Making allowances for this difference in its course, the foreign trade with the River Plate has varied little in its general amount for the last five years.
So far as regards the British trade, although there may appear to be a diminution in thevalueof our exports to the River Plate, as compared with what they were in the years immediately preceding the war between Buenos Ayres and Brazil, it will nevertheless be found upon analysis that there has been a large increase in thequantity, especially of our most important manufactures, viz., the cottons, thequantityof which now sent to the River Plateis double what it was in 1825, though the total declaredvaluehas only increased in the proportion of from about 350,000l.to 400,000l., the apparent discrepancy being accounted for by the greatly reduced rate at which we can now afford to sell these goods; in the linens there is also an increase; in the woollens there is, on the other hand, a slight falling off; the silk goods sent out have varied very little in value, but their amount was never of any importance.
The following is an account, taken from the custom-house returns, of the averagequantitiesof these several descriptions of goods sent to the River Plate in the four years from 1822 to 1825, inclusive, compared with the last four years from 1834 to 1837, inclusive:—
Upon the whole, the River Plate has been decidedly the most important of all the markets which have been opened to us for the sale of British manufactures in Spanish America. It takes off a much larger quantity of them than either Mexico, Columbia, or Peru; and although it would appear on the face of the official returns that of late yearsan equal or rather larger amount has been sent to Chile, the truth is, that a considerable part of those shipments were in reality destined for the southern ports of Peru, and the west coast of Mexico.
A comparative account of our exports to all those several countries during the last nine years will be found with the other returns of trade in the Appendix, and will show the relative and aggregate amount of British produce and manufactures taken by the new states during that period.
The average yearly value of them sent to the River Plate in the last five years amounted to £680,000.
The nature of theexport-tradefrom Buenos Ayres may be generally gathered from the following summary, or comparative valuation of the exports from thence in 1822, 1825, 1829, and 1837; though, being taken from the Buenos Ayrean custom-house accounts, some allowance must be made for short manifests by the shippers, perhaps an addition of twenty per cent. to the amount officially accounted for in each year. The returns of specie and bullion exported are especially liable to this observation.
Comparative Return and Valuation of the principal Articles Exported from Buenos Ayres in the years 1822, 1825, 1829, and 1837.
The annual account of the imports and exports, continuing to take the year 1822 as an example, may perhaps be generally stated as follows:
This difference, which upon the whole was of little importance, was at once accounted for by the investments of foreign capital in the purchase of every kind of property in the country previously to the war with Brazil.
Although foreigners, as has been already observed, were heavy sufferers by the events of that war, the country was benefited in a way which could hardly have been foreseen. In the impossibility of making returns to Europe during the continuance of the blockade, the greater part of thelarge amount of foreign property locked up in it was laid out in cattle-farms, agricultural establishments, saladeros (where thejerkbeef is made), houses, and a variety of speculations, the general tendency of which was greatly to improve the real resources of the country. Thus, although upon the whole there was afterwards apparently a falling off in the foreign trade of the port of Buenos Ayres compared with what it was before the war, there was in reality an increase in the quantities of the staple commodities of the country brought to market.
This was encouraging, inasmuch as it is in proportion to the increase and multiplication of the native productions that we must look for the stability and improvement of this trade—the great difficulty being to collect returns for the importations from foreign countries. Hides and skins have been till lately the only articles of any importance obtainable, though it is manifest that the country is highly capable of producing a variety of other articles of great value in a commercial point of view.
Had the provincial governments been sufficiently settled, and the state of the laws in the interior been such as to have afforded any adequate security to foreigners, intelligent men would doubtless long ago have resorted to those parts, and would have given a stimulus to the industry of the native population; for it is to such persons the natives must look to teach them to what account the productions of thesoil and climate of the interior of South America may be turned in other countries, as well as how they should be prepared for those markets. Foreigners would soon show them new sources of wealth, and give value to those which have hitherto been neglected or unknown. To them also the natives must look for the introduction of machinery, which may in some measure compensate for the want of hands, which at present makes labour dear, and deprives them of a hundred comforts and conveniences in the commonest use in the civilised countries of Europe. It would be folly to disguise that these new countries are in the very infancy of civilisation; studiously brought up by the mother-country in entire ignorance of all that could teach them their own value and importance, no wonder they now have all to learn.
When I state that in many of the towns of the interior a common wheelbarrow is as yet unheard of, that in the capital itself the first pump ever seen in a private house was put up a very few years ago by an Englishman, it will easily be understood how much the natives have yet to gain by the settlement amongst them of the intelligent mechanics and artificers of more civilised countries. Still greater will be the importance to the community if foreign capitalists should find sufficient encouragement and protection to fix themselves in the country.
