The Argentine in the twentieth century

Front matter

RONTO

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JÊÊ

PART I. The Argentine from the Economic Standpoint

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I. The Geography of the Argentine ... ... 71

Climate — Soil — Geographical situation of the Argentine ; its boundaries, its area.

Climate of various districts. The prevailing winds. Nature of the soil ; its fertility ; adaptation to the culture of cereals and the raising of live-stock — Transformation of virgin into fertile land — The Pampa — The cultivable area — Conditions favourable to production — The plague of locusts.

Rivers — Their exceptionally favourable influence — The hydrographic system — Network of navigable river-ways : the Rio de la Plata, the Rio Parana — Conditions of navigability — Canals.

Ports — List of the principal ports, with a summary of their trade — Buenos Ayres : description of the port, its area, its capacity, tonnage ; its docks — The Central Produce Market — Importance of Buenos Ayres in comparison with the great ports of the world — The port of La Plata — The port of Rosario ; increase of its traffic ; construction of the new harbour conceded to a French company — Bahia Blanca ; its development — The decentralisation of traffic.

Rapid development of the railway system — Tabulation of its extension in each Province — Table showing the general results of its operation — List of the lines actually running.

List of railway companies, with the length of their roadways and their returns — The difficulty of obtaining these figures exactly — The tariffs of the railway companies — Form of concessions, and suppression of guarantees.

Comparisons' the railway system of the Argentine with the railway systems of other countries — Proportion of mileage to area and population.

CONTENTS

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il. — continued —

Extension of the system in the near future, owing to tiie numerous concessions granted — The mileage of these concessions— Insufficiency of plans and previous examination — Examination of the most important concessions for which the capital is already guaranteed — The dimensions which the railway system will attain after the concessions are realised — Programme of narrow-gauge construction ; its value.

Meeting of the Argentine with the Chilian railways across the range of the Andes — The aerial mining railway in the Province of La Rioja.

Railways in relation to agricultural development — Insufficiency of transport at the moment of harvest ; its causes and remedies — Necessity of a better organisation which shall respond to the stress of production.

III. Immigration and Colonisation ... ... ... 113

Immigration is a vital problem for the Argentine — Table of the population per Province and per Territory. Its sparsity — The exceptional situation of the Argentine as the objective of European emigration — The poor results hitherto obtained through default of colonisation — The faulty division of the public lands — History of immigration in relation to colonisation — The nationality of immigrants.

PART II. The Argentine as an Agricultural Country

Natural Conditions — The Constitution of Property — The three principal agricultural districts — The northern, central, and southern districts — The division of crops and their varieties.

The constitution of rural property — The division of property — The great estates, called " estancias," and their size.

The drawbacks of large properties — The necessity of a better subdivision of the public lands — The division into lots of large tracts of land, in order to encourage colonisation — The system of exploiting property.

Agricultural Production — The progress realised in last seventeen years — Comparative yield of the chief products, wheat, flax, and maize — Lucerne ; the importance of the crop and the excellent results obtained.

Increase of the area under seed — The total area cultivated in the agricultural years 1908-1909 — The great agricultural belts.

The Province of Buenos Ayres, its agricultural development and its crops — The Province of Santa Eé — The Province of C6rdoba — The Territory of the Central Pampa.

Agricultural machinery, its importation from abroad, and especially from the United States.

The Agricultural Yield — The yield of the soil in the different Provinces — Exceptional results in certain districts — Detailed calculation of the yield of a wheat farm — Two instances of great wealth realised by immigrants to the Argentine.

CONTENTS vii

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II. The Production of Wheat in the Argentine compared with the yleld op other exporting Countries ... ... ... ... 154

The world's wheat-harvest — Comparison between the statistics of consumption — The conditions of production in Russia and in the Argentine — Comparison with the United States, India and Canada — The prospects of the Argentine export trade in wheat.

The transformation of the old "estancia " — The principal stock-raising establishments ; description, extent, number of heads of cattle and favourite breeds — The great "estancias" of the South and Patagonia.

