The Argentine as a Market Part 1

The Argentine as a Market.

by N. L. Watson.

THE GARTSIDE REPORTS.

The Gartside Reports are the reports made by the Gartside Scholars at the University of Manchester. The Gartside Scholarships were established in 1902 for a limited period, by John Henry Gartside, Esq., of Manchester. They are tenable for two years and about three are awarded each year. They are open to males of British nationality who at the date of the election shall be over the age of eighteen years and under the age of twenty-three years.

Every scholar must enter the University of Manchester for one Session for a course of study approved by the electors. The remainder of the time covered by the Scholarship must be devoted to the examination of subjects bearing upon Commerce or Industry in Germany or Switzerland, or in the United States of America, or partly in one of the above-mentioned countries and partly in others, but the electors may on special grounds allow part of this period of the tenure of the Scholarship to be spent in study and travel in some other country or countries. It is intended that each scholar shall select some industry, or part of an industry, or some business, for examination, and investigate this comparatively in the United Kingdom and abroad. The first year's work at the University of Manchester is designed to prepare the student for this investigation, and it partly takes the form of directed study, from publications and by direct investigation, of English conditions with regard to the industrial or commercial subjects upon which research will be made abroad in the second year of the scholarship. Finally, each scholar must present a report, which will as a rule be published.

The value of a Scholarship is about 80 a year for the time spent in England, 150 a year for time spent on the Continent of Europe, and about 250 a year for time spent in America.

CHAPTER I.

THE ECONOMIC BASIS OF THE ARGENTINE.

The first thing that strikes the new arrival in the Argentine, and the last thing that he is likely to forget when he leaves the country, is the extraordinary inflation of prices. With the exception of meat, and perhaps bread, there is no article of common consumption which does not cost considerably more than in England, every allowance being made for freight and tariff charges. The reason for this excess is doubtless to be found in the concentration of trade in the capital. All imports, for reasons that will be dealt with later, pa.s.s through the hands of the large houses in Buenos Aires, who act as sole agents for the whole of the Republic north of the Rio Negro. [While, owing to the precarious nature of all business, dependent entirely on the grain and cattle yield, much higher prices are charged in fat years than would be justified if these times of prosperity were regarded as permanent.]

Because of this concentration of business in the capital, and in the centre of the town in particular, rents have risen to an immense extent, greatly increasing all establishment charges, and in turn the price of commodities sold--a cause which acts again of course in retail trade and neutralises the freight charges to outlying districts. But the essential fact in Argentine Economics, and one which seems more than obvious, but apparently escapes the comprehension of Argentine legislators, is that the country is naturally, and must remain for some considerable time, a producer of raw material exclusively. The country is still considerably under-populated for the development of its natural resources, while only a small portion of the settled area is yet producing even half the yield of which it is immediately capable. Immigration of a certain cla.s.s--capable agriculturalists with some capital--is still required.

But with a strange perversity politicians have persistently advocated a high protective tariff for the purpose of fostering industrial development. The result has been that certain industries have cropped up under this system, which are quite incapable of independent existence, and, while satisfying neither the employers nor their men, const.i.tute a very heavy drain on the national purse. The chief objection, however, to the policy is that it invites a cla.s.s of immigrant who is really not required in the country and who has taken to settling in the capital instead of scattering into the camp.

The immigrant required is the "colonist," to whom the country is already beginning to owe much of its prosperity. There are two distinct types of colonist--the one who buys his land on a permanent colony, and builds a decent house, and the temporary tenant whose economic principle is to break the soil of new land, and moves to a new district at the end of his term. The latter owes his origin to the cultivation of "alfalfa,"

the wonderful clove-like plant that will grow on sand, and requires no rain, but thrives on the surface water which abounds in the country's flat, low-lying plains. Alfalfa will not grow in hard unbroken ground, and where the land is such, cereal cultivation is necessary for three years to reduce it to a fit condition. This work requires labour which is not available among the gauchos, the hors.e.m.e.n who act as hands on the estancias, and the estanciero himself probably does not possess the knowledge requisite for the cultivation of grain. A contract is therefore made with colonists, usually Piedmontese or Basques, to break the soil and grow cereals for three, or more usually five, years, either at a fixed rent or for a percentage of the crop, the stipulation being that with the last year's seed alfalfa is sown as well. When the last crop has been cut, the latter grows through the stubble. The growth of this plant is such that as alfalfa is more cultivated, the stock-bearing capacities of the country will easily be trebled.

