ferns - britain´s informal empire in argentina 1806-1914

7/27/2019 Ferns - Britains informal empire in Argentina 1806-1914

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The Past and Present Society

Britain's Informal Empire in Argentina, 1806-1914Author(s): H. S. FernsReviewed work(s):Source: Past & Present, No. 4 (Nov., 1953), pp. 60-75

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PAST AND PRESENT

Britain's Informal Empire in Argentina, 1806-1914

IT IS A COMMONPLACEOF POLITICALSCIENCETHATTHE COMMERCIAL,industrial and financial expansion of the Great Powers during thenineteenth and twentieth centuries was accompaniedby a growingpoliticaltensionbothamongthe GreatPowers themselvesandbetweenthe economically less well-developed communities of the worldand the modern industrialized nations of Europe and the UnitedStates. The frequent intervals of tension in the relations of GreatBritain with India, Egypt and China are examples of this secondclass. Contemporaneously, Argentina was also among the lesswell-developedcommunitiesof the world. Its economic connectionwith Great Britain was constant and of the highest importancebetween the years I8o6 and I9I4. For Great Britain, Argentina(at least during the years I880-I914) was more important thanEgypt or Chinaand,perhaps,even than Indiaas a sourceof foodstuffsand raw materials,a market and a place for the investment of capital.But, compared with the tension of Anglo-Egyptian relations, forexample, Anglo-Argentinepolitical relations were notable for a lowtemperatureand a seeming relaxation. To suggest tentatively someof the reasons for this relative absence of political tension inspite of a large and important Anglo-Argentine economic interestis the purposeof this paper.Great Powers have generallyemployed four methods of achievingthat subordination of less developed communites which is theessential characteristicof an imperialist relationship: (i) conquest;(2) intervention with the object of establishing a provisionalgovernment of native peoples capable of implementing policiesagreeable to the interventionist power; (3) the acceptance withvarying degrees of consent by the weakernation of advisory officersdirecting the policies of the weaker state; (4) the establishment inthe weaker community of extra-territorial privileges, naval andmilitary bases, and special areas where the commercial laws andpolicies of the stronger power prevail. The first three methods ofachieving the subordination of Argentina to Great Britain wereattempted or proposed in the course of the nineteenth century.All these eitherfailedor wererejectedbecause,as the Under Secretaryof the Foreign Officetold one advocateof interventionin I891, theywere beset with " manifest difficulties or impossibilities."1What were these manifest difficulties and impossibilities? Interms of manpower,wealth, military,navaland diplomaticexperience

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BRITAIN'S INFORMALEMPIRE IN ARGENTINAI806-I914Great Britain was a stronger power than Argentina. But notnecessarily in the Rio de la Plata. In I806 an unauthorizedfilibusteringexpedition organisedby Commodore Sir Home Pophamattemptedthe conquestof the Viceroyaltyof Buenos Aires. Pophamcommanded the ships of the Royal Navy, and the land forces wereunder the leadership of a man who subsequently became one ofWellington's field marshals. The Spanish forces were insignificantin numbers and commanded (this is hardlythe word for the activityof the Spanish Viceroy, the Marquisof Sobremonte)with incredibleincompetence and pusilanimity. But the filibustering expeditionwas completely defeated. So was the official and much largerexpeditionary force despatched to Montevideo and Buenos Airesin I807. In I845 Lord Aberdeen, in an ill-judged abandonment ofthe then establishedBritishpolicy of non-interventionin the domesticaffairsand internationalrelationsof South AmericanStates,consentedto a joint Anglo-French naval expedition designed to break theArgentine blockade of the River Plate. The result was instructive.It was demonstrated that Britannia did not rule the waves of theRio de la Plata, and in I849 the British Governmentsigned a treatyby the terms of which all vessels seized from Argentinawere to bereturned n good order and the British navalships in South Americanwatersobliged to salute the Argentine flagwith 2I guns in ceremonialacknowledgement of Argentine sovereignty.2 Thus ended the lastovertattemptby Great Britain to employviolence in Anglo-Argentinerelations.It does not follow thatArgentina's ocationandthe militaryprowessof her people doomed all efforts at forcible subordinationto failure.The absence of violence fromAnglo-Argentinerelationswas not alonedue to the fact that there were certain inherent physical difficultiesin its use.The British invasion of Buenos Aires in I8o6 was a truly privateenterprise undertaken on the initiative of the British commanderof the naval squadron which accompaniedthe force despatched tothe Cape of Good Hope to seize Cape Town from the Dutch.Popham was commercially-minded. He had already been court-martialled for alleged overchargesfor the repair of a ship of war.He knew that the British Government had on numerous occasionscontemplated, in collaboration with the revolutionary, Miranda,blowing up the Spanish Empire from within while assaultingit fromwithout.3 Following his assault on Buenos Aires, which wassuccessful in its first phase, he despatchedhome a circularletter tothe merchants of Liverpool and London telling them of the marketopportunitieshe had opened up. He was at once acclaimeda hero.The government of Grenville was put in a dilemma. They didnot want to open another front during the war against Napoleon