Approximate area of the soil devoted to cattle and sheep ; general estimate of the numbers of cattle and sheep — Results of the census of 1908. — The capital represented by Argentine stock-raising.

IV. The Value of the Soil ... ... ... 174

Difficulties in estimating this value — Principal factors of valuation— Examples taken from lucerne fields and the forests of quebracho — Despite adverse circumstances, and with a few exceptions, there has always been a tendency for the price of land to rise — Alienation of lands acquired by conquest from the Indians ; their enormous present value — The rise of value dates from 1902, and has hitherto continued without relapse — The causes of this rise, and its rational principles, according to an authoritative opinion.

Examples of valuation drawn from the sales of public lands — The rise of prices in the Provinces,!of Buenos Ayres, Cordoba, Santa Fé, and the Pampa, with figures indicating the prices realised in some large recent transactions.

V. Agricultural Industries ... ... ... 187

Sugar-Cane — Area of plantations — Statistics of production — Legislation affecting sugar — Consumption.

Vines — Area of vineyards planted —Production, consumption — Imperfect quality — Competition of foreign imports.

Tobacco — Area of plantations — Value of the product — Defective preparation.

The Mulberry — The culture of the silk-worm might be established in the Argentine, but at present exists only in an experimental condition.

Maté — Large consumption of this product. — Statistics of foreign importation — Districts suitable for its growth.

Cotton — Physical conditions proper to its growth — The first favourable results in the Argentine — Its introduction into Chaco — Lack of manual labour for the development of this industry.

Rubber — Existence of rubber plants in the Argentine — An unexploited source of wealth.

Arboriculture — On account of the diversity of the climate, all fruit-trees can be grown in the Argentine — The various fruits cultivated in different regions — Amelioration of the products. The trade in fruit — Its development possible on account of the inversion of seasons as compared with Europe — Refrigeration applied to the transport of fruit — Regions particularly suitable for fruit-growing.

PAGE viii CONTENTS

Part III

The Argentine from the Commercial and Industrial Point of View.

CHAP.

I. Foreign Trade ... ... ... 211

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 custom duties — Export duties ; their transitory characters — 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.

II. The Great Argentine Industries ... ... 235

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 5 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.

CONTENTS ix

CHAP.

II. — continued —

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.

III. Mines, Electrical and other Industries ... 250

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.

IV. Banks, the Bourse or Stock Exchange, and

Limited Companies ... ... ... 261

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 movable 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 x CONTENTS

IV. — continued —

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 factory 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.

PART IV. Argentine Finance

I. The Argentine Budget ... ... ... 295

The financial situation — Continual increase of national expenditure— Great and rapid progress since 1891 — Insufficiency of the means adopted to moderate this increase — The Budget Extraordinary and the Special Legislation Budget.

C-iuses of this increase of national expenditure — The increase of administrative requirements caused by an increasing population ; this is the most natural cause, and that most easily justified — Increase of the public debt — The intervention of the State as the promoter or guarantor of important public undertakings — Exaggerated military expenses.

The total sum of national, provincial, and municipal expenses. The proportion per inhabitant — Comparison with other foreign countries in the matter of administrative expenses.

The national revenue — The revenue as organised by the Constitution, and its analysis — Indirect taxation — The customs the chief source of revenue — Direct taxation ; its origin in the Argentine ; its justification ; its yield — Revenue of the industrial undertakings belonging to the State : railways, sewers, posts and telegraphs — The exploitation of the State lands.

Elasticity of the receipts, which follow the development and progress of the country — The accelerated increase of expenditure, and the resulting chronic deficit — Necessity of serious reforms.

Statistics of the public debt on the 1st January 1909 — History of the public debt — The first loans.

The financial crisis — Consolidated loans — The Romero arrangement— Loan for the redemption of guarantees — The internal public debt — The total of the Argentine public debt, and its annual cost in dividends and redemption — The proportion of financial charges as compared to other budgetary expenses.

The burden of the public debt is heavy, but not unduly heavy in relation to the productive power of the country — The necessity of restraining further issues and of converting old debts — The efforts of the Argentine to improve her credit.

