The Terms of Trade and the Rise of Argentina in the Long

361 Pages·2014·5.72 MB·English

The Terms of Trade and the Rise of Argentina
in the Long Nineteenth Century
Joseph A. Francis
A thesis submitted to the Department of Economic History of the London School of
Economics and Political Science for the degree of Doctor of Philosophy.
December 2013.
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Declaration
I certify that the thesis I have presented for examination for the MPhil/PhD degree of
the London School of Economics and Political Science is solely my own work other
than where I have clearly indicated that it is the work of others (in which case the
extent of any work carried out jointly by me and any other person is clearly identified
in it).
The copyright of this thesis rests with the author. Quotation from it is permit-
ted, provided that full acknowledgement is made. This thesis may not be reproduced
without my prior written consent.
I warrant that this authorisation does not, to the best of my belief, infringe the
rights of any third party.
I declare that my thesis consists of 75,746 words, inclusive of footnotes, but
exclusive of appendices and bibliography.
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Abstract
Argentina’s early twentieth century is commonly portrayed as a ‘golden age’ in
which it became ‘one of the richest countries in the world’. Here, however, this
optimistic vision is challenged by placing Argentina within a new metanarrative of
global divergence during the long nineteenth century. A massive terms-of-trade
boom – the extent of which has not previously been appreciated – had profoundly
uneven impacts across the periphery. Where land was abundant, frontiers could
expand, leading to dramatic extensive (that is, aggregate) growth. An expanding
frontier then had a safety-valve effect on labour markets, so capitalists responded to
high wages by mechanising production, which raised labour productivity and,
consequently, per capita incomes. In the land-scarce periphery, by contrast, deindus-
trialisation led to increasing quantities of labour receiving diminishing returns by
being applied to limited land resources. Similarly, Argentina’s own century-long
terms-of-trade boom allowed the Littoral to prosper but made the more densely
populated interior stagnate. The presence of the poor interior then prevented the
country from developing the kind of white-egalitarian democracy that had allowed
the prosperous European offshoots to make the transition to rapid intensive (that is,
per capita) growth. Most importantly, Argentina’s political backwardness ensured
that landownership remained concentrated, which muted the safety-valve effect of
the expanding frontier, so capitalists did not make the same investments in labour-
saving technologies. The new metanarrative of global divergence thus leads to a far
more pessimistic revision of Argentina at the beginning of the twentieth century – a
revision that is verified through a comparative assessment of its living standards that
shows them to have been considerably below the levels of Northern Europe and the
European offshoots. Argentina’s ‘golden age’ is therefore a myth.
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To Ron, Sally, Karen, y la changuita.
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Acknowledgements
Research for this dissertation received financial support from the Economic and
Social Research Council. Colin Lewis was instrumental in my obtaining that funding,
and provided patient supervision throughout my time at the LSE; Chris Minns came
on board later as a second supervisor, and gave much useful advice; Max-Stephan
Schulze excelled first as the PhD Programme Director, then as Head of Department;
and Rose Harris in the Financial Office gave assistance at various times, especially
when she rescued me from one particularly sticky situation.
The dissertation, especially Chapter 2, benefited greatly from comments
made by participants in the LSE Economic History Department’s Thesis Workshop,
particularly Peter Sims.Alejandra Irigoin kindly invited me to participate at the New
Economic Historians of LatinAmerica workshop at the LSE on 26April 2013, where
I received valuable feedback on Chapter 5, above all fromAlfonso Herranz-Loncan.
Chapter 5 also benefited from being presented at the Oxford Economic & Social
History Graduate Workshop at Nuffield College on 6 November 2013.
Invaluable stimulation and support also came from Carlos Brando, Ulaş
Karakoç, Cecilia Lanata Briones, Jesús Emilio Monzón, Felipe Pereira Loureiro,
José Luis Quintana Goyeneche, Beatriz Rodriguez-Satizabal, Gerardo Serra,
Leonardo Weller, and Bernardo Wjuniski. InArgentina I am indebted to the kindness
of Jorge Gaggero, Juan Carlos Garavaglia, Norma Lanciotti, Marcelo Rougier, Ruth
Sautu, and the late Jorge Schvarzer, as well as the librarians of the Instituto Torcuato
diTella, the Ministerio de Economía, and the Universidad de SanAndrés. Elsewhere,
thanks must be given to Cristián Ducoing Ruiz, Manuel Llorca-Jaña, Jonathan
Nitzan, Jeffrey Williamson, and the staff of the Bodleian Library, the British Library,
the British Library of Political and Economic Science, and Senate House Library.
