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The Politics of Rate-making: the British-owned Railways and the Unión Cívica Radical, 1921–1928

Published online by Cambridge University Press:  05 February 2009

Paul B. Goodwin Jr
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Extract

The accession of Hipólito Yrigoyen to the office of President of Argentina on 12 October, 1916, was the long-awaited climax to a quest for political power that had begun 25 years earlier with the founding of the Unión Cívica Radical. Since 1891 the UCR or Radical Party, as it is usually called, had been condemned to the status of an opposition party, its leaders waiting impatiently for their chance to uproot completely what they deemed to be the corruption and mismanagement of the régimen, their pejorative term for the conservative establishment that had dominated Argentine political life for decades.

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Articles
Information
Journal of Latin American Studies , Volume 6 , Issue 2 , November 1974 , pp. 257 - 287
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Copyright © Cambridge University Press 1974

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References

1 Manuel, Gálvez, La Vida de Hipólito Yrigoyen: El hombre del misterio (Buenos Aires, 1939), p. 273.Google Scholar

2 The British-owned railways, which represented a capital investment of £238,720,261 in 1923, consisted of four major systems — the Buenos Ayres and Pacific, Buenos Ayres Great Southern, Central Argentine and Buenos Ayres Western — and three smaller lines, the Entre Rios Railways, Argentine North Eastern and the Central Córdoba. See United States Department of Commerce, Bureau of Foreign and Domestic Commerce, Railways of South America. Part I, Argentina, by Brady, George S. (Washington, D.C., 1926), p. 35.Google Scholar

3 Rogelio, Araya, Tarifas ferroviarias (2 vols., 2nd ed.: Buenos Aires, 1923), 1, 31.Google Scholar

4 Carlos, Saavedra Lamas, Los ferrocarriles ante la legislación positiva argentina (Buenos Aires, 1918), p. 346.Google Scholar

5 Government intervention also was justified when the companies earned more than 6.8% on net receipts for three consecutive years, with working expenses arbitrarily calculated at 60% of the gross income. Law 5315, Anales de legislacicón argentina, 1852—1964 (5 vols., Buenos Aires, 1942—1965), vol. for 1881—1919.Google Scholar

6 Buenos Ayres Great Southern Railway, Report of Proceedings at the Ordinary General Meeting of Proprietors, 1920 (London, 1920).Google ScholarBuenos Ayres Western Railway, Proceedings at the Thirty-first Ordinary General Meeting of the Company, 1920 (London, 1920).Google ScholarCentral Argentine Railway, Annual Report and Accounts, 1920 (London, 1920).Google ScholarBuenos Ayres and Pacific Railway, Annual Report and Accounts, 1920 (London, 1920).Google Scholar

7 See ibid.

8 Virgil, Salera, Exchange Control and the Argentine Market (New York, 1941), pp. 26–30.Google Scholar

9 Killik, Stephen H. M., Manual of Argentine Railways for 1920 (London, 1920), p. 7.Google Scholar

10 Buenos Ayres and Pacific Railway, Annual Report and Accounts, 1920. Buenos Ayres Great Southern, Proceedings, 1920. These substantial sums did not escape the attention of the Argentine government. As early as Mar. 1918, the Director General de Ferrocarriles recommended that earnings or losses resulting from the exchange rate between gold pesos and pounds sterling be included in the companies′ working accounts for tax purposes. A decree to this effect was signed by Yrigoyen, on 3 08. 1920. For all pertinent documents, see Archivo, Ministerio de Transporte, ex-Dirección General de Ferrocarriles (hereafter cited as AMT/DG), Expediente 018313-D-918.Google Scholar

11 Salera, , Exchange Control, pp. 30–31.Google ScholarVernon, Lovell Phelps, The International Economic Position of Argentina (Philadelphia, 1938), pp. 38–42.Google Scholar

12 Buenos, Ayres Western, Proceedings, 1921. An examination of railway reports and accounts for 1921 reveals similar trends on all lines. The post-war depression promised to be especially debilitating to the Entre Rios and Argentine North Eastern railways, whose profits were marginal at best.Google Scholar See Francis, W. White, United States Chargé d'Affaires ad interim, to the Secretary of State, Buenos Aires, 10 01. 1922, United States Department of State, Records Relating to the Internal Affairs of Argentina, 1910—1929 (hereafter cited as USDS/RIAA), 835.773/11.Google Scholar

13 Higher rates were sought on excess baggage, parcels, passenger service and livestock. The Review of the River Plate (hereafter cited as RRP), 30 09. 1921, p. 859. In 1917 and 1919 the Argentine government allowed the railways modest rate increases which were quickly absorbed by spiraling fuel, material and labor costs.Google Scholar

14 From Lérrora's account of the meeting, in Archive, Buenos Ayres and Pacific Railway (Buenos Aires), Actas de Ia Junta de Representantes y Gerentes de los Ferrocarriles (here. after cited as ABAP'AJRG), Acta 2, 7 Mar. 1921. The companies considered these Actas strictly confidential. Lértora, along with other railway lawyers and most of the companies′ Buenos Aires directors, were native Argentines and, in Yrigoyen's mind, associated with the régimen.

