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Fourth International, November 1945


Charles Carsten

Behind the Argentine Crisis


From Fourth International, Vol.6 No.11, November 1945, pp.341-345.
Transcribed, marked up & formatted by Ted Crawford & David Walters in 2008 for ETOL.


While Argentina is the most prosperous, powerful and independent of the Latin American countries, it has, nonetheless, been in the position of a semi-colony to Britain for almost a century. Argentina’s agrarian economy has been a perfect complement to the highly industrialized economy of Great Britain.

Until the industrial development of the last 25 to 30 years Argentina’s wealth had been derived almost exclusively from the land. Prior to Argentine independence from Spain, wealthy landed estates had been formed on the basis of grants from Spanish Kings and the purchase of frontier land at unbelievably low prices. From 1832 until 1916 the landholders dominated the nation’s political and economic life.

The latifundia became phenomenally wealthy merely by virtue of title to the land which mounted in value from about 50 centavos a hectare in 1836 to over 5 pesos a hectare in 1857. In the following decade land values more than doubled. They continued a steady increase throughout the nineteenth century and then skyrocketed again, to undreamed of heights during the boom years of the 1920s. In the years of greatest prosperity they reached the fantastic level of 1,840 pesos a hectare.

Landed aristocrats, mistaking the prosperity of the twenties for the dawn of the millenium, mortgaged their holdings to the National Mortgage Bank which would lend them up to 80 per cent on the generously assessed value of their estancias. With the money they built homes in the city and villas in France.

The causes for this great increment of agricultural wealth were largely independent of the landowners’ activities. A great tide of immigration from Europe swelled the population, supplied cheap labor and created a domestic market. The development of packing houses for the processing of meat, and the means of chilling and freezing it so that it could be shipped abroad, as well as the construction of a network of railroads opening the interior of the country and making possible shipment of agricultural and pastoral products to the seacoast, was carried through by British capital.

A few wealthy Argentine families continue to hold most of the land in the largest acreages in the world. It is not uncommon for individuals to own one hundred to two hundred thousand acres of land. In 1942, 272 persons and land companies owned one sixth of the rich province of Buenos Aires – twelve and a half million acres of land valued at $200 million. In the province of Patagonia two companies hold 16,535,000 acres of land – an area equal to that of Switzerland and Belgium combined. Holding land in such large tracts makes mandatory a system of leases and sub-leases. Absentee landlords, with all the attendant evils, are the rule in Argentina.

The landowning interests soon found that Argentina’s semi-colonial status with relation to Great Britain worked out to their best interests. A strict trade bilateralism developed between the two countries. Britain, whose dense population depends upon the importation of foodstuffs from the outside, imported duty free Argentina’s surplus of beef, wheat, mutton and other agricultural products. In return Argentina raised no barriers to the free flow of British manufactured goods into the country.

The Landowning Aristocracy

By virtue of its preponderant economic weight, the land-owning aristocracy dominated the political life of Argentina through its political representative, the Conservative party. The Conservatives ruled continuously until 1916 when they temporarily lost power to the representatives of the industrial class, the Radicals. However, the landowning interests recaptured political power through the overthrow in 1930 of Hipolito Yrigoyen, caudillo of the Radical party and they retained power until 1943 when Ramirez, backed by the army, seized power for the military clique.

The latifundia has always opposed tariff legislation and the industrialization of the country. The landlords contend they must import manufactured goods in order to sell their agricultural products. They violently oppose any attempt to disturb this equilibrium. From their point of view the old trade relationship with Britain is the best one possible.

This profitable relationship was threatened, however, early in the thirties when Britain’s hard pressed economy forced her to curtail imports. The heavily mortgaged landowners were completely unprepared for the debacle that followed. The first five years of the depression brought land prices down from 373 pesos a hectare to 184 pesos by 1934. A national mortgage moratorium had to be called in 1933. Prices were 48 per cent lower in that year than they had been in 1928. Export prices had declined by 76 per cent. The decline continued until by 1936 some 38 per cent of the mortgages were in default. Many landowning families were either totally ruined or had their holdings partially wiped out. The latifundia remained in desperate circumstances until World War II created a shortage of meat.

