Alberto B Martínez.

The Argentine in the twentieth century [microform] online

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THE BALANCE-SHEET OF THE AP.OENTTNE 353



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354 THE ARGENTINE IN THE 20th CENTURY

The largest group of investments is constituted by the
capital represented by the private railway companies, which
amounts to £178,000,000, against £111,600,000 in 1904.
This capital increases daily, and considering the develop-
ment of the network of railways all over the country, it
is not fantastic to prophesy that in a short time this sum
will reach the figure of perhaps £200,000,000.

The second large group consists of the securities repre-
senting the External National Debt, which on the 31st
December 1908 stood at £62,900,000, or £7,400,000 lower
than that of the debt in circulation on 1st July 1905.
This diminution arises from the redemption of bonds by
means of the 6 per cent. Funding Loan, of which the total
was £5,600,000.

If to the amount of this debt we add the sums represented
by the external debt of certain cities, the internal debt of the
nation, and the internal debt of some of the Provinces, we
find that the entire Argentine National Debt forms a total
of £130,000,000 We need not examine at greater lengths
the composition and value of these two groups of securities,
as we have already dealt with them in special chapters.

As for the insurance companies and foreign banks, any
estimate of their capital is difficult ; but it is otherwise
in the case of the mortgage companies. The capital which
these companies have invested in the Argentine is now of
a nominal value of more than £16,500,000. But this is only
a small portion of the foreign capital invested in mortgages
in the Argentine ; for the high interest earned by this class
of investment, which a short time back rose to 10 per cent.,
has attracted large sums of foreign money which have been
invested privately. Senor Tornquist estimates the foreign
capital thus put out in mortgages at £9,000,000.

We must call attention to the interesting fact that the
amount of foreign capital invested in the agricultural and
other rural undertakings of the Argentine increases day
by day. At the end of 1908 this capital amounted to
£8,726,037, of which the greater part was the property of
British subjects, who first devoted their energies to agriculture
and stock-raising in the Argentine a comparatively long
time ago. It is the English who have been the most active



THE BALANCE-SHEET OF THE ARGENTINE 355

.agents of the rapid and extraordinary procuress of Arcjentine
stock-raisiug, especially iu all that relates to the selectitm ol"
breeds and the best manner of feeding.

Among the industrial undertakings, that which lias of
late years assumed the greatest importance is the frozen
or chilled meat industry — the refrigerating industry. There
are now nine refrigerating establishments, with a subscribed
capital of £3,993,915. Other industrial undertakings, such
as sugar factories, breweries, quebracho mills, and mines,
are beginning to take a significant place in the list of
Argentine securities.

The nominal total of all movable values being estimated,
at the end of 1908, at £474,396,933, the question which now
occurs is. What is the annual yield of these securities ?
This is the most difficult point of our inquiry, and one we
can answer only by approximate estimates.

While it is simplicity itself to calculate the interest on
the bonds of the public debt, whether external or domestic,
it is anything but easy to calculate in all cases the dividends
paid by each company to its shareholders. Some companies
do not publish balance-sheets, and others confound the profits
realised in the Argentine with the profits earned by their
foreign houses or headquarters.

As far as our present knowledge goes, the revenue of the
securities we have mentioned may be estimated to be as
follows : —

Annual Revenue of the Securities! of the Argentine
Republic, Slst December 1908.

Name or Nature of Securities. PoundrSterling.

External National Debt ... ... ... ... £3,209,727-2

Internal ,, 843,879-4

Municipal Debt of BuenoB Ayres ... ... ... ... 196,135'4

„ ,, Santa F6 ... ... ... ... 1,636-0

,, ,, Roeario ... ... ... ... 120,000-0

Cdrdoba ... ... ... ... 19,500-0

BahiaBIanca ... ... ... ... 6,600-0

External Debt of the Province of Buenos Ayres ... ... 368,928-0

Internal „ „ „ 255,904-0

Cedulaa of the National Mortgage Bank ... ... ... 872,051-6

Debts of the Provinces of Tucuman and Entre RioB ... 29,013-4

Carryforward £5,923,374-0



356 THE ARGENTINE IN THE 20th CENTURY



Armual Revenue of the Securities of the Argentine
2\st December 1908 — continued.

Name or Nature of Securities.