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Contents
Declaration........................................................................................................2
Abstract.............................................................................................................3
Acknowledgements...........................................................................................5
Contents.............................................................................................................6
Illustrations........................................................................................................8
1. Introduction....................................................................................................11
From Pessimism to Optimism.........................................................................13
Pessimism Redux.............................................................................................19
The Terms of Trade.....................................................................................20
The Great Divergences...............................................................................23
From Disorder to Order.............................................................................27
The Development Gap................................................................................37
Numbers, Myths, Metanarratives...............................................................39
Appendix 1.1: Argentina’s GDP, 1800-2012...................................................40
The Official Estimates, 1935-2012.............................................................41
The Unofficial Extensions, 1800-1935.......................................................44
2. The Long Boom..............................................................................................56
Old and New Narratives..................................................................................57
The Prebisch-Singer Hypothesis................................................................57
Williamson’s Narrative...............................................................................60
The Downward Bias........................................................................................64
India’s Deindustrialisation...............................................................................80
Whither Ricardo?.............................................................................................84
Appendix 2.1: 21 Terms-of-Trade Estimates, 1750-1913...............................85
Appendix 2.2: India’s Terms of Trade, 1861-1913..........................................91
3. A New Order..................................................................................................96
Land and Growth.............................................................................................97
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The United States......................................................................................100
The Followers...........................................................................................109
The Land-Scarce Regions..............................................................................113
The Global Reordering..................................................................................121
Appendix 3.1: Land and Population in 166 Countries..................................123
4. Reordering the River Plate.........................................................................126
The Imperial Impact......................................................................................127
Native Forces.................................................................................................136
The Civil Wars..........................................................................................137
The Oligarchic State.................................................................................146
The Emerging Nation................................................................................157
Paradise Gained?...........................................................................................172
Appendix 4.1: Argentina’s Terms of Trade, 1780-1938................................174
Exchange Rates........................................................................................175
Wholesale Prices of Hides........................................................................176
The Export Price Index.............................................................................181
A Proxy Import Price Index......................................................................187
Results ......................................................................................................189
5. The ‘Golden Age’ Myth...............................................................................193
Living Standards............................................................................................194
Political Institutions.................................................................................194
Public Welfare...........................................................................................200
National Income.......................................................................................208
Paradise Lost?................................................................................................221
Appendix 5.1: International Price Levels, c. 1905-07...................................222
Food Prices..............................................................................................223
Rents.........................................................................................................225
The Price Levels.......................................................................................228
6. Conclusion....................................................................................................233
The Bigger Picture.........................................................................................236
Data Appendix...............................................................................................240
Bibliography..................................................................................................309
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Illustrations
Figures
A1.1 Argentina’s Relative GDP Per Capita, 1930-85.........................................44
A1.2 Argentina’s Relative GDP Per Capita, 1800-1913.....................................54
2.1 Williamson’s Terms-of-Trade Boom, 1800-1913.......................................61
2.2 Prices of an Internationally-Traded Good with Falling Trade Costs..........67
2.3 Price of Egyptian Cotton in Alexandria and Liverpool, 1824-1889...........68
2.4 Own-Price and Proxy Terms of Trade, 1860s-1913...................................70
2.5 Indonesia’s Own-Price Terms of Trade, 1825-1913...................................73
2.6 Prices in Britain and Indonesia, 1836-1913...............................................75
2.7 Two-Good Terms of Trade for Indonesia, 1836-1913................................76
2.8 Other Two-Good Terms of Trade for Indonesia, 1836-1913......................77
2.9 Freight-Rate Indices, 1800-1913................................................................79
2.10 Three Estimates of India’s Terms of Trade.................................................82
2.11 Terms of Trade for Cotton and Cotton Shirtings in India, 1815-1913.......83
3.1 Arable Potential and Population Growth, 1500-1900..............................101
