The Argentine as a Market Part 2

1857-60 20,000 1861-70 159,570 1871-80 260,613 1881-90 846,568 1891-1900 648,326 1901-1905 536,030 --------- 2,461,107

Nationalities.

Italians 1,488,084 Spaniards 507,853 French 176,670 British 37,537 Austrians 42,983 Germans 33,686 Swiss 26,690 Belgians 19,990 Others 127,614 --------- 2,461,107

Arrivals in 1905.

Italians 88,950 Spaniards 53,029 French 3,475 British 1,368 Austrians 2,793 Germans 1,836 Swiss 576 Belgians 263 Other nationalities 24,827 ------- 177,117

The development of Argentine Railways is shown in following table[4]:--

Extent of Capital Pa.s.sengers Freight Receipts Expenditure Lines in $1,000,000 No. in 1,000 $1,000 $1,000 Years kilometres Gold thousands tons Gold Gold

1857 10 3 56 2 19 12 1865 240 53 747 71 563 438 1870 732 188 1,948 274 2,502 1,356 1875 1,956 409 2,597 660 5,178 3,009 1880 2,516 629 2,751 772 6,560 3,072 1885 4,502 1217 5,587 3,050 14,298 8,616 1890 9,432 3211 10,069 5,420 26,049 17,585 1895 14,116 4853 14,573 9,650 26,394 13,846 1900 16,563 5313 18,296 12,659 41,401 23,732 1901 16,907 5383 19,689 13,988 43,866 24,128 1902 17,677 5609 19,815 14,030 43,272 22,975 1903 18,404 5730 21,025 17,024 53,569 27,766 1904 19,428 5885 23,312 20,123 62,558 33,216 1905[5] 19,793 [6]6263 26,634 22,283 71,341 39,155

[4] Direccion General de Vias de Communicacion.

[5] Approximate figures.

[6] 125,274,000 approximately.

The relative importance of the various lines with their nationalities is as follows:--

Length of line Special 1904. (Kilometres) Engines Coaches Vans Waggons Waggons _State-owned Railways:_-- Andine (5ft. 6in.) 339 18 16 16 504 5 Central Northern (Metre) 1,122 85 51 43 1,418 74 North Argentine (Metre) 563 15 26 13 250 27 ---------------------------------------- TOTAL 2,024 118 93 72 2,172 106

Southern (5ft. 6ins.) 3,980 290 344 261 9,533 426 Buenos Aires Western 1,197 129 136 148 3,711 -- B. A. Rosario 1,997 146 188 154 4,982 111 Central Argentine 1,785 162 208 109 5,199 76 B. A. Pacific 1,261 100 80 60 2,523 15 Great Western (5ft. 6ins.) 714 90 54 37 1,258 56 Bahia Blanca and N.W.

(5ft. 6ins.) 385 20 8 8 286 3 East Argent. (4ft. 8ins.) 161 14 21 8 279 5 N.E. Argent. 662 36 42 16 340 7 Entre Rios 758 30 38 19 492 -- Prov. Santa Fe (French) (Metre) 1,392 81 112 47 1,852 48 Centr. Cordoba (N.) 885 80 76 56 1,606 74 " " (E.) 210 13 20 12 654 -- Cordoba and Rosario 289 29 55 32 654 21 N.W. Argentine 196 20 14 8 520 2 Cordoba and N.W. 153 9 12 4 86 -- Transandine 175 14 10 10 130 8 Central Chubut 70 2 6 3 57 -- ----------------------------------------- TOTAL 16,270 1,265 1,424 998 34,162 852

In "The Review of the River Plate" the growth of British-owned Railways is given as follows:--

Kilometres.

1864 25 1874 860 1884 1,748 1894 10,785 1904 15,315

For the total kilometrage of the year 1904 the same authority gives 18,412 kilometres, a considerable discrepancy from the official figures.

Of the two authorities the government statistics are generally regarded as the less trustworthy. But whatever the true figures may be, the proportion owned by British interests will not be lessened by the total of the more optimistic estimate, which is based largely on unrealised concessions. And in any case, the economic point to be emphasised is not weakened, namely the overwhelming preponderance of British influence in this direction. Moreover, not only has this influence been increasing relatively to that of compet.i.tors, but, absolutely, the increase is exceedingly great.

We have, then, in this department of industry a market for goods of proportions that quite exceed those of any other in the country, the greatest impetus to its development being given by the admission into the country of all railway material duty-free. In any estimate therefore, of the true position of any country's trade, this privileged demand must be considered. And in estimating future conditions, the tendency noted in the chapter on railways must be borne in mind, viz., the tendency to discourage the continuance of the quasi-monopoly of one country.

