IMPORTS ANDEXPORTS FROM AND TODIFFERENTCOUNTRIES.18901895190019011902190319041905$1000 Gold$1000 Gold$1000 Gold$1000 Gold$1000 Gold$1000 Gold$1000 Gold$1000 GoldAntilles:Imports...861943106373571505Exports9751,616438366470164282420Belgium:Imports10,9867,4418,4308,6885,4845,4489,0698,727Exports12,00315,41717,98013,45713,76020,14317,56620,780Bolivia:Imports8572122138122125108126Exports296591578541600450392539Brazil:Imports3,3544,0953,7414,3864,5835,3506,0325,328Exports8,4428,0966,1859,7028,3688,54510,72713,039Chili:Imports5141124111213200469669Exports2,1883,0678705686841,1701,4401,510France:Imports19,8759,11610,8979,9599,24312,70817,10921,248Exports26,68320,33719,00728,63729,58734,29430,59637,594Germany:Imports12,30111,16216,63516,72413,22917,00924,92629,083Exports11,56613,32320,07021,47922,93926,81229,52237,058Holland:Imports8501031735736227901,0071,288Exports160923,9061,7532,8344,5463,5003,761Italy:Imports8,66310,36314,92414,73612,26514,70219,12720,284Exports3,1943,5184,3044,3184,2154,3384,3446,468Paraguay:Imports1,7241,8241,8601,7671,4691,0591,5691,616Exports336100161216213173216330Portugal:Imports11058786889213271300Exports45613836971131018823South Africa:Imports............46212634Exports...83,2402,8918,2859,1704,9415,524Spain:Imports4,3022,5753,6913,9123,1663,5744,7975,726Exports2,0831,3112,6992,1312,0252,0351,9232,334United Kingdom:Imports57,81639,52438,68236,46036,99544,82664,51768,391Exports19,29914,69423,89029,92035,08435,60036,44544,826United States:Imports9,3016,68613,43815,53313,30316,68424,47328,920Exports6,0668,9476,8829,29610,0378,12610,21415,717Uruguay:Imports5,8857365206797447608621,023Exports5,5063,2902,3023,7103,6734,1885,0206,705Other Countries:Imports6,9321,2071411751,3937,31412,26511,870Exports1,55725,51641,71138,71536,59361,119107,233126,208TOTALIMPORTS142,24095,096113,485113,959103,039131,206187,305205,154EXPORTS100,818120,067154,600167,716179,486220,984264,157322,843
While a similar table (calculated in Spanish dollars) gives the following figures for the principal exporting countries in the year 1822:—
United Kingdom$5,730,952France820,109Germany, Holland, Sweden, and Denmark552,187Gibraltar, Spain, and Sicily848,363United States1,368,277Brazil1,418,768China165,267Havana248,625Chile and Peru115,674TOTAL$11,267,622
The contrast between the two tables is sufficiently remarkable; but before dealing with either, it is necessary to have clearly in mind the growth and nature of demand. For this reason the immigration returns and tables showing the development of the railway system are given at this point:—
ARRIVAL OFIMMIGRANTS IN THEREPUBLIC FROM1857TO1905.Years.Number.Nationalities.Arrivals in 1905.1857-6020,000Italians1,488,084Italians88,9501861-70159,570Spaniards507,853Spaniards53,0291871-80260,613French176,670French3,4751881-90846,568British37,537British1,3681891-1900648,326Austrians42,983Austrians2,7931901-1905536,030Germans33,686Germans1,836Swiss26,690Swiss576Belgians19,990Belgians263Others127,614Other nationalities24,8272,461,1072,461,107177,117
The development of ArgentineRailways is shown in following table4:—
YearsExtent ofLines inkilometresCapital$1,000,000GoldPassengersNo. inthousandsFreight1,000 tonsReceipts$1,000 GoldExpenditure$1,000 Gold185710·3562191218652405·374771563438187073218·81,9482742,5021,35618751,95640·92,5976605,1783,00918802,51662·92,7517726,5603,07218854,502121·75,5873,05014,2988,61618909,432321·110,0695,42026,04917,585189514,116485·314,5739,65026,39413,846190016,563531·318,29612,65941,40123,732190116,907538·319,68913,98843,86624,128190217,677560·919,81514,03043,27222,975190318,404573·021,02517,02453,56927,766190419,428588·523,31220,12362,55833,2161905519,7936626·326,63422,28371,34139,155
4.Direccion General de Vias deCommunicacion.5.Approximate figures.6.£125,274,000 approximately.