The main supports of the country are, therefore, cereals and cattle, the latter being undoubtedly the more profitable investment, but requiring a much larger capital. By Argentine, as by French, law property at death is compulsorily divided, and this tends to split up the now immense tracts of land occupied by individuals. Whatever the social advantages of such a system may be, it is not conducive to the most economic working, nor yet to the breeding of the finest strains of stock, for which a large capital is required. A form of evasion, however, has been found in the formation of limited liability companies, often private, to run big estancias. These have everything to recommend them from the economic point of view. A capable manager is put in charge of the work on the spot, and, as capital is usually forthcoming, the estancias are run in such a way as to yield the greatest possible return. They are usually well-maintained, up-to-date in management and fittings, and supplied with good home-bred strains.

There are, however, other natural sources of wealth in the Argentine; notably, the forests of hard-woods (of the acacia order) which abound in the Chaco, in Corrientes and Entre Rios, and are also found in the province of Cordoba and elsewhere; the sugar industry in the north-west (of which more will be said under "The Tariffs"); the hitherto undeveloped fruit cultivation in all parts of the country (this in the sub-tropical and central provinces would be especially liable to suffer from the depredations of locusts); perhaps, too, cotton growing in the Chaco, where, however, the supply of labour is much questioned, and some pests peculiar to the cotton-bole are reported as existing; and, lastly, the minerals, as yet wholly undeveloped. Although these are undoubtedly much more scarce than in Bolivia and Chile, the absence of an impartial geological survey has rendered the flotation of bogus companies easy, and practically prevented any genuine development, in spite of their greater accessibility than in the former country. The recent boom and collapse in gold ventures was the result of stock exchange transactions, probably fraudulent, as, with the exception of the sea-bed to the very south of the country (where it cannot be recovered), gold is probably one of the few minerals which does not exist to a workable extent.

A curious feature in the Argentine is the absence of navigable rivers.

With the exception of the treacherous Parana and the Uruguay, enclosing the provinces of Entre Rios and Corrientes, there is not a single waterway, natural or artificial. The result of this has been an enormous network of railways spreading over the central provinces with isolated offshoots north and west. The consequent great influx of capital would naturally have encouraged a large import trade; but the prohibitive tariff has succeeded in retaining the money in the country, while the revenue derived has, almost without exception, been uneconomically employed. The result is that, apart from an occasional monopoly that has succeeded, the only large gainers from this policy have been the town property holders.

A large part, however, of the province of Buenos Aires is liable to periodic inundation, and, to obviate this, an extensive system of drainage has been planned, a work of great difficulty owing to the small difference of alt.i.tude between the land and the sea. Some ca.n.a.ls, however, are in course of construction of which advantage might possibly be taken, if they were made of sufficient depth, for local transport.

If this were done, a large and important part of the country would be provided with a cheaper alternative to the railway. In a volume descriptive of the Republic (published, in English, by the Department of Agriculture) this possibility is foreshadowed, stress being laid on the slight fall from the Andes to the coast, and a scheme, chimerical on the face of it, of a system of trans-continental ca.n.a.ls is vaguely outlined. But, being so wildly improbable, it seems to have no existence, even problematical, outside the pages of that advertis.e.m.e.nt.

CHAPTER II.

THE RAILWAYS.

