, and whose assets, administered by the new institution, might have given better results than did liquidation, thus saving the State much expense; but this question is no longer of immediate interest. As was only to be feared, the public, after the spectacle of such striking examples of the lamentable end to which official banks are liable in countries formed by the chances of immigration, and devoid of established traditions: wherein there exists no sanction for the suppression of undoubted abuses: the public, we shall see, regarded the new institution with mistrust, and abstained from buying shares. The Government, disappointed in its attempt, was compelled to replace the system of public subscription by an issue of notes, which explains why a purely official bank was created, instead of the mixed bank which had been proposed. Realising that the success of a bank depends far more upon the confidence with which it inspires the public than upon its organic charter, Signor Pellegrini’s Government, together with those that followed it, took care to place at the head of the Banco del Nacion only men who were capable, by their good judgment, their technical competence in banking business, their social position, and their knowledge of the business world, of giving prestige to the establishment, and surrounding it with the atmosphere of respect and confidence which was necessary to its success. Thus in spite of its official origin the bank was able to find support in public opinion, and to render important services to industry and commerce. A study of the accounts of this establishment, during the A glance at the following table will prove this. It contains the balances of the three principal accounts, upon the 31st of December of the five years from 1904 to 1908 inclusive. We see from these figures that in five years the business done has increased by more than 101/2 millions of pounds; the overdrafts in current accounts by nearly £300,000 (in four years, 1905-1908), and the deposits by more than £8,000,000. The Bank of the Nation has one hundred and ten branch establishments scattered all over the Argentine, and their number is continually increasing. Here are the figures relating to the three principal accounts in these branch establishments during the same period:—
We find here, among the branch establishments, an increase of over £6,000,000 in the bills in hand; nearly £740,000 in the overdrafts on current accounts; and over £5,000,000 on the deposits. These exceedingly satisfactory results have been obtained by the National Bank by means of a nominal capital of £9,680,000. We use the phrase “nominal capital” with intention, for although this sum figures on the balance-sheets of the bank, we must remember that in this capital are included State bonds, which would have furnished, had they been negotiated, an available sum of £3,212,000 in paper-money, and that the net profits of the year 1908 are also The data we have just given prove abundantly that the Bank of the Nation has been directed by a hand as firm as it is prudent, and there is every reason to suppose that it will continue in the future to serve public and private interests as well as it does to-day. The forecast we predicted in the first edition of this book will have proved mistaken; a forecast based upon the authoritative opinion of an eminent Argentine statesman, who affirmed that the official banks “bore within them the germs of the moral and financial ruin of the country.” He even added that one should never “incorporate a bank with the political administration of a State, because sooner or later it will be used as a political weapon.” We must here pay our respects to the memory of Dr Ramon Santamarina, a former president of the Administrative Council of this establishment, whose premature death was a great loss to the bank and to the country. It is, indeed, to his intelligent and circumspect management of affairs that we owe a great measure of the happy results obtained. The Bank of the Province of Buenos Ayres.—There is in the Argentine another important financial house: the Banco de la Provincia de Buenos-Aires, which has lately re-arisen from its ashes, by the aid of the Banco del Comercio Hispano-Americano. This also was a victim of all kinds of abuses, committed to its detriment, by the administrations which successively directed it. The bank was reorganised in June 1906, with a capital of £1,760,000, of which sum half was furnished by the Government of the Province and half by the shareholders, with the proviso that this capital might be increased to The most delicate point in this conjunction, namely, the manner in which the administration of the bank should be conducted, has been so determined as to assure the preponderance of the private interests of the shareholders of the bank over the official interests of the Government. The administration of the bank is confided to a council, composed of a president appointed by the Government of the Province of Buenos Ayres, and twelve directors, four of whom are nominated by the Government and eight by the private shareholders; an arrangement which constitutes an excellent guarantee of proper management. From the balance-sheets of the last three years, and the figures contained in the reports of the directing board, or Council of Administration, we may judge the activity displayed by this bank, and the progress realised since its re-establishment. Here, for example, are the amounts of the deposit accounts as taken upon the 31st of December of each year, from 1906 to 1908 inclusive, as well as the bills in hand and the overdrafts on current accounts.