The province of Buenos Ayres, as contrasted with the interior, has strikingly exhibited the fruits of amore liberal policy towards foreigners; and could the practical administration of the new laws keep pace with their spirit, and with the general desire amongst the people for improvement, the consequences would be still more apparent. As it is, Buenos Ayres is at least a century in advance of the provinces in general knowledge and civilisation, and her wealth and importance have increased in proportion. Amongst other improvements which she owes to foreigners, she is indebted to some enterprising Englishmen for the introduction of late years of a new source of wealth, which bids fair to rival in importance the most valuable of her old staple commodities.
It is but a few years ago that the wool of the Buenos Ayrean sheep was hardly worth the expense of cleaning it; and as to the meat, I doubt whether the wild dogs would have touched it. It is well known that their carcases, dried in the sun, were used for fuel in the brick-kilns. The great pains and persevering exertions, however, of some intelligent foreigners to introduce and cultivate a better breed has met with a success beyond all expectation, and now promises to be of the greatest importance to the future commercial prospects of the country. The rapid increase in the value of this article of production will be shown by the following comparative account of the quantities which have been imported into Great Britain alone in the last eight years:—
Imports of Wool from Buenos Ayres.
Mr. Sheridan and Mr. Harratt are the individuals to whom Buenos Ayres is principally indebted for this new source of wealth: the greater part of the wool sent to England in 1834 was of their production, and sold at Liverpool at very high prices compared with those obtained for the old native wools of the country, the quality of which comes perhaps nearest to the low Scotch wools, and is only suited for carpeting, and other strong descriptions of goods. In a country where any quantity of land applicable for the purpose may be had almost for nothing, it is impossible to calculate to what extent the breeding and improvement of sheep may be carried, now that the wool is known to fetch a remunerating price in foreign markets.
Nor is wool the only raw material for our manufactures which we may expect to derive fromBuenos Ayres. In my notices of the interior I have stated that in Paraguay and some of the Upper Provinces, especially Corrientes, cotton of a quality equal to the average of that of Brazil is produced:—this has been often satisfactorily shown by samples sent to Liverpool. The natives cultivate it and make cloths of it for their own domestic purposes; and we shall probably obtain large quantities of it whenever foreigners shall enjoy such security as may induce them to carry into the interior the machinery necessary to clean and pack it for the markets of Europe.
From the same part of the Republic, as well as from several of the Upper Provinces, any quantity of indigo may be obtained, of an excellent quality. M. Bonpland, the celebrated naturalist, who has spent so many years in those parts, took the trouble years ago to draw attention to the peculiarity of the indigo found in the province of Corrientes. Speaking of those parts called the Missions, he says, "The whole of this country exceeds description; at every step one meets with things both new and useful in natural history. I have already collected 2000 plants, a large quantity of seeds, &c.
"Amongst the number of interesting plants to which my attention has been called, I am of opinion that this country may hereafter derive great advantages from the three new species of indigo which I have found in these fertile regions. They are very different from the plant from which the indigo isobtained in Mexico, Venezuela, Brazil, and India; and I flatter myself that the South Americans will avail themselves of this discovery, and cultivate a plant which has hitherto been disregarded under the common name ofyuyo. The superior quality of indigo that may be obtained from this newly-discovered plant, and the facility of its conveyance down to a port of shipment, render it an object of great importance to a country that has only a few exports, and its cultivation, if encouraged by the government, and undertaken by capitalists, will in a few years furnish an interesting and staple commodity for trade."
This account of the Corrientes indigo was copied from the Buenos Ayrean papers into the Annual Register for 1822, together with the following remarks on some other of the natural resources of the provinces of La Plata, which seem well deserving the notice of those interested in the trade with that part of the world:—"there are many other natural resources of the country to which the attention of the government of Buenos Ayres ought to be called. Theseda silvestre, a sort of wild silk left in the woods by a certain caterpillar, is found abundantly on the banks of the Paranã, and would constitute a valuable export. Very good cochineal may be gathered in Tucuman, besides a great quantity of bees'-wax.