Brought forward
Debt of the Province of Santa Fe
Railway Companies
National Banks of the Capital
Anglo-Saxon Banks of the Capital
Local Provincial Banks

Mortgage and Agricultural Loan Companies
Tramway Companies
Gas and Electric Companies
Telegraph and Telephone Companies
Harbours, Docks and Quays
Savings Banks, Building Societies, Annuity and Insurance

Companies
Agricultural and Stock-raising Companies
Forestal Exploitation Companies
Refrigerating Companies
Markets

Mining Companies
National Insurance Companies
Sugar Refineries
Breweries
Dairy Companies
Metallurgical Companies
Transport Companies ...
Hotel and Theatre Companies
Mills and Gr-anaries
Various Industries
General Commercial Companies ...



Revenues in
Pounds Sterling.

£5,923,374-0

67,745-0

8,423,510-8

1,131,499-6

788,680-8

53,725-6

1,044,847-2

907,603-8

804,578-2

97,478-6

293,447-8

254,852-2

496,309-2

188,505-0

229,654-2

165,243-8

23,816-8

192,040-4

165,154-6

174,2490

31,882-6

40,605-0

251,783-2

59,332-6

33,765-2

169,253-8

141,957-3

£22,144.939-2



Now what, approximately, are the amounts of securities
or movable values belonging to foreigners and to natives
of the Argentine ? Such is the question we must now set
ourselves, as one of the most important relating to the
country's future. Blessed with an immense area of territory,
mistress of enormous and unexhausted natural wealth, and
peopled by only 6 millions of inhabitants, the Argentine is
a nation still in process of formation. She attracts men
and money from all quarters of the globe ; for she promises
generous payment for initiative and for labour.

From the economic standpoint, then, it is of enormous
importance for the Argentine whether the revenue of her
securities goes to persons residing in the country, or whether,



THE BALANCE-SHEET OF THE ARGENTINE 357

on the other hand, it goes abroad, thus unfavourably affect-
ing the result of her commercial transactions, and threatening
to upset the balance of international payments.

In the case of a country which exists under the special
conditions which affect the Argentine, where there are no
accumulations of capital, where the spirit of enterprise is
not very highl}^ developed, and where every commercial or
industrial undertaking of any importance has to look to
the outer world for support, the total of the suras which
leave the country each year to pay for imported articles,
to meet the interest on the National Debt, to pay the
dividends on the shares of limited companies, and the profits
of private undertakings, the interest on capital out on loan,
whether on mortgage or otherwise secured, and finally to
remunerate capital invested and employed in the thousand
different ways peculiar to this period of rapid intercommuni-
cation — the total of all these sums must be very great ;
something, indeed, like a metallic river rolling across the ocean.
So much being granted, the moment has come to present
the problem : of the 22 million pounds required to pay the
interest on loans, the sinking-fund charges for their redemp-

. tion, and the dividends of hundreds of companies, what is
the proportion which each year leaves the Argentine to
become spent or invested abroad, assuring the owners of

■ bonds and shares the best part of the revenue of a distant
country, a country endowed with a fertile soil, in which
industry has a great future awaiting it ? And what propor-
tion of this total remains in the country ?

To solve this problem, it would be necessary to follow
the track of each of the shares or bonds issued, in order to
discover the destination of each ; and this is what we shall
attempt to do, with the help of the principal banking houses
and the great commercial houses in financial relations with
the outer world.

Although all estimates on such a subject must rest upon
the slightest foundations, and cannot be accepted as precise
statistics, we do not hesitate to give a few figures as an
indication worthy of credence, being drawn from the best
possible sources.

To proceed with due method, let us begin with the most



358 THE ARGENTINE IN THE 20th CENTURY

important division of the foreign capital invested in the
Argentine, namely, English capital, which was the first to
come from abroad to stimulate the progress of the country.
According to an inventory made by the banking house of
Tornquist & Co., which has willingly given us the informa-
tion we required, the capital imported from England and
invested in Argentine securities amounts to more than
£290,000,000, distributed as follows:—



English Co.pital Invested in the Argentine.







Capital.


Intorest.


Loans — Governmental, Provincial,


Municipal


... £63,854,643-8


£3,046,598-2


Railways




.. 166,360,683-2


8,049,431-8


Banks




.. 7,862,400-0


705,096-0


Agricultural Loans and Mortgages




.. 6,847,216-6


259,732-2


Tramways




.. 20,284,705-6


876,603-8


Electricity




5,152,590-4


287,685-2


Agriculture and stock-raising




... 4,018,997-8


248,204-8


Various investments




... 14,729,708-8


785,986-4




£291,110,946-0


£14,258,338-4



Thus this sum of £291,110,946 sterling represents an
annual revenue of £14,258,338.

To continue : in seeking to find the true amount of the
economic international balance, we should have to include in
the inventory of English capital bound to the Argentine by
commercial transactions the large number of steamers which
run between British and Argentine ports, whose value might
be represented by a sum not less than £10,000,000.

