The Past and Present Society

Argentine and Australian Development Compared Author(s): Barrie Dyster Source: Past and Present, No. 84 (Aug., 1979), pp. 91-110 Published by: Oxford University Press on behalf of The Past and Present Society Stable URL: http://www.jstor.org/stable/650538 Accessed: 14/11/2008 13:31
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ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED

IN A RECENT ARTICLE IN THIS JOURNAL PETER WINN DEMONSTRATED

the establishment of "BritishInformalEmpirein Uruguayin the NineteenthCentury''.1Obviouslythe formal political status of a territory mustnot be confusedwith the realityof its positionwithina W1C ereconomlc system. Uruguay shares many of the characteristics of such differing politiesas Australia,New Zealand,South Africa,the UnitedStates and Canada,as well as neighbouring Argentina. All of these, J. W. McCarty has reminded us, are "regions of recent settlement", encompassing "largeopen grasslands", whose originalpopulations havebeenoverwhelmed andrelegated to themargin, orthe bottom,by the new occupiers. "The purest examplesthat history offers of capitalisticsocieties" emerged in these areas, exportingprimary productsto Europein vast quantitiesand achievinghighper capita incomes for the settlers. As McCartyargued, their striking similaritiesmake explanation of differences betweenthem all the more revealing.At one end of the continuumhe placedAustralia,least encumbered by non-capitalist non-European remnants; at the other end, Uruguayand Argentina.2 The presentpaperseeksto presenta comparative analysisof Argentine and Australian development so as to reflect,not only on each other,but alsoon structural relationships withinnineteenth-century capitalism as a whole.
.

If the occupationof grasslands is taken to be definitivefor both regions,close parallelsappear.BuenosAiresat the beginningof the eighteenthcenturywas a provisioning port estimated to hold a mere one thousandpeople,3 forbidden to tradeby sea with the rest of the Spanishdominions, let alonewith foreigners. Althoughminorexceptions to this embargowere allowed as the century wore on, and smugglingtook place, it was only in the I770S that permission was given for BuenosAiresto trade openlythroughoutSpain'sempire. This was a singledecadebeforethe First Fleet left for BotanyBay.
1 Peter Winn, "British Informal Empire in Uruguay in the Nineteenth Century",

PastandPresent,no. 73 (Nov. I 976),

2

pp. I 00-26.

J. W. McCarty, "Australia as a Region of Recent Settlement in the Nineteenth Century", Australian Econ.Hist.Rev.,xiii ( I 973), esp. pp. I 48-5 I . 3 Aldo Ferrer, TheArgentine Economy (Berkeley, I967), p. 30.

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The variousestimates of BuenosAires'spopulation madeduringthe nextfiftyyearssuggestthat at leastas manypeoplelivedin the city as in its immediate hinterland of pampas.4 Indeedit seemsthat, evenby I 830, only one-third of the uninterrupted sweepof pastureacrossthe province of BuenosAires(whoseareais almostI 20X000 squaremiles) had been occupiedby Argentinegraziers.5 At the same time that graziers fanningout fromSydneywerelooking beyond theboundaries of the NineteenCounties,6 withinwhichthe government unavailingly attempted to confinesettlement, pastoralists on the Argentine pampas were similarlychafingat the tight arc allowedthem by the Indians behind their own great seaport.Pastoralistsin both regionscomplained,rightlyor wrongly,aboutthe shortage of labour,the ratesof wagesand the difficultyof attracting labourawayfromemployment in the city.7Giventhe magnitude of thecityin bothcasesandthe competitionfor employment that it offered, canwe assume thatrewards to capitaland labourwithinthe pastoral-export sector,andthe disposition of its variouslinkages,needdifferat all significantly between the regions? As late as the beginningof this centuryit was commonto bracket Australia and Argentina. Students of commercialgeographyin schools in New South Wales, for instance,were taught that "the ArgentineRepublic... has animal and vegetableproductions very similarto those of Australia,and it is our chief competitorin the marketsof Europe.It owns over I00 millionsof sheep . . .". This school-reader reprinted the text of a lecturegiven beforethe state's chamberof commerce,where the argumentwas expressedmore urgently:"In the particulars I have given it has been made abundantly clear that the Argentineis our most dangerouscompetitor . . .o.8 The samesternwarning wassounded by CaptainA. W. Pearse, grazier and politician,after his secondvisit to Argentinain about
4Miron Burgin, The EconomicAspects of ArgentineFederalism,I820-I852 (Cambridge, Mass., I946), pp. 24-9; Ferrer,op. cit., pp. 53-7;Sir Woodbine Parish BuenosAyresand the Provincesof Rio de la Plata: TheirPresentState, Tradeand Debt (London,I838). Parishwas Britishconsulin BuenosAiresin the 1820S and I 830S, a closestudent of affairsanda manof greatlocalinfluence. 5 Ferrer, op. cit., p. 50; see the mapsin HoracioC. E. Giberti, Historiaeconomica de la ganaderiaargentina(BuenosAires, I96I), pp. 49, I33. Ferrerestimatesthat only I 0 percentof theprovince "wasintegrated intothecolonial economy" by I 800. 6 Similar in size, thoughfar morebrokenin land-form: D. N. Jeans,An Historical Geography ofNewSouth Wales to I90 I (Sydney,I 972),chs.7-9. 7 Burgin, op. cit., pp. 27-g, 267-8; H. S. Ferns,Britain and Argentinain the NineteenthCentury (Oxford,I 960), pp. 53-66, I 37-44;W.A. Sinclair,"WasLabour Scarcein the I 830s?", Australian Econ.Hist.Rev.,xi ( I 97I ), arguesthatlabourwas sufficientfor the needsof Australian pastoralists; they did, nevertheless, seekmore workers thantheycouldget andat lowerratesof pay (prisoners or indentured labour oftenbeingpreferred). 8 S. H. Smith(Inspector of PublicSchools), Brooks'Commercial Geography of the World(Sydney, I908), pp. 3I, 62; the publishers were WilliamBrooksand Co., "Contractors forthe Supplyof Reading Booksto the PublicSchoolsof N.S.W.".