15 Frias′ report, in ABAP/AJRG, Acts i, 3.Mar. 1921.

16 AMT/DG, Circular No. 13, 2 Mar. 1925.

17 ABAP/AJRG, Acts 1, Mar. 1921.

18 White to the Secretary of State, Buenos Aires, 10 January 1922, USDS/RIAA, 835.773/11.

19 La Vanguardia, 20 12. 1920, p. 1.Google ScholarLa Prensa, editorial, 7 03. 1921, p. 5.Google Scholar

20 Leguizamón's memorandum of the interview, ABAP/AJRG, Acta 2, 7 Mar. 1921.

21 From a memorandum of the meeting, ibid., Acta 3, 8 March 1921.

22 La Epoca, 15 03. 1921, p. 1. The fines were imposed on the Western, Great Southern, Pacific, Entre Rios and Argentine North Eastern railways. See also ABAP/AJRG, Acta 4, 16 03. 1921. The paper peso (m/n) was worth approximately US $0.46.Google Scholar

23 From the memoranda of company officials, ABAP/AJRG, Acta 4, 16 Mar. 1921. Foremost among the complaining interest groups were the Sociedad Rural Argentina, Union Industrial Argentina and the Bolsa de Cereales. See RRP, 18 03. 1921, p. 669.Google ScholarLa Epoca, 17 03. 1921, p. 1.Google Scholar

24 RRP, 18 03 1922, p. 669.Google Scholar

25 ABAP/AJRG, Acta 4, 16 Mar. 1921.

26 The Confraternidad Ferroviaria was established in June 1920. It was a loose confederation within which both La Fraternidad, the engineers′ and firemen's union, and the Federación Obrera Ferroviaria, which represented the traffic and workshops personnel, maintained their separate identities. La Fraternidad had already signed a three-year escalafón agreement for its men on 3 Sep. 1920. La Vanguardia, 29 06 1920, p. 1.Google ScholarFernández, Manuel F., La Unión Ferroviaria a través dcl tiempo: Veinticinco años a servicio de un ideal, 1922—1947 (Buenos Aires, 1947), p. 127.Google Scholar

27 La Fraternidad, Año XIII (20 01. 1921), pp. 3–6.Google ScholarRRP, 28 01. 1921, p. 217.Google Scholar

28 La Epoca, 6 02. 1921, p. 1.Google ScholarLa Fraternidad, Año XIII (20 02. 1921), pp. 3–5.Google ScholarRRP, 11 02. 1921, p. 349.Google Scholar

29 ABAP/Actas Reuniones Mensuales de Gerentes; No. 1 a 100 del 15 de Marzo 1922 al 27 Noviembre de 1928, Acta I, 15 Mar. 1921. The railways were in any event willing to grant only fixed work scales and refused to consider fixed wage scales. ‘If we sacrifice the right to reduce wages we, besides weakening our control over the men, lose our only defence case the Government refuses further tariff increases that may be necessary hellip;′ ’ABAP/Ordinary Monthly Meetings of General Managers of British Railways, 31 Mar. 1921.

30 See ABAP/AJRG, Acta 19, 25 June 1921.

31 La Prensa, 6 04 1921, p. 6.Google ScholarLa Vanguardia, 7 04 1921, p. 2.Google Scholar

32 ABAP/AJRG, Acta 8, 8 Apr 1921.

33 Legal Representatives to Yrigoyen, , 8 04 1921,Google Scholar in ibid.. The fines were announced in La Epoca, it 04. 1921, p. 1.Google Scholar

34 From O'Farrell's memorandum of the interview, in ABAP/AJRG, Acta II, 22 Apr. 1921.

35 ibid..

36 ABAP/AJRG, Acta 12, 25 Apr. 1921.

37 ibid., Acta 13, 27 April 1921.

38 ibid., Acta 15, 29 April 1921.

39 Legal Representatives to Yrigoyen, , 4 05 1921,Google Scholar copy in ibid., Acta 16, 4 May 1921.

40 ibid..

41 ibid..