The prosperity of the Argentine Republic would undoubtedly have been impossible without the enormous investments made by British financial houses in its railway development. For many years--in fact, until quite recently--the influx of capital was welcomed and encouraged. Concessions were lavished on anyone ready to take them up, and, far from irksome conditions being imposed, valuable privileges were granted to the _concessionnaires_. Moreover, the national and provincial governments were only too eager to get rid of such lines as they themselves owned, and invariably worked at a loss, and to transfer them to European concerns. That the railways were financed from motives of promiscuous philanthropy is improbable, but that the English financiers were almost alone in their confidence in the future of the country is not only true, but it is a truth which the most respected and able Argentines fully realise. There exists, however, at the present moment a very powerful feeling of opposition to the "Empresas," as they are called--the "concerns" that practically control the country--and (so say their opponents) exploit it entirely for their own ends. Apart from the fact that a railway, in order to pay, must humour its traffic, and would be attempting suicide were it really guilty of the exorbitant overcharging and mismanagement of which some lines are accused, there is little or no cause for these complaints. In a country where a mortgage on land pays 8 per cent. interest, and where other investments are expected to give a proportionate return, the 7 per cent. of a railway dividend is far from being excessive, especially when it is remembered that locusts and drought may at any time absorb practically the whole year's profits of a whole system.

The motive of this hostile spirit, or what may be behind it, is difficult to discover. That jealousy of foreign--especially English--influence exists in a certain section of the people is undoubted. But, considering that the true Argentine population--supposing that such a thing exists or could be defined--is very small compared with the foreign element, and that of itself it is absolutely incapable of developing the country, some other reason must exist to justify the position. But, discreditable as such jealousy is to the people concerned, it is without doubt a very powerful factor.

Fortunately, these opinions are not shared by the Government, nor, probably by the people generally, who, although always complaining of high freights, delay in transport, and all the other grievances for which every railway under the sun is blamed, seem to dread the alternative of Government control. The official members of the Government are on the whole considered to be sincere, industrious men, with a genuine desire to do their best. But Government management invariably means peculation, among subordinates especially, and the introduction of petty politics into business. It is from this element that the opposition springs. Concessions requested by capitalists, permission for extensions required by existing concerns, although of undoubted advantage to the country and approved by Government, are blocked in Congress. The tone and quality of Congress may be judged from the fact that the only measure of any importance pa.s.sed during a whole session was that authorising an increase in the salaries of the deputies. For weeks on end no meeting can be held, be the measures to be discussed ever so important, because, from carelessness or deliberate intention, sufficient members do not appear to form a quorum. Several deputies, indeed, never sit from the beginning of the session to the end. Thus, even if there is no opposition to a railway bill, it often happens that it is as effectually blocked by the sheer slackness of individual congressmen.

That the railways themselves are not blameless in every respect stands to reason. And, although this is almost certainly not the origin of the present obstruction to their demands, they would command a much greater share of sympathy--after all, a considerable a.s.set--if they would realise their own faults.

Having had, and still having, a practical monopoly in their own districts, the various companies have adopted a somewhat despotic att.i.tude towards new and outside enterprise, and, sometimes a disregard for the requirements of their customers, as well as for the true needs of the country. Railway affairs centre in River Plate House, and any attempt on the part of outsiders to establish themselves in the Argentine is viewed with great suspicion by the financial ring that rules there. Concessions put forward have been blocked times out of number by the influence which the ring could exert in Congress. If by any chance--and this has been more frequent of late--the concessions have been secured in spite of its opposition, every obstacle is placed in the way of raising the requisite capital in London--opposition which the ring is in a peculiar position to make effective. Only recently a very sound project was floated with the greatest difficulty, even the debentures failing to realise more than 90 per cent., because one of the existing lines considered the proposal a trespa.s.s on its especial preserves. Moreover, there seems to be every reason to antic.i.p.ate the rapid failure of the new line owing to the rate war which the existing one will undoubtedly declare.