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I900; cheap labourin Argentinaand the entrenchment of its landowners'tenurebeyondthe reachof reforming LandActs,he believed, ensuredthat it would outstripAustraliain the future.9Latercommentators, of course,tendedto see in theseelements (lowerwagesand more powerful landowners)evidence of Argentina'scomparative weakness ratherthanof its strength. In their essays comparingthe developmentof Australia and Argentinaboth E. L. Wheelwright10 and Theodore H. Moran1 1 locatedthe divergence in fortunesaboutthat veryperiod,the turnof the century.They both concentrated on the roleof the labourmovements,emerging in Australia as a separate politicalforcewhichcame to supportprotectionand a deliberate policyof industrialization, in Argentina subordinating itself to a middle-class radicalpartyespousing liberaldoctrinesof free trade. The Harvardeconomist,Arthur Smithies, in a papersimplyentitled"Argentina andAustralia", found fundamental similarities betweenthe twocountries untilthe adventof Peronin Argentina) who allegedly threwthe nationinto chaos."Any sophomore could have told Peronthat he was raisingreal wagesfar above the marginal product of labor at full employment.But unfortunately no sophomore hadhis ear''.l2WhyPeronism arose,and was acclaimed, andat that particular juncture, arequestions not even asked.All threeof theseessaystreateverything beforethe emergence of labourmovements as prehistory. If the economic, politicalandclass structures of the two countries werealikein previous periods, thenthe divergentpolitical responsesof working men should become the problemto be explainedand not the a priori explanationof later phenomena.It is certain that Wheelwright at least, who has more recently celebratedthe work of Paul Baran and Andre Gunder Frank,l3wouldnow presentan analysiswhichreachesfurtherback into the past and which takes seriouslythe actionof the European economy on the regionof recentsettlement. Accountsbeginningin I890, or in I940, omit too much of the evidence.Whatcan be said of those otheressayswhichascribed the differentcharacteristics of Australiaand Argentina to the "political cultures"supposed to be translated froman idealizedBritainand an idealizedSpain?In his eclectic treatmentof "Argentinaas a New Country"CarterGoodrich,for example,emphasized theseidealized

A. W.Pearse,Our GreatRival: TheArgentineRepublic (Sydney, c. I90I). lo E. L. Wheelwright, "Australia and Argentina: A Comparative Study",in his Radical Political Economy: Collected Essays (Sydney,I 974). 11T. H. Moran,"The 'Development' of Argentina and Australia", Comparative
9

Politics, iii

( I 970). 12 Arthur Smithies, "Argentina andAustralia",Amer. Econ. Rev.,lv (1965),p. 26. 13 E. L. Wheelwright, "Under-Development or Revolution? The Baran-Frank

Thesis",in hisRadical Political Economy: Collected Essays.

94 traditions as fundamental denominators,'4 a line of argument to, though less subtlethan, similar that whichgenerated the hypotheses Louis Hartz and his associates of whosecollection,The New Societies, appeared Foundation of in the sameyear as the But Hartz's "radical"is as Goodricharticle.ls inappropriate a category to define Australian society (especiallybefore America. Even RichardM. Morse, I850) as "feudal"is for Latin writingon LatinAmericain the Hartzvolume,took care to substitute"patrimonial" for "feudal"at every point,and he has argued that Spanishdominion maintained by imperialcitieselsewhere was rather than by "feudal" Sharper and morerecentanalyses estates.'6 andnot feudal relationships arguepersuasively that capitalist shaped the social structures Spanish of the colonies and of the independent states which succeeded them. 17 When wecontrast thefreetradeprovince of BuenosAireswith the convictcoloniesof Australia in century an antithesisof feudalism the first half of the nineteenth and radicalism seemsparticularly difficult to sustain. The prison and prisoner-labour early componentof Australian societywouldin itself drastically qualifydisparities ascribed to theparentcultures of BritainandSpain. The Argentine economist, RaulPrebisch, advanced a different of argumentto explainthe limited kind development he homeland perceived in his andin countrieslike it.l8 Primary producing the countries, periphery, on have faced regularly termsof trade,he argued, while the industrialized deteriorating economiesat the centre of the capitalist worldhaveretained the rewards of theirproductivity their own borders,partly because within their workers have been able to defend a level of wages which is, relativeto wageselsewhere, Unfortunately high. Australia(to mentionno other economy) hypothesis; falsifiesthis it is a countryat the exporting raw materials, whose relativelyhigh per capita periphery, income is no more skewedin its distribution thanis the casein economies at thecentre. Two helpfullines of inquiry,however, have extendedand indeed transformed the typeof analysis whichPrebisch propounded. Oneline 14 Carter "Argentina Society and History, vii (I964-5); as a New Country",Comparative Studies in Goodrich cites Spanish the Goodrich, earlier versusBritishtraditions, emergence of a stronglabour movement in Australia, secondary thepaucityof fuelfor industryin Argentina, and the massiveimmigration beginning of this centurywhich intoArgentina at the resulted in a deepif temporary Argentina andtheimmigrant-dominated gulf betweenrural 15 L. Hartzet al., The Foundation of cities. New Societies (NewYork,1 16 R. M. Morse,in Hartzet. al., 964). op. cit.; R. M. Morse, Latin American UrbanHistory", of Amer. Hist. Rev., lxvii ( I"SomeCharacteristics 17 See 962). RodolfoStavenhagen, "Seven Fallacies about Vitale, Latin America", "LatinAmerica: Feudalor Capitalist?", repr.in JamesPetrasandand Luis Zeitlin (eds.),Latin America: Reform Maurice or Revolution? 18 (New See York,1968). Raul Prebisch,Toward a Dynamic (New Development Policy for Latin York, 1962); L. E. di Marco(ed.), America International Economics and Essays in Honor of R. Prebisch Development: (NewYork,1972).

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is looselyknownas dependency theory,accepting thecentre-periphery antithesis.I9We can still carry away from these authors the implausible, usuallyunstated,assumption that Australia too, because it is peripheral, mustbe dependent and underdeveloped on the Latin American model;but the workof AndreGunderFrank,at least, has stressedthat underdevelopment is a dynamicprocess,and is best understood as a consequence of the deformation andsubordination of one economy by another, moreaggressively capitalist, economy.20 His definition of underdevelopment as an activeandnot a passiveprocess will providethis paperwith one of the instruments for distinguishing between ourtworegions. The secondline of inquiryhasbeenfollowed by Arghiri Emmanuel in his book, Unequal Exchange.. A Study of the Imperialism of Trade.21 For him, wage differentials underpininequalityin internationalor interregional trade. High-wagecountries,by their very successin maintainingtheir level of wages, imposeterms of trade favourableto themselveson low-wagecountries, and retain and circulatewithin their economiesa greaterproportion of the returns fromtrading.Thispaperwill seekto showhowa higherlevelof wages mightbe maintained in the convictcoloniesof Australia than in the tradingworldsurrounding BuenosAires,and it will suggestsomeof theconsequences of that. The crucialperiodwas the last quarterof the eighteenthand the firsthalf of the nineteenth centurles.In ArgentinaI 852 was the year in whichthe long ruleof GeneralRosaswasbroken, whenthe federationfell apartinto a decadeof interprovincial warout of whicharosea fairly stable new order attractiveto British investors;in Australia I 85 I was the firstyearof goldrush.It willbe argued herethat,before Rosasdisappeared, and gold was discovered in Australia,a decisive shift had occurred in Argentina's termsof tradetowards landholding andproduction for export,whereasthe balancein Australia between importand export,betweenconsumption and production, held firm throughout.
19 Fromits firstissuein 1974, LatinAmerican Perspective has carried a greatdeal of debateabout"dependency theory".See alsothe symposium on the "Economics of Imperialism" at the 1970 annualmeetingof the American EconomicAssociation, publishedin a supplement to Amer. Econ. Rev., lx (I970), pp. 225-46j Susanne Bodenheimer, "Dependency and Imperialism: The Rootsof LatinAmerican Underdevelopment", PoliticsandSociety,i ( I 9'7 I ) j J. D. Cockcroft et al., Dependence and Underdevelopment (New York, I972)j Alainde Janvry,"The PoliticalEconomy of Rural Developmentin Latin America: An Interpretation", Amer. 31. Agric. Economics, lvii ( I 975). 20 Andre Gunder Frank, Capitalism and Underdevelopment in Latin America (NewYork,1969);KeithGriffin,Underdevelopment andSpanish America (London, 69). 21 A. Emmanuel, UnequalExchange:A Study of the Imperialism of Trade(London, 1972).