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III. The Double Currency ... ... ... 330

The persistence of the double currency — The history of paper money — The origins of the premium on gold, and its almost continual increase — The year 1890 and the depreciation of the currency — The causes of this depreciation ; abuses in the issue of paper, caused by a bad financial and administrative policy.

Remedies suggested — Rosa's law fixing the value of paper money and establishing a Caisse de Conversion — Opposition to this law — Its beneficent effect upon agriculture and stock-raising, which had especial need of a stable medium of exchange — Reserve fund created with a view to converting paper money ; its vicissitudes in the past and its present constitution — The present monetary situation.

IV. The Caisse de Conversion ... ... ... 342

The principles on which the establishment of this institution is based — The necessity of a rapid redemption of fiduciary money — The doubtful success of this programme — New issues of notes — New attributes of the Caisse dating from 1899 — The exchange of paper for gold and vice versa — The development of this system of exchange — The authority attaching to the Caisse.

V. The Balance-sheet of the Argentine according

to the Inventory op Securities ... ... 349

The Inventory of Movable Property or Securities— The capital represented by movable properties, stocks, bonds, shares, etc., is the only kind of capital which lends itself to statistics — The great groups of movable properties : National Funds, Railway Shares, Insurance Companies, Foreign Banks, Mortgage Companies, and agricultural and industrial undertakings.

The nominal amount of capital represented by movable values — Table of the annual revenues of the same, and the sinking fund — Division of this revenue among the different countries having capital invested in the Argentine.

English capital — The importance of English investments in all branches of Argentine activity — The benefits of a reaction in favour of Argentine capital — French capital ; its small value compared to English capital — German capital and its rapid increase — Approximate valuation of that portion of revenue remaining in the Argentine, and of that which goes to the various nations having capital invested in the country.

The Balance-Sheet — The assets are principally composed of exportation values; the liabilities, by the value of imports — The revenue of investments exported to foreign countries, and the total of the sums expended by the Argentines abroad — Table giving a summarised Balance-sheet and the balance in favour of the Argentine — International exchanges and the importation of gold confirm this favourable situation — Argentine capital will presently play a more important part in the country as compared with foreign capital.

AUTHOR'S NOTE

AT the outset of this work our thanks are due to Senor J. Romero, ex-Minister of Finance, who has given us the benefit of his experience for this study of current Argentine affairs. Senor Romero is the author of the monetary law of 1881, and was responsible for the arrangement of the foreign Debt of 1892; he is to be numbered among those Ministers who have rendered, in the course of their financial administration, the greatest services to their country.

We must also pay tribute to the memory of two eminent gentlemen, no longer living, whose death the Argentine deplores ; who had desired, by aiding us with their advice, to be in some sort collaborators in this work, destined as it is to make popularly known to European readers the present prosperity of the Argentine Republic.

We must express our utmost gratitude first of all to Signor Pellegrini, that eminent man who assumed the Presidency of the Republic in a difficult moment of her history. We are greatly honoured in that we are able to associate his name with this book, by publishing, as an Introduction, a most interesting study of the formation of the Argentine Republic, which was one of the last writings of this eminent citizen.

And we must not forget the friendly and conscientious assistance rendered us so willingly by one of. the most notable figures in the financial world of the Republic : M. Ernest Tornquist, whose death was also most truly a national bereavement. M. Tornquist exercised a considerxiv THE ARGENTINE IN THE 20th CENTURY

able influence over the trend of affairs, and he most notably contributed to the work of economic expansion, and financial and monetary reorganisation, of which the Argentine is to-day feeling the beneficial effects. We have profited, in writing this book, by his incontestable competence, and respectfully salute the memory of this willing friend and collaborator.

ut if

Author's Preface To The Third

EDITION

THREE years have elapsed since the appearance of the first edition of this book, and we have to-day the satisfaction of being able to state that the development of the country has fully responded to our optimistic forecast. Short as such a period is in the life of a people, it has been extraordinarily full; the ground covered is so considerable that it is of a larger Argentine that we now have to revise the picture, while recording its pacific victories in the economic field.