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PAST AND PRESENTand his allies, and they resented naval officers making policy forministers. But they also loved the applause of the mercantileandindustrial interests. They arrived at a typical Whig compromisein circumstances like these; they court-martialledPopham and sentout reinforcements.In BuenosAiresthe supremequestionwaswhetherBritain ntendedto liberate Buenos Aires from Spain or establish British control.Beresford, the commander of the land forces, proclaimed a regimeof free trade on a system preferential o Britishmerchandisebut opento all nations. This was agreeableto one of the growinginterests inthe community,the estancieros ndthe packersof dried meat. It wasagreeableto some of the mercantilecommunity. To this extent theBritish could hope for some support against the Spanish Viceroy,but Beresford made the mistake of requiring an oath of allegiancefrom the town authorities and he invited the public to come forwardand swear similarly. This, of course, raised fundamental politicalquestions. Apartfrom the town authorities,only 58 personstook theoath, and they, secretly.4 The discordant elements in the Argentinecommunity,the church and the liberals,those who wantedfree tradeand those who wanted to preserve restrictions, estancierosand poorgauchos and Indians, all drew together to form a united resistanceto the British forces. Against this union neither military force norpolitical manoeuvrewas able to effect anything, and the Britishexpeditionaryforce was obliged to capitulateand withdraw.While these events were in process a new government had cometo power in Britain. In May, I807, Castlereaghpresented to thenew Cabinet a remarkablememorandum5 which laid down thepolicy which GreatBritain has followed with few deviations fromthatday to this in its relationswith most of the States of Latin America.What, Castlereagh asked, is Britain's object in South America ?". . . the particular nterest which we should be understoodaloneto propose to ourselves should be . . . the opening to ourmanufacturers of the markets of that great Continent." What ofthe means? " The questionfor the Cabinetto decide," Castlereaghwrote, " is whether some principle of acting more consonant to thesentiments and interests of the people of South America cannot betaken up, which, whilst it shall not involve us in any system ofmeasures,which,on groundsof politicalmorality,oughtto be avoided,may relieve us from the hopeless task of conquering this extensivecountry againstthe temper of its population . . . In lookingto anyscheme for liberating South America, it seems indispensable thatwe should not presentourselvesin any other light than as auxiliRriesand protectors." Britainshould be cautiousand keep in mind that" in endeavouring to promote and combine the happiness of thepeople with the extension of our own commerce, we might, in

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BRITAIN'S INFORMALEMPIRE IN ARGENTINAI806-I9I4 63destroying a bad government, leave them without any governmentat all."Here we have the brilliant germ of the idea of Dominion status;the realization that military occupation, administrative control andpolitical interference in the affairs of other communities areunnecessaryto the interest of Great Britain provided there exists inthose communities the institutional means and the will to engage inan economic and financial relationship with Great Britain,advantageousto British investors and consumers of foodstuffs andraw materials. In a very real sense Argentina was the firstcommunity, substantially dependent economically on Great Britain,to achieve Dominion status.

Why did this happen? From the time of the first foundationof the Spanish Empire in Americain the early sixteenth century theSpanish Crownand the Laws of the Indies had interposedobstaclesto an economic connection between Great Britain and Central andSouth America. From Drake to the younger Pitt, British statesmenhad contemplated the removal of these obstacles by violence.Diplomacy had, however, accomplished as much, perhaps more,than violence might have done; for, from I604 onward, as theSpanish economy ran down towards decay, a series of treatiesestablished a legal (and a cover for an illegal) way into the Spanishdominions for British goods and a way out for the bullion soindispensableto Great Britain in her commercial operations in theFar East.6 But the economic revival of Spain in the last half of theeighteenth century had put a strain upon the long establishedcommercial connection between Britain and Spain (and Portugal)while, at the same time, the expansion of British production, theimprovement in British credit facilities and the perfection of Britishmarketing techniques made British interests impatient with thecomplicated and narrow channels by which merchandiseflowed toSeville and Cadiz and thence to the Americas.7Until the economic reforms of Charles III in I778, Buenos Aireswas of little account. In the Empire until that time it was regardedas a military post closing the back door to Peru, where the Empirehad its economic and political centre. The most developed partsof what is now modern Argentina were the interior provinces ofCordoba and Mendoza which supplied the mining areas of AltoPeru with food, mules, textiles and leather. The intendancy ofBuenos Aires was a frontierregion:poor, thinly peopled and lawless.They had nothing to occupy their time but praying, hunting andtradingillegally with the occasionalship which appeared n the God-forsaken, muddy waters of the Plate estuary. The economy of theregion was primitive. The Pampas of Argentina were treelesssave for the solitary ombu here and there. Fuel and building