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Australia developed as a regionof highwagesand,two-thirds of the waythroughthe century,of highlandpricesalso;in Argentina, wages remainedlower and landholders had paid little for their land. In Australia,that is, the relativelyhigh costs of labourand land were tolerable to capitalists because theyunderwrote purchasing powerand forcedruralproprietors to come to termswith urbaninvestors.The magnates of Argentina, on theotherhand,sawlabourandlandsimply as costs that must be minimized so as to enlargethe marginof profit won from producingfor non-Argentine consumption. As a consequenceArgentina's historyfits the specifications of dependency and expropriationmuch better than does Australia's;Australia has developedas a provincewithin the metropolitan economy,whereas Argentina has beenfar moretributary (in the senseof "thesubmitter oftribute")to themetropolis. The analysis runs counter to widely held assumptionsabout Argentineand Australianhistory.The heavy inflowof people and capitalduringthe secondhalfof the nineteenth century hasoftenbeen thoughtto havetransformed bothcountries; this papersuggeststhat the inflowdeepenedand broadened channelsthat had been sharply carvedalready,before the middleof the century.The explanation advancedhere for Argentinaavoidsinvokingfeudalism(a concept currentlydisputedfor Latin Americaas a whole, let alone for the environsof BuenosAires)and "nationalcharacter", and tries to go beyond brute lust for power. The explanationadvancedhere for Australiarejects the common belief, explicit or implicit, that its development was export-led, usually"at the sheep'stail". EvenJ. W. McCarty'sbrilliant restatementof staple theory,22whereby the Britishcommissariat duringthe first two generations of settlement actedas the externalmarketwhichcreatedanddefined localproduction for "export" by virtueof its own demand,has been invertedin this paper,whichpresents the commissariat as the coreof a consumer economywithinAustraliawhoseappetitewas fed as much by products fromoverseas as by itemsgrownor fashioned locally.To restate the formulae, land andlabourin Argentina wereseenas costs,whose increase would diminish returns on capital; land and labour in Australiacame to be seen by the dominantcapitalistsas resources, ensuringcapitalgains(orintereston fundslent to landowners) in the caseof land, andsustaining effectiveconsumer demand amongwageearners.
22 J. W. McCarty, "The Staple Approachin AustralianEconomicHistory", BusinessArchivesand History,iv (I964); see the critiqueby G. J. Abbott,"Staple Theory and AustralianEconomicGrowth, I788-I820", BusinessArchivesand History,v ( I 965).

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II Buenos Aires, it has been implied already, was largely a creation of the late eighteenth century.23At the beginning of that century it was little more than a provisioningstation on the route around Cape Horn. The Spanish crown had simplified its administration by prohibiting the movement of goods into or out of South America through Buenos Aires, thus protecting Lima's monopoly over intercontinental trade with the silver-producing areas of the Andes. In the interior of Argentina, however, provinces existed (holding perhaps a quarter of a million people) which were encouraged to produce foodstuffs, wines, crude textiles, hides and draught animals for use in Potosi and throughout the Andes, receiving silver in payment. A sturdy if rather unsophisticated economy developed in these provinces. Inland towns like Tucuman, Salta and Cordoba flourished, while Buenos Aires remaineda distant village away on the periphery. An increase in the number of aggressiveforeign tradersin the South Atlantic, Brazil's expansion southwards, a decline in silver production in the mountains, and growing pressure within Spain itself to adopt commerciallyliberal policies at least within the empire, all contributed to a more 'rational" use of Buenos Aires under royal regulations towards the end of the century. Trade through the port was freed by stages, bringing about a reversal of relationships within Argentina. Buenos Aires moved from the periphery of the Argentine economy to become its gateway. The interior was now many months closer to Europe. Goods flowed across the Atlantic to a market which could pay in silver. Although the cost of overland transport still limited the number of these goods which could reach the interior profitably, importsbegan to displace local producein the old Argentine provinces. This process accelerated in the nineteenth century as production and freight costs of European exports halved over the first four decades.24Long-standing Argentine wine production first of all, and
23 The following paragraphs owe mostto Parish,BuenosAyresand theProvinces of Rio de la Plata, pp. 338-44j Ferrer, Argentine Economy,pp.20-73; JohnLynch, Spanish ColonialAdministration, I782-I8I0: The IntendantSystem in the Viceroyaltyof the Rio de la Plata (London,I958), pp. I-45, I62-71; AdolfoDorfman, Historia de la industriaargentina(BuenosAires, I970), pp. 25-74; Sir Herbert Gibson, The History and Present State of the Sheep BreedingIndustry in the Argentine Republic(BuenosAires,I 893), ch. I; JoseM. MariluzUrquijo, Estadoe industria, I8I0-I862 (Cordoba, I969), esp. pp. 57-63,7I-9; TulioHalperin Donghi, Historia contemporanea de Americalatina (Madrid, I975), pp. I94-204; Tulio Halperin Donghi,Politics,Economics andSocietyinArgentina in theRevolutionary Period(Cambridge, I 975) . 24 Parish, op. cit., pp. 35I-2; A. Imlah, "The Terms of Trade of the United Kingdom, I798-I9I3", 1. Econ. Hist., x (I950), p. 183; D. C. M. Platt, Latin Americaand British Trade,I806-I9I4 (London,I972); Paul Bairoch,"European ForeignTradein the XIX Century: The Development of the Valueand Volumeof Exports (Preliminary Results)", Zl.European Econ.Hist., ii ( I 973), p.20.