This apparent disregard of the needs or desires of their customers is, perhaps, attributable partly to the unreasonable nature of the demand, partly to an occasional pursuit of some pet theory of management, but, in all probability, more largely to the division and conflict of authority. The management is separated from its central board, not only by the Atlantic, but by the local board sitting in Buenos Aires. And, although on the home board there are men whose knowledge of the country was intimate some years previously, their aspect of the working of a railway naturally undergoes considerable modification upon their transference from the executive to the directorate; while the local board, who are often appointed merely to secure local support and influence, are rather apt to exercise their power in a vexatious and capricious manner--more to show their authority than to further the interests of the railway. As regards the actual working of the lines, in some cases complaints are made that too much confidence is placed in the long-haul, long-train theory. There are only a few lines on which there is any opportunity for or advantage in the very long train, the agricultural districts centring round the various ports. Owing to the lack of warehouse accommodation along the line, grain has often to be loaded into the trains straight from the growers' carts, thus causing endless delay when trains of immense length stand to be filled. It often happens, too, if the harvest proves at all good, that, in spite of Government orders, the rolling stock is quite inadequate for the traffic, the result being that with the acc.u.mulation of work in the docks, a crop is sometimes kept locally for a whole year before it can be removed to a port.

Considerable inconvenience is caused, and will continue to be caused for some time, by the congestion at the port of Buenos Aires. Control there has been exercised by half a dozen different boards with no central authority. The wharf.a.ge and warehouse accommodation are quite inadequate, even if the great savings possible in time and s.p.a.ce were realised. And, lastly, although there is already sufficient confusion with a one gauge system, there is an immediate prospect of the introduction of two other gauges. The existing lines there are 5 ft.

6 in. But preparations are already being made for the continuation of the Central Cordoba (metre gauge) into the port, and possibly of the Entre Rios (4 ft. 8 in.) extension as well.

The solution to the difficulty is at present very doubtful. Increased accommodation to a limited extent is quite possible in Buenos Aires itself, and with an immense outlay of capital an entirely new set of docks might be constructed there--though this is highly improbable. The more reasonable course would undoubtedly be to construct new ports or develop existing ones elsewhere, a course that is already being adopted by the Southern at Bahia Blanca, and the Entre Rios line at Ibicuy.

There is also a new project floated for the construction of a large port in the Bay of Samborombon (also on the Southern system), but this scheme does not meet with much approval in the country, while, for some reason, the port of La Plata has never succeeded, in spite of every encouragement. At some time a port will have to be constructed at Mar del Plata, where the only rock foundation on the whole coast is to be found. Mar del Plata is the Argentine Brighton, and any commercial development there is certain of an unfavourable reception. But as sand and mud are the only base from Santa Fe to Bahia Blanca--in some cases there being not even firm sand--and as dredging is exceptionally expensive, no other solution seems reasonable. On the Uruguay River, and on the Eastern Bank of the Parana, in the South of Entre Rios there is deep water. But as this only affects the lines of that province and of Corrientes it has no bearing on the general question of Argentine transport.

As a last word, it must be remembered that the present boom in the country is extremely recent. Argentine has developed in an extraordinarily rapid manner, and some confusion is excusable. That the railway and the country will realise and overcome their difficulties there can be little doubt. And in any case the natural wealth of the country is so great that in the end it will force a way out, in spite of obstacles.

Statistics relating to railways will be found in Chapter VI.

CHAPTER III.

INDUSTRIES AND THE LABOUR QUESTION.

The labour question in the Argentine Republic is one of great difficulty. There is really no native labour, certainly none for industrial purposes. The Gaucho,[1] now degenerated into the peon,[2]

is only available for stock-raising. Agriculture is carried on almost entirely by colonists of various nationalities, and industries by Italian immigrants only. There is one exception, the sugar industry of the north. There conditions are so very different from those in the centre and the south, that it must be treated as almost a separate country. While the north-east--the Chaco district--is still in so uncivilised a state that its possibilities are very hazy. The Quebracho trade yields very large returns with Indian labour, but Indian labour is an unknown quant.i.ty. Uncivilized Indians still cause considerable trouble there, and opinions differ considerably as to the possibility of employing them successfully for cotton growing and other new enterprises.