"Therubia tinctoriais found in many of the extensive forests, but the best is in Tarija, the Chaco,and the Sierra de Cordova; it yields a brilliant colour. It was not till within these few years that notice was taken of a new mode of dyeing a green colour from a production called by the Spaniardsclavillo, from its resemblance to a little nail. Some persons consider it to be the excrement of a certain insect smaller than the cochineal; others believe it to be the insect itself. Hitherto it has only been gathered in Carquejia, and the point is found introduced into the bark of a shrub; it was first used by the poor people of the country, and it has since been proved by repeated experiments that the Vicuña and Alpaca wools, as well as cotton, after being prepared with astringents, such as alum, and previously boiled in a yellow dye, when thrown into a solution of clavillo, acquire a beautiful green colour; the shade of this simple is in itself greenish, and by keeping grows darker: abundance of it is found in the valley of Catamarca and province of Tucuman, but as yet no scientific experiments have been made with it."
A variety of valuable gums and medicinal balsams may be had from Paraguay, of the efficacy of which marvellous stories are related by those who have resided in those regions. The tree producing caoutchouc is found in abundance about the rivers in the upper part of that province, where the Indians have long known its value, and use it as a substitute for candles: the children make balls of it to play with. They obtain it by making an incision in the tree, from which the gum is run into a hideplaced beneath to catch it, and when cold is wound upon large balls for use.
In addition to these, I may mention nitrate of soda, so much used now in our cotton manufactories, which may be procured in any quantity from the provinces of La Plata;—as yet, I believe, not a single bag of it has ever been brought from Buenos Ayres, although there is no reason why it should not be imported from thence at as low a cost as from Chile and Peru; from which countries alone, of late years, the annual importations have been from 50,000 to 100,000 cwt.
War in Europe will always create an increased demand for the produce of such a country as Buenos Ayres. In the last years of the general war, not only was there an enormous demand for the hides of Buenos Ayres, but considerable quantities of tallow also were shipped from thence; and, although those shipments ceased to answer when the Russian markets were reopened, they may always be calculated upon again should any stoppage take place of our ordinary supplies through the Baltic. At present, though Buenos Ayrean tallow is worth as much as Russian in the English markets, there is no great quantity of it produced, in consequence of the animals being killed for their hides as soon as they are marketable, which is before they yield tallow in any quantity worth collecting.
Corn also was an article of export from Buenos Ayres during the general war in Europe, and isagain beginning to be exported to Brazil—as is shown by the account of the exports in 1837. It is of an excellent quality, and might be grown to any extent.
Mules, horses, and asses have at times been shipped in large numbers for the West Indies and for the Isle of France, and have been sold there at an enormous profit.
In the short notices given of the provinces of the interior, I have given such accounts of any other of their native productions as I could collect. The silver and gold mines of Cordova, La Rioja, Mendoza, San Juan, and Salta, may eventually become productive; and, when an intercourse is once more permitted with Bolivia through the interior, it may be expected that some portion of the precious metals produced there also will, as formerly, find their way to Buenos Ayres.
In old times, not only were the rich and populous provinces of Bolivia exclusively supplied through the Rio de la Plata with all such articles as they wanted from Europe, but they took from the lower provinces a variety of useful productions of their own, for all which they paid in gold and silver. Of mules alone upwards of 60,000 were annually sent to Potosi from the provinces of Tucuman and Santa Fé.
This internal trade, once of so much importance to the people of the intermediate provinces, was annihilated in the struggle for establishing the independency of the Republic; for, Bolivia remaining to the last in the hands of the Spaniards, of course all commercial intercourse was prohibited with the provinces of La Plata, which had thrown off the yoke of the mother-country. To this may be ascribed in great measure the extreme poverty and backwardness of many of those provinces at the present day. Salta, Tucuman, Cordova, Santa Fé, and Paraguay, lost the best markets for their native produce; whilst the people, dragged from their pastoral and agricultural pursuits in the first instance to fight against their old masters, and afterwards to destroy one another in support of the ephemeral authorities which succeeded them, naturally contracted such unsettled and disorderly habits as it will require many a year of domestic peace and better government to wean them from. To time, and a continuance of those blessings, as I have elsewhere said, we must, I believe, look for the remedy of these evils, and for any material improvement in the condition of the interior provinces of the republic.
In connexion with what I have said upon the trade of Buenos Ayres, a brief notice of the origin and extraordinary increase of the vast herds of horses and cattle which at present constitute so large a portion of the riches of Buenos Ayres, may perhaps be not uninteresting to some of my readers.
America is indebted to Europe for these animals, which were unknown to the people of the New World before its discovery by the Spaniards. Of the two it will easily be understood that the horses, which formed so important a feature in the military equipment of the conquerors, were the first introduced. In 1535, the Adelantado Mendoza, who was the first to effect a landing at Buenos Ayres, took seventy with him on board the expedition which accompanied him from Spain, of which perhaps half were lost on the voyage, if we may judge from the small number of cavalry—one author says twelve, another thirty—which he was able to muster in his first battle with the Indians. The few that survived, when his followers were shortly afterwards driven out of that part of the country by the warlike natives, were turned loose into the pampas, where they multiplied exceedingly, and were found in great numbers forty years afterwards by De Garay, when he re-established the Spanish settlement at Buenos Ayres.