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textileproduction soonafter,weresapped bythecompetition. Foreign shipping agentsandporteno25merchants looked forpayment in silver. The declineof the Andeanmines,moreover, meantthat no reliance couldbe placedon that traditional marketand sourceof incomefor Argentine producers. The stockof silverin theinterior mustinevitably dwindle,given the speed of the outflow. There was, therefore,a bullionand speciedrain at the very time that local production was being eroded.The old provinces of Argentina, then, providea casestudyof the dynamic process knownas "underdevelopment", whichis theprocess of dismantling a functioning economy.26 In so far as theporteno merchants andthe foreignshipping agents reliedon the size and liquidityof the inlandeconomyto underwrite theirflowof imports, theywerecounting on twowastingassets-the productive powerof the old provinces andthe silverhoard.Whenthe firstassetrandown,Argentina acquired a vastunderdeveloped region, perennially depressing to the nationalmarketanda sourceultimately of cheap surpluslabour. When the secondran down by the early I830S,27 even more of the resourcesof the state were devotedto extending the boundaries of pastoral occupation againstthe resistance of residentIndians,so that availablepasturewithinthe provinceof Buenos Aires increasedalmostthreefoldin the course of the next twenty years; some of the landownerswere also provokedinto improvements in technique,as well as the consciouscultivationof overseas markets,all to compensate for the loss in exchange.28 (This parallels the slightlyearlierreactionof theirAustralian counterparts whenreductions weremadein the issueof treasury bills throughthe commissariat, or when tradersin Calcuttamademore urgentcalls than usual on Sydney for payment;pastoraland export activity increasedsignificantlyin responseto the squeezeon exchange.)29 Priorto this time,however, the availability of silverandthe cheapening of imports hadmadeeconomic andpolitical decision-makers in the seaport complacentabout the need actively to foster an internal market. Purchasing powerwas,if anything, contracting. Onceindependence wasproclaimed in I 8 I o it became apparent that three regionallydistinct interestswould vie for dominancewithin Argentina, eachpowerful enoughto makethe defenceof its ownconcernscostlyto, andperhaps destructive of, thoseof its rivals.Porteno
25Thewordusedto distinguish residents of thecity of BuenosAires. 26Seenote20 above. 27Parish,op. cit., pp. 354, 358-9. The supplyof silverwas also affectedby the

captureby the new Bolivianrepublic of a porton the Pacificcoast, throughwhich mostof its tradethenpassed. 28 Gibson,op. cit., pp. 50, I 87-290;Giberti, Historia economica de la ganaderia argentina, pp. I 16-44; Dorfman,op. cit., pp. 57-60;Wilfrid Latham,The States of the River Plate, 2ndedn.(London, I 868),p. 367. 29 G. J. Abbott,The Pastoral Age: A Re-Examination (Melbourne, I 97 I ), pp. 7- I 3, 25-6, 36-45-

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merchants and intellectuals, representing one of thesethreeinterests, had immediately declaredthe formervice-royalty opento tradewith the whole world, relatively free of tariff except for purposesof revenue. BuenosAireswasa mercantile andnota manufacturing city. High tariffs on the coast or between provinceswould impedeits businessand raisethe cost of living.30 Admittedly therewereartisans in the city whoaskedfor tariffprotection but theylackedthenumbers andwealthto havetheirdemands met.3'The inlandprovinces, one of the other contendingregions,had long been dominated by families who now recognized that the basisof theirwealthand local position was jeopardized by the unhampered flowof goods.Betweenthe coast and the high plains lay, geographically and politically,the third region,the pampasof the province of BuenosAires.For the graziers there, as producersand as employers, the free movementof cargo through the portin bothdirections washighlydesirable. Yetalthough theydidnot haveto facecompetition fromEuropean imports, theydid welcometariffsbetween provinces so as to stiflecompetition fromthe long-established pastures inland.32 This contestbetweenthreegreatinterests(theportenos, the inland elites and the graziersof the pampas)precipitated threeexhausting warsduringthe I 820S-a warbetween the province of BuenosAires andtherestof thecountry,thatkeptrecurring untilthe 1860sat least; a warwith Brazil;and a war againstthe Indianson the pampas that flaredsporadically for half a centuryto come.Noneof thesewarscan bereduced simplyto theclicheof a brawlbetween caudillos. It was the civil war that grew most directlyout of the clash of interests.The "underdeveloping" areas fought for a full federalist constitutionto confine the powerof the metropolis and to enforce both a high nationaltariff and interprovincial customsduties. The portenos foughtfor a unitarystatewithoutinternalbarriers. Andthe ownersof the pampas(whoprovided muchof the cavalryfor Buenos Aires) took the intermediate position,favouringinternationalfree tradeandprovincial protection. The compromise arrangements made after each truce came, quite logically,closest to that intermediate position.The resultantmodified federalism thus gave the advantage amongthe threecontending interests to the pastoralists of the coastal
province.

The second war, against Brazil, was fought to keep the Plata estuarya porteno monopoly, to preventa hostiletradingor privateering rival from controllingthe oppositebank. Neitherside won, but
30 Mariano Moreno, "Free Trade versus Monopoly", in R. A. Humphreys and John Lynch (eds.), The Origins of theLatinAmerican Revolutions, I 808-I 826 (New York, I965); Wendell C. Gordon, The PoliticalEconomyof Latin America(New York, I 964), ch. I . 31 Mariluz Urquijo, Estadoe industria passim. 32 Burgin, EconomicAspects ofArgentine Federalism, pp. 76- I45.

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BuenosAireslost morein the shortrun becausethe outcomewasthe establishment of the independentrepublicof Uruguay across the water.33While fighting continuedfrom I826 to I828, moreover, Britainhelpedto applya Brazilianblockade of the estuary,actingas midwifeto the birthof Uruguayas a checkon, andcompetitor with, BuenosAires.The port itself suffered,and importing almostceased, but the graziers'supplyof hides,horns,horsehair and tallowmerely waiteda yearor two longerto be unloaded on to the worldmarket, or wasdiverted to domestic andmilitary consumption. Duringthe lull in international trade,fundstrapped in Argentina had little alternative but to flow into land- and livestock-holding.34 This vested those interestswith mobilecapitalmorefirmlyin the rural-export sector.A Frenchblockadefrom I838 to I840 and an Anglo-French blockade from I845 to I847 repeatedthe process.Overseas consignors could not expect unbrokenrelationships; importingtended to become a tradein speculative cargoes.The compensatory glut of importsafter each blockade,moreover,undersold whateverold or incipientlocal production there was, and contributed nothingto an orderlystructureof importing.35 BuenosAires'sthirdseriesof campaigns gathered in moreterritory on the pampas.Determined groupsof Indians,feelingtheirliberties threatenedand valuing livestockhighly, would attack the frontier estancias anddriveoff horsesandcattle.At the sametimethe export tradewas a lucrativeone and rangelandswerein strongdemandby existinggraziersandporteno capitalists. Military expeditions to push the Indiansback and downcontinuedto be outfittedrightup to the
I

8 80s .

The conflictswere expensive.Ferrerestimated that "no less than sixty per cent of the expenditure of the Litoralgovernments was for militarypurposes".36 Taxes were unpopularand customsrevenue, with the low duties, was limited. The provincialgovernmenthad raised one internationalloan, in I824, when Baring Brothers,in associationwith a Britishmerchanthouse in BuenosAires,placed bondson the Londonmarket,face value?I millionat 85 percent of par. That marginof ? I 5o,ooo Baringscountedas commission, and the merchanthouse retainedfor itself a sum sufficientto pay the interest and amortizationcharges for two years. The provincial governmentreceivedat most ?600,000, with annual paymentsof ?6s,ooo to make. Not surprisingly it found this a difficult debt,
33 Winn, "British Informal Empire in Uruguay in the Nineteenth Century", pp. 100-4. 34 Parish, Buenos Ayres and the Provinces of Rio de la Plata, pp. 355-6; Ferns, Britain and Argentina in theNineteenth Century, pp. I 64-8. 3S See also B. W. Clapp, Zohn Owens: Manchester Merchant (Manchester, 1965),
PP 1 04-6.

