False Economy - Alan Beattie [8]
Along with Australia and Canada, Argentina and the United States formed a clutch of efficient, profitable New World farm exporting countries. Production expanded massively, seizing on the new technologies. Fresh American beef appeared with frequency on the tables of Europe. A growing market and established supply chains meant that the concentration of production in a few products like beef and wheat seemed the logical way to go. By the end of the nineteenth century, Argentina's economy, calculated on a per capita basis, was higher than that of France, and a third higher than Italy's.
A British visitor to Argentina in 1914 wrote: "One cannot go through the country and see its fecundity, go into the killing houses of La Plata and Buenos Aires, watch the ocean liners, with the Union Jack dangling over their stern, being loaded with many sides of beef, visit the grain elevators at the ports of Bahia Blanca and Rosario pouring streams of wheat destined for European consumption into the holds of liners, without the imagination being stimulated when standing on the threshold of this new land's possibilities."
Used wisely, the benefits of this export boom could have kept Argentina up in the pack, chasing the United States. But much of the money was captured by the owners of huge swaths of pasture, not their badly paid employees, and they generally either spent it on imported consumer goods or bought more land with it. Argentina needed to import more than just technology to benefit from the commodity boom. It needed to borrow the money from abroad as well. At this time it hardly seemed to matter. The British were on hand. They poured money and expertise into railroads that opened up the pampas just as they did in Australia, Canada, and the United States.
If Argentina looked like it was following the American route, it was doing so by rote, not by understanding—importing modern technology, but not the spirit of innovation and change. Argentina borrowed money from the British, but America learned from their experience as well. Economies rarely get rich on agriculture alone. Britain had shown the world the next stage: industrialization. Crudely put, labor-saving inventions increased farm output, created surplus profits, and reduced the demand for labor. The savings were used for investment in industry. The displaced farmers went to the towns to work in the factories.
The same benefits that boosted American farming also helped it industrialize. Sometimes it serves to be second on the scene: the United States could follow the path that Britain had already beaten down. Two advantages in particular were to be gained from Britain's agricultural revolution: one, the technologies of smelting iron and so forth already existed; and two, America could tap some of Europe's, and notably Britain's, large pools of money looking to invest abroad.
America learned quickly. Though it benefited from the farm trade in which it also had a comparative advantage, and from British investment, it never became as dependent on either as its counterpart in the Southern Hemisphere. Its most significant import from Britain was neither money nor goods but ideas. Among other things it grasped that building a manufacturing industry would allow it to benefit from better technologies, whereas halfheartedly trying to squeeze a little more wheat out of the same fields would not.
American business owners wanted to invest their own money in industrializing their country. Although they borrowed a great deal from abroad, they also saved their money and invested it. Foreign capital accounted for no more than 10 to 15 percent of investment in America, compared with more than a third in Argentina.
It was not as if Argentina consciously and visibly rejected the same course. It could scarcely avoid growing its own manufacturing industry unless it copied the remarkable Chinese decision, earlier in the millennium, to retreat from the world and regard foreign technologies with