The depression that proved ruinous for the landowners was a boon to the urban capitalists. Due to a number of unforeseen circumstances it immeasurably accelerated the industrial development. The growth of Argentinean commerce and industry was given impetus by the first world war and the resultant shortages produced by the blockade. It was further aided by the accumulation of domestic capital seeking a profitable investment.

Industry continued its expansion in the years between the first world war and the thirties. During the depression of that period, the peso was depreciated, thus increasing the cost of foreign goods at a time when domestic labor was unemployed and cheap. Exchange controls, intended to benefit the latifundia, restricted purchases from abroad. This provided special protection for domestic industry. Both of these factors growing out of the agrarian crisis which accompanied the world depression, were fostered by the agricultural-pastoral interests but worked, unforeseen by them, to the advantage of industrial interests.

Growth of Argentine Industry

Growth of Argentine industry in the thirties was nothing short of phenomenal. From 1914 to 1935 the number of workers in industry increased only 24 per cent. But from 1935 to 1941 they increased by 79 per cent. Industrial establishments which had numbered 40,000 in 1935, increased to 60,000 by 1941. The value of manufactured articles was 3.5 biI1ion pesos in 1935; by 1941 it was 6.3 billion pesos.

In comparison to agriculture tie growth is even more striking. During the period 1914-1940 the number of persons employed in agriculture rose only 19 per cent, according to Miron Burgin in The Economic Problems of Latin America. On the other hand, the number of persons dependent upon industry for a livelihood increased, during the same period, by 122 percent, from 1,246,000 to 2,770,000.

In value of production the 1argest industry in Argentina is meat packing. Next in value comes the building trades, an indication of the rapid tempo of urban expansion. Then, in order of their importance come the following: power companies, petroleum refineries, flour mills and textile mills. In addition there are many other industries of lesser importance. Argentina can now make the shoes, hats, stockings, tableware, electric appliances, refrigerators, washing machines, radios, and railroads she once imported from England, Germany and the United States. By 1942 the net value of industrial production had edged up to a position about equal to that of agrarian-pastoral production.

This process of industrial expansion was given further impetus by the drastic restrictions placed on trade with Europe soon after the beginning of World War II. Early in the war Britain’s lack of shipping space and surplus products for exportation to Argentina virtually stopped their active trade relationship. A little later, another of Argentina’s suppliers, the United States, was confronted with a similar situation. The drying up of her normal sources of supply forced Argentina to look for new ones. Argentine industry attempted to fill the domestic demand by accelerating its production and expanding its facilities. Since Argentine industry enjoyed a virtual monopoly of the domestic market, had access to huge amounts of refugee capital from Europe and a large sum of accumulated domestic capital, it was able to expand rapidly. But in order to do so it was necessary to find new sources of fuel and raw materials. Thus, she got part of the three million tons of coal Britain had previously supplied annually, from Brazil and Chile. As a consequence, her trade with Latin America grew remarkably. In 1943 her trade with Bolivia was three times larger than it had been in 1939. Commerce with Chile increased five times; with Colombia six times. Her trade with Brazil rose by 50 per cent and with Uruguay by more than 100 per cent.

Not only did Argentina’s trade increase but it changed in character. Burgin states that one of the most significant aspects of Argentina’s wartime exports “is the remarkable increase in the value of exports of manufactured goods. In 1939, Argentina’s shipments of manufactures were valued at 45 million pesos, representing 3 per cent of total exports. In 1943, such exports amounted to 424 million pesos or 19 per cent of the total.” Furthermore, many of the products shipped to Latin America appeared for the first time among Argentine exports.

Coincident with the growth of industry in Argentina, the native industrial capitalist class grew more powerful. Today it is competing more vigorously than ever with the landowning interests for domination of the country. The industrial section of the Argentine bourgeoisie desires protection from foreign competition in the form of high tariffs. It wants to institutionalize agriculture, changing it to a partial producer of raw materials needed for an expanding industry. This group of native industrialists aspires to replace Wall Street imperialism in trade with South America.