The extensive business done by this bank, which is evident from the preceding figures, has produced considerable profits, which amounted to £109,298 in 1906; £220,551 in 1907; and £246,884 in 1908. In the latter year the net profits reached an average of 14·02 per cent. of the total capital. This flourishing state of affairs allowed of the payment to the shareholders of a dividend of 9·5 per cent. in 1907 and 10 per cent. in 1908, without prejudice to the reserve funds, which amount to £73,920. Money-lending or Mortgage Banks (Banques HypothÉcaires). There are two great official institutions of this kind in the Argentine: the Mortgage Bank National is progressing in a normal manner; the other, the Mortgage Bank of the Province of Buenos Ayres, is painfully achieving the process of liquidation. We must explain that this institution, which worked for a number of years with average regularity, collapsed violently in 1890, on account of the scandalous abuses committed by the management in the matter of loans, and the pernicious introduction of electoral politics into the conduct of business. This is one of the most lamentable pages of the administrative and financial history of the Argentine during the last few years. After numerous efforts had been made at various times with a view to making an arrangement between the bank and its creditors by means of an exchange of its bonds of mortgage for new bonds of the Rente Provinciale, a satisfactory agreement was at length arranged, which put an end to the irregular situation of the bank, in a manner as advantageous for the creditors as for the Province. According to the report drawn up by the representative of the Government, the liabilities of the bank amounted, on 30th June 1906, to £19,725,636; and to set against this colossal debt the bank possessed the assets, largely precarious, represented by 503 loans on mortgage, of which the principal amounted to £1,967,704, while unpaid or overdue interest accounted for £6,568,440; or a nominal total of £8,536,140. The assets also comprised certain other items, amounting to a total of £2,186,184. Some of these assets had a real value and could be considered as capable of realisation. Among these were: the money in the bank, the bank premises, the mortgages, and the special accounts with the Provincial Government; these items constituted the best class of assets. The remaining Two classes of assets, for example, which were apparently of considerable importance—those relating to hypothecary credit and to personal shares—were far from representing the value which was shown on the balance-sheet. Taking into account the probabilities of the realisation of certain classes of assets, in case of need, a liability of £19,725,636 was opposed by assets equivalent to £6,242,039, leaving a deficit of £13,583,595. In other words, the assets represented only 31 per cent. of the liabilities. The Government’s representative, having analysed the effective revenue at the disposal of the Province, and allowing for the probable progress by which it might benefit in the immediate future, declared that the Public Treasury could not put aside more than £308,000 for the purpose of guaranteeing the dividends on the shares of the Bank; but that this sum would probably be increased by £44,000 during the next five years, and by £48,400 at the end of ten years; thus assuring the creditors of an interest of 31/2 per cent., and a proportional amortisation of 1/2 per cent. An arrangement on this basis was proposed to the creditors of the Bank at a general meeting, held at la Plata in November 1906, and was accepted. We must add that at the present time the Provincial Government is considering a scheme designed to infuse new life into the Mortgage Bank. This system consists of founding a limited company in which both public and private interests would be represented; a state of affairs very like that already in existence, and yielding excellent results, in the case of the Bank of the Province of Buenos Ayres. The great official establishment for loans on mortgage in the Argentine is the Banco Hipotecario Nacional. This bank grants loans upon real estate in the capital, provinces, and national territories. It issues cedulas which bear an interest of 5 to 6 per cent., with an amortisation rate of 1 to 4 per cent., which are quoted at about par on the market, so that the holder, after the deduction of expenses and commissions, obtains a satisfactory interest. In addition to these official establishments, there are various private companies, founded by means of foreign capital, which issue loans on real estate in the capital of the Republic and on land in some of the Provinces. According to our information, these companies employ a capital of nearly £15,000,000, divided as follows:
High as these figures are, however, they represent only a portion of the foreign capital employed in this class of transactions, for considerable sums are advanced by private persons who wish to obtain the high interest obtainable. These companies lend only gold, that they may escape the fluctuations of the paper-money market, and usually limit their operations to dealing with properties in the capital or in the Province of Buenos Ayres, doing business with the rest of the country only in a very limited degree. Although Argentine legislation is extremely advanced in the matter of loans and mortgages, the lender fears, in the case of certain provinces, to encounter difficulties in practice, or delays of legal procedure in the case of foreclosing. The interest on mortgages, which during the year 1908 was maintained at about 9 per cent., is to-day showing a tendency to fall, on account of the abundance of money in the Buenos Ayres market; the rate is now as low as 8 per cent. It is in the capital of the Argentine that mortgage operations are most active. During the decade 1889-1908 the amount of loans upon property reached the sum of £37,241,000. This amount was lent upon 40,996 properties; and of this total £7,603,000 was lent in 1908 alone. The mortgages effected upon rural properties, throughout the entire Republic, for the years 1903 to 1907 inclusive, amounted to £37,920,000, and the mortgaged property amounted to nearly 80,000,000 acres. In this total the Province of Buenos Ayres was represented by £16,880,000; that of Santa FÉ by £3,240,000; that of CÓrdoba by £6,240,000. The Argentine Republic possesses one of the most perfect systems of mortgage in existence among modern nations. To prove this statement we need only explain that the Argentine laws do not recognise secret mortgages; nor do they admit any privileges in favour of married women or minors in respect of special mortgages. Neither does such a thing exist as a general mortgage, nor are there any privileges taking precedence over the right of the mortgagee. The mortgage, like every action which affects or modifies the right of the proprietor over immovable property, must be signed before a notary and registered by the Conservator of Mortgages. Before drawing up the deed, the notary must, as in the case of sales, demand a certificate stating whether the property is or is not free from charges. Although the right of the proprietor is perfect as to possession, the law tends to give property a certain degree of mobility; thus for this reason the term of a sale with power of redemption is three years, the term of a lease ten years, and that of the registration of a mortgage ten years; but all these terms may be renewed upon expiration. The term of ten years in the case of mortgages does not affect the Banco Hypotecario National, nor the Banque HypothÉcaire de Buenos Ayres, nor the Banque HypothÉcaire de la Capitale, in virtue of the special laws which created these institutions. The Bourse or Exchange.—The first Commercial Exchange or Bourse, or let us rather say the first institution to fulfil the functions of an exchange or Bourse, for we cannot give that name to the market which formerly existed in Buenos The documents available do not tell us how long this institution lasted, nor whether at a later period it opened its doors to the Argentine element nor whether, being finally transformed, it served as a basis for the organisation of the exchange as it is to-day. The only thing certain is that in July 1834 the first members of the association met in the Via San Martin, there to establish the Bourse, of which the inauguration took place on the 1st of December following. Before this date there was a financial group known as the “Sociedad Particular de Corredores,” which was known as the Camuati, and which busied itself with mercantile transactions. The Bourse retained its original premises until the year 1862, when it was installed in another building in the same street, at present occupied by the Caisse de Conversion, or Bank of Exchange. Some years later, the premises being too small, it was proposed to build other and far larger premises, sufficient to meet the ever-increasing demands of the institution. In 1881 an extraordinary general meeting was held, with a view to forming a company to undertake the construction of premises to house the “Sociedad Bolsa de Comercio.” But the company was not formed until 1883, when it acquired the site on which the Bourse now stands; and its official inauguration took place two years later. Since then the Commercial Exchange has enjoyed a period of continued prosperity; it is to-day the first commercial centre of Latin America. It exercises a great influence over the commercial and economic life of the Republic. It is the sole establishment of its kind, having judicial powers, open to all mercantile transactions, and establishing, under the stress of supply and demand, the prices of the products of labour or commerce. Having the power of fixing the value of merchandise by quotations of The most eloquent commentary upon the importance of the operations effected by the Bourse de Commerce is the simple enumeration of their value at various periods, for we then realise the enormous development which they have achieved in a period relatively short. In 1886 the total of the business done was $173,000,000 paper, £34,600,000 face value; in 1887 it was $254,000,000 (£50,800,000); in 1888 $432,000,000 (£86,400,000); in 1889 $469,000,000 (£93,800,000). The total value of all business