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Globalisation, the Terms of Trade, and Argentina's Expansion in the Long Nineteenth Century

Published online by Cambridge University Press:  01 March 2017

JOSEPH A. FRANCIS
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Abstract

Following Tulio Halperín Donghi's pioneering work, historians have tried to explain why Argentina experienced a dramatic export-led expansion in the first half of the nineteenth century despite a lack of price incentives. This paradox is resolved by a new estimate of Argentina's terms of trade. It suggests that they probably improved by at least 2,000 per cent from the 1780s to the first decade of the twentieth century, so there were considerable price incentives for export-led growth. Labour and capital moved into the export sector, bringing into production the country's Pampean land – a previously under-utilised resource. This suggests that Argentina's expansion in the long nineteenth century was less a result of internal factors than a response to globalisation.

Spanish abstract

Siguiendo al trabajo pionero de Tulio Halperín Donghi, los historiadores han tratado de explicar por qué Argentina experimentó una dramática expansión de las exportaciones en la primera mitad del siglo XIX a pesar de los pocos incentivos a los precios de los productos. Esta paradoja se resuelve por una nueva evaluación sobre los términos comerciales de Argentina. Los datos sugieren que estos probablemente mejoraron en al menos 2.000 por ciento desde los años 1780s hasta la primera década del siglo XX, así que hubo considerables incentivos en los precios para el crecimiento de las exportaciones. Trabajo y capital se movilizaron hacia el sector exportador, llevando las tierras de la Pampa –un recurso previamente subutilizado– hacia la producción. Lo anterior sugiere que la expansión Argentina en el largo siglo XIX fue menos el resultado de factores internos que una respuesta a la globalización.

Portuguese abstract

A partir do trabalho pioneiro de Tulio Halperín Donghi, historiadores têm buscado explicar as razões pelas quais a Argentina, apesar da falta de uma política de incentivo de preços, passou por uma impressionante expansão baseada na exportação durante a primeira metade do século XIX. Este paradoxo é resolvido por uma nova estimativa dos termos de troca argentinos. Tal estimativa sugere um aumento provável de pelo menos 2.000% entre a década de 1780 e a primeira década do século XX, demonstrando haver consideráveis incentivos de preços para um crescimento baseado na exportação. Capital e trabalho moveram-se em direção ao setor exportador, fazendo com que as terras da região pampeana argentina, previamente subutilizadas, fossem engajadas na produção. Isto sugere que a expansão argentina no longo século XIX foi menos resultado de fatores internos que uma resposta à globalização.

Keywords

Argentinaterms of tradenineteenth centuryglobalisationArgentinatérminos comercialessiglo XIXglobalizaciónArgentinatermos de trocaséculo XIXglobalização
Type
Research Article
Information
Journal of Latin American Studies , Volume 49 , Issue 4 , November 2017 , pp. 709 - 738
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Copyright © Cambridge University Press 2017 

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References

1 An accompanying workbook is available online at www.joefrancis.info/data/Francis_Arg_tots.xlsx (accessed 23 Dec. 2016).

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52 In-bond prices are those prior to the payment of any applicable import taxes. For hide prices in Buenos Aires, see Anon, ., ‘Report on the Trade of the River Plate’, reproduced in Humphreys, R. A., British Consular Reports on the Trade and Politics of Latin America 1824–26 (London: Offices of the Royal Historical Society, 1940), p. 33 Google Scholar; Anon, ., ‘Precios corrientes de productos en Buenos Aires en los años 1821, 1822 y 1823’, in Barba, Enrique M. (ed.), Informes sobre el comercio exterior de Buenos Aires durante el gobierno de Martín Rodríguez (Buenos Aires: Academia Nacional de la Historia, 1978), p. 60 Google Scholar; Broide, ‘Evolución de los precios’, p. 41, Cuadro 16; and Moutoukias, ‘Crecimiento en una economía’, p. 804, Cuadro 3. For Buenos Aires hide prices in London, see Gayer, Arthur D., Rostow, W. W. and Schwartz, A. J., microfilmed supplement to The Growth and Fluctuation of the British Economy 1790–1850 (Oxford: Clarendon Press, 1953)Google Scholar, as compiled by Jacks, David S., O'Rourke, Kevin H. and Williamson, Jeffrey G., ‘Commodity Price Volatility and World Market Integration since 1700’, Review of Economics and Statistics, 93: 3 (2011), pp. 800–13Google Scholar; with the database available online at www.sfu.ca/~djacks/data/publications/Britain,%20Commodity%20Prices,%201790-1850,%20monthly.xlsx (accessed23 Dec. 2016); and Halperín Donghi, ‘Expansión ganadera’, p. 65. The differential varies according to which series of hide prices in Britain is used.

