LATIN AMERICA

ARGENTINA

(Owing to the continuance of exchange control, the rates given are partly nominal. Average exchange rates in 1936: Official buying rate, 3.01 pesos to $1, or 1 paper peso equals $0.332; official selling rate, 3.41 paper pesos to $1, or 1 paper peso equals $0.2933; free market rate, 3.59 paper pesos to $1, or 1 paper peso equals $0.2786)

The year 1936 opened inauspiciously, owing to the effect of the drought on small grain crops and grazing conditions, but a strong tide of prosperity set in during the second half of the year, stimulated by an exceptional corn harvest, rapid recovery of pasturage conditions, and rising prices for cereals, meats, hides, wool, and other commodities of which Argentina is an important producer. The favorable trade balance of 539 million pesos was the largest in the history of the country, excepting the inflated war years. The terms of trade were also favorable to Argentina, as the average price of imported goods declined 9 percent in relation to 1935.

The large returns from exports were further augmented by a substantial inflow of foreign funds for investment. Under the pressure of this movement, the peso showed a strengthening tendency throughout the year, the "official" selling rate improving from an average of 3.43 pesos to the dollar to 3.31 in December. The free market rate, which averaged 3.68 in January, was 3.34 in December, only a few points above the official quotation. Despite this improvement, exchange control and the 20 percent surtax on imports without prior permit were continued in force, but the rigor of the regulations was relaxed in several particulars. In June the Exchange Control Board expanded the list of American goods entitled to official exchange cover. On December 9 the Central Bank reduced the selling rate from 17 to 16 pesos to the pound sterling, the rate for other currencies being adjusted correspondingly. The buying rate remained unchanged at 15 pesos to the pound sterling. There was a boom on the Buenos Aires Stock Exchange, the turn-over rising from 819 millions in 1935 to 1,196 millions in 1936.

The favorable financial situation enabled the Government, in midDecember, to float a 4 percent internal issue of 100 million pesos. Between November 1936 and April 1937 a series of dollar bond refunding and redemption operations were completed. Of the approximately $234,000,000 of 6- and 5%-percent bonds outstanding, the Argentine Government deposited funds in New York for the redemption of approximately $121,000,000 out of cash resources, and refunded the balance by an issue of $23,500,000 4%-percent bonds and $105,000,000 of 4-percent bonds. From 1938 onwards the service on the long-term dollar debt will be $7,041,000 a year instead of $20,186,000, a saving of $13,145,000 per annum.

1 Bulletin 100, Apr. 22, 1937, Roberts, Meynell & Co., Buenos Aires.

AGRICULTURE AND PASTORAL INDUSTRIES

Conditions throughout the agricultural areas ranged from good to excellent in contrast to the unfavorable conditions of 1935. The partial failure of the small-grain yields as a result of the drought in 1935 made itself felt in the early months of 1936, but the corn crop was of good quality and quantity. The shortage in the United States placed a premium on all grains and linseed, and prices went up strongly in a speculative market. The production of wheat, linseed, oats, barley, rye, and birdseed in 1935-36 was substantially below 1934-35 levels. Rice output was only slightly lower than the record yield of 1935, while the production of cotton reached record proportions. Sugar production was materially in excess of 1934-35.

An increased production in 1936-37 of cereals and linseed was anticipated as the firming of world prices in midyear influenced the plantings of comparatively extensive areas. The Government's first estimate of the 1936-37 production is 60.8 percent greater in tonnage than for the 1935-36 harvest and above the average for the past 10 years.

The 1935-36 corn crop, amounting to 9,970,000 metric tons, was delayed by rainy weather, but prices after the harvest were materially above those earlier in the year, and the export of corn was the dominant feature of the outward movement in agricultural products. Toward the close of 1936 the outlook was so favorable that the Government terminated guaranteed prices for wheat and linseed, and announced the discontinuance of the guaranteed price for the 1937

corn crop.