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PAST AND PRESENTmaterialswere, thus, lacking. More serious was the want of Indiansupon the backs of whom the Spaniardselsewhere in the Americashad built their civilization. The Indians of the Pampas andPatagonia were fierce mounted hunters of cattle and horses whowere hardto catchandharder o keep. Juande Garay,whore-foundedBuenos Aires in I58o, granted 64 encomiendaso his followers, buttwenty yearslaternot a single Indian deservicioexistedin the region.8Negro slaves were introduced, but, as might be expected, they seemto have been absorbed nto the plantationsand shops of CordobaandMendoza where they could be employed at the production ofcommodities for commercial sale. The inhabitants of BuenosAires, whether landowners, gauchos (i.e. white plainsmen whoowned little or no land) and Indians were alike primitive hunterswho lived on the flesh of wild cattle, clothed themselves (except forthe woollen poncho)in their skins, made their rude furniture fromtheir bones, and sold their hides whenever opportunity presenteditself in order to supply themselves with woollen cloth, tobacco,metal wares and Paraguayantea. In The Purple Land Hudsondescribed life among the gauchos, but his picture, primitive as itis, in one of a condition much more advanced than that whichexisted before the late I770's when Buenos Aires began to establisha directlegal connectionwith the ports of the SpanishEmpireand tofind better markets for hides and jerked (i.e. dried) beef.After the opening of Buenos Aires as a port for direct trade withSpain and the Spanish Indies by the reformsof Charles III the priceand volume exported of hides rose steadily from then until the closeof the Napoleonic Wars.9 At the same time bullion from AltoPeru flowed through Buenos Aires overseas,and this trade endowedBuenos Aires with a flourishing public revenue and steady surplusesin the public treasury.10 Indeed, at this stage of Buenos Aires'development, the connection with the mining areas was moreimportantto the city and its trading class than the activities of theimmediate hinterlandof the Pampas.The purposeof thus describingthe economic characterof colonialBuenos Aires is to revealthe existence, in the shape of the estancierosand meat packers, of an important interest on the shores of theRiver Plate whose economic development, which was begun bywidening markets,required a vasteropening of marketsof the kindin which Great Britainwas becoming increasinglyinterested by thelate eighteenth century.The shock administeredto the communityin Buenos Aires by theBritish invasion of I806-07 precipitated the revolution. Not onlydid it revealto the creoles that the Spanish Crowncould not defendthem, but that they could defend themselves. After the Britishwithdrawalthere was no longer any question of what relationship

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BRITAIN'S INFORMALEMPIRE IN ARGENTINA I806-I94 65with the mother country Spain would permit, but what relationshipwith Spain was agreeable to the colony. About this there wasconsiderable disagreement, and out of this disagreement the firstphase of the revolution developed. In this phase the criticalquestion concerned trade policy. The regime which followed uponthe expulsionof the Britishhad adopteda liberalpolicy of permittingBritish and other foreign vessels to trade in Buenos Aires. WhenCisneros, the new Viceroy from Spain arrived, the exclusive lawsof the Spanish Crown were applied at first with leniency, but thenwith a growingvigour which, by the end of I809, made it impossiblefor foreignersto own propertyor to do business with any but Spanishmerchants. The export of gold and silver was absolutelyforbidden,and payment for imports had to be taken in the form of the onlyother considerable export of the country-hides and tallow. InDecember Cisneros finally ordered all the British in Buenos Airesto withdraw. On 25th May, i8io, a Junta supported by the creoleofficersof the garrisondeclared Cisneros deposed, and, in the nameof FerdinandVII, they seized power. Three days later in responseto a petition from the " labradores hacendados the prohibitionson trade were relaxed. Within a fortnight export duties on hidesand tallow were reduced from 50% to 71% and within six weeks theprohibition on the export of bullion was removed. By a bloodlessrevolution a native Argentine interest had effected a change whichBritish arms had been unable to accomplish. In a public speechCaptainFabian of H.M.S. Mutine told the revolutionariesabout thejoy their actions would evoke in his native country.11This first phase of the revolution was a relatively simple one.It was followed almostimmediatelyby a social revolt which had beenbrewingat least since the onset of prosperitysome thirtyyearsbefore.The increasein the price and the demandfor hides, meat and tallowconvertedcattle and horses from useful, but valueless, natural assetsinto commodities worth some energy to possess and to sell. Thedistinction between landlords, gauchos and Indians, who in oldcolonial times engagedin common activities and followed a commonmode of life, now became apparent. In I792 the formation of aguild of estancieroshad been authorized by a Viceregal auto.12 Asystem of registeringcattlebrandswas established,andthe marketingof unbrandedhides was madeillegal. Thus was the marketreservedfor the estancieroswho possessed registered brands. After therevolution the branding of people as well as cattle was undertaken.A decree of 20th August, 1815, declared all plainsmen, not certifiedto be landownersby a justiceof the peace, to be servants and orderedthat they carrya paper signed by their employer and countersignedevery three months by a justice of the peace. Failure to possessthis passport rendered a man liable to outlawry and, upon