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63 Francis, ‘Periphery's Terms of Trade’, esp. pp. 53–56.

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69 The parallel would be the much greater terms-of-trade boom experienced in the western United States than on its eastern seaboard. See North, Douglass C., The Economic Growth of the United States 1790–1860 (Englewood Cliffs, NJ: Prentice Hall, Inc., 1961), pp. 255 Google Scholar, 280 and Tables I–9 and 1.

70 Even within the Province of Buenos Aires there would have been considerable variations. When measured in the capital city, the terms of trade for wheat, for example, deteriorated in the late nineteenth century, which initially seems surprising, given the rapid growth in wheat exports during this period. Were the terms of trade measured in the wheat producing regions, by contrast, an improvement would be seen owing to the reduction of internal transportation costs following the arrival of the railways.

71 Halperín Donghi, ‘Expansión ganadera’ and ‘Expansión de la frontera’.

72 Chiaramonte, ‘Mercado de mercancías’, pp. 91, 93.

73 Sabato, Agrarian Capitalism, pp. 204–8.

74 Amaral, Rise of Capitalism, pp. 232–41.

75 Garavaglia, ‘Economía rural’.

76 Newland, ‘Exports and Terms of Trade’; also see Newland and Ortiz, ‘Economic Consequences’.

77 For a useful summary, see Llorca-Jaña, British Textile Trade, pp. 257–67.

78 Including the following occupations: blanqueadores; cordeleros, hiladores e hiladoras; tejedores y tejedoras; pelloneros; tintoreros; torcedores de lana, seda, etc. Calculated from Argentina, República, Primer censo de la República Argentina (Buenos Aires: Porvenir, 1872), pp. 642–69Google Scholar.

79 Including the following occupations: cardadores de lana; cordeleros; fabricantes de tejidos; hiladores, tejedores, tellaristas; tintoreros. Calculated from Argentina, República, Tercer censo nacional, vol. 4, Población (Buenos Aires: Rosso, 1916), pp. 201–329 Google Scholar.

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83 This largely applies to the estimates used by, for instance, de la Escosura, Leandro Prados, ‘The Economic Consequences of Independence in Latin America’, in Bulmer-Thomas, Victor, Coatsworth, John H. and Conde, Roberto Cortés (eds.), The Economic History of Latin America, vol. 1, The Colonial Era and the Short Nineteenth Century (New York: Cambridge University Press, 2006), p. 495 Google Scholar, Table 13.8 and ‘Lost Decades? Economic Performance in Post-Independence Latin America’, Journal of Latin American Studies, 41: 2 (2009), p. 289 Google Scholar, Table 1; Bértola, Luis and Ocampo, José Antonio, The Economic Development of Latin America since Independence (Oxford: Oxford University Press, 2012), pp. 92–3Google Scholar; and Victor Bulmer-Thomas, The Economic History of Latin America since Independence (3rd ed., New York: Cambridge University Press, 2014), App. 2. For the origins of the main estimates used by these authors, see Francis, ‘Periphery's Terms of Trade’, pp. 63–5.

84 For case studies of the privatisation of communal lands, see Boixados, M. Christina, ‘Expropiación de tierras comunales indígenas en la provincia de Córdoba a fines del siglo XIX: el caso del pueblo de La Toma’, Cuadernos de Historia: Serie Economía y Sociedad, 2 (1999), pp. 87–113 Google Scholar; and Paz, Gustavo L., ‘Encomienda, hacienda y orden rural en el norte argentino: Jujuy 1850–1900’, Anuario de Estudios Americanos, 61: 2 (2004), pp. 551–70Google Scholar. For the debate about deindustrialisation in the Interior, again see Llorca-Jaña, British Textile Trade, pp. 257–67.