It was in that expedition (in 1580) that De Garay carried from Paraguay the first horned cattle ever seen in the pampas. How the stock had previously reached Paraguay is thus told by Dean Funes, the native historian. He says, "In 1555 there arrived at Assumption, from San Francisco, on the coast of Brazil, a few straggling emigrants, amongst whom were two Portuguese gentlemen, brothers, of the name of Goa, having with them a bull and eight cows, the origin of that mighty stock of cattle which now forms the wonder of the provinces of La Plata." The Portuguese servant intrusted with the important charge of these animals in their long over-land journey from the coast, whose name was Gaete, was rewarded for his care of them with one of the cows, a payment thought so much of at the time, that it gave rise to a saying still in use in those parts—"Es mas caro que las vacas de Gaete" ("Dearer than Gaete's cows").
But the value then set upon all European animals carried to America was enormous, as well it might be when the difficulties are considered of safely transporting them in the crazy and inconvenient shipping of those days. In Peru, in the same year (1555), so highly were horses prized, that it was thought worth recording in the public archives of Cuzco that 10,000 dollars had been refused for one offered for sale;—in that city a boar and sow, about the same time, were sold for 1600 dollars, and European sheep and goats fetched prices nearly as high.
Of the cattle carried by De Garay to Buenos Ayres it was not long before some escaped into the territory of the Indians, where they increased and multiplied, as the horses had done before. The settlers were too few, in the first instance, to domesticate more than were necessary for their own immediate wants, neither was the extent of their lands, for some time, adequate to the maintenance of any considerable stock; the cattle, therefore, ranged at liberty in the Pampas, and, though occasionally hunted down by the Spaniards for the hides, or by the Indians for food, the destruction was as nothing compared with the prodigious increase which went on:—they also found their way into the Banda Oriental, probably from Paraguay, where they multiplied even faster than in the Pampas, from the better quality of the pasturage and the more constant supply of water; and here it was that the illicit trade established by the Portuguese appears first to have awakened the Spaniards to a notion of the future importance of these animals.
The vicinity of their establishment at Colonia, immediately opposite to Buenos Ayres, not only facilitated their smuggling across it the European goods and tobacco and slaves which were wanted, but made it a convenient station for collecting from the Spaniards the hides for which they were but too glad to find any sale under the restrictions then imposed upon all trade. The Portuguese took good care to buy them only at such low prices as insuredthem an enormous profit upon their exportation for other markets; but the speculation answered to both parties, and as the contraband trade of the Portuguese with Buenos Ayres increased, so we find did the cattle establishments of the Spaniards in the Banda Oriental.
Cargoes of hides were occasionally shipped for Spain, particularly after the Spaniards founded Monte Video, in 1726; but the demand was far from equal to the production, and the stock of cattle went on gradually increasing till the partial opening of the colonial trade in 1778. At that period the cattle had reached an amount which, perhaps, has never been equalled at any subsequent period, but the increased demand for country produce which then took place was well nigh exterminating the whole stock. In 1783 no less than 1,400,000 hides were officially registered for exportation, besides a vast number clandestinely shipped.
Superabundance also led to waste to an enormous extent; a gaucho would kill an ox for the tongue, or any other part of the animal he might fancy for his dinner, and leave the rest of the carcase to be devoured by the vultures, or by the wild dogs which swarmed in the country, and destroyed an incredible number of the young cattle. Little respect was then paid to this description of property, and the peons were easily bribed to kill their masters' or their neighbours' cattle to barter their hides for thetobacco and spirits offered to them by the peddling traders who wandered over the country to collect them.
The government was obliged, at last, to take strong measures to stop these evils:—they enacted heavy penalties on those found destroying or selling what did not of right belong to them; whilst, for the better identification of property, every proprietor was obliged, by a given day, to brand his cattle with his own particular mark:—all beasts found without a mark after that time were declared to be the king's, and the right to seek for and seize them was sold to or farmed by individuals. Proprietors were obliged to take out licenses to sell their hides, and the slaughter of cows and calves was entirely prohibited. War, also, to extermination, was declared against the wild dogs.
These regulations, however feebly enforced, were not without effect:—the protection, at any rate, which they promised to property was enough to induce the people to extend their cattle establishments, whilst their own experience, after a time, led them to regulate their annual sales in more due proportion to their stocks.