42 Hipólito, Yrigoyen, Pueblo y gobierno (12 vols., Buenos Aires, 1956), IV, ‘Mensajes inaugura les del Congreso de la Nación’, p. 255.Google Scholar

43 ABAP/AJRG, Act, 22, 19 07 1921.

44 RRP, 22 07 1921, p. 259, and the various company financial statements for 1921.Google Scholar

45 RRP, 22 07 1921, p. 221.Google Scholar

46 La Nación, 31 07 1921, pp. 5–6.Google Scholar

47 ABAP/AJRG, Acta 24, 3 Aug. 1921. See also Acta 23, 1 Aug. 1921.

48 Among the British lines the Central Argentine refused to sign because it felt its situation to be unique in that the company had withdrawn its rates on 17 Mar. and had never been fined. Thus the company saw no need to beg forgiveness because it was guilty of no infraction. The Central Argentine did raise its rates on I Aug., supposedly with the approval of Giovacchini and Torello. Central Argentine, Proceedings, 1921. The Central Córdoba refused to sign because the note threatened its ‘rights’. For further details see ABAP/AJRG Acta 23, 1 Aug. 1921. British diplomatic personnel considered the signing of the note a ‘great blunder’ on the part of the railways. Sir Ronald Macleay, British Minister to Argentina, to Tyrell, W. G., Buenos Aires, 14 10. 1921, Public Record Office, Foreign Office (hereafter cited as PRO/FO) 371/A8257/5526/2.Google Scholar

49 The decree was published in La Epoca, 21 08. 1921, p. 1. See also ABAP/AJRG, Acta 27, 22 08. 1921. To the companies′ relief, the decree also cancelled the fines which had been mounting since 9 Mar.Google Scholar

50 ABAP/Actas del Directorlo Local [Pacific Railway], Acta 884, 31 Aug. 1921. ABAP/AJRG, Acta 28, 20 Sept. 1921. On St David's references to foreign credit see Buenos Ayres and Pacific, Proceedings, 1921. The Argentine Minister of Foreign Affairs assured the companies that rate increases would be authorized without delay. See White to the Secretary of State, Buenos Aires, 10 Jan. 1922, USDS/RIAA, 835.773/11.

51 ABAP/AJRG, Acta 28, 20 Sept. 1921. The government's published version of the events of August may be found in Torello's note of 4 Oct. to the companies. See RRP, 7 10. 1921, pp. 929–933.Google Scholar

52 ABAP/AJRG, Acta 28, 20 Sept. 1921. The ‘political exigencies’ probably referred to the important gubernatorial campaign being waged in Córdoba, a commercial center always opposed to higher railway rates.

53 From the Legal Representatives' note to Torello, , 30 09. 1921, in RRP, 7 10. 1921, p. 927.Google Scholar For the reputed text of the resolution of 31 Aug. see ibid., 30 Sep. 1921, p. 861. With respect to newspaper rumors see La Razón, 5 09. 1921, p. 1.Google ScholarLa Vanguardia, 6 09. 1921, p. 1,Google Scholar and the important financial and commercial paper El Avisador Mercantil, 5 09. 1921, p. 1.Google Scholar Socialist Deputy Nicolás Repetto requested information from the Ministry of Public Works about the ‘secret decree’ during the legislative session of 23 Sept. República Argentina, Congreso, Nacional, Diario de sesiones de la cámara de diputados, 1921 (Buenos Aires, 1921), V, 260–262.Google Scholar

54 The Times, 3 09 1921, p. 12.Google Scholar

55 ibid., p. 7.

56 RRP, 30 09 1921, p. 861.Google Scholar

57 The election was scheduled for 13 Nov. La Prensa, 12 09. 1921, p. 5.Google Scholar

58 White to the Secretary of State, Buenos Aires, 10 Jan. 1922, USDS/RIAA, 835.773/II.

59 La Epoca, 17 09. 1921, p. 1.Google Scholar See also La Vanguardia, 9 09 1921, p. 1.Google Scholar The Socialist paper thought the rates question to be a colossal farce and accused the Radical government of collusion with the railways. ibid., 5 Sep. 1921, p. 1, 8 Sep. 1921, p. 5.