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PAST AND PRESENTapprehension, o five years' service in the army.13 Thus were all menwithout land compelledto enter the labour market. This process bywhich a body of purely undifferentiatedhunters were being dividedinto employers and workers, property owners and propertylessgauchos, was one of the sources of the social revolt.The other source of revolt was visible at the time of the revolution.Handicraftsmenproducing for local and regional marketsflourishedin SpanishAmerica. The Laws of the Indies had never aimed at thesuppressionof colonial industry in any systematic way, and the veryrestrictionsplaced upon trade across the ocean acted as a protectionfor local handicrafts. The Spaniards, ndeed, like the Romans beforethem, had exported industrialand handicrafttechniques rather thanthe products of industry. By the end of the eighteenth centurythere were, therefore, in South Americamany centres of handicraftproductionable and willing to resist the penetrationof the marketbyforeign competitors. In answeringthe petition to open the ports toBritish commerce in I809, the attorney of the commercial tribunalaskedof the Viceroy: " What would become of the unhappyartisanwho always merits the protection of an enlightened government?Is it not true that the shoemaker, he blacksmith,the carpenter,and amultitude of otherartisanswho honorablysupportmany largefamiliesby the sweat of their brow would be compelledto shut their stores andto abandontheir shops forever? It is a reportonly too commonthata single one of the ships which we can see carries n its cargonineteenthousand pairs of shoes .... What a calamity is this, YourExcellency, to the guild of shoemakers and to the tanners of everykind of hide or pelt."14These two constituents of the social revolt manifest themselveseverywhere on the Pampas. As one might expect, in a communityso widely dispersed over a territory of half a million square milesand in a society at a low level of functional integration, this socialrevolt did not experience a uniform measure of success or failure.Paraguay, for example, established its political independence.Under the leadershipof Dr. Jose de Francia it sealed itself off fromthe world save for that closely regulated trade necessary to supplythe few wants unsupplied by Indian and Creole enterprise. Underthe dictatorship of Francia agricultureand handicrafts, previouslythreatened with extinction, began to flourish.15 Paraguaypresentedan extremeexampleof conservativehandicraftand peasantresistanceto foreign influence, but it was only an extreme variationof a trendwhich manifest itself in the interior provincesof C6rdoba,Mendozaand Tucuman, sometimesin policies of protectionapplied throughthe Customs Houses in Buenos Aires.16Uruguay witnessed the most prolonged success of the gauchoand Indian resistance to the landlord class. Under the leadership

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BRITAIN'S INFORMALEMPIRE IN ARGENTINAI806-I914 6of Jose Artigas the gauchos succeeded in destroying the power ofSpain and overthrowingthe authority of Buenos Aires and, for atime, in suppressingcompletely the class of property holders every-where east of the River Paraguay. They destroyed not only theestanciasof the landlords,but the heavy wagonsthey used for movinghides to market n orderto preservethe primitive system of exploitingthe herds.17 The Protector of all the Free People was an ablesoldier and a brave,ruthlessand consistent man who never sought toconverthis powerinto personalriches and estate. He commandsourrespect, this simple soldier seated on an ox skull, eating beef off aspit, drinking gin out of a cowhorn and laughing about his emptymoney chest.18 But he did not understandthe economic forces ofthe society in which he lived, and he was incapable of organizingamonghis wild and barbarouscompanionsa democratically upportedeconomy in which the labourer controlled the full measure of hisproduct. In his exile on a bush farm in Paraguayhe depicted thetragedy of the popularconservative.Looking back across the troubled years of Argentine history, wecan see now what was then apparentto only a few men of exceptionalinsight viz. that a meaningfuleconomicconnectionwith the industrialcommunitiesof western Europe depended upon the structure of theinternal politics of the states of the River Plate. There was aneconomic and a popular basis for conservative xenophobia inArgentina,not perhapsas strong but just as real as existed in Egypt,India or China. But in Argentina native elements succeeded inacquiringpower, establishinglabourdisciplinewithin the frameworkof a wage system, and creating a free, competitive market open tointernational commerce and finance. They did this in their owninterest, in their own way and on their own terms. Foreign inter-vention in Argentina was not only impractical;it was unnecessaryat any time between I806 and I914.By I820 the community of the River Plate had achieved thatcondition so much feared by Castlereagh:a complete absence ofgovernment. Suddenly out of the Hobbesian anarchy emerged aBenthamite authority. Martin Rodriguez was the head andBernardinoRivadaviawas the brain of this government. Rivadaviaembracedthe fallacyof rationalityviz. that men are equallyrational,equally self-interestedand only need to see their rationalnecessitiesto embracethem. Indeed, upon takingofficehe wroteto Benthamtoassure him that " je n'ai cesse de mediter vos principes en matierede legislation;et a mon retour ici j'ai eprouve une satisfaction biengrande en voyant les profondes racines qu'ils jettaient et l'ardeurde mes concitoyens a les adopter."19 This piece of utilitarianself deception led Rivadaviato attempt to complete prematurelytheintegration of Argentina in the international competitive market.


