GENERAL PLAN AND METHOD OF THIS BOOK
Bernard Miall translation
Before commencing a study of the financial and economic situation in the Argentine Republic, it is important to decide at the outset as to the spirit in which this examination should be pursued, and the method most proper to such an inquiry. We tread upon a novel and peculiar field, and any too rigid comparison with the events of other countries might easily lead us to errors of appreciation.
Above all we must practise the philosophical principle nil admirari; we must be astonished at nothing, and abstain from all too absolute judgments. Although, as the figures of foreign trade will show, the progress of the country has surpassed all expectation, it is, on the other hand, almost impossible to foretell how far the results of one year will be ratified by the year following.
Like all young nations, the Argentine progresses on its path to the unknown by leaps and bounds; it is as yet in an unstable condition, in which the oscillations of prosperity are still of great amplitude and exceedingly sudden.
It is easy to discern the cause of this essentially unstable condition.
The Argentine, in its present phase, is an agricultural country, whose principal sources of wealth are cereals and stock-raising; the result is that each year the whole life of the country is affected by the harvest.[13] On the harvest depends, in a great degree, the movements of external commerce; it produces those sudden changes which occur from year to year, and which result occasionally in a variation of £8,000,000 to £12,000,000 above or below the average.
The harvest influences not only the exports, more than half of which consist of agricultural products, but has no less an influence on the value of importations.[14]
The national powers of consumption are, in fact, very intimately connected with the measure of the agricultural output; as the latter is bad or good, the home consumption absorbs more or fewer imported products. Thus the poor harvests of 1901 and 1902, which resulted in a fall of nearly £1,800,000 in the cereal exports, produced in 1902 a fall of £800,000 in the imports of iron and materials used for construction. The same depression was visible in the imports of textiles and beverages, and still more so in those of articles de luxe. The spending powers of the country being closely dependent on the facility of realising the products of the soil, it is easy to understand that in the case of a bad harvest or a poor market the consumers have no longer the same powers of purchase.
We find the same ups and downs in the figures of the Budget, the contributive powers of the country being influenced by the same causes as its consumption. If the crops are poor, the Budget of the following year shows immediate traces of the fact. Thus in 1902, the year of the bad harvest, the total receipts were estimated at £5,534,000 in paper, and £9,486,669 in gold; but the actual receipts were only £5,221,000 in paper, and £8,047,755 in gold; a deficit of £1,438,913 in gold.
At the same time the Customs receipts, which are the most variable item of the revenue, on account of their direct relation to consumption, have fallen from one year to another (as in 1903 compared with 1902), as much as £1,200,000 in consequence of the agricultural crisis.
There is an equally direct relation between the financial situation and the results of the harvest. If the commercial balance is favourable, the Argentine becomes a creditor of foreign countries by the excess of its exportations, and the resulting payments in gold, after the deductions of the interest on the foreign debt, increase the proportion between the metallic currency and the monetary circulation in general.
As these few examples prove, the prosperity of the country is subordinated to the result of the harvest; the latter gives the measure of all improvement, all progress of a financial and economic order. Unlike the ancient European nations, the Argentine Republic has no reserves of accumulated capital behind it, so that it can live on its own savings in times of crisis. Its commerce and its industries depend almost exclusively upon its agricultural yield, and share all the latter’s vicissitudes.
All depends on the value of the soil, the basis of public and private wealth. The power of expenditure which follows a good harvest may contribute towards proving personal property, but the latter remains always strictly related to the agricultural yield and general produce of the soil, and does not constitute an easily-realised reserve.
For the rest, we must recognise that, as a rule, this capital does not remain inactive, and is as little as possible sterilised by investment in the public funds. Those who possess available cash, in the shape of revenue from a large estate, usually employ it by increasing their stock of cattle, or in reclaiming more land, or by investing it in other estates; so that all that comes from the earth returns to the earth, and goes to increase its yield.
The peculiar situation of this great agricultural country, which constitutes at once the strength and the instability of the Republic, shows us in what spirit and by what method it should be studied. All depends upon the yield of the soil, for this is the great dispenser of the national wealth; it is therefore the agricultural system that we must examine first of all, if we wish to arrive at a solution of the problems arising from the present condition of the Argentine or predict its future.
To follow out this general plan, we must consider the country first of all from two standpoints: we must examine into its production and its markets or outlets, in order to learn the true conditions of its existence, the value of its soil, and its sources of revenue.
We shall then proceed to examine its administrative machinery, showing how the Argentine lives and progresses as a nation, and to analyse its financial and monetary organisation with reference to the economic situation.
The two portions of this scheme are closely connected, and their study must lead us to the same conclusion, that the Argentine is a nation in a state of growth, and, like all young nations, still uncertain of its first steps; but it is animated by a spirit of initiative, and urged by the breath of progress, which may lead it to a high destiny among the great productive countries of the earth.