The annual increase on a well-regulated estancia has been ascertained to be from 30 to 40 per cent., which yields an enormous profit to the proprietor, whilst his expenses are comparatively trifling. The only serious casualty to which thecattle-owner is liable is from the effects of occasional droughts, which in these countries are, at times, attended with frightful devastation:—the cattle then rush in thousands from their own pastures in search of water in every direction, and perish for want of it in immense numbers. In the last great drought, which continued during the summers of 1830, 31, and 32, it was calculated that from a million and a half to two millions of animals died:—the borders of all the lakes and streamlets in the province were long afterwards white with their bones[80]. But for this calamity the quantity of hides brought forward in the last five years would have been much greater than it has been.
In the years immediately preceding the independency of the republic the annual export of hides from the river Plate was from 700,000 to 800,000, besides an enormous consumption of them for every conceivable purpose by all classes of the people of the country, and great destruction by waste; so that it is generally supposed that at that time the number of cattle in the provinces was not less than five millions. Azara estimated them attwelvemillions (in 1792), but I never met with any one who would agree with him in that calculation.
By far the greater part of these animals were then reared in the Banda Oriental and Entre Rios:—nor was it till subsequently to the commencement of the struggle for their independence, when those provinces became the seat of war, and were laid waste by the Portuguese and by Artigas, that the people of Buenos Ayres began to occupy the lands south of the River Salado, which have given so much increased importance to that province. Since that period every encouragement and protection which it is possible to give to this source of national wealth has been wisely afforded by the ruling authorities.
The Pampas are no longer a vast, useless, and unappropriated waste in which the animals run wild as formerly; by far the greater part of the lands comprised within the boundary line laid down in the map having been carefully measured by the government officers, and allotted to individuals, who, as they occupy them, are obliged to set up and preserve their marks of possession, which, together with the bounds and extent of every separate estancia, are duly registered in the topographical department of the state. Of the hundreds of thousands of cattle now reared in these lands there is hardly, perhaps, a single animal of a year old which is not branded with the mark of an owner, and that mark is equallyregistered by the authorities, and entitles him to claim his property wherever he may find it.
It is calculated by the best authorities,—the most extensive proprietors in the province,—that the present stock of cattle in the territory of Buenos Ayres alone may be from three to four millions; and it is supposed there may be above another million in the other provinces:—from this we ought to calculate upon an annual exportation of nearly a million of hides, gradually increasing.
FOOTNOTES:[78]The official valuation of the average imports from 1792 to 1796, inclusive, was only 2,606,754 dollars; though at that period every article sent from Spain was charged at the most exorbitant price to the colonists.[79]In 1835 nearly a million and a half lbs. were also sent to the United States, and the demand for it was likely to increase with its production.[80]The drought in question was one of the most destructive on record; large lakes in the south, never before known to have been without water, were entirely dried up, in which immense numbers of fish perished, the stench from which was described as enough to have produced a pestilence. Another serious consequence from it, of a different description, was the prodigious increase of all kinds of vermin, especially field-mice, myriads of which overran the country, and entirely destroyed the maize-harvest for 1833.
[78]The official valuation of the average imports from 1792 to 1796, inclusive, was only 2,606,754 dollars; though at that period every article sent from Spain was charged at the most exorbitant price to the colonists.
[78]The official valuation of the average imports from 1792 to 1796, inclusive, was only 2,606,754 dollars; though at that period every article sent from Spain was charged at the most exorbitant price to the colonists.
[79]In 1835 nearly a million and a half lbs. were also sent to the United States, and the demand for it was likely to increase with its production.
[79]In 1835 nearly a million and a half lbs. were also sent to the United States, and the demand for it was likely to increase with its production.
[80]The drought in question was one of the most destructive on record; large lakes in the south, never before known to have been without water, were entirely dried up, in which immense numbers of fish perished, the stench from which was described as enough to have produced a pestilence. Another serious consequence from it, of a different description, was the prodigious increase of all kinds of vermin, especially field-mice, myriads of which overran the country, and entirely destroyed the maize-harvest for 1833.
[80]The drought in question was one of the most destructive on record; large lakes in the south, never before known to have been without water, were entirely dried up, in which immense numbers of fish perished, the stench from which was described as enough to have produced a pestilence. Another serious consequence from it, of a different description, was the prodigious increase of all kinds of vermin, especially field-mice, myriads of which overran the country, and entirely destroyed the maize-harvest for 1833.