4.Direccion General de Vias deCommunicacion.
5.Approximate figures.
6.£125,274,000 approximately.
The relative importance of the various lines with their nationalities is as follows:—
1904.Lengthof line(Kilometres)EnginesCoachesVansWaggonsSpecialWaggonsState-owned Railways:—Andine (5ft. 6in.)3391816165045Central Northern (Metre)1,1228551431,41874North Argentine (Metre)56315261325027TOTAL2,02411893722,172106Southern (5ft. 6ins.)3,9802903442619,533426Buenos Aires Western1,1971291361483,711—B. A. Rosario1,9971461881544,982111Central Argentine1,7851622081095,19976B. A. Pacific1,26110080602,52315Great Western (5ft. 6ins.)7149054371,25856Bahia Blanca and N.W. (5ft. 6ins.)38520882863East Argent. (4ft. 8½ins.)161142182795N.E. Argent.6623642163407Entre Rios758303819492—Prov. Santa Fé (French) (Metre)1,39281112471,85248Centr. Córdoba (N.)8858076561,60674" " (E.)210132012654—Córdoba and Rosario28929553265421N.W. Argentine196201485202Córdoba and N.W.153912486—Transandine1751410101308Central Chubut7026357—TOTAL16,2701,2651,42499834,162852
In “The Review of the River Plate” the growth of British-owned Railways is given as follows:—
Kilometres.186425187486018841,748189410,785190415,315
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 beemphasised 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 competitors, 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 farSouth 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 pass 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 municipal contracts were issued broadcast. Harbours, sewage and water-works, lighting, tramways, and every other form of public enterprise, were initiated from thattime 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 Frenchconcessionnairesmade 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 municipality to pay for the work.
Besides the above mentioned work, ports have been constructed at Bahia Blanca, La Plata, Buenos Aires, San Nicolas,Santa Fé, Paraná (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 municipal 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 excessis 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 100·82 millions to 142·24, in 1905 the former had risen to 322·84 millions, and the latter only to 205·15. 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, whilethat 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 notproved 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 scrapping. 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 competition 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 competitors. 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 naturalmonopoly—the preponderating Italian influence among the working classes 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 otherenterprises, 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 reputationfor 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 commercialtravellers 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 evengreater development with judicious advertising. In particular, jam is invariably liked by Argentines of all classes, 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.
Argentinais professedly a protectionist country. It is also professedly Republican, with a philosophic ideal of the greatest good of the greatest number. The two ideas, however, have not achieved a complete harmony. This was perhaps inevitable. Curiously enough, the vitalindustries of the country have not been favoured in any way by the fiscal system, which has been used to foster exotics and economic growths hardly suited to the conditions of the country.
In the Argentine there can be no question of “Back to the Land”; there has never been any departure. But until the present chief of the Department of Commerce began his campaign for a rational tariff, there seems to have been a tacit assumption that factories constituted wealth. That the country should remain permanently agricultural was never advised. It was assumed that it must manufacture, and on this assumption the national policy was directed. As a matter of fact, there was probably no reasoned determination at all. Some industries existed originally before communication was established on the present great scale with the rest of the world. As time went on these suffered from outside competition, and protection was invoked and secured. Other industries were then started speculatively and for them similar protection was granted. If prevailing opinion is of any value, it was even impossible for an industry to succeed except by political jobbery. Even now the evil appears to be very far from removed, and the difficulties experienced by theEnglish Railway companies are partly attributable to this cause. These have consistently refused to bribe, and it may be said that almost without exception they have adhered to this rule. The nearest approach to this form of persuasion is the nomination of influential Argentines to the local board of the company, and the retention of prominent lawyers for nominal services at a fixed yearly fee. Except for this no attempt is made to secure support in congress, and in all probability no payment has ever been made or promised by an English company in return for particular support for a definite proposal. The great privileges which the railways enjoy, especially in the matter of tariff, were granted in pursuit of a declared policy of encouragement to railway enterprise—a policy which no one there has reason to regret, as without it the country would never have emerged from its former lethargy.