If this be added to the sum already obtained, we find that
the English capital invested in the Argentine or bound to
the country by commercial ties is not less than £300,000,000 ;
the revenue of which, estimated at an average of 6 per cent.,
represents a sum of £18,000,000 per annum, entirely paid
out of the production and the economic forces of the
Argentine.

To test the accuracy of this estimate we may mention
that according to a conscientious study of English capital as
placed in the principal countries of the globe, a study published
in 1909 in the Economist, the sums invested in the Argentine



THE BALANCE-SHEET OF THE ARGENTINE 359

amount to £254.000,000 ; a ficrure not very different iVcm
that we have already giveu.

But let us be content for the moment to realise that the
known inventoried revenue on bonds and shares beloncring
to British companies or British subjects residing or situated
in England amounts to £14,000,000 after the deduction of
the portion remaining in the hands of Englishmen residing
in the Argentine; and in the presence of such figures let
us meditate for a moment on the social and economic
consequences of such a fact.

English capital, since the dawn of the organisation of
Argentina, has been the great propulsive agent of all
national progress. In 1822, when she was still insignificant
both in riches and in population, Argentina knocked for
the first time on the doors of British capitalists, asking them
to lend a million pounds to be used for the construction
of a harbour, for the instalment of waterworks in her
capital, and for the foundation of cities ; projects which were
never executed ; for it was with this loan as it was to be
afterwards with many other Argentine loans. The funds
demanded on credit were not employed to further the
object for which they were solicited. After this first
loan all other Argentine loans were subscribed by British
capital.

Moreover, no industrial or commercial undertaking has
been established in this country but it has gone to seek the
breath of life in the financial houses of the City. Professor
Eteocle Lorini said with reason, in commenting on this fact
in his book, II Debito Publico Argentino : " All the industrial,
commercial, agricultural and mining companies which furnish
our Argentine statistics bear the foreign mark, limited; so
that one ends by getting the impression that one is studying
a purely English colony, for one finds this limited upon all
species of manufactures; limited after the statement of
capitals; all undertakings are limited; insurance is limited ;
the circulation and distribution of Argentine wealth is
limited."

Whatever may be the importance of the limited company,
it is by no means to the interest of the Argentine to declare
war upon foreign capital ; she should, on the contrary,



360 THE ARGENTINE IN THE 20th CENTURY

respect the far-seeing provisions of her Constitution, which ^j
imposes upon Congress the duty of encouraging the introduc-
tion of foreign capital conjointly with a foreign population,
because both are vital elements of the national development
and progress. But while we respect this tradition we feel
that the Government should, in counteraction, endeavour to
stimulate the application of Argentine capital to commercial I
or industrial enterprises, in order that the entire resources
of the country shall not be developed for the sole profit of
the foreigner.

Professor Lorini, whom we have just quoted, is of the
same opinion. " We are certainly not of those," he says,
" who complain of the introduction of foreign capital. The
more the latter is imported, the more it gives employment,
and increases yet more the wealth and welfare of the country.
But we must also add that as more capital arrives from
without, so the payments which the country has to make
for the use of it grow larger, and for this reason the whole
financial policy of the Government and the Argentine should
have as its object the introduction of the severest economy
and the greatest possible thrift ; not only that engagements
contracted may be honourably met, but that in course
of time we may form a national capital, capable of com-
peting with foreign capital, of reducing its pretensions,
and even of replacing it little by little, should the latter,
for any reason whatsoever, be compelled to emigrate in
virtue of causes foreign to the economic laws of the
country."

After England France stands in the first rank of those
European nations which have had faith in the future of
the Argentine, and have risked the investment of their
capital in this young and wealthy state. Unhappily the
total amount of French capital invested has not been
augmented, as one might have hoped, by the political and
commercial ties which for many years have united the two
countries, or by the fertile opportunities which the Republic
has to offer to the activity and enterprising spirit of the
Latin races.

The nominal total of Argentine securities quoted on
the Paris Bourse amounted, on the 31st of December 1907,



THE BALANCE-SHEET OF THE ARGENTINE .'^01

to the value of £78,999,308, which sum may he analysed as

follows : —

State funds £r>2,:?32,:i0»;

Banks 10,;5;?r>,()80

Transport 12,80L',L".>0

Mines r»4S,'.)78

Various 2.1)80,000



£78.900.25+



To prevent an erroneous interpretation of the above
figures, it should be stated that this total does not re-
present the value of the securities actually held by French-
men, but only the securities quoted on the Bourse, which
is a very different matter. For example, the French Bank
of the Rio de la Plata figures in this total to the extent
of £2,400,000, the amount of its capital actually subscribed,
although scarcely a quarter of it circulates in France.