Origin of the Funded Debt of Buenos Ayres. Receipts and Expenditure from 1822 to 1825, during peace. Loan raised in England. War with Brazil, and stoppage of all revenue from the Customhouse for three years. Pecuniary difficulties in consequence. The Provincial Bank of Buenos Ayres converted into a National one. The Government interferes with it, and, by forcing it to increase its issues, destroys its credit. Debt at the close of the war at the end of 1828. Hopes founded on the peace destroyed by the mutiny of the Army;—deplorable consequences of that event. Depreciation of the Currency. Deficit in the revenue, and increase of the Funded Debt:—its amount in 1834, and further increase in 1837. General account of the liabilities of the Government up to that year; increased by subsequent war with Bolivia, and French Blockade.
Origin of the Funded Debt of Buenos Ayres. Receipts and Expenditure from 1822 to 1825, during peace. Loan raised in England. War with Brazil, and stoppage of all revenue from the Customhouse for three years. Pecuniary difficulties in consequence. The Provincial Bank of Buenos Ayres converted into a National one. The Government interferes with it, and, by forcing it to increase its issues, destroys its credit. Debt at the close of the war at the end of 1828. Hopes founded on the peace destroyed by the mutiny of the Army;—deplorable consequences of that event. Depreciation of the Currency. Deficit in the revenue, and increase of the Funded Debt:—its amount in 1834, and further increase in 1837. General account of the liabilities of the Government up to that year; increased by subsequent war with Bolivia, and French Blockade.
In any attempt to convey an idea of the finance accounts of Buenos Ayres it should, in the first instance, be observed that, although those accounts are,primá facie, national, they exhibit in reality the receipts and expenditure of the government of theprovinceof Buenos Ayres alone:—the other provinces, containing three-fourths of the population of the whole republic, contribute nothing towards the general expenses, though most of them manage to support their petty provincial administrations. Buenos Ayres alone found all the pecuniary means both for the war with Spain for the establishment of the independence of the republic, and, subsequently, for liberating the Banda Oriental from the domination of the Emperor of Brazil, which latter state, though gaining everything by the result, has never repaid her a single dollar. Chile owes her as much for the armies sent across the Andes, which freed that country also from the yoke of the King of Spain, and has been equally ungrateful.
It is only astonishing how this little State contrived, as she did, to raise the ways and means for these efforts, and that she did not altogether succumb to the difficulties and embarrassments they gave rise to:—that they have left her finances in a wretched state can hardly be wondered at. Nevertheless, if it had not been for the struggle with Brazil, which succeeded the establishment of her own independence of the mother-country, Buenos Ayres would long ago have been quit with all her creditors, presenting a very different appearance, quoad her finances, to the world.
When the struggle with Spain was over, and her military establishments reduced, the arrangement of her pecuniary affairs became one of the first objects of her provincial administration.
In 1821 commissioners were appointed to call in and liquidate all outstanding claims against the government, of whatever description, not excepting even those left unsettled by the authorities of the mother-country previous to the declaration of independence. The greater part of these debts were duefor actual services, or for loans to the government in times of necessity; others were of a more doubtful character, and had been sold or made over to other parties by the original creditors, and into these classes they were separated by the legislature:—the one receiving obligations bearing an interest of six per cent; the other, receiving the same, bearing an interest of four per cent per annum; and these obligations were simultaneously provided for by the creation of public stocks, bearing quarterly interest:—the first instance of the establishment of anything like a public funded debt in any of the new states of South America. Commissioners were appointed to manage it, and to pay the dividends quarterly to the stock-holders; transfer-books were opened, and a sinking-fund was established for its gradual redemption. The first quarter's interest became due on the 1st of January, 1822, and, for the credit of Buenos Ayres, it should be stated that, notwithstanding the great subsequent increase of the debt, under the circumstances to which I shall presently refer, the quarterly dividends have, from that time to this, been as regularly paid as those at the Bank of England.
The amount of stock created up to the close of 1825 was—
which was sufficient to provide for every outstanding claim against the government up to that period, whilst the charge for the annual interest was hardly felt in the general expenditure, which, after the reductions consequent upon a state of peace, the revenue was more than sufficient to meet,—as will be seen by the following returns of the yearly receipts and payments from 1822 to 1825, inclusive.
The receipts were—
The total of the four years was, Spanish dollars, 11,233,635, which, at the exchange of 45d.per dollar, was equal, in sterling money, to about £2,106,306, or, on an average, £526,576 per annum.
Three-fourths of this revenue was derived from the custom-house duties, the yearly account of which was, in the year—
The remainder was made up by duties on stamps,the contribucion directa, a sort of property-tax; the post-office revenue, the port-dues, rents of government buildings and lands, and other items of little consequence.
