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Published online by Cambridge University Press: 05 February 2009
By 1930 there were £435.1 million of British capital invested in Argentina, 62.3% of which was located in railway companies whose securities duly yielded reasonable annual profits. However, the onset of the Great Depression and the successful 1930 revolution brought this state of affairs to a standstill. Moreover, both events inaugurated years of growing difficulties for the British-owned railways and the British government, for whom these public utilities gradually turned into economic hostages and a potential source of conflict in Anglo-Argentine relations. On the one hand, the railways were slowly squeezed between rising operating costs and regulated tariffs while their net receipts dwindled becausé of the crisis. Furthermore, the companies began to experience the following: growing hostility from a local public opinion who resented their foreign ownership; the adverse effects of the Argentine nationalistic economic policies; and had to find suitable new courses of action to deal with government officials who were not wholly sympathetic to their interests. On the other hand, although Whitehall could not fail to consider that to some extent the railways were the backbone of Britain's economic stronghold in the Argentine, they also had other substantial trading, financial and shipping interests at stake in this highly profitable market. Therefore, the British government began to weigh carefully the role of these public utilities in British policy towards Argentina; the real prospects of a clash with Argentina if the railways' finances deteriorated too much and the Foreign Office intervened on their behalf; and whether their aspirations should be considered on the same standing as other British concerns in the Argentine.
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12 See Lewis, Colin, British Railways in Argentina, 1857–1914. A Case-Study of Foreign Investment (London, 1983), pp. 144–5 and 193–18 Congreso Nacional, Cámara de Diputados de la Nación, Sesiones ordinarias, iii, Sesión del 19 de agosto de 1932, pp. 220–4.Google Scholar
13 Throughout the 1930s, the Argentine–British-owned railways demanded from the Buenos Aires authorities a relaxation of Argentina's exchange control restrictions and more favourable exchange rates for their remittances to London, a free hand to solve their labour difficulties and reduce their working expenses, permission to increase their tariffs to compensate their rising operating expenses and a conclusive transport coordination policy to curb motor competition. Important though all these issues were, for reasons of brevity this article is focused on the last one only.
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18 Congreso Nacional, Cámara de Diputados de la Nación, Sesiones ordinarias, iii, Sesión del 19 de agosto de 1932, pp. 220–4.
19 The Review of the River Plate, 19 Aug. 1932, p. 11; The South American Journal, 10 Sept. 1932, p. 250; 29 Oct. 1932, p. 424, 5 Nov. 1932, p. 449.
20 Harper to Craigie, Confidential, London, 20 Oct. 1932, FO 371 A7117/719/2.
21 See a commentary by Robert Craigie in November 1932, FO 371 A7551/719/2; handwritten commentary by a Foreign Office official dated 3 Mar. 1933, FO 371 A1706/440/2; Vansittart to Ambassador Malbrán, London, 30 Dec. 1932, Ministerio de Relaciones Exteriores, Archivo Embajada Argentina en Londres (hereinafter cited as MRE, Archivo Embajada), 1933, Box 198.
22 Telephone conversation between Alberto Hueyo (Buenos Aires) and Julio A. Roca (London) on 7 Mar. 1933, MRE, Archivo Embajada.
23 De Tomaso to Saavedra Lamas, Buenos Aires, 17 Apr. 1933, MRE, Archivo Embajada, 1938, Box 217.
24 FO 371 A 1706/440/2 (1933). Telegram from Finance Minister Alberto Hueyo to Vicepresident Julio A. Roca, Buenos Aires, 26 Feb. 1933, Ministerio de Relaciones Exterioresy Culto, Memoria presentada al honorable congreso nacional correspondiente al período 1933–1934 (Buenos Aires, 1934), p. 382Google Scholar; Wright, , British-owned Railways in Argentina, 1854–1948, p. 148.Google Scholar
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28 La Prensa, 14 Apr. 1934, p. 10.