85 See, for example, Klarén, Peter F., ‘The Origins of Modern Peru, 1880–1930’, in Bethell, Leslie (ed.), The Cambridge History of Latin America, vol. 5, c. 1870–1930 (Cambridge: Cambridge University Press, 1986), pp. 616–26Google Scholar; and Herbert S. Klein, ‘Bolivia from the War of the Pacific to the Chaco War, 1880–1932’, in Bethell, ed., Cambridge History, vol. 5, pp. 554–9.

86 See Friedrich Katz, ‘Mexico: Restored Republic and Porfiriato, 1867–1910’, in Bethell, ed., Cambridge History, vol. 5, pp. 48–53. On the decline of the cottage textiles industry, see Salvucci, Richard J., Textiles and Capitalism in Mexico: An Economic History of the Obrajes, 1539–1840 (Princeton, NJ: Princeton University Press, 1987)Google Scholar, chap. 5.

87 Frank, Andre Gunder, Latin America: Underdevelopment or Revolution (New York: Monthly Review Press, 1969)Google Scholar, chap. 1.

88 The accompanying workbook is available online at www.joefrancis.info/data/Francis_Arg_tots.xlsx (accessed 23 Dec. 2016). For a longer account of its contents, see Joseph A. Francis, ‘The Terms of Trade and the Rise of Argentina in the Long Nineteenth Century’, unpubl. PhD diss., London School of Economics, 2013, pp. 174–92; and a more detailed analysis of the methodological issues discussed here can be found in Francis, ‘Periphery's Terms of Trade’.

89 Prebisch, ‘Economic Development’; and Singer, ‘Distribution of Gains’.

90 The standard series for Argentina for 1810–70 comes from Newland, ‘Exports and Terms of Trade’, pp. 413–15; for the underlying data, see Newland, ‘Puramente animal: Exportaciones y crecimiento en Argentina 1810–1870’, mimeo, 1990, available online at https://www.scribd.com/doc/93245804/PURAMENTE-ANIMAL-EXPORTACIONES-Y-CRECIMIENTO-EN-ARGENTINA-1810-1870 (accessed 31 Dec. 2016). Newland mainly used wholesale prices and unit values from the core countries. There is no canonical series for 1870–86, so the gap is filled by various means. Williamson, for example, relies on a series calculated using British commodity prices for exports and US wholesale price indices for imports. Williamson, Jeffrey G., ‘Globalization and the Great Divergence: Terms of Trade Booms, Volatility and the Poor Periphery, 1782–1913’, European Review of Economic History, 12: 3 (2008), p. 390 Google Scholar; also see Blattman, Christopher, Hwang, Jason and Williamson, Jeffrey G., ‘Winners and Losers in the Commodity Lottery: The Impact of Terms of Trade Growth and Volatility in the Periphery 1870–1939’, Journal of Development Economics, 82: 1 (2007), pp. 156–79Google Scholar. Ferreres, meanwhile, chose a domestic wholesale export price index divided by Britain's export prices. Ferreres, Dos siglos, p. 588. For 1886–1913, an index originally calculated by Ford is the standard series. He used a mixture of prices from Argentina's trade statistics and British wholesale prices that he corrected for changes in transportation costs. Ford, A. G., ‘Export Price Indices for the Argentine Republic, 1881–1914’, Inter-American Economic Affairs, 9: 2 (1955), pp. 42–54 Google Scholar. This correction procedure should make Ford's estimates more accurate than those of Newland or Williamson, although his use of Argentina's official trade statistics is problematic because the statistical authorities did not use market prices for much of this period. See Roberto Cortés Conde, Tulio Halperin and Haydée Gorostegui de Torres, ‘Evolución del comercio exterior argentino: Tomo I: Exportaciones: Parte primera 1864–1930’, mimeo, 1965, available at the Biblioteca di Tella, Buenos Aires.