No country in the world has ever in so short a time realised so rapid a progress, in respect of the produce of the soil. In 1904-1905 the area under culture was as yet no more than 22J millions of acres, while to-day, in the agricultural year of 1908-9, it attains the figure of 35 millions of acres, representing an increase of nearly 75 per cent. In the same period the value of cereals, which was about £1,600,000 in 1904-5, has also increased in very large proportion.

Taking as basis the figures furnished by the Division of Rural Economy and Statistics of the Ministry of Agriculture, we may estimate that the harvest of 1908-9 will give a yield of, 13,811,000 (metric) tons,* which may be divided as follows: Wheat 5,760,000 tons, flax 1,228,000, oats 823,000, and maize 6,000,000 tons. The value of the harvest, according to the prices ruling in 1908, will amount to 1045 millions of paper piastres, or £92,000,000.

To appreciate these figures at their true value, one must remember that twenty-five years ago the Argentine was still importing foreign flour to make her bread, while to-day the

* Reducing the above quantities to bushels of 56 lbs. weight, the cereal harvest ib estimated at : wheat, 230,000,000 bushels; oats, 33,000,000; maize, ^40,000,000. The metric ton is 34-5 lbs. lighter than the English.

xv xvi THE ARGENTINE IN THE 20th CENTURY

production of grain represents nearly a ton per head per inhabitant.

It is the same with maize : twenty years ago it was hardly grown, and to-day the harvest amounts to 6 millions of tons ; furnished almost entirely by two provinces — those of Buenos Ayres and Santa Fé.

As for stock-raising, we cannot make a comparison with any very recent statistics — since the last available date back to 1895 — but we may say that the general census which has just been undertaken, under the direction of Senor Alberto B. Martinez, has revealed a wealth whose magnitude surpasses all conception. To-day the Argentine counts 29,116,625 horned cattle, 67,211,754 sheep, 7,531,376 horses, 750,125 mules and asses, and 3,945,086 goats ; which is equivalent, at the present time, to a capital of 1481 millions of paper piastres, or £130,000,000. By referring to the figures for 1895, which give us 21,701,526 horned cattle and 4,446,859 horses, we may judge of the immense progress which the Argentine has realised in a few years, thanks to the transformation of 3f millions of acres of soil into magnificent pastures of lucerne.

On the other hand we must, it is true, note a decrease of 7,167,808 head of sheep, which are gradually falling back before the advance of agriculture and the increasing numbers of cattle. This harmless animal contents itself with a poorer soil, and does not fear the intemperance of the seasons ; also sheep-raising is now giving place, in our central provinces, to other more remunerative industries, and the sheep are taking refuge in great quantities in the southern regions.*

If we consider these facts with a view to noting the precise direction in which the Argentine is to-day evolving, we shall observe a marked tendency towards the extension of agriculture proper, and a check in the progress of stock-raising, which appears — at least for the moment — to be developing more slowly than of old.

This characteristic change is perceptible each year in the

* Patagonia, and even Tierra del Fuego, with its terrible winds and drenching rain, is now being occupied by the sheep-rancher, to the destruction of the guanaco and the natives ; frost being rare save on the ranges, and the pasture luxurious. — [Trans.]

AUTHOR'S PREFACE xvii

statistics of foreign trade. The exportation of agricultural products amounted, for the year 1907, to the value of 164 millions of piastres (gold), or £32,800,000 as against £32,400,000 and £34,000,000 for the two preceding years. As for the products of stock-raising, the value in 1907 amounted only to £24,800,000, while in the two preceding years it was £24,800,000 and £28,200,000 ; and ten years ago it exceeded by more than £10,000,000 the value of the agricultural exports.

Many causes are contributing to this transformation of a pastoral into an agricultural country ; their action is progressive, and they are profoundly modifying the aspect of the land, by gradually substituting, for the monotonous horizons of the ranchero's prairies, the variety of cultured fields.

While the prices of cereals have always attained a remunerative figure, those of the bestial, on the contrary, have now and then suffered sensible depression ; and, what is still more serious, the ranching industries have also suffered, as they did in 1908, by a lack of demand for hides and wool, and simultaneously for an insufficient outlet for meats.