3.2 US Terms of Trade, 1659-1913................................................................105
3.3 US Overseas Trade, 1790-1913................................................................109
3.4 Railway Density, 1830-1910....................................................................110
3.5 Arable Potential Realised, 1780-1910......................................................111
3.6 Welfare Ratios of Unskilled Labourers in Eurasia, 1730-1913................116
A3.1 Argentina’s Population, 1500-1900..........................................................125
4.1 Part-Proxy Terms of Trade for Nine Argentine Exports, 1780-1913........133
4.2 Part-Proxy Terms of Trade for Argentina, 1780-1913..............................135
4.3 Volatility in Argentina’s Part-Proxy Terms of Trade, 1780-1913.............136
4.4 Immigration and British Investment in Argentina, 1865-1913.................149
4.5 Land Distribution in 16 Counties of Buenos Aires Province, 1836-90....163
4.6 Cultivated Land Per Capita in Argentina, 1872-1913..............................164
4.7 Land Distribution in Argentina, 1914.......................................................165
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A4.1 Prices of Bulls and Dry Hides in Buenos Aires, 1780-1848....................179
A4.2 Two Series of Salted Hide Prices, 1864-1906..........................................180
A4.3 Argentine Dry Hide Prices, 1780-1938....................................................182
A4.4 Argentine Salted Hide Prices, 1821-1938................................................183
A4.5 Two Export Price Indices for Argentina, 1864-1938................................187
A4.6 New and Old Terms-of-Trade Estimates for Argentina, 1810-1938........189
A4.7 Terms of Trade for Argentina and Indonesia, 1780-1938.........................191
5.1 Disproportional Representation in Argentina, 1895 and 1914.................198
5.2 International Life Expectancy at Birth, 1870-1913..................................204
5.3 International Primary School Enrolment, 1870-1913..............................206
Tables
A1.1 Three Estimates of Argentina’s GDP Growth, 1875-1913.........................46
A1.2 Cortés Conde’s Industrial Growth Rates for Argentina, 1875-1910..........48
A1.3 Argentine Production Tax Data for Beer, 1891-1900.................................50
A1.4 Argentine Production Tax Data for Wine, 1892-1900................................51
A1.5 Evidence of Industrial Growth in Argentina, 1870s-1913..........................52
2.1 Distribution of World Manufacturing Output, 1750-1913.........................63
2.2 Own-Price and Proxy Terms of Trade........................................................71
2.3 Williamson’s 21 Terms-of-Trade Series.....................................................72
2.4 Indonesia’s Two-Good Terms of Trade, 1836-1913...................................78
2.5 Cotton Cloth Production in India, 1795-1900............................................81
A2.1 Weights in India’s Import Price Index........................................................92
A2.2 Weights in India’s Export Price Index........................................................93
3.1 Global Arable Potential, 1780-1910...........................................................99
3.2 Welfare Ratios of Unskilled Labourers Around the World, 1500-1849...103
4.1 British Capital Exports, 1865-1913..........................................................150
4.2 Argentina’s Population, 1869-1914..........................................................159
4.3 Argentina’s Day Labourers, 1869-1914...................................................161
4.4 Argentina’s Textile Workers, 1869-1914..................................................169
A4.1 Weights in Argentina’s Export Price Index, 1780-1938...........................184
A4.2 Weights in Argentina’s Proxy Import Price Index, 1780-1938.................188
A4.3 Three Estimates of Argentina’s Terms of Trade, 1780s-1900s.................190
5.1 International Political Indicators, 1913....................................................195
5.2 International Health Indicators, c. 1909-13..............................................201
5.3 Life Expectancy at Birth in Argentina, 1913-15.......................................202
5.4 International Education Indicators, 1910.................................................205
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5.5 International GDP Per Capita, 1913.........................................................209
5.6 International Real Wages, pre-First World War........................................211
5.7 International Weekly Wages in Construction, c.1905-09.........................212
5.8 International Prices, c. 1905-09................................................................217
5.9 International Price Levels, c. 1905-09......................................................218
5.10 International Wage Levels in Construction, c. 1905-09...........................219
A5.1 International Prices (Raw), c. 1905-09.....................................................224
A5.2 Cortés Conde’s Rent Series, 1903-12.......................................................226
A5.3 Rents in 23 Conventillos in Buenos Aires, 1907......................................227
A5.4 Rents in Buenos Aires, 1914....................................................................228
A5.5 Expenditure Shares on Five Food Items...................................................229
A5.6 Cost of Calories and Food Baskets...........................................................230
A5.7 Alternative Estimates of the Price Levels................................................232
A5.8 Correlation Coefficients of Price-Level Estimates...................................232
DA.1 Argentina’s GDP Estimates, 1875-2012...................................................241
DA.2 Williamson’s Terms-of-Trade Series, 1750-1913.....................................247
DA.3 Terms-of-Trade Series for Six Countries, 1861-1913..............................254
DA.4 Indonesia’s Terms of Trade, 1820-1913...................................................256
DA.5 India’s Terms of Trade, 1861-1913...........................................................258
DA.6 International Exchange Rates, 1791-1938................................................260
DA.7 International Commodity Prices, 1813-1913...........................................264
DA.8 International Freight Rates, 1757-1913....................................................267
DA.9 Arable Potential, Cropland, and Population, 1780-1910..........................269
DA.10Potential Arable Land and World Population, 1500-1900........................273
DA.11 Estimated Exchange Rates for Argentina, 1780-1938..............................277
DA.12Argentine Hide Prices in the Core (£ Per Ton), 1790-1938.....................281
DA.13Hide Prices in Buenos Aires, 1780-1851..................................................285
DA.14Hide Prices in Buenos Aires, 1863-1938..................................................288
DA.15Argentina’s Export Prices, 1780-1938......................................................291
DA.16Argentina’s Export Prices, 1910-1938......................................................297
DA.17Argentina’s Proxy Import Price Index, 1780-1938..................................299
DA.18The 100 Largest Corporations Registered in Argentina, 1914.................303
DA.19Land Ownership in Buenos Aires Province, 1836-90..............................306
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