The pastoral industry experienced a rapid recovery from the drought conditions which prevailed in the latter part of 1935. Shipments of most frigorifico products were higher than in 1935, and prices for cattle on the hoof varied little until at the end of the year when there was a slight weakening as a result of the provisions of the new AngloArgentine Trade Agreement imposing duties on meat imports into England. By a decree of December 16 (published late in January 1937) the Government temporarily assumed a part of the burden of the new tax by allotting to the National Meat Board 15,100,000 pesos per year from exchange-control profits to be used to reimburse the frigorificos and cattle raisers for a portion of the loss they would incur through the imposition of the British duties. The supply of sheep and lambs was fairly plentiful, and prices firmed considerably as compared with previous periods. Shipments of inedible tallow declined sharply, but exports of edible tallow lard, tankage, and bones were higher in quantity and value. The foreign demand for hides and skins resulted in a slight increase in the quantity of cattle and horse hides, and sheepskins and lambskins exported; values showed a great improvement as foreign buying became more sustained as the year progressed. Wool exports increased slightly in quantity, with an appreciable increase in value. The start of the new wool season on October 1 was followed by unusually heavy trading, and prices rose to the highest levels for several years past.

INDUSTRIAL DEVELOPMENT

Domestic manufacturing experienced a period of further expansion. Industries engaged in processing foodstuffs increased their output and improved the quality of their products. The dairy industry recov

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ered from the depression of recent years, and the output and exports of butter and casein improved. Several new cement plants were started, the output of gas and electricity was higher, and activity in the automobile assembly plants reached new high levels.

The petroleum industry was featured by the granting to the Government-controlled Y. P. F. of the control of all importations of crude and refined petroleum products and negotiations of the Government looking toward the acquisition of the properties and business of a large foreign oil company. Production of crude oil in 1936 amounted to 15,454,000 barrels as compared with 14,296,000 barrels in 1935.

BUILDING AND CONSTRUCTION

Although the index of building permits in Buenos Aires registered a slight decline from 1934 and 1935, construction activity in the capital and throughout the Republic continued at a high level. The erection of privately built apartments, business buildings, theaters, and industrial establishments was supplemented by governmental, provincial, and municipal programs involving almost every type of project.

The 1936 Government public-works program included new Government offices, port improvements, irrigation and drainage, and the extension and improvement of State railways. Bids were asked on the first of a series of terminal grain elevators to be erected throughout the country at strategic points. The 15-year (1933–47) highway program was continued.

EMPLOYMENT AND IMMIGRATION

There was a shortage of skilled and unskilled labor as the net gain from immigration failed to keep pace with the growing needs of agriculture and industry. The shortage mainly existed because of a continuance of the Government's policy of restricting the immigration of lower-class workers in order to protect nationals in similar occupations, and of admitting more highly skilled workers only when such are not available within the country. This was especially true of specialized workers for the cotton areas and new industrial enterprises. A decree of October 16 (effective Jan. 1, 1937) established even stricter control over immigration. No indices are available concerning wage trends, but in view of the rising cost of primary necessities it is believed that wages moved upward to some degree. There was little labor trouble, although a strike confined to one plant lasted several months.

FINANCE-EXCHANGE-BANKING

The year 1936 showed no fundamental change in financial conditions, but represented a trial period for the new financial institutions created in 1935 and for the several modifications made in financial laws. The operations of the Central Bank and Mobilization Institute were satisfactory, while the position of the Bank of the Nation and of the National Mortgage Bank improved.

The Central Bank rapidly dominated the financial situation, and as fiscal agent for the Government it did considerable short-term financing.

As a result of complex circumstances the 1935 budget was carried over into 1936. Treasury receipts amounted to 1,165,166,000 pesos

and expenditures to 1,164,432,000 pesos, both figures being substantially in excess of those outlined in the original 1935 budget. However, both revenues and expenditures were below the actual totals for 1935, which were in excess of the proposed 1935 budget estimates. The 1937 budget estimated ordinary revenues at 833,932,000 pesos and expenditures at 983,383,000 pesos, the deficit to be financed by the sale of bonds and other securities.