36

Ferrer,ArgentineEconomy, p. 59.

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especiallyin time of war, and defaultedin I827; repayments began again at the end of the I850S (a few instalments were paid in the I840S) as the price of gettingback into the Londonmoney-market. But duringthe intervening decades bothBritishinvestors andporteno authoritieswere understandably reluctantto resort to new international bondissues.37 Insteadloanswerefloateddomestically.38 The dislocation of trade duringthe variouswars made it difficultto meet paymenton these also, and from I826 onwardsthe provincialgovernment used the printing-press to meet old debts and to avoidcontracting new ones. The depreciation of the currency was so steepthat at the end of I 830 the peso was worth,againstgold, only about I 5 percent of its value in JanuaryI826. Depreciation occurred intermittently throughthe I 830s until the French blockade from I 838, whenmorepapermoney was printedand the peso fell to one-fifthof its rate againstgold in I 830, while the issue of moneyduringthe blockade of I 845-7 (supposedlyto assertfreedomof tradeon the Plata and its tributaries) morethanequalled thatalready in circulation.39 Regulardepreciation redistributed wealth towardsthe employer who paid (at least temporarily) lower real wages, the exporterwho found international prices translatedback into inflatedand inconvertible pesosX and the pampasgrazier whose instalmentson the purchase of his tractfromthe provincehurt him less and less as the currency deteriorated. As the employer, the exporter andthe pampas grazierwereoftenone and the sameperson) this was a redistribution to a specificclass.40 Capitalgravitated towardspastoralism and the occupation of newland as its profitability became conspicuous. Those merchants who retained the leadership in importing tendedto neglect the interestsof everyday customers who presented unstableand nonnegotiablepesos (althoughthey still movedwhateverbulk cargoes turnedup in theharbour) andpreferred insteadtransactions bymeans of foreign exchange,which meant that they pitchedtheir consignmentsevenmoreto the tasteandpocketof the familiesearningexport income. The depreciation consequenton the wars and the AngloFrenchblockades accentuated the shift towardspastoralinvestment andpastoral power,as well as a narrowing of the preferred marketof importers, to degrees notevidentin Australia. The Spanish monopoly beforeI 8 I O hadprevented the emergence of an Argentine merchant marine,and mostoceanshippingin the port
37 Letters fromBuenosAiresby the Robertson Brothers andthe DuguidBrothers can be found in BaringPapers,PublicArchives of Canada,Ottawa,MG24, D21, vols. 5, I o8, Ferns Op. Cit., Index,p. 457, underi'Baring Loanof 1824";Burgin,Op. Clt., pp. 38, 54-6 38 Fora contemporary discussion of thepublicdebt seeParish,Op. Cit., pp. 374-89. 39 Burgin, Op. Ctt. pp. 35, 50, 58, I 60, I 65, 206-g. 40 Ferrer, Op. Cit., pp. 57-64.

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afterthat date was ownedand mannedby foreigners.41 Of the three majortraders with BuenosAiresin thisperiod,the UnitedStatesstill tendedto visit it as a station on the way to China or the whaling grounds; many passing American ships off-loaded flour from Baltimore (untilit was excluded in the I 830s)or dumped coarseNew England cottons, picking up jerkedbeef for Cuban slaves on the homeward run,butveryfewYankee merchants settledto regulate and profitfrom these freights.There weremany Frenchshopkeepers on both shoresof the Plata sellinggoodsof somequality,but relatively fewshipsor wholesale housesflewthe French flag.42 It was the British whose navy, merchantmen, diplomats and wholesalers evincedthe greatest,if fluctuating,ambition.Britain's tradeto Argentina hadgrownsteadily until I 824, whenexports to the countryhad been worth over j;I million.This figurewas not to be reachedagain until I 849. BuenosAires'swar with Brazildisrupted the movement of Britishgoodsdecisively. In I 825 ninety-five British shipsenteredthe port, in I826 seven,in I827 one. Britishequityin Argentina,mainly goods for export and specie, was estimatedat ?I,536,000 whenfightingbegan,to whichshouldbe addedholdings of governmentand bank stock (not countingthe Baring loan) of roughly?75?,???. Therewas, firstof all, a greatrushto shipout as muchproduce as possible beforethe blockade became absolute. When that openingclosed,Britishmerchants converted to bullionand sent all they could get their handson in the Britishgovernment packet, which carried dispatchesand mail and which the Brazilianslet through.The swiftoutflowdepleted Argentine stocksstillfurtherand helpedprecipitate the monetary depreciation. In response to depreciation andto the absenceof alternatives, manyof the remaining British fundswereswitchedto land, livestockand stockpiling hides."By the end of I 827 Britishassetsin BuenosAireshaddeclinedto ?4g2,000 . . . of which?220,000 wererepresented by the holdingsof hidesand ?75,ooo in land"43 Capitalrelations werefurtherconstrained by the fact thatBarings, who had underwritten (and undermined) the defaultedloan, also financed a majorpartof Britain'sAtlantictradeandthe tradeof the UnitedStatesaroundthe Hornto China.44 Giventhe importance of multilateral andpassing trade,thepolicyandexample of Barings were
41 Table of shipping in Parish, op. cit., p. 4I I; Robert G. Albion,"British Shipping and Latin America, I 806- I 9 I 4",71. Econ.Hist.,xi ( I 951), p. 363 . 42Parish, op. cit., pp. 336-71 342-6, 4II; E. J. Pratt, "Anglo-American Commercial and Political Rivalry on the Plata, I 820-I 830", HispanicAmer. Hist.Rev.,xi ( I 931 ); Clapp, op.cit., pp. 9I-5. 43 Ferns, op. cit., pp. I64-8; Parish, op. cit., pp. 336-4I, 355-6; Latham, Statesof

theRiverPlate,pp.

3 I 6-19.

44Ralph W. Hidy, The House of Baring in American Trade and Finance (Cambridge, Mass., I 949), esp. pp. I 03-5.

ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED

I 03

of critical importance.The firm's reluctanceto extend credit to commenced Argentineconsumersuntil the provincialgovernment repayment,and its insistencethat Argentineproduce(valued at a further skewedthe heavy discount)should cover all transactions, exportsfrom importsand undervaluing terms of trade, hampering BuenosAires. moreheavilycomcapitalbecame ThusbothBritishandArgentine functionwas sector,whilethe importing mittedto the pastoral-export returnof British The exuberant by its discontinuities. characterized thisbias. afterI 862 simplyconfirmed to Argentina investment III reparticularline of development If explanationof Argentina's of a majorregion,to to the activeunderdevelopment quiresreference of wastingwarfarewhich resultedpartlyfromthe underdeveloping by the Britishand the that region(not to mentionperiodicblockade a depreciation, severeboutsof monetary French),and to consequent strong contrastwith Australiais alreadyapparent.The argument for Australia of explanation to establisha framework belowattempts will be The conclusion the analysisof Argentina. that counterpoints that the balancebetweenimportand export,betweenconsumption and production,holds firm for Australia,making life and death far otherpossibilities) (among of the currency or debasement struggle lesslikelythere. first. None of the three The negativeassertionswill be amplified kinds of warfareravagingArgentinaseriouslydisruptedthe white against of aggression equivalent The Australian economy. Australian the Indians was, of course, the piecemealdefeat of Aboriginal the norpossessed in the numbers, rarelymassed Aborigines resistance. in manyfaceengaged cavalry,of the Indians.Settlersandshepherds to-face encounterswith the original Australians,the costs to the poisonandso on beingtacitly economy of labour,fire-power, invading againstAboriginal borneby the privatesector. Officialexpeditions peopleswere eitherpaid for by the Britishtreasuryand the British in New ZealandandSouth militarybudget(as was the casegenerally throughan Africaas well) or by fundsraisedsolelyfor that purpose as whichwasnot regarded tax leviedperheadof livestock, assessment onerous. In either case it was not a charge on the colonies'conrevenue. ventional warsof otherkindsmadelittle directimpacton the International a neverblockaded The British,understandably, continent. Australian port andthe Frenchwerekeptawayat the British (white)Australian equivalent of Brazil. expense. Therewasno SouthPacific taxpayer's The third class of warfare,civil strife, whetherit arose out of

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regionalunderdevelopment or not, was absentfrom Australia.The invasionof Australiaby the Britisheconomyafter I 788 admittedly visited drastic underdevelopment on the pre-existingAboriginal economies.But the Aborigines provided neithera marketnor a significantlabour pool, let alone a store of currency,unlike the old Argentinians, so the derangement of their economiesdid little to disturbthe new colonialorderof things.Nor did the convictsfit the Argentinian specifications for underdevelopment. They werenot the survivorsof a formerly functioning economic region. They had migratedfrom the same economyas the non-convict colonists,and although their temporaryconditionsas labour and as consumers differed in manydetailsfromthoseobtaining in Britain,theysuffered essentiallyunder an extensionof the stringentclass structuresof Englandand Ireland.Indeedconvictswereactivelypromoted as consumers. Because they had neither bullion nor prior productive enterprisestheir exploitationas a market did not entail "underdevelopment" in thesensealready used. Warfaresuch as absorbed60 per cent of the coastal provinces' budgets in Argentina thus imposed few if any burdens on the Australiancolonists.The Britishtaxpayerspaid most of what bills therewere. There was consequently no pressure on currency within Australia fromthat cause.The governors hadreasonto maintainthe exchangevalue of sterlingwithinthe colonies,and commissary and otherofficials (themorecorrupt the better)shared thatinterest. The formativeyears of the colonialeconomywere dominated by the government andits commissariat expenditure on the demand side, and by the activity of privatetraderson the side of supply.45 For almosthalf a centurythe officialpay-roll andadministrative decisions expressedthrough spendingon rations, material,house rent and publicworks(or throughthe allocationof land) werepreponderant elementsin establishing the amountand pricesof commodities consumed in New South Wales and Van Diemen'sLand. The commissariat was also important to the coloniesas the firstmajorsource, whencombined withthe officers' pay,of fundsin sterling,whichwere indispensable for thosepeoplewho weresavingfor an opulentreturn home or at least for the purchaseof importedgoods to maintain Britishstandards of consumption. This, overandabovethe sheerprofitability of the activity,impelled the mostambitious coloniststo seekout as muchof thecommissariat's
4S The evidencein the next few paragraphs, althoughnot necessarily the interpretation, can be checkedagainstthe articlesin G. J. AbbottandN. B. Nairn(eds.), EconomicGrowthof Australia,I788-I82I (Melbourne, I969), esp. those by G. J. Abbott,MargaretJ. E. Steven, D. R. Hainsworth and W. G. Rimmer-and Ken Buckley,"Primary Accumulation: The Genesisof Australian Capitalism", in E. L. Wheelwright and Ken Buckley(eds.),Essaysin thePoliticalEconomyof Australian Capitalism, 3 vols. (Sydney,I 975-7), i.

ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED

I 05

businessas possible,by standingas middlemen betweenthe governmentand the shipswhichbroughtoverseas cargoesto port,by standing as middlemenbetween the governmentand those domestic producers whowereindebted to them,and(a slowerandmorearduous business)by raising producethemselves.Because there were also small-scale farmers craftsmenand retailerswho sold directlyto the commissariat, the earlyentrepreneurs weredoublyinterested in these peopleas customers, not only to expandthe marketfor importsbut additionally, to possessin exchaxlge the store receipts(conrertible, whenaggregatedinto billson the Britishtreasury) whichthe smaller settlershad themselvesreceivedas paymentfrom the commissariat store. The first generationof entrepreneurs, then)were traders.If they becameproducersit was to augmentand diversifytheir trading. Macarthurand the officers,Riley and Berry, even Campbelland Lord,mightbe remembered nowadays as landowners but in theirday this was only one aspectof their ramifiedtradingactivities.Their primeinterestlay in substantialexpenditure by the administration, promotinga high level of consumption by the government's dependantsand a fairlywidedistribution of storereceipts acrossthe private sector,whosedemandfor textiles,toolsX alcoholor tea couldonly be met by the importingnetworkwhich the large entrepreneurs controlled.JohnPalmerand DavidAllan,who headedthe commissariat for most of the earlyyearsbeforeI820, werethemselves substantial importers and used)successfully, a varietyof stratagems, including theirownoverdrafts, to involvethe commissariat in far moreexpenditure than governorsand the British treasuryfound acceptable.46 Whateverlimits leading citizens insisted should be placed on the social and politicalrightsof convictsand ex-convicts, they did urge a measure of economic enfranchisement so thatprisoners andemancipistscouldtakepartin energetic,if unequal,transactions. Manyof the notables,then, by virtueof officeor of the narrowness of society, could significantlyinfluence decisions made by the administration. Thereweretimeswhena merchant or a tightgroupof tradersthreatened monopoly.Campbelland Palmeror "the Selfish SordidFirm"of Jonesand Riley4'wereat varioustimesthoughtto havecornered the marketthroughofficialfavour.In I 808 the governor was deposedby a collectiveof officer-traders. But Governor Bligh'ssupplanters, oncesuccessfulfell apartintocommercially contending parties. In such cases a governoror a concert of rivals
46 T. G. Parsons,"PublicMoneyand PrivateEnterprise: The Administration of theN.S.W.Commissariat, I 8 I 3-I 820",71. Roy.Australian Hist.Soc., lx ( X974). 47GovernorMacquarieto Lord Bathurst, I Mar. I819, in Hist. Recordsof Australia,IStser.,x (I925), pp. I8-20.