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PAST AND PRESENTA regimeof free trade was inaugurated. A bank was established onthe principlesof the Bankof England. A fixed monetarystandardwasestablished. Land was nationalized and rented (often in enormousblocks).20 The church was separatedfrom the state, and educationboth stimulated and secularized. An attempt was made to payintereston all public loanseven those contractedby pre-revolutionarygovernments. A foreign loan with a face value of I,ooo,ooo (whichrealized 570,000 in cash) was floated in London. Immigrationsubsidized by the State was undertaken. Finally he negotiated atreaty of commerce and friendship with Great Britain. In hisconception of Argentina'sneeds and the means of realizing themRivadaviawas a more ambitious anticipationof Gibbon Wakefield.By an interesting antithesis of conceptions he designed to create alaisserfaireeconomy by the direction of an omnipotentstate.The treatybetween Great Britain and the United Provincesof theRio de la Plata signed in February I825,21 established the legalfoundationsof Anglo-Argentineintercoursefor more than a century.It is a simple document expressing parallelismof purposes and ajoint resolve to maintain freedom of commercial activities, securityfor property and freedom of conscience for the subjects or citizensof each state in the dominionsof the other. The Argentinewas notbound, as Brazilwas, to a policy of low tariffs;simply to a policy oftreating British subjects, merchandise and services equally to thesubjects etc. of other friendly powers.The epoch of Rivadavia came to an abrupt end in I828. Theimmediate occasion was the unsatisfactory peace negotiated withBrazil, but there were more profoundreasons for his disappearance.His system had failed completely. The public loans were in default;the currency was inflated;the men who had rented the " national-ized " land refused to pay their rents; the church was opposed toliberal ideas. Looking back to that time and keeping in mind thesubsequent behaviourof the Argentine landed interest, we can seewhy the utilitarianphase of the revolution passed so quickly and socompletely. Had Rivadavia'ssystem worked, the national incomewould have passed in increasing measure into the hands of thefinancial interests in Buenos Aires and abroad. The system ofrenting land established by Rivadavia'sLaw of Emphiteusis, hadit worked, would have diverted a substantial portion of theestancieros'ncome into the coffers of the state to be dispersed tofinanciers n BuenosAiresandLondonor to rivalemployersof labourin the shape of subsidized immigrants who were to be given landfor agricultural,not pastoral,purposes. Rivadavia'ssystem of freetrade was to the benefitof the estancieros, ut they had to balancethisadvantageagainstthe disadvantagesof the control of financeby thestate andthe controlof creditby bankersall of whom were merchants

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BRITAIN'S INFORMALEMPIRE IN ARGENTINA1806-1914and many of whom were foreigners. The men who had rented vastcattle ranges, from Rivadavia's government- the Anchorenas,the Viamonts, the Lezicas, the Velez, the Diaz - swung away fromthe urbanized, liberal regime and were found later firm in the ranksof the great gaucho caudillo, GeneralJuan Manuel Rosas.Rosas can legitimatelybe regardedas the architect of the Argentinepowerstructure. He did not concernhimselfprimarilywith buildinga state apparatus. He built an army the purposes of which areplain at this distance. The army provided a heirarchical socialframeworktheoretically embracing all persons, and in practice allpersons not fitting in some way into the social system as an employeror a worker. It was the means of extending the frontier; ofdistributingland on heirarchicalprinciples;of preservingthe nationalindependence and of helping gauchos everywhere in the republicto find a placein a society run by and in the interest of the estancieros.Rosas was a species of rich William Jennings Bryan; for herepresented a social element rich in land but poor in capital. Headoptedfinancialpolicies and techniques appropriate o the conditionof his class i.e. a papercurrency, ow landrents, low taxeson property,and an inveterate hostility to banks. Indeed, he achieved theagrariandeal of suppressingall banks.

The British merchants with an established interest in Argentina,and the Scottish and Irish sheep masters who came out during theI830'S and I840'S, found Rosas an agreeable enough politician.He kept order, he protected property and he made trade possible.Abroad, however, Rosas was not viewed in such a favourablelight.During the I840'S an anti-Rosas literaturewas circulated in GreatBritain, and the British mercantile community was persuaded, forexample in I844, that intervention in the affairs of the Rio de laPlata was desirable.22 The Committee of Spanish AmericanBondholders were active, lobbying both in London and Paris.In I845, Lord Aberdeen briefly abandoned Castlereagh'spolicy ofnon-intervention, and permitted himself to collaborate with theFrench in an endeavour to free the Argentine blockade of the Riode la Plata, which was part of Rosas' military operations againstUruguay. Rosas refused to break off relations with Great Britain.He merely limited himself to drivingthe British gunboatsout of theriver and offering to make a token payment in the default loan ofI824.