The aggregate foreign debt of Argentina was placed in October at 5,636,638,000 paper pesos, of which the National Government was responsible for 3,839,465,000 pesos, provincial governments for 1,237,724,000 pesos, and the municipalities for 559,449,000 pesos. Coincident with the publication of the debt estimate the Government announced the refunding of several United States dollar loans. December 17 an issue of 4-percent bonds was floated through the Central Bank for a total of 100,000,000 pesos, known as the Crédito Argentino Interno 4 percent 1936's; interest rates were 4 percent and 1 percent annual accumulative amortization.

COMMERCIAL POLICIES

On

After protracted discussions, the new agreement with the United Kingdom 2 was signed on November 20, 1936, and although placed provisionally in operation it had not been ratified by either country by the end of the year. The new arrangement embodies many of the provisions and concessions of the former agreement, and Argentina is given a minimum but slightly reduced quota on meats imported into the United Kingdom. Argentina secured control of the administration of the meat export quotas. In return, Argentina granted tariff concessions on about 300 items of special interest to Great Britain, including the free entry of British coal. The Argentine guarantees in matters of exchange, also granted under the former agreement, are to remain in force insofar as they are now applicable.

The special convention with Germany was renewed. Further conversations were held with Chile regarding the reconstruction and operation of the Trans-Andine Railway. Conversations were also held with Peru for the termination of a customs dispute between the two countries.3 Negotiations were also undertaken with France and Italy, but nothing definite was consummated.

TRANSPORTATION AND COMMUNICATION

The outstanding developments of 1936 were the passage of the transportation coordination bill, and the Government's policy of acquiring privately owned railways to supplement existing national lines. The State Railways reported a greater surplus of earnings than in 1935, but privately owned roads experienced slightly decreased earnings. Largely because of the drought and the decrease in the early season movement of cereals and linseed, Argentine shipping showed a slight drop in 1936, although there was a substantial pick-up in the closing months as the corn movement got under way.

Aviation developments consisted of faster schedules between the United States and Buenos Aires, the maintenance of a line to southern

Cmd. 5324, H. M. Stationery Office.

A commercial modus vivendi of February 3 agreed to repeal the decrees which had increased Argentine duties on Peruvian crude petroleum and Peruvian duties on Argentine wheat by 50 percent. Commerce Reports, Mar. 6, 1937.

Argentina, and the purchase of American planes by the Government. German and French companies continued to maintain their 3-day mail service to Europe. Telephone, telegraph, and radio-telephone services were expanded during the year.

FOREIGN TRADE

Preliminary statistics place the foreign trade (exclusive of bullion and specie) at 2,769,160,000 pesos in 1936, an increase of 24,829,000 pesos or 0.09 percent as compared with 1935. Exports totaling 1,652,449,000 pesos were 5.3 percent higher, but imports (real values) amounting to 1,116,711,000 pesos were 5 percent lower, than in 1935. The realization of such a favorable export balance was not anticipated until late in the year when exports began to move out rapidly and prices held firm. At the end of June the export balance was much lower than for the same period of 1935, but from then on each month registered steady gains.

The volume of exports was lower than in 1935, owing almost entirely to lesser shipments of cereals and linseed during the early part of the year, but the value was higher in consequence of increased world prices. On the other hand, the volume of imports was higher, but the value was lower than for 1935.

The United Kingdom maintained its position as the leading Argentine export market, followed by the United States, the Netherlands, Belgium, and Brazil. The share of the United Kingdom was 31.8 percent and of the United States 10.5 percent, both apparently decreasing as compared with 1935. However, at the close of the year 11.1 percent of total Argentine exports remained unidentified in "to order" shipments. It is believed that when these shipments, amounting to 183,506,000 pesos, are finally distributed the share of the United States in Argentine exports will be considerably higher.

The value of imports of tobacco and manufactures, drinks, textiles, lumber and wood products decreased in 1936, while that of all other groups increased slightly. On the basis of these tariff values, the total value of imports in 1936 increased 4.2 percent, while on the basis of real values there was a decrease of 5.0 percent. As real values are not yet available imports by countries are on the basis of tariff values. Accordingly the share of the United Kingdom in the Argentine import trade in 1936 was 20.4 percent and of the United States 14.6 percent, the British proportion being slightly less and that of the United States but fractionally more than in 1935. Imports from Germany and Belgium remained approximately constant, while imports from Japan declined.