With the exception of railway material, which for the most part, comes in duty free, all manufactured articles pay a very heavy duty indeed. But, whereas in almost every other country of note, some portion at least of the raw material is procurable locally, or at least from no great distance, in the Argentine the most elementary of basic materials have to be imported. With the exception of wool, grain, cattle, a special quality of timber, and sugar, there are no raw materials at all available for industrial purposes. There are no minerals; cotton is a negligible quantity at present; and fuel is as expensive as labour. Coal does not exist (at least to a workable extent, if at all); petroleum, though reported in parts of the Cordillera, is non-existent for all practical purposes; while wood is found in any quantity only in the forests in the North, North East, in Entre Rios, and in parts ofCórdoba and San Luis. The expense of carrying this to the capital would be prohibitive except by boat from the riverine forests. And, in any case, the wood being slow-growing and intensely hard, it would be manifestlyuneconomical to use anything but the trimmings as firewood.
We have, then, a country with a highly protective tariff compelled to import by far the greater part of its fuel, which, though admitted free, is necessarily burdened with freights prohibitive to economic industrial development. The Argentine, indeed, may be said to be placed, geographically, in the worst position possible for such a purpose. Keeping, then, the question of fuel in mind, the possible advantage (from the purely economic point of view) must be examined of reducing at home to the state of finished commodities the raw materials mentioned above.
In every case of manufacture, the two obvious economic reasons are either the ability to produce better or the ability to produce cheaper. The former is out of the question in the Argentine, because there is no hereditary or traditional skill, nor special climatic conditions as in Manchester; the latter, for the same reason, can only be a question of freight. Any article to be consumed at home, and produced mainly from native raw material should,prima facie, be capable of production at home for that consumption, granted an adequate supply of labour. But, for export, general conditions being at best only equal to those in the importing countries, the only circumstances which could render home-manufacture profitable would be greater liability to deterioration in transit in the raw material than in the finished article, or a great saving in bulk or weight in the latter.
Taking the raw materials, therefore, in the order given above, the wool produced or procurable in Argentina is greatly in excess of the present local requirements. What skill there is in the country for spinning and weaving is insignificant for practical purposes, the articles produced being either extremely crude, or quite exceptionally fine, and consequently expensive. Both are the work of Indians, or half-castes—who are rapidlybecoming a smaller and smaller proportion of the total population. Passing by as inconsiderable, therefore, the advantage of home production on the score of special skill, there remains the question of cheapness. For some goods, special lines of purely local popularity, which European houses would not make for other customers, there are points in favour of local production. But in such things as socks and articles of general clothing, that command a universal market (with differences only in design), it is found cheaper to import. It must be added that there is comparatively little demand for woollen goods at all in the Argentine itself. Though the tariff, therefore, does not impose a great burden on the people, from its protective aspect it is encouraging an unprofitable industry.
The duties are as follows: On spun wool about 1½d. per lb., valued at about 7d. per lb., on washed wool 1s. 7d. per lb., the customs valuation being 7d.; on stockings and socks (all classes) about 50%, on woollen cloth (pure) about 40%, and on wool and cotton mixed, over 30%.
Passing over grain, the main manufactured product of which, flour, is not imported at all, and cattle, which in the frozen meat trade and its attendant industries form one of the main items of export, there are left wood and sugar. Of the former, the country produces little for constructional and industrial purposes, all the natural timber being employed either for railway sleepers, fencing posts, or for tanning extract. It is an extremely important business, but there could be no question of importation, except for intermediate fencing bars (those not planted in the ground) and for sleepers. Even so the only circumstances which could render it possible are the inability of the home supply to cope with the demand, and the consequent rise in price. Recently poplar has been planted on the islands of the Tigre near the mouth of the Paraná with great success. But theavailable space is limited there, though it is quite possible that planting might be continued on the Paraná and Uruguay rivers. The duty on imported soft woods is comparatively small.