The account of the expenditure for the same period stood thus:—
Never had the financial concerns of the republic borne so creditable and promising an appearance. In this prosperity nothing was thought of but schemes for improvement of every kind; and projects were submitted to the government for a variety of public works, piers, docks, custom-houses, &c., some of which were of manifest utility.
It was under these circumstances, and with a view to carry into effect some of the projected improvements, that the government of Buenos Ayres determined to endeavour to raise a loan in England, which there was no difficulty in obtaining upon the terms they stipulated for, viz., seventy per cent. At that price parties in London contracted with them for aloan, nominally, of a million sterling, to be raised upon bonds bearing interest at six per cent per annum, payable half-yearly. A sinking-fund of £5000 per annum was to be applied to their redemption, and the contractors were further allowed to keep back the amount of the dividends for the first two years. This, with charges, &c., reduced the sum to be paid over to the government of Buenos Ayres to about £600,000. The first half-yearly dividend became due on the third or fourth quarter of 1824.
Whilst the government were deliberating, amongst the many projects before them, how to lay out this money to the best advantage, the quarrel broke out with the Emperor of Brazil for the possession of the Banda Oriental, which soon settled all difficulty on that point, and absorbed every dollar of the loan in preparations for the ruinous war which followed. From the commencement of that struggle not only were the expenses of the state enormously increased, but, when resources were most wanted, nearly the whole of its ordinary revenues (depending upon the duties on foreign trade) were suddenly cut off by the blockade of the river Plate instituted by the Brazilians, which lasted during the whole continuance of the war, viz., from December, 1825, to September, 1828,—nearly three years.
In their emergencies the government determined to avail themselves of the bank, an establishmentwhich had been set up by the leading capitalists of Buenos Ayres in 1822, upon the grant of an exclusive privilege of issuing notesin that provincefor twenty years. It was entirely independent of the government, and was managed by directors annually chosen by the shareholders. To the mercantile body it was of great utility, and its notes, payable in specie on demand, in default of any national coinage, had become the ordinary currency of Buenos Ayres, and were as readily taken as gold or silver:—its capital was a million of dollars. But, as this could not be done compatibly with its independence and existing constitution, it was further, in an evil hour, resolved to alter entirely its original character.
Under pretence of extending the circulation of its notes throughout the republic, application was made to the General Congress[81]to sanction its conversion into anationalbank, with a nominal capital often millionsof dollars, towards which the governmentsubscribed for shares to the amount ofthree millions, and very soon assumed the right to exact from it almost any accommodation they required. The consequences were soon apparent. The wants of the government increasing, the bank was obliged, in order to provide for them, to increase its issues, which, ere long, reached an amount obviously out of all proportion to its real capital[82]. The aid of the legislature was again called in:—the notes were declared a legal tender for their nominal value, and the bank was relieved by law from the obligation of paying them in specie on demand:—its credit fell to the lowest ebb, and its notes became proportionably depreciated.
The government, however, had then no alternative but to go on with the system it had commenced:—the precious metals having wholly disappeared as a medium of circulation, it was in this depreciated currency that it found itself obliged to continue borrowing such sums as it required, until, as may easily be imagined, the nominal amount of the public debt became fearfully increased. Before the close of the war with Brazil, the value of the paper dollar of the bank had fallen from 45d.to below 12d.sterling; and at the end of 1828, besides 6,000,000 dollars which had been added to the amount of thefunded debt, the deficit on the general account of receipts and expenditure was 13,412,075 dollars, the whole of which was due to the bank; and this was independently of the English loan.
Nevertheless, when peace was signed, upon terms highly honourable to the republic, the public confidence immediately rallied. The value of the current dollar rose at once to 24d., and amidst the general rejoicings even the pecuniary prospects of the country put on a flattering appearance. Nor were the hopes entertained by the Buenos Ayreans of a speedy improvement in their finances without foundation. It was evident, as has been observed in the preceding chapter, that, although the foreign war had led to enormous expenses, the sudden suspension of the trade had locked up a large amount of foreign, as well as native, capital within the country, the investment of which, in a variety of ways, had greatly tended to increase its means of production, and consequently its national resources.
The mutiny of the army, however, under General Lavalle, and his barbarous murder of General Dorrego, the Governor, blasted all these flattering prospects, and involved the whole republic in confusion and ruin. The consequences of the civil warfare which followed to the finances of the country were deplorable, and infinitely worse than those occasioned by the war with Brazil. The currency suffered apparently beyond all hope of recovery, and the paper dollar, after great fluctuations, fell to about 7d., atwhich rate it has, with little variation, been stationary for the last seven years.