60 Decree of 8 Sept. 1921 in República Argentina, Ministerio de Obras Públicas, Antecedenres, discusión e informes de la Comisión Técnica de Estudios y Revisión de Tarifas (hereafter cited as MOP, Comisión Técnica) (Buenos Aires, 1922), p. 5.Google Scholar

61 La Epoca, 17 09 1921, p. 1.Google Scholar

62 ABAP/AJRG, Acta 28, 20 Sept. 1921.

63 La Vanguardia, 19 09 1921, p. 1.Google Scholar AMT/DG, Circular No. 45, 28 Sept. 1921. La Epoca, 28 09. 1921, p. I. Giovacchini, in a meeting of 13 Sept. with Torello and several railway officials, denied that he had usurped the president's authority in the question of rate increases and threatened to resign. Torello said that ‘this could not be permitted’ and convinced the beleaguered Director General to remain in office. From railway minutes of the meeting, ABAP/AJRG, Acts 29, 28 Sept. 1921.Google Scholar

64 ABAP/AJRG, Acts 29, 28 Sept. 1921. The text of the companies′ note may be found in RRP, 7 10 1921, pp. 925–929.Google Scholar

65 Telegram from the London boards to the legal representatives, London, 4 Oct. 1921, ABAP/AJRG, Acts 31, 4 Oct. 1921.

66 See almost any La Epoca front page for October.

67 AMT/DG, Circular No. 48, 5 Oct. 1921. La Epoca, 5 10. 1921, p. 1. ABAP/AJRG, Acta 32, 5 Oct. 1921.Google Scholar

68 RRP, 21 10. 1921, pp. 1049, 1051. Once in the courts the railways could legally challenge Yrigoyen's pretended right to regulate all rates.Google Scholar

69 Suing for money was the only legal action which could be taken against the government without the prior consent of Congress, an eventuality which the companies scrupulously avoided. See ibid., p. 1051.

70 ibid..

71 ABAP/AJRG, Acta 33, 19 Oct. 1921.

72 Macleay, to Tyrell, , Buenos Aires, 14 10. 1921, PRO/FO, 371/A8257/5526/2.Google Scholar

73 147 H.C. deb. 5 s, cols. 1324—25, 7943—44, 31 Oct. 1921.

74 La Vanguardia, 3 11 1921, p. 1.Google ScholarLa Epoca, 4 11. 1921, p. I.Google Scholar

75 See Cecil, Harmsworth, Parliamentary Under Secretary of State to Samuel, A. M., , M.P., 16 01. 1922,Google Scholar PRO/FO 371/A29/7170/2, and the FO minute, 2 Mar. 1922 in ibid., A1518/7170/2.

76 Quoted words are from a conversation between the United States Chargé d'Affaires and a company manager. White to the Secretary of State, Buenos Aires, 2 Dec. 1921, USDS/RIAA, 835.00/263. See also Macleay to the Foreign Secretary, Buenos Aires, 27 Jan. 1922, PRO/FO 371/A1491/7170/2.

77 ABAP/Actas del Directorio Local, Acts 886, 31 Dec. 1921.

78 ABAP/AJRG, Acta 36, 17 Nov. 1921.

79 MOP, Comisión Técnica, passim. Both Torello and the commission defended the companies against accusations referring to watered capital and questionable accounting procedures.

80 ibid., pp. 552–560. See also ABAP/Actas dcl Directorio Local, Acta 888, 28 Feb. 1922.

81 ‘Informe de La Comisión Revisora de Tarifas: Nota de Elevación’, 20 May 1922, AMT/DC, Expedienre 014199-C-922.

82 Chalkley, H. O., British Commercial Attaché, to the Foreign Secretary, Buenos Aires, 28 06 1922, PRO/FO 371/A4712/7170/2. The companies also threatened to reduce rail service, cut salaries and wages and lay off workers.Google Scholar See La Epoca, II 05 1922, p. 1.Google Scholar

83 Killik, , Manual of Argentine Railways for 1924, p. 5.Google Scholar

84 For details of the cereal crops crisis, see Goodwin, Paul B., The British-owned Railroads and the Unión Cívica Radical: A Study in the Political Uses of Foreign Capital, 1916—1930 (unpublished Ph.D. dissertation, University of Massachusetts, Amherst, 1971), pp. 273–279.Google Scholar In 1927 the most insistent groups demanding lower rates included the Sociedad Rural de Rosario, Cámara Gremial de Cerealistas de Rosario, Sociedad Rural de Pergamino, Centro Unión de Almanceros de Rosario, Sociedad Rural de Santa Fe, Cámara Gremial de Cereales de Buenos Aires and the Bolsa de Comercio de Córdoba. See República Argentina, Minisrerio de Obras Públicas, Dirección General de Ferrocarriles (hereafter cited as MOP/DG) Tarifas Ferroviarias: Estudio de Ia Dirección General de Ferrocarriles sobre su revisión (Buenos Aires, 1928), pp. 29, 139–140.Google Scholar

85 ABAP/AJRG, Acta 127, 18 May 1927; Acta 128, 15 June 1927.

86 La Acción, 15 11. 1927. p. 16.Google Scholar MOP/DG, Tarifas Ferroviarias, p. 140. According to Castello, he was the first to advise Ortiz that the rates of the Central Argentine and Great Southern were too high and needed revision. Interview, Buenos Aires, 9 June 1970.Google Scholar

87 La Acción, 29 03. 1928, pp. 4, 10.Google Scholar

88 MOP/DG, Tarifas Ferroviarias.

89 ibid., pp. 5–25.