[1] The descendents of the original Spanish settlers, often showing marked traces of Indian blood.

[2] Peon is the name applied to all labourers.

The more important question is that relating to labour for factories, workshops, and railways in the central part of the Republic, and in the towns themselves. That a country situated so far from the great centres of production should continue to import nearly all its necessities as well as luxuries seems incredible. Yet the tendency is certainly more in the direction of increased importation than of home manufacture. There is a tariff of exceptional severity on every conceivable article, but even this fails to develop industries in the country. Breweries, flour mills and repairing shops seem to be the only successful growths, with a few isolated instances, such as canvas shoe factories and similar works.

Even the production of such essentially native goods as "ponchos"[3] has lapsed in favour of German and Italian wares. While the manufacture of matches--in the hands of a powerful monopoly, bolstered up by privileges and an exorbitant duty--was so seriously jeopardised by a strike last year, that the threat was made--whether seriously or not, cannot be said--of closing down the works and importing immediately from England and Sweden. (It is satisfactory to note in this connection that an English firm promptly stepped forward and made an offer to the Government that if a reduction was made in the duty, it would undertake to place on the market, within little more than a month, some millions of boxes of matches).

[3] "Ponchos" are the peculiar rugs with a central slit to admit the head when the "poncho" is used as a cloak. They are used universally in the country.

Even those industries, however, that flourish, do so in spite of their labour. They are all, it will be observed, concerned with the production of goods that are either expensive or difficult to transport, and only the direst necessity could prevent their home manufacture. In the course of last year there were two general strikes (in Buenos Aires and Rosario) besides numerous small ones. Dock labourers seem to be continually in partial ferment, and even the most generous treatment does not prevent railway employees from stopping work occasionally. The causes of this instability are fairly apparent, though the same cannot be said of the remedy.

For various reasons industrial labour is entirely supplied by Italian immigrants, mostly Neapolitans. The other nationalities who come into the country engage for the most part in agricultural work, either as colonists, buying their land, or as tenant farmers on short leases.

Skilled English and other European labour is also employed in factories, but only for the higher grades of work, and in positions of some responsibility. Thus the available labour is recruited from the lower cla.s.s of immigrants, and from a race not remarkable for stability.

In the second place, living in the capital is extremely dear, not least being the price of house accommodation. Although an Italian can satisfy his requirements at a much lower rate than an Englishman could his, yet even he can scarcely make both ends meet, while the excess of expenditure over receipts is particularly galling in the land of promise. Recently, too, additional grievances have been introduced by the wholesale eviction of tenants owing to the purchase by syndicates of whole blocks of buildings, and the subsequent re-letting of them at immensely increased prices. In the first six months of last year there were more than eleven thousand pet.i.tions for evictions before the justices. With a discontented and excitable working population, therefore, as a field for their activities it is not surprising that the agitators, of whom there is no lack, should be so successful.

Attempts are being made by various large concerns to supply reasonable accommodation for their employees, and more than one railway has been particularly liberal in this respect. But it was only a short time ago that a strike of very serious dimensions was declared in the workshops of one of the most generous, on the most ridiculous pretext.

The great danger in all labour troubles in the Argentine lies in the fact that they are apt to become general and paralyse trade. It is usually impossible to secure "blacklegs," a circ.u.mstance which the workmen fully realise. Moreover, owing to the peculiar economic conditions of the country, a strike on the part of the workmen in one industry means that all the workmen in that industry stop work; and, as trade is usually in a state of congestion, the difficulties created are enormous. A dock strike in Buenos Aires is doubly serious, because the port is already overcrowded, and there is no alternative port suitable.

A match strike, with the present tariff, causes a match famine. A railway strike is sure to break out only when the year's harvest must be negotiated. And should any single strike show signs of missing fire, in all probability the result is a sympathetic strike on the part of all workmen, including cab-drivers and bakers.