effected, liquidated or not, cash or credit, during the years 1890 and 1891, amounted to $18,000,000,000 (£1,584,000,000) and $7,000,000,000 (£616,000,000), respectively. These figures, in their simplicity, cover the history of an interesting period of the financial life of the country. The wave of speculation which turned all men’s heads began to rise as early as 1887, and in 1891 was at its greatest height; it then crumbled into foam, having shattered the most deeply-rooted of banking houses, compromised the national credit, changed brilliant illusions into melancholy realities, and sown desolation and ruin in many a home. After the catastrophe the total value of business done rapidly fell, and we see it falling violently from one year to another—from the $18,000,000,000 of 1890 through the $3,376,000,000 of 1895, to the $835,000,000 of 1900; a year which experienced a condition of affairs which was destined to produce a beneficent influence upon the economic life of the country. In this total of $835,000,000 of paper-money we find that transactions in gold amounted to $774,000,000 paper money, corresponding to $66,800,000 of gold negotiated; while in 1899, the whole business done in the Bourse still amounted to the respectable sum of $1,295,000,000 paper, of which $1,234,000,000 represented operations in gold. From one The principal cause of this notable decrease was the “law of monetary conversion.” This law, which has been in force since 1890, fixed the value of 44 centavos, or $44 gold, for the future conversion of paper-money, and enacted that the Caisse de Conversion should receive the gold and deliver paper, and vice versa, at this same rate: a rate equivalent to 227·27 per cent. The effect of this reform was thus, if not to destroy, at least very largely to limit unbridled speculation, which made itself especially felt in the value of the paper piastre. Speculation in gold being suppressed, the volume of business transacted on the Bourse de Commerce of Buenos Ayres grew gradually less and less, falling finally, in 1904, to $37,312,000 paper, of which $19,968 stood for gold. After 1904 the total sum of these operations was still further reduced, the figures for 1908 being incredibly low. Thus the total, which in 1905 had attained £45,400,000, rose to £57,800,000 in 1906, fell in 1907 to £16,880,000, and in 1908 to £12,560,000. To-day the activity of speculators is concentrated upon operations in mortgage bonds and the shares of various companies; each class of operations amounting to some £5,000,000. These figures show that the Bourse de Commerce loses from day to day some part of its importance as the regulating centre of mercantile transactions; but it would be an error to measure the economic vitality of the Republic by the amount of business effected on the Bourse, since an examination of the situation shows us that the Argentine has never known a period of more obvious prosperity. Having explained the new phase upon which the Buenos Ayres Bourse has entered, we must now consider its organisation and its usages, and the regulations under which it operates. In the first place we must remark that the Bourse is not an official institution, but a private establishment, founded and supported by a limited liability company, the “Bolso de Comercio,” which is recognised as a judicial body. In contrast to other Exchanges, and that of New York in particular, the number of shareholders is unlimited, and varies from time to time. In 1886 there were 2959; in 1891, 4901; in May 1905, 3709. To become a member of the Bourse one must be presented by two shareholders, admitted by the Council Chamber or Committee (Chambre Syndicate), and must pay a moderate entrance fee, as well as an annual subscription. According to its rules, the object of the Bourse de Commerce is to “offer a place of meeting to these members, where they may discuss and effect all manner of lawful business; and to facilitate and negotiate all commercial operations by giving them security and legality.” It also undertakes to represent commerce and production in general before the authorities of the country, or before private undertakings; it supports petitions relative to their interests, in order that laws about to be proposed, or those which are being adopted, shall be equitable and shall favour the development of commercial transactions. Its object is both to ensure the unity of commercial usages, and in case of need to take the initiative in all questions of economics which may affect commerce in general. The management of the Bourse is effected by the Council Chamber—the Chambre Syndical de la Bourse, which is entrusted with the general and official representation of the institution. It is this authority which permits or refuses the official quotation of all stocks, shares, loans, etc., issued according to the laws of the country of their origin and by legally constituted bodies. The functions of the stockbroker can only be fulfilled by persons previously authorised by the Council Chamber, after they have accomplished certain formalities, and have proved whether they have attained their legal majority, have experience of business, and have enjoyed a good reputation, all of which must be guaranteed by three men of business of known responsibility. The number of such brokers is not limited, and may