The Argentine as a Market

The foregoing is a brief account of the course of taxation introduced for purposes of protection as described by M. Pillado. At this point he takes occasion to moralise on the iniquity of the system, and exclaims that it is a matter of congratulation that the promoters of the industry did not think fit to produce even further from the great centres, somewhere on the borders of Bolivia. In emphasising these existing burdens, however, the writer is merely making a dramatic pause preparatory to enlarging on the further excess in the institution of bounties on export.

The immediate result of this tariff was naturally an immense rise in the price of all sugar, and subsequently the practical exclusion of the imported article. The figures cited in the work speak for themselves. In 1884 the total imports of sugar of all classes were 35,000 tons. In 1902 they had fallen to 155 tons. While the next year saw an importation of some hundred tons of refined sugar, the other grades were represented by a total of about 300 lbs.

We now come to the real interest of the question—the effect namely which this policy had upon the industry itself and the devices which the latter adopted to regulate prices.

In the first instance an unparalleled boom took place. In 1884 the production was 75,000 tons. In 1895 it was 109,000. In the following year the sum of 134,417 tons was reached—a production quite in excess of the country’s requirements. The result was that in the words of M. Pillado, “the refiners began to cry to heaven and to earth for any solution whatever to rescue them from the asphyxiation which threatened to overwhelm at one and the same time themselves and their system.”

For the planters, however, Tucuman had become a veritable Eldorado. Two years sufficed to give a net return four times as great as the capital invested. As a natural consequence it followed that labour and capital flowed into the Sugar districts, creating an unprecedented boom and denuding the other agricultural industries not only of the province but of the rest of the republic as well of their very necessities of existence. The effect was felt, apparently even in the capital, so that “lawyers deserted their profession, workmen their tools, to throw themselves with a regular fever into an occupation so full of promise.” Works sprang up as if by magic. Palaces were constructed to house the staffs. Capital was lavished on the industry by individuals and banking houses alike. No one, in short, took the slightest pains to investigate the stability of the trade, and investments were made with complete recklessness.

While fortunes were being created in the cultivation of sugar cane, orchards, orange-groves, pasturage, arable land—everything else, in short—were being either transformed or neglected, and the public generally was compelled to pay an exorbitant price for its sugar. The moment had, therefore, arrived for a reduction in the import duties, and in the price of the article. That, however, was not the view of the interested parties. “If,” they said, “by any misfortune this year’s harvest should prove so good as the last” a worse evil would befall. Considering that private mortgages amounted to some five million dollars and that the total indebtedness of the industry, in spite of its abnormal prosperity, was no less than twenty million, the gravity of the situation was not exaggerated. A bad harvest would be insufficient to satisfy the claims of creditors. A good harvest would cause a tremendous fall in prices and consequent disaster.

Unfortunately, however, for the success of the venture, some concerns were not in the precarious state to which the majority had been reduced. By dint of better management and through other causes they still succeeded in maintaining substantial returns. These refused to enter the Trust—or Kartel more strictly—and the result was a more or less complete failure.

Two combines were instituted, nevertheless, the above mentioned “Union” (in a modified form, no doubt) and a body known as the “Centro Azucarevo.” These concerns devoted themselves with energy to the solution of the problem of the surplus, and, as was to be expected, the easiest seemed to be that supplied by political means, the president of the “Union” being also president of the Chamber of Deputies. So successful were their efforts that in 1897 a bounty of 12 c. per kilo was sanctioned, raised for the next year to 16 c. To pay for this bounty an Inland Revenue tax of six cents paper per kilo was declared on all sugar home or imported. As in countries nearer home, the bounty system was an attempt, a costly attempt, to market a commodity which in normal circumstances was absolutely incapable of meeting its competitors. Argentine sugar under the most favourable conditions could not, and never was expected to, compete in the open market with that of other countries. In the circumstances it must be admitted that the whole scheme was merely an organised exploitation of the public in the interests of a weak industry and certain speculative financiers. “What public interests,” exclaims Mr. Pillado, “what benefit for the community could be cited to warrant a contribution from the country at large of $40,000,000 in five years as a gift to the exporters of sugar?”

Of the $39,850,000 levied, $25,250,000 were given as a free gift to the exporters, only $14,600,000 finding their way into the exchequer.

Statistical Appendix.

Index