29 Data on the social background and professional connections of this commission's members can be taken from Kraft, Guillermo, Quién es quién en la Argentina (Buenos Aires, 1939 and 1943)Google Scholar and Guía de sociedades anónimas, 1933–1934 (Buenos Aires, 1934).Google Scholar
30 Anales de la Sociedad Rural Argentina (May 1935). pp. 289–304; La Nación, 29 Sept. 1935, p. 12.
31 R. Morrison's minute, FO 371 A8831/76/2 (1934); FO 371 A9535/76/2 and A 10323/76/2 (1934); La Prensa, 22 Dec. 1934, p. 7; FO 371 A4619/418/2 (1935).
32 The Times, 18 Mar. 1935, p. 22, 18 Oct. 1935, p. 21; The South American Journal, 19 May 1935, p. 490 and 6 July 1935, p. i.
33 This MP had recently asked the Foreign Secretary quite embarrassing questions about the situation of the Argentine–British-owned railways in the House.
34 R. Morrison's minute, FO 371 A8831/76/2 (1934); Follet Holt to Cyril Cobb, Private, 18 May 1935, FO 371 A4619/418/2.
35 Memorandum by John Vyvyan commenting the correspondence between Walter Runciman (Board of Trade) and Sir John Simon (Foreign Secretary), London, 19 Mar. 1935, FO 371 A 2873/418/2; Follet Holt to Troutbeck, London 16 Apr. 1935 and Follet Holt to Leguizamón, confidential telegram, London, 16 Apr. 1935, FO 371 A3162/418/2.
36 Leguizamón to Chilton, Buenos Aires, 31 Apr. 1935, FO 371 A3532/418/2.
37 For a discussion of the main characteristics of this debate, see Wright, , British-owned Railways in Argentina, 1854–1984, pp. 172–96Google Scholar and Heras, Raúl García, ‘The British-owned Railways in Argentina: Stability, Decadence and Prologue to their Nationalization, 1928–1943’ (Ph.D. Diss., University of La Plata, 1983), pp. 249–301.Google Scholar
38 See, for example, Mejía, Ezequiel Ramos, Laws tarifas ferroviarias ante el transporte caminero (Buenos Aires, 1932), pp. 9–12Google Scholar; La coordinación nacional de los transportes (Buenes Aires, 1933). pp. 4–5.Google Scholar
39 He was a member of the local boards of the Entre Ríos Railways, the Argentine Northeastern Railways and the Argentine Fruit Distributors Co., cf. Guía de sociedades anónimas (Buenos Aires, 1931–1932)Google Scholar. Years 1930–1 and 1932–3.
40 See, for example, Empresas de Ferrocarriles de Jurisdicción Nacional, La coordinación nacional de los transportes (Buenos Aires, 1936), pp. 7, 9, 10, 14–15.Google Scholar
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42 Leguizamón to Follet Holt, Buenos Aires, 3 May 1935, FO 371 A4; 19/418/2.
43 For more details, see Wright, , British-owned Railways in Argentina, 1854–1948, pp. 175–82Google Scholar and La Vanguardia, 26 Sept. 1935, p. 10.
44 Summary of the interview between Lord Stanhope, Sir Follet Holt and Howard Williams, London, 5 Nov. 1935, FO 371 A9304/418/2.
45 Foreign Office to Henderson, London, 20 Nov. 1935, FO 371 A954/418/2.
46 In a private letter, British Ambassador to Argentina Malcolm Robertson stated that ‘We shall begin to get a move on when directors are forced by law to travel annually to the parts of the world in which their companies are interested. It seems incredible, but I know of directors, chairmen, even general managers, of some of the greatest companies connected with Argentina, who have never been to South America.’ Several officials of other departments shared these views. See FO 371 A8506/2687/2 (1929). In the late 1930s Whitehall's criticism also stressed the obsolete services that these companies provided, the stubbon insistence of the managers on demands that the Argentine administrations were reluctant to respond favourably, and their far-fetched appeals for help to the Foreign Office.