be increased or decreased according to circumstances. In 1905, for instance, their number was 385. They are not obliged to give security nor to make any deposit as guarantee before practising; they have merely to pay a small monthly subscription. The regulations of the Bourse contain severe provisions against brokers who infringe any of the numerous prohibitions affecting them; such as accepting orders from clients whose identity has not been proved; from persons known to be insolvent, or from incapable persons; or acting as intermediary in negotiations where there is reason to suspect that the parties involved are not proceeding seriously. Brokers who infringe these rules or others—who do not, for example, meet their engagements—are suspended by the Council Chamber of the Exchange. All operations must be declared in an audible voice by the stockbroker to the recorder (annotator), in order that the latter may inscribe them upon the blackboard. The vendor and the buyer must then exchange memoranda, in order that the transaction shall be definitely confirmed and made valid. All transactions effected on exchange Such are the principal rules of the organic charter which regulates the operations of the Stock Exchange of Buenos Ayres, and such is its method of operation. Let us now examine the total amount of its operations during the period 1895-1908, and how they may be analysed:—
Of this total an amount of 8724 millions of piastres, or 76·2 per cent., applies to metallic operations, which kept speculation alive until the monetary law of 1899 once and for all arrested the varying values of paper money. If this law had had no other effect, this result alone would have justified it as wholly beneficial to the interests of the nation. In the quotations of the above period mortgage bonds hold the second place; they represent about 5 per cent. Being dominated by the spirit of speculation, which expended itself principally, indeed almost exclusively, upon monetary transactions, the Bourse had no time to devote itself to more legitimate business. Thus the public funds represented only some 3 per cent. of this total; then came shares and debentures of various companies; and last of all banking shares, the amount of these being insignificant. The nominal value of all the securities which were quoted on the Buenos Ayres Bourse in 1907 amounted to $554,791,932 paper and $127,763,525 gold, or an actual total of £74,374,395, and an analysis gives the following results:—
These two totals together are equal to a sum of £74,374,395. In the first edition of this book we gave a summary of the nominal value of all the stocks quoted on the Buenos Ayres Stock Exchange in 1904; the sum amounted to 462 millions paper and 38 millions gold, or a total of £52,256,000; so that in three years these figures had increased by 93 millions paper and 70 millions gold, or over £22,000,000. It is permissible to hope that in the course of time the Buenos Ayres Exchange will attain a far greater development, and that it will even exercise some steadying influence on the prices of the public funds. To-day their real market is in London, Paris, or Berlin, so that the credit of the country is affected by the disturbing events of European markets, while the Buenos Ayres market is devoid of any compensating effect. However, it may be observed that when a country begins to grow rich and to have more assets at its disposal, the public funds placed abroad show a tendency towards repatriation. We have seen this in the case of Italy and Austria, which had an important foreign debt in France, and have considerably reduced it during these last ten years of economic progress. It will certainly be the same in the case of the Argentine when, thanks to a series of good harvests, its available or fluid assets have increased beyond what is absolutely necessary for the development of agriculture. Investments will be made not only in land or in live stock, but money will be invested in stocks and shares as well, and notably in the Government stock of the country. As a symptom of this tendency, we may mention that interest on the foreign debt, the coupons for which have hitherto been payable abroad only, is now payable in the Argentine as well, in order to facilitate the purchase of this stock in the Republic as a staple investment. The internal debt is also the object of more extensive operations, now that the seventeen loans which constituted the old debt have been unified, and now that a special call is to be made upon the internal credit of the county with a view to undertaking vast public works. To enlarge the market for this Government stock the authorities have just decided that its coupons shall be payable on the principal foreign markets. Finally, in the course of time the market for industrial stock, bank stock, and railway shares will gradually become less restricted, in proportion as the public fortune becomes more extensively subdivided, instead of being concentrated, as it is at present, in a comparatively small number of hands. The only thing that may compromise this future is the excessive speculation which we find, unhappily only too often, in a country where gambling is a dominant instinct. This excess, with its natural sequelÆ in the form of financial crises, might end by driving all serious clients from the Bourse, and in destroying the excellent elements which Buenos Ayres possesses for the creation of an important financial market. Limited Companies.