The revolution which overthrew General Rosas in I852 did notchange the social structure of Argentina. General Urquiza, theconqueror of Rosas, was a great estanciero; he lived in Santa Fewhereas Rosashadoperated n BuenosAires. This was the differencebetween them. But the I850's witnessed a silent revolution in theneeds of the estancieros. Under Rosasthe preservationand extension

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PAST AND PRESENTof propertyand the maintenanceof labour discipline among the fewpeons requiredto herd cattle and shepherd the flocks was sufficientto insurethe well-beingof the estancieros. But the world was movingon. Sheep farming, the breeding of cattle and sheep, the fencingof land required capital. The old costly method of transport inhigh wheeled wagons must yield to railways if Argentine producewas to continue to enter the world market. Between I852, whenRosas was overthrown,and I862, when General Mitre defeated thelast resistance of the provincial elements, the thinking of theestancieros underwent a marked transformation. In I853 theCommittee of the Spanish American Bondholders renewed theirimportunities concerning the defaulted debt of I824. The ForeignOffice in London lent a sympatheticear,but the authorities n BuenosAires seemed stone deaf. For three years the finance minister inBuenosAires evaded the issue or traded insults with the representativeof the Bondholders. Finally Lord Clarendon,the British ForeignSecretarystated" that Her Majesty'sGovernmentwouldbe perfectlyjustifiedin proceedingat once to the adoptionof other and strongermeasures for supportingand enforcingthe rightsof H.M. subjects."23Too much, however, can be attributed to this threat. Shortlyafter it was uttered a special representativeof the House of Baringappeared on the scene, and after quiet negotiations secured anagreement completely unlike anythingwhich had been offeredin thecourse of diplomatic negotiations and better even than Baringsthemselves had expected to obtain.24 The entire settlement smacksof a businessdealrather han apoliticalnegotiation.25...It s interestingto note that Seiior Norberto de la Riestra,the Argentine negotiator,became laterthe directorresidentin BuenosAires of the first and mostsuccessful British bank in Argentina.After the final unification of Argentina by General Mitre in I862the Argentine Congress laid the legislative basis for the influx ofboth foreign merchandise and capital. The national market wasmade uniform and as nearly free as the fiscal requirementsof thestate would permit. Railway legislation established the principleof state support for railwayundertakings n the shape of guaranteedprofits and land grants. The Law of i6th November, I863,guaranteedpaymentin sterlingin London of all public bonds unlessit was otherwise stated in the instrument; a public record of allpublic debts was established and the public debts were declared acharge on all the public revenues. These laws, coupled with thematerial evidence of Argentina'scapacityto pay exemplified by theresumptionof payments on the defaulted Loan of I824 (amountingto 977,000 in capital and I,660,000 in defaultedinterest), causedcapitalat once to start flowing to the River Plate. Within 10 yearsat least C23,ooo,ooo had been raised in the London market forinvestment in Argentina.

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BRITAIN'S INFORMALEMPIRE IN ARGENTINA1806-1914During the depressed years after I873, which were particularlysevere in Argentinain I875-I876, there was a revival of provincialxenophobiain Santa Fe province. A branchof the Bankof London

and the River Plate was shut down by the authorities in order tomake things easier for a local rival. British gunboats were orderedup the river to protect British lives and property. So long as thegunboats were in the river the bank did not open, but after theywithdrew, the managing director of the Bank of London and theRiverPlate madea simple arrangementby which the Bankof Londonand the River Plateagreed,if allowedto reopen, to accept for depositthe depreciatednotes of its local rival. The willingnessof the Englishbank to accept the notes caused them at once to appreciate n value,and the episode ended happilyfor all concerned.In the i88o's the increase in the British stake in Argentina wasenormous. By I890 the British investment was I74,ooo,ooo.26Then came the great Baring Crisis by comparison with which"I 866 would be a trifle." Argentinawas now of such consequencein the British financialand economic empire that the functioning ofits economy was capableof affecting the entire structure and courseof Britishaffairs. The role of the statein this greatcrisisis, therefore,extremely interesting. On the British side the Baring Crisis marksthe beginning of the end of laisser aire capitalism.It has been customary, following Dicey, to associate the end oflaisser aire with policies designed to achieve a minimum of popularwelfare;it is overlookedtoo often that the end of laisser aire was alsorelatedto financeand to marketprocesses. In this instanceGoschen,the Chancellorof the Exchequer, promised to underwrite the planto bail out Baring'sand preventtheir bankruptcy. He was followinga new principle, viz. that the power of the state would be employedto use the wealth of the whole communityto sustain the fortunes ofparticular enterprises provided these enterprises were big enough(and badly enough run) to fail with a bang. When Goschen under-took to back the bankers,he appearsto have acceptedthe suggestionof the Governorof the Bankof England" to workon the Argentinegovernment about those discredited securities."27 If the facts arewhat Sir John Claphamhas suggestedthey are, the intention appearsto have been for the British Government to back up the bankersonthe one hand and on the other to put pressure on the Argentinegovernment with a view to wringing sufficientout of the Argentineeconomy to keep Barings and the rest afloat. If this was the plan,it did not work.There is no evidence in the records of the Foreign Office of adetermination "to work on the Argentine government." LordSalisbury was at this time the Foreign Secretary as well as PrimeMinister. He stuck closely to Castlereagh's original policy of