But Argentine industrialists need large quantities of machinery, tools, metals, oil-well and railroad equipment and motor vehicles in their drive toward self-sufficiency. Their major reservoir of capital, “295 million pounds of blocked sterling exchange in London, a sum which will be larger by the war’s end,” according to Ysabel Fisk and Robert Rennie in the Foreign Policy Report for May 1, 1944, may compel them to buy British goods, but Britain is not able at present to supply the products Argentine industry needs. This was already made clear by Lord Halifax who was quoted by the New York Times, September 23, 1945, as saying that “we cannot export or revive our great carrying trade until we have reconstructed our plants and restored our merchant navy.”

Argentine capitalists are forced, therefore, to turn to the United States to supply them both the credit and the goods. But the United States has made unmistakably clear that such credit and equipment will be supplied only in exchange for a favored position in Argentine economy.

Although the Wall Street imperialists favor limited industrialization of Argentina to create a better market for American exports and prevent the country’s domination by Britain, mutually beneficial trade relations between the United States and Argentina are impossible. Argentina produces nothing except quebracho and flaxseed that this country needs to import. A further deterrent to Argentina becoming an important industrial power is her lack of essential raw materials such as coal, iron and petroleum. With no large deposits in her own country she is forced to import large quantities from either Europe or the United States.

British capital which built the railroads, packinghouses and other major enterprises in Argentina exercised until recently the preponderant influence in the country. This capital amounted to one and one-half billion dollars in 1943, according to Stanley Johnson, who wrote in the Washington Times-Herald for May 25, 1944, that this was far in excess of the “United States’ three hundred and eleven million and the rest of Europe’s nine hundred million.” Thus Britain had 55.5 per cent of the investment in Argentina as compared with the United States’ investment of 11.5 per cent, and was 150 times greater than German investments in the country. “British influence in the pampas country,” he said, “is in direct relation to her investment there.”

But since British investments date far back, most of them are in public utilities which were excellent investments during the last century but have since declined in value. “Return on British capital in Argentina has sharply decreased in this century, particularly since World War I,” wrote Ysabel Fisk and Robert Rennie in the Foreign Policy Report for May 1, 1944. “In 1913 British railroads were earning 4.8 per cent, while today they are earning only a shade over 1 per cent. All categories of British investments – government bonds, railroads, power companies, banks – averaged a return of 4.9 per cent in 1914, as compared with 2.1 per cent in 1942.”

Furthermore during World War II Britain had to liquidate her investments all over the world to finance her war expenditures. As a result “many of the investments which appear in the Central Bank study as British or Belgian are already in American hands. This was particularly true of electric light companies ... So rapid was the liquidation of British holdings in the first two years of this war that the real ownership of ‘British’ companies in Argentina and elsewhere will probably not be known for several years,” stated Fisk and Rennie.

By contrast American investments in Argentina are more recent and moreover are yielding returns far in excess of British investments. The following table of the investment and profit of eight leading American companies shows the startling contrast between the yield on American investments and those of the British. It also illustrates the highly remunerative character of Wall Street’s foreign enterprises.

The older British investments were made chiefly in railroads and tramways. The investments became obsolete without being written off the books. Thus Argentina was forced to service a debt that had long ago been amortized. Rolling stock held by the British, for example, averages twenty years in age and some coaches in daily use are over fifty years old. British trams in Buenos Aires are over twenty-six years old and their useful life, by the company’s own admission, is only twenty years. “This situation,” wrote Fisk and Rennie, “multiplied by the number of railroads and street railways in Argentina, explains the almost bankrupt condition of the majority of British investments in the country.”






(in pesos)


Percent of

Swift de la Plata








Standard Oil Co., Argentina




First National Bank of Boston








General Motors, Argentina




National City Bank of New York




United Shoe Machinery Co., Argentina




*Figures from the Argentine Corporation Commission, as published in Veritas, April 1, 1942, pp.395-436.