—In the vast progressive movement which increases in force yearly throughout the Argentine Republic, the Bourse of Buenos Ayres has yet another part to play: that is, to facilitate the formation of collectivities of capital under the form of joint-stock companies, since the spirit of enterprise exhibits itself by preference under this form. Collective effort is to-day more and more replacing individual effort; the Argentine must therefore learn how to employ this weapon of associated capital in order to promote new undertakings, and, by popularising movable values or securities by the help of the Bourse, to raise up new resources to the country’s profit. Our study of the chief manifestations of Argentine life and its commercial machinery would thus be incomplete if we did not give some account of the public companies of the Argentine, the legal formalities demanded of them upon their formation, their mechanism, and the vicissitudes through which they have passed at various interesting periods of Argentine history. The constitution of public companies is subjected by the Commercial Code to rigid formalities, in accordance with the most advanced principles of universal legislation upon such matters, in order to assure their proper operation as well as the interests of the shareholders. The indispensable conditions of the formation of such companies are the following: the number of associates must not be more than ten; the capital of the venture, or its first To gain the right to publish the prospectus appealing to possible shareholders, the company must also conform to the following rules: it must indicate the date of the provisional formation of the company, must mention the place where the charter of the company was drawn up and registered, and what journals have published the articles and the Governmental authorisation; it must give details of the object of the company, its capital, the number of shares, and the conditions of subscription and payment; it must explain the exceptional advantages claimed by the founders of the company, and convoke the subscribers to a general meeting, which must take place within three months, at which the company shall be definitively constituted. The law formally forbids the founders of limited companies to reserve any sum or advantage whatever, in the form of shares, debentures, or founders’ shares, in exchange for concessions gratuitously granted by the Government. It concedes them a maximum of 10 per cent. of the capital, or 10 per cent. of the realised and liquid profits during a term which must not exceed ten years. The founders or administrators of any company are responsible, jointly and severally and without any limit, for all that has been done in the name of the company up to the time of its definitive constitution, without appeal against the latter, if it take place. If the company be finally constituted, the expenses and the consequences of all proceedings undertaken to that end by the founders will be charged against the exclusive account of these latter, nor will they have any resort or recourse to appeal against the subscribers. In the case of limited companies which are not legally Once a limited company is constituted, its administrators contract no common or personal responsibility for the engagements of the company, but they are responsible, personally and conjointly, to the company and to third parties, for the failure of execution or the improper employment of their mandate, and also for the violation of laws, regulations, and statutes. All companies are obliged to appoint at least once a year a censor chosen by the general meeting, who directly represents the shareholders, and who supervises the proper conduct of the company, and the accomplishment of the legal formalities which concern it. The Commercial Code contains many other enactments which tend to ensure the correct and legal constitution, as well as the proper conduct, of limited companies: but those we have cited will suffice to show that the law-maker has striven to use the utmost foresight, with the object of guaranteeing the interests and the capital confided to such companies. Despite this prudence and foresight, we are forced to recognise that the institution of such companies, which constitutes a powerful economic lever when they are correctly administered and established with a view to commercial and industrial utility, is at present discredited on account of the abuses committed in its name at the time of the great crisis of 1890. The institution of limited companies is so intimately connected with the financial disasters of that period that its history is to a certain extent the history of speculation, and it has suffered all the vicissitudes of speculation. In 1882, when Buenos Ayres was federalised and became the permanent capital of the Republic; when public tranquillity was confirmed, with the conviction that it would be long before it was disturbed; when the public expenditure The companies floated in 1882 and in the three following years were not very numerous, and their capital was insignificant as compared with the capital of those that followed: yet a very marked impulse