The dried-meat (saladeros) industry, which used to absorb annually nearly two million beasts, has by now been almost entirely removed in the direction of Uruguay, or the Brazilian province of Rio Grande do Sul, and is little more than a memory ; as this primitive and rudimentary method of preparation had perforce to give way before the more hygienic and progressive chilled and frozen meat trade. The chilled beef industry, however, upon which such hopes were founded, has not of late years male any conquest of new markets, England being almost the Republic's only customer.

As for the exportation of cattle on the hoof, it is greatly impeded in Europe by prohibitive measures, which diplomacy, by means of commercial treaties, is endeavouring to remove. Yet were the desired advantages obtained, the result would be doubtful on account of the considerable rise in the price of cattle and the high freights which are charged for the transport of living stock. It therefore results that this particular species of exploitation is at an obvious disadvantage in the face of the refrigerating trade.

xviii THE ARGENTINE IN THE 20th CENTURY

If the raising of stock and its dependent industries have not, in these last few years, realised a progress comparable to that of agriculture, we must by no means conclude that this department of production has ceased to be an element of national prosperity. Quite on the contrary : thanks to the efforts made to better affairs by happy selections in the breed of animals, the value of live stock has increased in surprising proportions, and the Argentine still retains its rank as second to the United States as a stock-raising country.

What we have endeavoured to emphasise, as a new manifestation of the national activity during the last few years, is that the development of the country has been in especial along agricultural lines ; an incontestable proof of progress, and an index of a higher degree of civilisation.

Agriculture, as compared to stock-raising, is, from the economical point of view, a source of wealth having quite a different bearing upon the general prosperity and welfare of a nation. It is the fairy which little by little transforms the vast plains of the Argentine pampas into a more animated landscape, peopled by numerous homesteads, foci of colonisation, which then develop into villages, which in a score of years may perhaps be important cities. Agriculture summons the railroad, stimulates emigration, promotes the division of the soil, creates the small proprietor; it influences even the manners and morals of the inhabitants, for it demands more labour, more intelligence than ranching ; nimbler wits, more method, greater foresight.

The comparison between the two great industries of the Argentine is summed up in the following fact : a property comprising 25,000 acres of pasture can be put into working order and managed by a staff of ten to twelve men. For an estate of 1500 acres under culture, one may estimate that forty to fifty persons, grouped in families, may easily live upon the soil and prosper. We may perceive by this the great superiority of agriculture from the point of view of the general interest of the country. It demands and supports a denser population ; it permits the grouping of this population in villages and cities, it creates, in proportion, with a smaller capital, a great wealth of produce ; in short, it contributes on

AUTHOR'S PREFACE xix

the one hand towards increasing the wealth of the country by participating largely in its exports, and on the other it increases its power of consumption, by absorbing a greater number of imported products.

Thus the evolution of the Argentine towards agriculture constitutes a real progress, and if the country continues to follow the same path, its development will assuredly not be arrested by lack of soil. The 35 to 37 millions of acres already reclaimed, and at present under culture, represent at the most a tenth of the total area of cultivable land, which is estimated roughly at 375 millions of acres, of which at least 125 millions are perfectly adapted to the culture of cereals. The four Provinces of Buenos Ayres, Santa Fé, Cordoba, Entre Rios, and the Territory of Pampa Central alone contain some 32J millions of land under the plough, while there remains about 170 millions of acres of land which is just as fertile, and which without manuring or preparation would yield a splendid crop from the first year of tilth.

This transformation into an agricultural country has already borne fruit. The figures relating to external commerce, compared with the world's statistics of cereal production, show the present position of the Argentine among the great exporting nations.

It is the Argentine which to-day, after the United States, occupies the second rank in the matter of cereal exports ; and this is a significant event in the economic history of the nations, to which the attention of Europe should be directed. At the present moment the Argentine, with her 4 million tons of corn available for exportation, is not as yet mistress of the grain markets, but she represents, to those countries whose production is insufficient, a notable reserve, which has become indispensable since the United States, Canada, and Russia seem to have reached their limit of exportation.