90 ibid., pp. 27–159, 176–179.

91 ibid., pp. 159–175, 180–181. According to government figures the Great Southern's coefficient of exploitation, which had reached a high of 82.45% in the fiscal year 1921, had fallen to 63.28% for the fiscal year 1926. Company figures were 83.17% and 66.0% respectively. For further data on the Great Southern's financial condition see MOP/DC, Tarifas Ferrouiarias: Ectudio de Ia Direccidn General de Ferracarriles sobre su reisión; Cuadros Numéricos, A/1, B/1.

92 Ferrocarril, del Sud, Nota dirigida a S.E. el Señor Ministro de Obras Públicas de Ia Nación, Dr. Roberto M. Ortiz con motivo del Informe de la Dirección General tie Ferrocarriles referente a tarifas (Buenos Aires, 1928), pp. 4–5.Google Scholar

93 MOP/ DG, Tarifas Ferroviarias: Esrudios de la Dirección General de Ferrocarriles relativos a la revisión tie las tarifas del Ferrocarril del Sud, analizando las observaciones contenidas en la Nota de la empresa del 2 de Mayo de 1928 (Buenos Aires, 1928), pp. 66–68.Google Scholar

94 República Argentina, Ministcrio, de Obras Públicas, Revisión de las tarifas del Ferrocarril del Sud (Buenos Aires, 1928), pp. 6–8.Google Scholar

95 MOP/DG, Tarifas Ferroviarias: Estudio de Ia Dirección General de Ferrocarriles sobre su revision en el Ferrocarril Central Argentino (Buenos Aires, 1928), pp. 35–38. See also Castello's note to Ortiz, 20 June 1928, AMT/DG, Expediente 015831-D-928.Google Scholar

96 Central Argentine to Ortiz, 18 July 1928, AMT/DG, Expediente 019046-C-1928. The decree may be found in ibid., Expediente 14840-F-928.

97 La Acción, 25 06 1928, p. 2.Google ScholarLa Epoca, 11 07 1928, p. 2.Google ScholarLa Vanguardia, 22 06 1928, p. 1: 21 07, p. 2.Google ScholarLa Prensa, 5 07 1928, p. 1: 21 07 1928, p. 9.Google Scholar

98 RRP, 27 07 1928, p. 24.Google Scholar

99 Central Argentine to Castello, , 04 08 1928, AMT/DG, Expediente 020878-C-1928.Google Scholar

100 For the text of the decree see ibid., Expediente 14840-F-928.

101 Central Argentine to Castello, , 1 10. 1928,Google Scholaribid., Expediente 026758-C-1928.

102 Castello, to Ortiz, , 2 10. 1928,Google Scholaribid., Expediente 026758-C-1928. For the text of the decree see ibid., Expediente 21643-F-1928. The Central Argentine's note to Castello, dated 11 Oct. 1928, is found in ibid., Expediente 028032-C-0928.

103 See RRP, 7 09 1928, p. 11, as well as the various company Proceedings for 1928.Google Scholar See also La Nación, 27 10 1928. p. 6,Google Scholar and Aranasio, Iturbe, ‘Algunas leyendas sobre los ferrocarriles’, Revista de Economla Argentina, 29 (01. 1929), 562.Google Scholar

104 Report of Allen, H. C., London chairman of the Great Southern, in Buenos, Ayres and Great Southern Railway, Proceedings, 1928.Google Scholar See also Lord, St Davids′ remarks in Buenos Ayres and Pacific Railway, Proceedings, 1928.Google Scholar

105 La Epoca, 20 10 1928, p. 1; 25 10 1928, p. 1.Google Scholar

106 Castello interview.

107 ibid.. For the text of the decree see AMT/MOP, Expediente 23404-F-1928. The Central Argentine's rates were never lowered during Yrigoyen's term. See the memorandum of José, Benjamín Abalos, Minister of Public Works, 6 06 1929, AMT/DG, Expediente 023404-F. 1928.Google Scholar Early in October 1928 the Great Southern instituted legal proceedings seeking annulment of Alvear's decrees of 13 June and 23 July as well as reimbursement for damages. La Nación, 12 10 1928, p. 9.Google Scholar