towards progress was already perceptible, as much in numbers as in capital. Thus the sum of 10 million piastres, the amount of the nominal capital declared by the limited companies in 1882, rose to nearly 13 millions in 1885. But as the fever of speculation and affairs grew higher and ever higher, thanks to the aid of the credit too liberally granted by the banks, whether mortgage or money-lending banks or otherwise, and as at the same time all the paper thrown upon the market was immediately absorbed, to the great profit of those who issued it, the limited company followed the upward march, although this movement did not always correspond with the idea of progress. Thus we see with surprise that from 13 millions of piastres (paper) in 1885, the capital of the companies rises to 34 millions in 1886, to 95 millions in 1887, to 196 millions in 1888, and in 1889 to 378 millions; and in these two latter years the fever has reached the period of greatest danger. In 1890 the economic-financial crisis, long delayed by artificial means, burst over the country with terrible force, and a revolution broke out simultaneously. Under the weight of this double disaster the banking houses tottered on their foundations, soon to fall in ruin; credit, personal or secured, vanished absolutely; the paper currency, already depreciated, fell to a still lower value; industry and commerce were arrested in their progress, and the whirligig of speculation, which had so far gone merrily but giddily round, came to an abrupt standstill. As a natural reaction, the formation of companies, which speculation had stimulated to excess, These, rapidly denoted, are the salient lines of a sketch of the vicissitudes of speculation and the affairs of the capital during the last ten years; a picture which begins with the rosy tints of hope and illusion, and ends in the sombre colours of bankruptcy and ruin. The branches of trade and industry which are most largely represented by the limited company form another question of interest. It is certainly very difficult to discover the true social idea which these companies pursue at flotation, for behind pompous titles which seem to express a true national progress, such as the construction of harbours, the foundation of colonies, the building or management of railways or tramways, the opening up of new districts by means of canals, etc., there lurks, only too often, a mere scheme of speculation in shares or land. Judging, however, by the actual operations effected by these companies during the course of their existence, we can class them according to the object declared at the time of flotation, and at the same time give the statistics of their capital. The capital of all the companies floated since 1882 amounts to 950 millions of piastres (paper), or £83,600,000. Of this sum £14,320,000 was frankly intended to promote speculation in land; £13,200,000 was applied to railways (including the purchase of the railways of the Province of Buenos Ayres); £12,144,000 to insurance (a form of employing capital much in vogue at the time), and £12,056,000 to banking affairs, which in some cases were only the mask of speculations in stock and in land. To make our sketch complete we ought to give, instead of the nominal capital declared by these companies, the capital actually paid up; as we know that it is not every company that has at its disposal the sum mentioned in its articles, but that many have to be content with the payment of one or two instalments, while others cannot even find subscribers. Knowing these data, and being cognisant of the present condition of the companies, we should then be Unfortunately this investigation is impossible, for lack of information, and we can only state that millions of pounds of private fortunes were lost or stolen in the limited companies of the period. After the crisis of 1890 there was, as there was bound to be, a great mental reaction; especially in matters relating to the institution of the limited company; and the latter was so discredited that for several years not a penny could be obtained for investment in undertakings of the kind. But it was not possible that such an important element of economic progress should be entirely suppressed on account of the abuses committed in its name. Very slowly it came into favour once more; but thanks to the lessons of experience the new companies were concerned in the foundation of undertakings of genuine industrial and commercial value. Thus the companies floated in 1902, 1903, and 1904 represented a nominal capital of $803,979,000 paper (£70,950,352 actual value), and those founded from 1905 to 1908 (inclusive) had a nominal capital of £72,573,445, which may be analysed as follows:— The mere list of the above investments is enough to convince us that the day of merely speculative companies In the matter of company formation, as in the matter of operations of the Bourse, we see that the Argentine has re-entered the normal path of progress. Under these two manifestations, which reflect the economic activity of the country, the tide of affairs continues to increase, but the spirit of speculation no longer turns it aside, no longer undermines the organisation of the nation’s commerce. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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