The Rise and Fall of Argentina’s Economy

While studying Argentina, one can see that the country’s economy boomed between 1880 and 1920 through its major exports, agriculture and livestock. The first major drop in revenue occurred immediately after this period of history; this drop was a whopping 50 percent.1 There must be an explanation to this sudden downgrade of profits. One can only blame the Argentines as global traders so far for a monetary loss, but perhaps there are more factors behind the collapse.

Trade in Argentina was dominated primarily by their exchanges with international partners, with “Britain [as] the principal source, followed by France and Germany.”2 The United States also became a partner later on. On a grand scale, Latin America as a whole became successful due to international trade; this also, unfortunately, led to its inevitable economic downfall as well. Argentina was no exception; one can see this as true through the statistic in the previous paragraph. Such dependence can be dangerous.

This essay will focus on a very popular export at the time in Argentina: wool. Known even more predominantly is their export of beef and cattle; the relation between the two will be discussed. It is possible that one important export may have lead to the failure of another. Further, this failure could lead to a catastrophe of a great trade union or partnership, or even greater, an entire economy.

The wool trade in 1916 was at a remarkable peak, so elevated that “…quotations [were] higher than the abnormally high ones of [the previous] year…”This is primarily due to the United Kingdom and their trade tactics that brought Argentine farmers a great profit.3 Argentina is completely dependent on Britain to continue their policies that bring them great wealth, a dependency that certainly should not be relied upon. This “…overwhelming dependence on foodstuff exports made the nation’s economy vulnerable to fluctuations in world prices…”4

Indeed the world prices did fluctuate, and at some points exchange had reached a standstill. This pause was the result of low quality varieties of wool available for grabs; this is especially disastrous since England fulfills the requests of Ally countries in Europe for varieties they themselves cannot produce.5 This led to low sale prices in a new season of the wool trade. Countries like the United States would be to blame for this crisis. They would send buyers straight to Buenos Aires and purchase unshorn wool; this in turn threw a wrench into the market, affecting negatively Argentina.6 Regardless of how beneficial the world market could be, complete dependence upon it could lead to dire circumstances.

Beef and cattle become more popular in global trade over time. In 1895 it was reported that “preparations have been made for much larger shipments”7 of cattle, sheep, beef, and mutton for the future. This signifies a greater focus towards this industry and away from others; there would be, therefore, more of a determination to fatten and improve the quality of meat products than, say, to ensure that a high quality wool export was ensured. Economists early on predicted that exports of cattle and beef from Argentina to major partners like the United Kingdom would augment in the close future.8

An 1897 news report from minister Buchanan of Argentina to the United States Department of State described his thoughts about the wool industry, stating, “he is convinced from careful observation that a probably maximum of production in that country has been reached.” The profits from beef and cattle have lately been extortionate, and will inhibit the growth of wool.9Later newspaper articles prove that this prediction became reality:in 1916 the previous growth year was reported to yield 150,000 tons of wool10, and in 1920 “the wool year closed on Sept. 30… with only 37,740 tons sold, against 59,334 last year.”11 This trend sadly proves the minister’s words to be true.

Another reason why the production of wool decreased overtime was because it was directly affecting the quality of the newest and most desired meat export. Bulls shipped from the United States to Argentina contracted foot and mouth disease upon arrival. As any animal illness can do, the infected specimens are now worthless; the United States Department of Agriculture now has no choice but to decide “…whether it will stop the importation of wool from Argentina…” The same vessels that exported the cattle previously imported Argentinian wool.12 Sheep are as susceptible to foot and mouth disease as cattle, so it is quite possible that the United States banned wool imports from Argentina. This case is also a human hazard, for they are also vulnerable.13 The situation further shows why wool was pushed out of the spotlight by beef.

Although it is uncertain as to what the final consensus was concerning wool imports to the United States, one can deduce that it certainly contributed to the first major international trade collapse of Argentina after 1920. In effect, the popularity of beef and cattle simply pushed wool out of the minds of global trade partners. Excessive dependence on these partners definitely sped up the process of failure; the market is full of tough competition that sometimes can bring much profit, followed by crushing losses. Wealth flourished throughout the country with the assistance of wool and beef, but as history proves, nothing lasts forever.