On the other hand there is a very considerable quantity
of Argentine securities belonging to capitalists or investors
living in France ; securities which are not quoted on the
Bourse and are not deposited in any bank. We may cite
as an example the last loan of £10,000,000, issued under the
title of "Internal Argentine Credit 1909." Of this amount
£3,400,000 was subscribed in France, yet the bonds of
this loan, on account of a difference with the French Govern-
ment, have not yet been quoted on the Paris Bourse.

We are thus justified in concluding that the amount
we have given as representing the value of the stock held
by Frenchmen — £78,998,854 — is approximately correct ; and
that the two factors which affect the matter in opposite
senses may be taken to cancel one another.

We must also note the fact that the majority of Govern-
ment funds find as large a market in London as in Paris.
For example, the 4 per cent, loan of 1897-1900, which was
entirely issued in London, was only admitted to quotation
on the Bankers' Exchange of Paris in 1903.

In the banking department, the shares of the Spanish Bank
of the Rio de la Plata and the French Bank of La Plata were
only introduced to the Paris Bourse at the beginning of 1908 ;
the principal market for these shares is still at Buenos Ay res.

In the transport department, the General Company of



362 THE ARGENTINE IN THE 20th CENTURY

the Tramways of Buenos Ayres, which has a capital of I
£1,800,000, can only be represented in France by a very
small proportion of this capital ; the shares have been
issued principally in Brussels, London and Berlin.

We must remember that French influence in the
Argentine has been active for a long time and in various
ways. It was especially the immigration of the worthy
inhabitants of the French Pyrenees which first set in
towards the Rio de la Plata, where the Frenchmen invested
their energies in many remunerative departments of labour
some becoming farmers, some cattle-breeders, some givin,
themselves to industrial work, some to trade in the cities ;
thus contributing to the development of the wealth of the
country. Thev French mercantile marine was also the first
to establish and maintain a rapid and easy transport between
French and Argentine ports, thus permanently uniting the
two countries.

As for French commerce, it retained, as lately as 1884,
a place in the first rank with regard to the exchange of
manufactured articles or the products of the soil, the trade
being carried on especially through the medium of the Rio
da la Plata ; indeed there was a time when French commerce
represented 51 per cent, of the total trade of the Argentine,
while now it is responsible for only 20-7 per cent, of the
total value of Argentine imports and exports uuited.

We may therefore consider that the part played by French
capital in Argentine affairs is much too small as compared
to the function of English capital, and we must regret that
France is not more deeply interested in the great movement
towards national prosperity.

After France the European nation which has invested
the largest amount of capital in the Argentine, and which
has fully understood the true importance of the latter
country, is Germany.

In the remarkable increase and expansion of her industries
Germany has not forgotten the shores of the Rio de la Plata.
She has entered upon a struggle with England; all her
electrical and chemical undertakings have taken root;
factories have .sprung up due entirely to German capital ;
a German Transatlantic Bank has been established in Buenos



4



THE BALANCE-SHEET OF THE ARGENTINE 363

Ayres ; the Hamburg South American Company flies its
ensign on the ocean, swiftly carrying passengers and mer-
chandise between the two continents; a German electrical
company has established its power-houses in the Argentine
capital ; an extract of meat company is drawing its profits
from the live-stock industry ; several quebracho mills have
been founded ; many other factories have been established,
and the Germans have thus absorbed a large proportion of
the Argentine export trade.* The commercial relations
between Germany and the Argentine increase each day.
Twenty years ago the exchanges between the two countries
represented hardly 19*4 per cent, of the general foreign trade
of the Argentine — at a time when France possessed 51 per
cent, instead of her present 20'7 per cent, of the trade —
while in 1908 the exchanges with Germany amounted to
23"4 per cent, of the entire trade.

What is the total value of the German capital invested
in the Argentine Republic ? It is not easy to say with strict
accuracy ; but according to the very authentic information
of certain Buenos Ayres bankers we may reckon that the
German capital employed in the banks, commercial houses,
estancias, and industrial concerns, and in the German
Electrical Company, the electric tramways, etc., etc., amounts
to £40,000,000. If to this capital we add that represented
by the vessels under the German flag, which maintain an
active communication with the Rio de la Plata, obtaining
a large proportion of the best clients, the total of the
German capital employed in the Argentine amounts to some
£60,000,000.

With these data in hand, and an approximate knowledge
of the amount of foreign capital invested in this country in



Online LibraryAlberto B MartínezThe Argentine in the twentieth century [microform] → online text (page 32 of 33)