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PAST AND PRESENTnon-interference. Goschen may have abandoned laisser faire atthe Treasury, but at the Foreign Office Salisbury considered thenumerous applicationsfor assistance from various business interestsin the light of the Treaty of I825 and its interpretationby the LawOfficers of the Crown. Their interpretationwas invariablya strictone and, therefore, opposed to intervention in the affairs of theArgentine state.The situation in I891 was necessarily an alarmingone from thepoint of view of the investing classes. A substantial part of thesterling debt of the Republic was in default. At the same time theArgentine Government was pursuing its traditional monetarypolicy of primitive Keynesianism.28 This was at once frighteningand incomprehensible in the City of London. As a result of thelosses being experienced on the Stock Exchange and the anxietiesoccasionedby wild unorthodoxyin Buenos Aires, the Foreign Officewas beset by many cries of " For God's sake, do something!" Onebanking house, which had marketed Argentine securities for someyears and was probably hearing from disturbed curates and foxhunters in the shires, " respectfully ventured to enquire if HerMajesty's Government would be disposed to enquire through theaccredited Minister, if the Government of the Argentine Republicwould receive a special Delegate or Envoy, selected by and havingthe confidence of Her Majesty'sGovernmentwith a view to enquiringinto the interests of British capitalat stake, into the condition of thecountry, and in consultation with its authorities to formulatesome broadscheme for the adjustmentof the finances of the countrywith due regardto the variousinterests involved."29Lord Salisbury did not reply personally to this suggestion, buthe may as well have done, for he scattered across the draft amend-ments and notes designed to underline the final point of the lettersigned by a secretarythat "the Minister (of the British Governmentin Buenos Aires) could not, with a due regard to British interests,take the initiative in proposing to the Argentine Government suchan interferencewith their internal affairs as the appointment of aSpecial Delegate or Envoy would necessarilyinvolve."30At this time a much bolder suggestion was made to the ForeignOffice which its author apparently considered so delicate that itcould not be expressed on paper. A certain banker accompaniedby an expert adviser with Argentine experience attended at theForeign Office in July I891, where he was seen by the PermanentUnder Secretary. The suggestion made was simple and drastic;for Great Britain to consult with the Great Powers about an inter-vention in Argentina for the purpose of setting up a ProvisionalGovernment. " The United States should be asked but wouldprobably be unable to undertake it." The inference was thatBritain should conduct the intervention.

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BRITAIN'S INFORMALEMPIRE IN ARGENTINAI806-I9I4" I pointed out," the Permanent Under Secretary reported toSalisbury, " the manifest difficultiesor impossibilities of the coursesuggested. He was an earnest and respectable man; but had only

looked at the matter from one point of view."31 Salisbury's onlycomment on the reportwas written in red ink: " Dreams!"Salisbury had a lively appreciationof the fact that other GreatPowers existed in the world and a strong dislikeof interferingin theaffairsof other nations especially in the interest of capitalists who,by all the current theories of political economy, were supposed toknow what they were doing. He was succeeded at the ForeignOffice in August 1892, by Rosebery, a politician of quite anotherstripe. How this plutocratic imperialist would have responded tocomplaintsaboutArgentina,hadthey continuedto pour in, we cannotsay. The fact is that the volume of complaints began to diminishby the time Rosebery came to the Foreign Office. This diminutionwas related to the course of economic development in Argentina.The momentary inflation in Argentina cut real wages, maintaineda high level of employment (althoughit led to an exodus of people)and seems to have been a factorin the tremendousgrowth of outputin I892 and after.32 Argentine wheat, meat, linseed and woolflooded into the world market in increasing volume, and Argentinenet receipts, at least in the British market, mounted even morerapidly than the volume of goods sold. The expansion of theArgentine economyby the characteristicArgentinedevice of monetarymanipulationresolved the Baring Crisis in spite of Lord Rothschildand his committee. The increase of cash receipts made possiblethe payment of those obligations which were written in sterling,and even made it possible for various agents of the Argentineprovincialas well as federal governmentsto re-negotiate their loansat lower interest rates and to abolish the evil system of guaranteedrailway profits.The years between the resolution of the Baring Crisis and theoutbreakof World War I witnessed a renewal and heavy increase ofthe British equity in Argentina. No documentary evidenceconcerning Anglo-Argentine relations is available after 1902, butthe external signs suggest that the traditionalrelationshipinvolvinga low degree of political tension persisted. On the other handthere is evidence of growing political tension within Argentina,not of critical volume, perhaps, but of sufficient intensity toshift the formal, if not the real, centre of political gravity in thedirection of parliamentarydemocracy.Is it possible to elicit from the history of Anglo-Argentinerelationsbetween I806 and 1914 an " explanation" of the low degreeof political tension we have emphasized as a characteristic of thepolitico-economic connection? It seems apparent that the class