91 Francis, ‘Periphery's Terms of Trade’, p. 58.

92 Tena-Junguito, Antonio and Willebald, Henry, ‘On the Accuracy of Export Growth in Argentina, 1870–1913’, Economic History of Developing Regions, 28: 1 (2013), pp. 28–68 Google Scholar.

93 Jacks, David, ‘Intra- and International Commodity Market Integration in the Atlantic Economy, 1800–1913’, Explorations in Economic History, 42: 3 (2005), pp. 381–413 CrossRefGoogle Scholar; and ‘What Drove 19th Century Commodity Market Integration?’, Explorations in Economic History, 43: 3 (2006), pp. 383–412 Google Scholar.

94 Moutoukias, ‘Crecimiento en una economía’, p. 804, Cuadro 3.

95 Anon., ‘Report on the Trade’, p. 33; and ‘Precios corrientes’, p. 60.

96 Broide, ‘Evolución de los precios’, pp. 41–3, 50, Cuadros 16–18 and 22.

97 Álvarez, Julio, Temas de historia económica argentina (Buenos Aires: El Ateneo, 1929), pp. 208–26Google Scholar.

98 Cortés Conde, Halperin Donghi and Gorostegui de Torres, ‘Evolución del comercio’, pp. 73–9.

99 As compiled in Dirección General de Estadística de la Nación, Extracto estadístico de la República Argentina correspondiente al año 1915 (Buenos Aires: Compañía Sud-Americana de Billetes de Banco, 1916), pp. 204–17Google Scholar; Bunge, Alejandro, Intercambio económico de la República, 1910–1917 (Buenos Aires: Talleres Gráficos Argentinos de L. J. Rosso y Cía, 1919)Google Scholar, chap. 11; and Vázquez-Presedo, Vicente, Estadísticas históricas argentinas (comparadas), vol. 2, Segunda parte 1914–1939 (Buenos Aires: Ediciones Macchi, 1971), pp. 194–221 Google Scholar.

100 For 1780–1822, it was necessary to estimate the exchange rate based on the silver content of the peso and the price of silver in London. From Álvarez, Temas de historia, pp. 80–124; as compiled by Rodolfo G. Frank, online at www.anav.org.ar/sites_personales/5/MONEDA.xls (accessed 23 Dec. 2016); and Roy W. Jastram, Silver: The Restless Metal (New York: John Wiley and Sons, 1981), Table 15 and App. C; reproduced by Greg Clark and Peter Lindert, online at http://gpih.ucdavis.edu/files/England_1209-1914_(Clark).xls (accessed 23 Dec. 2016). From 1816 onward, the exchange rate was compiled from Anon., ‘Precios corrientes’, p. 60; Schneider, Jürgen, Schwarzer, Otto and Denzel, Markus A., Währungen der Welt, vol. 7, Lateinamerikanische Devisenkurse im 19. und 20. Jahrhundert (Stuttgart: Franz Steiner Verlag, 1997), pp. 212–18Google Scholar; and Balboa, Manuel, ‘La evolución del balance de pagos de la República Argentina, 1913–1950’, Desarrollo Económico, 12: 45 (1972), p. 160 Google Scholar.

101 Weights and measures come from Tornquist, Ernesto, The Economic Development of the Argentine Republic in the Last Fifty Years (Buenos Aires: Ernesto Tornquist & Co., 1919), pp. 325–8Google Scholar.

102 International Monetary Fund, Producer Price Index: Theory and Practice (Washington, DC: World Bank, International Labour Organisation, International Monetary Fund, Organisation for Economic Co-operation and Development, and United Nations, 2004), pp. 566 Google Scholar, 593.

103 The geometric mean has been preferred owing to its mathematical properties. See Hill, Robert J. and Fox, Kevin J., ‘Splicing Index Numbers’, Journal of Business & Economic Statistics, 15: 3 (1997), pp. 387–9Google Scholar.