Britain has made many attempts to improve the situation for its coupon clippers. During the depression of the 1930’s, “as the returns of British investors in Argentina dwindled to the vanishing point,” Fisk and Rennie declared, “Britain brought increasing pressure to bear on the Argentine government to save the failing enterprises of its investors.” Britain was in an exceptionally favorable position to exert pressure on Argentina, as the latifundia was dependent upon British purchases of its exports. Under normal conditions, Britain buys 30 to 40 per cent of everything Argentina sells, and 90 per cent of the meat.

The British owners of the Anglo-Argentine tram company of Buenos Aires insisted that the city take the enterprise off their hands and operate it as a municipal venture. British railroads protested to the Argentine government against the building of automobile highways which would permit trucks and buses to compete, etc.

By 1932, as the world economic crisis wore on, Britain was in desperate financial straits. At the Ottawa conference, as is well known, Britain broke with its century old tradition of free trade and signed a series of preferential trade agreements with the other nations of the Empire. These agreements placed additional tariffs on non-Imperial products and set quotas for them. As a consequence, Argentina’s meat quota was drastically slashed and it was made clear that it would be further reduced in the future. As a result, Argentine meat exports declined at the rate of 5 per cent a month. “At the beginning of 1933,” said Fisk and Rennie, “it looked to Argentine estancieros as though the end had come.”

The Argentine government, which was in the hands of the Conservatives, sent Vice-President Julio A. Roca to London in 1933 to negotiate with Walter Runciman, President of Britain’s Board of Trade. They signed an agreement that linked Argentina to Britain in a tight bilateralism. Argentina was to allow 15 per cent of the meat to go to domestically owned packing houses; the rest was to go to foreign packers. Tariffs on British goods were lowered. The British, knowing their victim was at their mercy, squeezed out the last possible concession by writing into the agreement a section which stated that “valuing the benefits of collaboration of British capital,” Argentina “proposes to accord such enterprises ... a benevolent treatment.” “Benevolent treatment” meant saving the tram company and cessation of road building in competition with British-owned railroads. In return for these concessions the imperialist bandits of Britain agreed not to cut the meat quota below the average of the last three months preceding June 1932.

The Roca-Runciman agreement was renewed in 1936 and had a determining influence on Argentine foreign policy until it was suspended in 1939. Under its provisions, which were implemented by exchange controls, British goods received such preferential treatment that the United States was almost driven from competition. Pounds were sold cheaply to those who wished to import British goods, but dollars were sold at an average of 20 per cent higher. Argentina set quotas to prevent the importation of American automobiles. And when, in spite of the adverse trade relations, a favorable dollar balance had accumulated in 1937, Argentina used it to retire 372/ million pesos in dollar bonds instead of buying American products. Irate American imperialists protested against the “discrimination” but were met with the stock phrase: “We buy only from those who buy from us.”

England took Argentina’s surplus and virtually dictated the policies of the country until the Nationalists seized power in 1943. Giving the lie to assertions by the United States government, which branded Argentina as an Axis satellite, is the following statement by Fisk and Rennie:

Argentine neutrality under President Castillo had the full, if unacknowledged, sanction of the British business interests in Argentina, and of the British consular service represented by the Board of Overseas Trade. The groups representing British capital felt that a break with the Axis would bring Argentina wholly into the Pan American bloc and under the economic dominance of the United States, a business rival of Britain in Argentina. As a result, contrary to popular belief, the Castillo Government although anti-American was pro-British and pro-Ally. It represented to the last the interest of the landholding class in maintaining Anglo-Argentine bilateralism.

Britain’s Decline

World War II finally crippled Britain’s ability to supply Argentina with the products she needed and disrupted shipping between the two countries. Power passed out of Britain’s hands when the nationalist military group seized the government and wrested political control from the agrarian pastoral interests.

The Wall Street imperialists aim to prevent domination of Argentina by the latifundia which could only mean stronger ties with Britain, intensified bilateralism and the loss of Argentina as a market for American goods. Wall Street is therefore prepared to sanction a limited industrialization of Argentina, provided it is strictly subordinate to U. S. industry and does not conflict with American interests in South America. The United States believes such a development will free Argentina of its dependence on a single market for its exports and thus offer a large market for American machinery, tractors and automobiles.