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eventuallywidenedthe channelsof supplyagain, such oligopolistic competition returning pricesto a leveltolerable to the market overthe long term, even though many of the customersmight remain inextricably indebted to theirsuppliers. When governmentexpendituretemporarilydeclined, or when shipping agentsfromIndiaor England calledin theirextended credits, Australian merchants gave more attentionto exporting marineand pastoral goodsto Asiaandto Europeso as to makeup the shortfall in foreignexchange.48 Their swiftnessof responsederivedfrom their heavycommitment to importing. Thus a priorpropensity to import elicited,years after the first inwardsconsignments, a flow of lesser value for sale overseas.Whereasthe importtrade into Argentina undermined localproduction, in Australia localproduction, growing from nothing,emergedas its complement; in so far as storereceipts andprivatecustomweresoughtby the wholesalers, it was recognized that local production must persistto increasethe amountof foreign exchangeultimatelyaccruingto the traders.In other words, the processof capturing silverto spendon imports to Argentina earlyin the nineteenthcentury"unemployed" Argentinian resources, while the process of capturing treasury billsto spendon imports to Australia generated domestic activitythere. Although by I 840 wool-growing rousedthe greatest expectation of profit in New South Wales and Van Diemen'sLand it was the merchantsof Sydney, Hobart and Launceston who dominatedthe boardsof banksand other financecompanies,49 and their interests werevestedin a vigoroustwo-way international trade.BuenosAires wasmerelyone of severalportsto whichshipssailingsouthacrossthe Atlantic could take freight; if one local or national marketwere unfavourable there were other harboursto visit; for many vessels BuenosAireswas merelyan optionalport of call on a muchlonger voyageto the Pacificor IndianOceans.5? But Sydneylay at the endof a runwhichled nowhere else.The newersettlements around Australia (unlike Montevideo,Valparaisoor the Brazilianports for Buenos Aires) formed part of the one colonial network,moving grain or bullionas advantage dictated,tendingtowards a common pricelevel; the arrestedstate of WesternAustralia,for example,reflectedthe greaterattraction of othercoloniesforpeople,capitalandgoods.Survival depended on being able to approximate to the rewardsbeing offered in andaround Sydney.
48 G. J. Abbott's arguments to this effectarepersuasive. Seenote28 aboveandhis articles in Abbott andNairn(eds.),Economic Growth ofAustralia. 49 S. J. Butlin, Foundationsof the AustralianMonetarySystem, I788-I85I (Melbourne, I 95 3), chs. 8-9. soClapp,3Fohn Owens,pp. 7 I-5, 8 I-7, 9I-5, I 00; Pratt,"Anglo-American CommercialandPoliticalRivalryon the Plata";Richard Graham, Britainandthe Onset of Modernization in Brazil,I 850-I 9 I4 (Cambridge, I 9?2), pp. 88 ff., 187,1 89.

ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED

I 07

Four of the five major English receiversof Australianwool by I8405l the Gores, the Montefiores, the Walkersand the Donaldsons had sons or nephewsplaced as agents in Sydney. The family connectionemphasized the singlemindedness of their investmentin whatthe fifthof themajortraders, Robert Brooks, calledcomprehensively "the New South WalesTrade''.52 Althoughtherewere overtwo hundred importers of Australian woolin England,thesefive housesaccounted for one-third of the amount.Giventhe smallshares parcelled out to most of the remainder, this was enoughto lead the market.It can be established, moreover, that almostno importer of Australian woolhandled fleecesfromSpain,Russia,Germany or even SouthAfrica(whichwasdirectly on the routebackto England); ninetenths of the wool, to be precise,came to peoplewho had no other stake in wool-trading.53 They were not in the wool but "the New South WalesTrade",receiving produce fromAustralia to coverconslgnments prevlously sentout. RobertBrooks'sown activitiesmay be taken as indicativeof the institutionalstructureand flow of this trade.54 He had begun by travellingwith a shiploadof his own goodsto Sydneyin I823, and fromthen on he sentout a growingfleetto dropcargoesin Australia, the skippersbeing empowered to negotiatefor returnfreights.His most trustedcaptainof the I 820S, RanulphDacre,stayedin Sydney after I830 as Brooks'sagent. Throughhim, stockswere sent to the town's leadingdrapers,ironmongers, grocersand publicans,while assisted immigrantsstepped ashore from Brooks'sships in their hundreds.By I842 he had nine vesselsregularlycarryingconsignmentsto his agentsin Sydney,Launceston, Hobartand Melbourne. The voyage home brought thousandsof wool bales and, also in quantitywhenavailable, sperm-oil, whalebone, tallow,mimosabark. Brooks was thus a general exporterfrom London and a general importer fromAustralia.55 He andDacrecloselystudiedthe pricesof commodities, and the overallstate of the market,at both endsof the run. WhenDacrewent bankrupt in 1844 he was replaced by Robert Towns, who had mademany voyagesduringthe previousdecadeas Brooks's partner in movingpeopleandgoodsto Australia. Townswas as keenas Dacrehadbeen,butmorecarefulandmoreruthless, to bind customers to hissources of supplyandto diversify exports.
. . .

51 Lists of British importers of Australian wool, with the amounts for the preceding years, in the Australian [Sydney newspaper], 27 June 1840; Sydney Herald, 26 May 842; A ustralian, I I July 1842; Sydney Morning Herald, 12 Aug. 1843. 52 Robert Brooks to Messrs. Archer, Gilles and Co., 23 May I842: letter-book, Robert Brooks and Co. Papers (hereafter Brooks Papers), Mitchell Lib., Sydney, microfilm FM4/2348. 53 ListsinAustralian, I I July I842. 54 See Brooks Papers; and Robert Towns and Co. Papers, Mitchell Lib., MS. X279. 55 This agrees with the description of the trade in Alan Barnard, The Australian WoolMarket, I 840-I 900 (Melbourne, I 95 8)) pp- 5?-60, 69 ff