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of estancieros,whose economic interests fitted into the developingpattern of British economy of the nineteenth and early twentiethcenturies,were able to control the social situation in their communityand to build the social economic and political structurewhich madepossible productivity of the kind required. It seems plain enoughthat at several stages of the historicaldevelopment of Argentinatheeconomy might have been forced into a different pattern than thatwhich actually developed, but that the class of estancieroswere ableat every critical point to exert their will and to lead Argentinapeacefully step by step into closer relations with the advancedindustrial nations of Western Europe. While they did this theymaintained their independence and served their own interests witha skill and a sophistication which Europeans did not altogetherappreciate or fathom. In examining the financial operations ofthe Argentine community it is interesting to observe, for example,how previous obligations payable in sterling were invariably payablefrom the wealth of the whole community (e.g. government bonds,guaranteedrailwayprofits and various forms of debentures)but theobligationsspecificallyof the estancierose.g. cedulasor land mortgagebonds) were written in Argentine pesos, and automatically scaleddown in real value by currencymanipulation. How much Europeancapitalistslost in cedulas is beyond calculation,but we do know thatthe debt-riddenlandlordsof the Pampaswere able to build imitationfeudal castles where once there had been great annual slaughters ofwild cattle and to match these with palacesin the Avenue Kleber.Universityof Birmingham. H. S. Ferns.

NOTES1 F.O. 6/420, Memorandum of the Permanent Under Secretary to theMarquis of Salisbury, July, I891.2 Accounts and Papers, I850, XXV, p. 4.3Minutes of a Court Martial . . . for the trial of Captain Sir Home Popham.(London, I807).4J. Street, British Influence in the Independence of the River Plate Provinces.(unpublished Ph.D. thesis in the Library of Cambridge University, 1950),P- 34-6 Correspondence Despatches and other Papers of Viscount Castlereagh,(London, i85I), vii, p. 319 ff.6J. O. McLachlan, Trade and Peace with Old Spain, 1667-I750. (Cambridge,1940).7 A. Christelow, " Great Britain and the Trades from Cadiz and Lisbonto Spanish America and Brazil, I759-I783," Hispanic American HistoricalReview, I947, p. I ff.8A. F. Zimmerman, " The Land Policy of Argentina with Particular Referenceto the Conquest of the Southern Pampas," Hispanic American HistoricalReview, I943, p. 3.

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BRITAIN'S INFORMALEMPIRE IN ARGENTINAI806-I914 759E. A. Coni, Contribucidn la Historiadel Gaucho, BeunosAires), I937),p. 48.10Documentosara la HistoriaArgentina,V, (BuenosAires, I915, p. LIII.11Street, op. cit. p. I33.12 Documentos para la Historia Argentina, IV, (Buenos Aires, I914), p. I40.13 J. Alvarez, Estudios sobre las Guerras Civiles Argentinas, (Buenos Aires,I914), p. 99.14 Quoted in R. Levene, (translatedby W. S. Robertson) A History ofArgentina, (Chapel Hill, I937), p. I I2.15Rengger and Longchamps, The Reign of Doctor Joseph Gaspard Roderickde Francia in Paraguay, (London, I827), p. 48,16M. Burgin, Economic Aspects of Argentine Federalism, (Cambridge, U.S.A.,1947), Chap.V, for an excellentdescriptionof the provincialeconomy.17 J. P. and W. P. Robertson, Letters on South America (London, I84I)i, p. 64.18 J. P. and W. P. Robertson, Letters on Paraguay (London, I839), iii, p. 102.19BritishMuseum,Add. MSS. 33545,fr. 596-7 quotedin R. A. Humphreys,

British ConsularReport on the Trade and Politics Latin America, i824-26 (Cam-den Third Series, Vol. LXIII, London 1940), p. 9, Note i.20 E. A. Coni, La Verdad sobre la Emfiteusis de Rivadavia. (Buenos Aires,1927), pp. 24-29.21 L. Hertslet, A Complete Collection of the Treaties and Conventions atpresent subsisting between Great Britain and Foreign Powers; vol. iii (London,I84I), p. 44 ff.22 J. F. Cady, Foreign intervention in the Rio de la Plata, (Philadelphia, 1924),pp. I22-I23.23F.O. 6/1I93Clarendon o Parish,8th November, I856.24 F.O. 6/20I, White (the representativeof Barings) to Christie, 27thSeptember,I857.25I have described the entire negotiationin " The Establishment of theBritish Investment in Argentina," Inter-American Economic Affairs, vol. 5,No. 2 (I95I) pp. 71-78.26 This estimateis based,afterconsiderablecorrectionand revision,upon anestimate made by ArthurHerbert,CommercialSecretaryof H.B.M. Legationin Buenos Aires printed in Accounts and Papers, I892, LXXXI, 92-3.27 J. H. Clapham, The Bank of England, A History (Cambridge, I944),ii, p. 329.28 It is a matterof interest that Silvio Gesell, whom Lord Keynes regardedas a great seminal mind in the field of economic science, was a businessmanin Argentinaduringthe Baringcrisisand its resolution.29 F.O. 6/42o, 6th August, I891.30 supra, I ith August, I891.31supra, Memorandumof 24th July, I891.32 J. H. Williams, Argentine International Trade Under Inconvertible PaperMoney, (Cambridge,U.S.A., P, I92I).

ferns - britain´s informal empire in argentina 1806-1914

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