In the five years from 1828 to 1832, inclusive, the receipts and expenses were as follow:—
TheWar Department, it will be seen, absorbed more than three-fourths of the whole revenue:—nor was this the final account of the extraordinary expenses which may be traced to the revolt of the troops above alluded to. Whilst they were cutting the throats of their countrymen in the interior, the Indians broke in upon the frontiers, left without defence, and made it necessary to organise a new army to put them down, which occasioned a great expenditure, though it was, perhaps, compensated for by the extension of the frontiers, and the new security it gave to the lands in the south of the province.
To provide for these expenses the Funded Debt was again very largely increased, and at the close of 1835 stood as follows:—
Besides this there was a floating debt in treasury-bills and other outstanding claims of nearly 8,000,000 more to be provided for out of the ways and means for 1836, which, after every possible reduction of the establishments, were hardly equal to meet the ordinary expenditure. In the hope of being enabled to pay off this part of the debt, the Legislature authorised the Government, in the first instance, to offer for sale, at a fixed price, a portionof the lands in the south, acquired in the recent campaigns against the Indians:—but their expectations were not realised,—there were no bidders for the lands; and when the junta met the next year to receive the accounts for 1837, instead of any decrease in the floating debt, it had risen to above 9,000,000 of dollars. They then adopted the alternative of creating Public Funds, and passed a law for adding no less than 17,000,000 to the Public Debt. The funds in question were placed at the disposal of the government for sale, at a price not lower than sixty per cent, at which it was calculated that they would produce 10,200,000, and be, therefore, sufficient to cover the floating debt, and leave the ordinary revenue free to meet the ordinary expenditure of the states. To provide for the increased interest of the Public Debt, new stamp duties and a more strict enforcement of the direct taxation (Contribucion Directa) were enacted.
This was at the commencement of 1837, when, including this new creation of stock, the responsibilities of the government appeared to be as follow:—
First.—The Funded Debt.
The annual charge for the interest and sinking fund of this part of the debt amounted to 3,055,199 current dollars.
Secondly.—The English loan for 1,000,000 sterling, the interest of which (at the rate of £60,000 per annum) has been unpaid since January, 1828.
And Thirdly,—The amount of the bank issues in circulation, understood to be about 20,000,000 of dollars currency, for the whole amount of whichthe government had declared itself responsible to the public as the easiest mode of settling its own account with that establishment upon the expiration of its charter in 1836.
On the other hand, the whole of the ordinary revenues were only estimated at 12,000,000 of currency, of which about a fourth part, as above stated, was required to be set apart in the first instance to meet the charges for the funded debt.
The remaining 9,000,000 was insufficient by half to meet the ordinary expenditure of the state, much less to enable the government to make any provision for a settlement with the English bondholders, or for the redemption of the currency.
This was the state of things at the commencement of 1837, as far as I can collect from the accounts which have been published; deplorable as it appeared, it perhaps would not have been altogether irremediable, had the peace of the country been preserved, and the war establishments been reduced.
The estimated revenue of 12,000,000 was based upon the average of the years immediately preceding, which had been far from favourable to the development of the resources of the republic. It was notorious that many branches of it were very loosely collected; the contribucion directa, or property-tax, especially, which produced little or nothing, instead of being made, as it ought to have been, one of the most important items in the revenueof the state. In this, as in other branches of it, there was no doubt that, with care and good management, the public income might have been greatly increased. Besides, there were still the greater part of the public lands undisposed of, which the legislature, in 1836, had given authority to the government to sell, for the purpose of liquidating the debt previously contracted; and with regard to the funded debt, the operation of the sinking fund with its accumulating interest was becoming so efficient that, notwithstanding its large amount, a very few years indeed would suffice to redeem the whole of it, if not further increased. In 1837 the sinking fund already amounted to more than a million of dollars, which, in twelve months, redeemed little short of two millions and a half of stock.
But, as I have before had occasion to observe, touching their social condition, so it is most especially with regard to their financial prospects, there can be no well-founded expectation of any improvement which is not based upon a continuation of the peace and quiet of the country. That, unfortunately, has been again interrupted in the past year, and the Republic has not only become involved in the war declared by Chile against Bolivia, but in a much more serious and disastrous dispute with the French, the calamitous consequences of which it is difficult to estimate.
Pending the settlement of their alleged grievances,the French have instituted a strict blockade of Buenos Ayres, which falls heavily upon those neutral parties who have established an extensive commercial intercourse with the country.