The one article of home-production left, which was open to foreign competition, is sugar. The erratic development of this industry in conjunction with the tariff has been so eventful, and so instructive from the economic point of view, that a rather lengthy review may be pardoned. This is practically a paraphrase and condensation of the extremely interesting, though, at times, somewhat exclamatory article written by M. Ricardo Pillado, the head of the Division of Commerce in the Argentine Ministry of Agriculture, 1906. Unfortunately, in attempting to follow some of the author’s calculations it has been found quite impossible to verify his results or to see how he arrived at them. In some cases the figures are so obviously impossible in the light of the data that the only explanation seems to be a misprint. In order not to sacrifice the continuity of his account, these figures have been given as they stand. The fact that the article in question appears in a collection, derived from various sources, and republished officially at the Ministry of Agriculture, seemed to give additional justification for its presentation here without emendation.
Writing at end of 1903, when the Brussels Convention had just condemned Bounties, and when the original heavy import duties and export drawbacks were still in force, he makes this preface to a general discussion of the whole working of the exaggerated protection of the Sugar Industry.
“The fiscal protection of the Sugar industry, instituted in the year 1883, and maintained up to the present moment in all its intensity, has been the source of the gravest evils to the Republic, not merely through its immediate effect and its having admitted and securedthe maintainanceof an economic system so detrimental to the country, but also, in the sphere of credit, through the complications of which it has been the indirect cause. Every effort, therefore, tending to destroy to their very foundations the fallacies which have been the mainspring and origin of its birth and continuance up to the present day ought to be considered, in my opinion, as an act of patriotism and duty.”
M. Pillado is far from being a free-trader in the accepted English sense. “The protection which reasonably may be and, I will even say, ought to be afforded to national industries cannot,” he goes on to say, “be identified with the favours which were lavished on the sugar industry.” Although he is in favour of a moderate and strictly protective Tariff, he cannot reconcile the prevailing system with any economic theory whatever.
The Sugar plantations and refineries are situated in the remote North West of the country, and the latter were practically in the hands of two powerful concerns. Owing to the expense of rail transport, under no circumstances could the sugar be transported to the coast to compete on equal terms with the imported ocean-borne article, and certainly not, with the additional freight, in European markets.
The initial error lay in the assumption that these Northern Districts round Tucuman were especially adapted by climate and other conditions to the cultivation of cane. No such natural privilege exists. The origin of the industry, on the contrary, is to be found in that very distance from a port which renders its present condition anomalous. Sugar-cultivation was instituted solely with a view to the satisfaction of local requirements, and the idea of competition with foreign produce in the capital was probably never dreamed of. This view is the more probable when it is remembered that Tucuman lies nearly a thousand miles from Buenos Aires, whilerailway communication was not established until 1888 or even later.
At that time, however, protection was already in full force. Although full communication was not established until 1892, and till then goods had to be transported by cartage, or whatever means the state of the roads (such as they were) permitted, so early as 1883 the duty was raised from the existing rate of 25%ad volorem, to a specific tax of 5 cents per kilo, at a time when there was only one currency. The impost being irrespective of quality, the actual burdens resulted as follows: On refined Sugar valued by the customs at 19 c. the kilo, 26½%; on white or granulated with a valuation of 14 c., 35¾%, on raw of 11½ c. per kilo, 43½%. It is obvious says the writer, that the greatest burden fell on the lower grades, the only ones which the local refineries were in a position to produce and to offer in competition with imported sugars.
The year 1885 marked the next stage in the development. Owing to facilities of transport being absent, Tucuman was in no better position than before, while the issue in the same year of the decree authorising a paper currency with the consequent premium upon gold, resulted in a natural increase in the restrictions on importation. The increase in the duty was nominally from 5 to 7 c. per kilo irrespective of quality. But the actual increase resulted in a total of 90% on refined sugar and 108% on the lower grades.
The third increase took place three years later, in 1888, when the import charge was raised to 9 c. gold per kilo on refined sugar, other qualities being taxed at the old figure. On M. Pillado’s estimate this meant a difference of 268% between the cost of that sugar in bond and its price to the importer.7