Argentine industry is desperately in need of capital and machinery from the United States. But the landholders want at all costs to restrict purchases to Britain. The struggle between these two forces in Argentine economic life is mounting in intensity. Neither group directly holds political power today, neither group is able to force its full policy upon the country. The national bourgeoisie is divided into two almost equally powerful, yet antagonistic groups. According to Fisk and Rennie “power is in the hands neither of the middle-class Radicals, nor of the landed Conservatives, but of a small group of army men who represent extreme Right-wing nationalism.”

This nationalism flowered because of the flagrant exploitation of the country by the foreign imperialists. Nationalists pointed demagogically to the foreign spoliation of the country. They gave the military dictatorship that came to power through a coup d’etat in 1943 an ideological basis and a program. Argentine nationalists are anti-liberal, anti-foreigner and, since capital is mainly supplied by foreigners, they demagogically claim to be anti-capitalist.

Most important among the supporters of the dictatorship is the G.O.U. (Group of United Officers), organized and controlled by Colonel Peron. The regime is also supported by a majority of the officer caste, some of the Federal office-holding bureaucrats, the extreme Catholics, the Hispanistas who revert to Feudal Spanish Catholic tradition for their ideological roots, and the fascists. It is estimated, however, that the whole of its support does not amount to more than 15 per cent of the population.

For all its daring, the Farrell-Peron regime is intrinsically weak for it is opposed by the majority of the working class, as well as the two major bourgeois political parties. In an effort to extend its base and appease the widespread anti-imperialist sentiment of the population, the military clique, soon after it seized power, placed army supervisors in the leading foreign corporations to control operations, and declared themselves in favor of revoking all concessions made to foreign capital by the Conservative president; General Augustin P. Juste. The nationalists, say Fisk and Rennie, “are against Britain because they fed that British capital has had a first mortgage on their country. And they are against the United States because they fear American imperialism.”

To bourgeois journalists such as T.B. Ybarra, it appears that the Farrell-Peron regime “like the coffin of Mahomet, is “held up in mid-air without visible means of support.” But in reality, the regime finds its source of power in the inability of any economic group in the country to rise to a position of complete domination and force on the country a policy that expresses its own particular needs. Furthermore, the regime acts in the general interest of the entire capitalist class; its major acts of terror are directed against the parties and organizations of the working class.

Aims of Wall Street

The United States’ primary interest in Argentina is not restoration of democratic liberties to the Argentine people. The lie is given to Spruille Braden’s “democratic” effusions by the State Department’s recognition and support of the equally dictatorial and brutal Vargas regime in Brazil – a regime which has a long record of torture, murder and imprisonment of its political opponents, a regime which denies any democratic rights to the Brazilians. Similar policies are followed by the Peruvian “dictatorship. Last winter the Paraguay government deported to a concentration camp in the waterless Gran Chaco, seven hundred men who took part in a strike. Many other governments in Latin America stifle the press, refuse to permit free assembly, violate the democratic rights of the people. Still the United States has the friendliest relations with all of them.

The truth of the matter is that the United States, having in the course of the war driven England, Germany and Japan out of most of their strongholds, is all the more anxious to bring to heel Argentina, the strongest nation in Latin America and the only one that remains under a semblance of British domination.

In opposition to Great Britain, who favors the agrarian-pastoral interests, the United States is desirous of aiding the rise to power of the young Argentine industrial class. The United States is anxious to replace British domination with her own. She wants to dictate the policies of the country, supply the manufactured goods, capital and raw materials needed by Argentina’s infant industry. The U.S. State Department has declared diplomatic and economic war against the Farrell-Peron regime because this military dictatorship at present stands athwart its imperial plans, its determination to convert Argentina into a semi-colony of Wall Street. The only reason the Wall Street imperialists hypocritically shout so loudly for democracy in Argentina is that the industrial group, represented politically by the Radicals, today enjoys an unquestionable majority. Free elections would probably place them in power. It goes without saying that the State Department would just as gladly recognize any dictatorship that ruled Argentina, if it evinced “friendship” for the Wall Street imperialists and their plans.

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