104 When a series was not available for part of a subperiod, these weights were adjusted accordingly.

105 Bullion exports have been excluded from the index because they were essentially financial flows used to cover a merchandise trade deficit with Europe. Including them would, in any case, make little difference to the finding of a long terms-of-trade boom, given that bullion exports became insignificant by mid-century.

106 Moutoukias, ‘Crecimiento en una economía colonial’, pp. 805, 808, Cuadros 4 and 7.

107 Parish, Buenos Ayres, p. 353, Table 1.

108 Nine goods were included in Brazil's export price index. They were reweighted every 10 years according to their export value. Calculated from Fundação Instituto Brasileiro de Geografia e Estatística, Estatísticas históricas do Brasil: Séries econômicas demográficas e sociais de 1550 a 1988, 2nd edn (Rio de Janeiro: IBGE, 1990), pp. 345–56Google Scholar.

109 Britain: Imlah, Albert H., Economic Elements in the Pax Britannica: Studies in British Foreign Trade in the Nineteenth Century (Cambridge, MA: Harvard University Press, 1958), pp. 94–8Google Scholar, Table 8; Feinstein, Charles H., National Income, Expenditure and Output of the United Kingdom, 1855–1965 (Cambridge: Cambridge University Pres, 1972)Google Scholar, p. T132, Table 61; and Esteban, Javier Cuenca, ‘The Rising Share of British Industrial Exports in Industrial Output, 1700– 1851’, Journal of Economic History, 57: 4 (1997), p. 901 Google Scholar, App. Table 1. France: United Nations, ‘International Trade Statistics 1900–1960’, mimeo, 1962, Table 11, online at http://unstats.un.org/unsd/trade/imts/Historical%20data%201900-1960.pdf (accessed 24 Dec. 2016); and Maurice Lévy-Leboyer, ‘L'héritage de Simiand: Prix, profit et termes d'échange au XIX e siècle’, Revue Historique, 243 (1970), pp. 108–11, Tableau 5. Germany: Walther G. Hoffmann, Das Wachstum der deutschen Wirtschaft seit der Mitte des 19. Jahrhunderts (Berlin: Springer-Verlag, 1965), pp. 606–9, Table 151. Italy: Giovanni Federico, Sandra Natoli, Giuseppe Tattara and Michelangelo Vasta, Il commercio estero italiano 1862–1950 (Rome: Editori Laterza, 2011), pp. 228–9, Tabella 7b. United States: various series compiled in Irwin, Douglas A., ‘Exports and Imports of Merchandise – Price Indexes and Terms of Trade: 1790–2002’, in Carter, Susan B., Gartner, Scott Sigmund, Haines, Michael R., Olmstead, Alan L., Sutch, Richard and Wright, Gavin (eds.), Historical Statistics of the United States: Earliest Times to the Present: Millennial Edition (New York: Cambridge University Press, 2006)Google Scholar, online at http://hsus.cambridge.org/HSUSWeb/HSUSEntryServlet (accessed 24 Dec. 2016).

110 Using exchange rates from Lawrence H. Officer, ‘Dollar–Sterling Exchange Rates: 1791–1914’ and ‘Bilateral Exchange Rates – Europe: 1913–1999’, in Carter et al., Historical Statistics, Series Ee618, Ee625, Ee626, Ee629 and Ee636; and Denzel, Markus A., Handbook of World Exchange Rates, 1590–1914 (Farnham: Ashgate, 2010), pp. 15–28 Google Scholar, 42–3.

111 In theory, Newland's proxy import price index for 1810–70 should be superior to the one used here. It consists of five goods that cover 50–60 per cent of imports for the 1820s, but less than 40 per cent for the 1860s. Dividing the new export price index with his import price index results in terms of trade with an annual trend of 1.4 per cent, compared to a 2 per cent annual trend when the new proxy import price index is used for the same period. This difference is largely due, however, to Newland's arbitrary downward adjustment of the share of cotton textiles in his index, from around 56 per cent to 32 per cent of the total. Had he used the higher figure, which his own numbers suggest is more accurate, his index would be far closer to the new one. See Newland, ‘Puramente animal’, Apéndices D and E.