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Meanwhile, in Britain,Brookshelpedto regulate the trade.He was one of a small group which established freight rates and terms of exchangeon bills betweenLondonand Sydney.He sat on the committee setting the times and supervising the conditionsof the wool sales. He joineddelegationsto ministersrecommending policiesin regardto Australia.Gore, Montefiore, Walkerand Donaldsonmet him at eachof thesegatherings.56 WhenGoresandMontefiores faced bankruptcy through over-extension of creditto Australia at the beginningof the I 840s Brooksbecamea trusteeforbothhouses,struggling manfullyto findtwentyshillingsfor eachpoundof theirdebts.57 His involvement hadnothingnecessarily to do withfriendship. No matter howsharpthe rivalry, thecreditof thelargefirmsin thetradeconcerned all the others,generallybecauseit underwrote the flow of funds withinthe coloniesand betweenthe coloniesandthe metropolis, and specifically becauseeach firm held paperendorsed by the others as paymentfor cargoessold within Australia. Brooks's correspolldence is full of concernthat billsandscripcirculating withinAustralia, and thereforeavailablefor tenderto him throughhis agents,shouldbe prudently regulated.58 He worked especially hardto monitorall notes issuingfrom Londonso as to preventtheirdebasement. Spectacular failures,moreover, would makefinanceor creditfor the Australian tradeharder to findin Britain,andraisethe rateof interest. This vigilancefound its fullest institutionalembodiment in the Union Hankof Australia and the Bankof Australasia, bothfounded in Londonin the I 830S.59 By the timegoldhadbeendiscovered these two companieseach held more funds in Australia,and were more stable, than any of the banks of colonial origin.60 RobertBrooks claimedto havebeen"instrumental in starting" the UnionBank,the largerandmorestableof the two, addingthat he himselfhadinsisted on specific andstrictsafeguards whichallegedly freedit fromspeculative pressures.61 The bank'schairman,J. J. Cummins was Brooks's suretybeforethe ColonialLandand Emigration Commissioners, the deputy was Brooks'sfriend and competitorJohn Gore, and other "Australian" merchants joinedhim on the board.Dacrewas one of
S6 Forexample, see lettersby R. Brooks,I 3 Apr.and I 8 Nov. I 841, 4 Jan. and23 May I 842, 8 Mar.and24 Apr. I 843: BrooksPapers; JohnAbelSmithandothersto LordGlenelg,3 I Jan. I 839:Macarthur Papers, Mitchell Lib.,A2g18, vol. 22. 57 Lettersby R. Brooks,25 Feb., I0 and I3 Mar., I7 and 26 Apr., 23 Aug., 28 Sept- 6 Oct- 184I, 18 Apr-,7 May (p- 497), I8 June(p. 50I) I842: BrooksPapers. Brooks andthe othersurvivors absorbed muchof the business formerly transacted by thebankrupt Britishfirms, confirming rather thandisrupting theexistingstructure. S8 See, for example, the case of the Britishand ColonialLoan Co.: lettersby R. Brooks,g and I8 Dec. I84I, I5, I8 and 2I Jan., 2, I0 and I5 Feb., 8 Mar., 14May I 842, 30 Mar. I 843:Brooks Papers. ss S. J. Butlin,Australia and New Zealand Bank (London,I 96I ), chs. 3-7. 60 Butlin,Foandations of theA ustralian Monetary System, pp. 586-6I 0. 61 R. Brooks to R. Campbell JuniorandCo., 8 May I 841:Brooks Papers.

ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED

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the Sydney directorsand James Sea, Dacre's father-in-law,was Sydney manager. Fewer traders appearedon the Bank of Austhowever,was a director,Horatio ralasia'sboard;JacobMontefiore, the J. B. Montefiore established Montefiore its Londonstockbroker, DavidFurtado didthe same Sydneyboardandoffice,andhis partner in Hobart. the family agency The Anglo-Australian banks complemented as closeas possible to par.Becauseof systemensuring orderly transfer the interests of their directorsand customers,they resisted any to massiveoutflowof funds from Australiaand were not prepared slash Australian land and incomevaluesfor the sakeof exportfrom cost.The movement of freightandthe Australia at the lowestpossible andwidelydistributed spending movement of fundsrequired solvency power within the Australiancolonies. Merchantsin London and this.Theymaynot havebeenableto merchants in Sydneyunderstood althoughthesehaddeveloped createunaidedthe requisite conditions, primary propensity to import, buttheir out of the colonies' recognized wereintendedto safeguard these variousinstitutionalarrangements conditions oncetheyexisted. Banks in Buenos Aires, on the other hand, had shallow, fitful had usedthemto expandthe existences.The provincial government them when they explodedlike balsupplyof money,and discarded loons.The firsttransatlantic bankopenedas late as I 864 in order,not exportsector.62 Britishbanksin surprisingly, to servethe entrenched Australia,almost thirty years older, operatedmore evenhandedly, forestallingdepreciationof its currency:British-basedbanks in there. Argentina appeared onlyin thewakeof depreciation IV a pastoraleconomy As Peter Winn has shown for Uruguay,63 generatesof itself very few linkagesfor the region in which the of the primary comgrasslands arelocated.Oncethe crudeextraction modityhas takenplace,all that is neededin the countryof originis a set of railsor a caravan of drays,a longwharfandsomesturdyfellows didnot sufferthe drastic to loadandunload.UruguayandArgentina simplification of the economyvisited,say, on Angolaor Guatemala; marketaroundthe the long-standing hope of fosteringa consumer which wouldblightpurchasing Plata estuarydiscouraged measures of Argentina hadbecome powertotally.Nevertheless wholeprovinces
62 Burgin, Economic Aspects of Argentine Federalism, Index, p. 295, under "Banco de Buenos Aires", "Banco Nacional"; Ferns, Britain and Argentina in the Nineteenth Century, Index, pp. 496-7. 63 Winn, "British Informal Empire in Uruguay in the Nineteenth Century", pp . I I 6-2 6.

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impoverished, dryingup localdemand thereandallowingwagelevels acrossthe nationto be helddown.Monetary depreciation anddisruptions to tradereinforced the advantages whichlandedgentrygained overtheirmercantile rivals. An export-oriented economy has an interestin low wages,low land costs and a weakened currency. The interests of capitalin Australia, however, hadgrownwitha relatively highrateof consumption, widely distributed; the mostpowerful interests werevestedequally,or more, in trade and exchange as in export production.The Australian pastoralists'demand for cheap labour (convicts, or indentured workers fromAsiaandthe Pacific)andfor cheaplandconflicted with the merchants' demandfor an expanding consumer marketand for the capitalization of land;Australia's income,the merchants argued, must not be earnedat the expenseof the domestic marketfor goods and real estate.64 The merchantsprevailed.The revivalof convict transportation was successfully resisted,and LandActs werepassed whichforcedthe occupants of grazingrunsto payfortheiruse,andto payagain. CaptainA. W. Pearsein I900 enviedthe cheapness of land and labourin Argentina. The twentiethwouldbe Argentina's century.65 But the structure of Australian tradewithBritainwas,andremained, reciprocal, not merely"tributary". This wasreflected institutionally. British companiesassembledmuch of the capital that flowedinto Argentinaand Uruguay in the second half of the century. Australianinstitutions (governments, banks,pastoral companies, building societiesand so on) assembled muchof the capitalflowingthere.Returnson capitalin Australia camefroman internalbalancebetween consumption and production; returnsin South Americacame from concentration towards production. Differences in development betweenArgentina and Australia derivefromdifferences in the conformationand needsof capitalin eachregionfunctioning withinthe oneinternational exchange economy. University ofNewSouth Wales BarrieDyster

64 Barrie Dyster, "The Discrete Interest of the Bourgeoisie before the Age of Gold", in Max Kelly (ed.), Nineteenth-Century Sydney: Essays in Urban History (Sydney, 1978); T. H. Irving, " I 8so- I 870", in F. K. Crowley (ed.), A New History of Australia (Melbourne, I 974). 65 See note g above.