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

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

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

The question of the nature of demand cannot be over-emphasised. It is owing to neglect of this that the greatest mistakes are made both in practice and in argument. Up to 1880 the nation's demands were those of any immature nation. Subsequently to that date the country began to boom and the whole economic condition was altered. Whereas previous to that date the market was for articles for private use, whether domestic, agricultural, or personal, subsequent to the national awakening private needs became insignificant compared with those of public bodies. Not only was the construction of railways commenced in earnest but national and munic.i.p.al contracts were issued broadcast. Harbours, sewage and water-works, lighting, tramways, and every other form of public enterprise, were initiated from that time onward. But, whereas the earlier works were largely executed by English firms, of recent years foreign (in particular Belgian) contractors have secured the concessions. The methods employed by the latter, however, have been such as rather to disgust the country with its experiment. The case which has been causing intense excitement is that of the Rosario Port-works.

The French _concessionnaires_ made a bad job there of a difficult undertaking. That, however, was little compared with the terms which by some means they managed to insert into their concession, terms by virtue of which they were enabled to make the most extraordinary exactions from everyone who entered the port, regardless of the fact that many of the wharves were the property of other concerns. On the other hand, the English firm that constructed the Rosario sewage system, and constructed it with the greatest thoroughness, were treated to a series of vexatious interferences culminating in a refusal on the part of the munic.i.p.ality to pay for the work.

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

Recently, since the investments have begun to give returns, the balance of trade has turned, and, whereas in 1890 the sale of exports (in dollars gold) was to that of imports as 10082 millions to 14224, in 1905 the former had risen to 32284 millions, and the latter only to 20515. Even then it is hardly credible that exported interest should have equalled, much less exceeded, the new capital invested, and the alternative of gold shipments must be admitted.

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

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

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

English engineers seem to prefer a solid, well-finished engine, which can stand accidents, and innumerable repairs. The Baldwin engine is cheap, but apparently of indifferent finish, and is built on a rigid frame. The slightest accident to this incapacitates the whole machine, and, in any case, the locomotive is built for hard use over a short period, with subsequent sc.r.a.pping. Neither the traffic nor the capital of Argentine railways justify such a course. The actual figures of imports of locomotives for 1905 are--United Kingdom 91, U.S.A. 16, Belgium 9, Germany 46--increases of 27, 8, 7, and 22 respectively.

English engines are the most expensive. The German engines are largely those employed in construction. In railway material (not specified) although England exported to the value of $384,342 gold the increase over 1904 was $703,548 gold, yet America with an export of only $470,527, shows an increase of $411,876. Thus even in the privileged domain of the railway market, there are signs of very keen compet.i.tion appearing. This may not prove effective for some time, the connection between the home contractors and the London board being intimate, and there is a danger of its possibility being overlooked.

Another important demand is that for tramway material. In this it is satisfactory to see that there is a favourable tendency in favour of English goods. Previously, no doubt, the greater knowledge and experience in the States enabled them to supply cars and material more readily than in England, and the possession by Germany of the Buenos Aires electric works favoured its exportation of the latter. But recently some Preston cars have been put on the road which give the greatest satisfaction. The increase in electric traction in England ought to furnish the experience necessary for the successful development of this branch of trade.

In Agricultural machinery the market is absolutely open, and where there is any opportunity, English firms have undoubtedly succeeded. It is unreasonable to expect that we should be able to compete with the States in sowing, reaping, ploughing, and similar machinery, provided as they are with an experimental field with conditions similar to those prevalent in the Argentine. But in traction engines the Lincoln firms outstrip all their compet.i.tors. Rushton, Proctor and Co., Clayton and Shuttleworth, Ransomes, Sims and Jefferies, are names that may be seen all over the country. The genuine solidity of construction in their engines, combined with adaptability to the country's requirements, has for once overcome the overwhelming attraction of cheapness. Considerable success has also attended their threshing machines, in spite of their comparatively greater expense and of various other factors in favour of American machines.

The case of Agricultural implements is curious. While in axes the United States have increased their already large export, though under the heading of spades, picks, &c., their export of 680 tons in 1905 is 8 tons greater than in 1904, the value is 1900 less, while the English 590 tons is 167.5 tons more than in the previous year with an increase in value of 8080.

In cotton goods there is again a natural monopoly--the preponderating Italian influence among the working cla.s.ses encouraging the trade with that country in the special line of goods which appeals to them.

But perhaps the most important factor in international trade is the nationality of the importers. In 1823 nearly all the merchants in Buenos Aires were Scotch, and the preponderance of British houses continued until recent years. Then, however, for various reasons--the development, perhaps, of the wool trade on the Continent and the allurements of finance, owing to which many British merchants invested in land and other enterprises, in preference to the less congenial uncertainties of trade--a large number of foreign, especially German, houses appeared, turning the current of trade more in the direction of that country.

Whatever the reasons may have been, at the present moment Germany is firmly established in the country, and its trade is continually increasing. It must be added, that although German firms have a natural preference for dealing with their own country, they are always ready to do business with English houses provided that the latter make it profitable for them to do so.

It will be convenient to deal here with the complaints made by importers in the Argentine, of English exporters, and the faults that the latter have to find with the conditions of trade in that country.

Briefly, the chief complaint made of the English manufacturer and merchant is lack of adaptability--the well-worn objection that appears in every Consular report, and is repeated even by tradesmen in this country. The ways in which he shows his stubbornness may seem trifling, but their importance is sufficiently great in practice. Price-lists published solely in English, with those measures and prices which are a continual nightmare to the foreigner, get-up packing that do not quite meet local taste, all these are apparently trivial, but they affect the balance of trade nevertheless.

In cutlery, English goods have been entirely ousted from the popular market. The large British population in the country, however, as well as the wealthier Argentines themselves, who as a rule are extremely partial to English goods, from socks to agricultural machinery, still insist on Sheffield blades, which in the best shops are often the only ones procurable. But the popular demand is for a cheaper article, often manufactured in the country. This the English manufacturer has consistently refused to supply, his reasons being, firstly, that he does not make it, and secondly, that if he did, it would ruin his reputation for good work. The plan adopted abroad of not fixing the maker's name to an inferior article would safeguard the reputation which the English producer undoubtedly does possess. In this connection it is a strange anomaly that the impression still holds good in England, and seems to prevail even in other countries, that German goods are of inferior quality. This erroneous idea does not, of course, apply to such things as armour plates and machinery. But in the popular mind the impression created by toys "made in Germany" has spread to all small articles emanating from that country. If the work of any country deserves this stigma it is that of America. The undeniable ingenuity and neatness of American products is, unfortunately, very often combined with bad workmanship. In Argentine, according to some authorities, disappointed buyers of American goods are returning to more solid work. Undoubtedly the field for cheap goods is favourable in that country, the moneyless colonists being compelled to buy them irrespective of quality. Besides, there is a delight, to which the Italian is peculiarly susceptible, in always having something new. A bright and new thing pleases most people more than a solid article many years old. And in many directions the yearly improvements and inventions soon reduce the latter to a position of economic inferiority.

Turning to the exporters' complaints, there are two which must be admitted reasonable. In the first place, the economic conditions of the country as well as the inclinations of the people require exaggerated credit.

Nothing, apparently, will alter this, and the merchant who refuses to take business on these terms must expect to lose it altogether. The other is one that is capable of removal. The English merchant frequently complains that he cannot come into touch with his ultimate customers.

The taxes levied on commercial travellers are exorbitant, each province vying with the other in preventing their entrance. From this it follows that few firms can afford to send representatives further afield than Buenos Aires or Rosario, and practically all business is conducted through the larger importing houses of the capital. This is an absolutely prohibitive system that is bound to have the most disastrous effects on the expansion of trade. The intention is no doubt protective.

But in a country that is naturally incapable of any industrial development, the policy cannot be considered as anything but unwise.

As regards the travellers sent out by English firms, they are often inadequately equipped for the work they have to perform. Knowledge of the language, coupled with knowledge of the article whose sale they have come to promote, and an ability to quote credit terms offhand in terms of dollars and kilos, are important. Too much reliance is often placed on written matter which a busy merchant has no time to read.

A descriptive pamphlet or book is an extremely valuable adjunct to an obvious price list and an intelligent traveller. But by itself it is of little value.

A further point, and one of some importance, is that Argentines expect immediate delivery of orders. Recently a large English motor car firm opened an agency in Buenos Aires. The cars were much admired, and as they were well boomed at an opportune moment, a great many orders were secured. Owing, however, to considerable delay in delivery, these were withdrawn, and the orders were transferred to French firms.

Finally, a word must be said of proprietary articles. In these no fault can be found with British manufacturers. Soap, lime juice, whisky, mustard, jam, and even soda water and ginger beer, are among the special products that may be seen almost anywhere throughout the country, and this branch of trade is capable of even greater development with judicious advertising. In particular, jam is invariably liked by Argentines of all cla.s.ses, and were it pushed a very large consumption might follow. At present there is only one firm of any note whose products are seen in the shops. The same may be said of biscuits, although both in this and in the former case, the high tariff (about 50% to 60% of the value) would be a great restriction.

CHAPTER VII.

THE TARIFF.