47 Henderson to Foreign Office, Buenos Aires, 3 Jan. 1936, FO 371 A788/65/2.
48 This was an economic doctrine by which the Dominions and colonies of the British Empire would form a self-contained trading unit, protected against foreign competition by high tariffs. This doctrine was adopted by Britain's National Government in 1931.
49 Wright, , British-owned Railways in Argentina, 1854–1948, pp. 169–71Google Scholar; Hoare to Henderson, London,. 13 Dec. 1935, FO 371 A10540/111/2.
50 John M. Eddy's memorandums outlining his interviews with Argentina's Foreign Relations Minister Saavedra Lamas on 21 Nov. and 3 Dec. 1935, FO 371 A 105 50/11/2; Follet Holt to Troutbeck, London, 20 Dec. 1935, FO 371 A10744/418/2.
51 Minute of the interview between Howard Williams (Central Argentine) and John Troutbeck, London, 4 Jan. 1936, FO 371 A982/65/2; minute of the interview between John M. Eddy and John Troutbeck, London, 6 Mar. 1936, FO 371 A2028/65/2.
52 The Argentine government agreed to give the railways this franchise in February 1936, at a time the country's exchange control allowed foreign exchange remittances with certain restrictions either through the official of the free markets. The terms of the agreement were that (a) during 1936 the railways could remit profits totalling 157.4 millions of paper pesos at a rate which was 5% over the offical buying rate; (b) these remittances had to be made in strict compliance with the exchange regulations agreed by Britain and Argentina after the signature of the Roca–Runciman treaty; (c) the railways granted a 10% rebate on their corn tariffs and promised not to raise the other freight-rates during 1936. La Prensa, 15 Feb. 1936, p. 11; Henderson to Foreign Office, confidential, Buenos Aires, 25 Mar. 1936, FO 371 A 3193/58/2.
53 Foreign Office minute of the conversations between Robert Craigie, Stanley Irving, John Troutbeck, Sir Follet Holt, Howard Williams and John M. Eddy, London, 20 June 1936, FO 371 A6105/65/2.
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55 For news and comments about this opposition see La Prensa, 11 Jan. 1936, p. 9; La Natión, 4 Apr. 1936, p. 3 and 28 Apr. 1936, p. 3; The South American Journal, 14 Mar. 1936, p. 283.
56 Since Argentina's exchange control system was modifed in November 1933, at best the railways had been allowed to remit their profits at the official selling rate, which was approximately 20% higher. The companies considered that this was an indirect tax on their net receipts, from which they were exempt by Article 8 of the 1907 Mitre Law that regulated their concessions. See Ambassador Malbrán to Foreign Relations Minister Saavedra Lamas, London, Je. 10, 1936, MRE, Archivo Embajada, Letter Book no. 311; summary minute by Mr Gorell-Barnes, London, 26 Jan. 1939, FO 371 A675/29/2.
57 In November 1933 the Justo administration had begun to give active support to the local farmers by purchasing their main cereal crops at guaranteed minimum prices. The funds to subsidize this policy were obtained through a modification of the country's exchange control system. For some detailed dicussions see Allende, Walter Beveraggi, El servicio del capital extranjero y el control de cambios (Buenos Aires, 1954). pp. 168–72Google Scholar; Arrarte, Jesús Prados, El control de cambios (Buenos Aires, 1944), pp. 84–5 and 286Google Scholar; Salera, Virgil, Exchange Control and the Argentine Market (New York, 1941), pp. 96–107Google Scholar, and Alhadeff, Peter, ‘Dependency, Historiography and Objections to the Roca Pact’ in Abel, Christopher and Lewis, Colin M. (eds.), Latin America: Economic Imperialism and the State (London, 1985), pp. 368–70.Google Scholar
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59 For example, the 1933 treaty had established that (a) £3 million would be deducted annually from the amount of Argentina's annual exports to the United Kingdom to allow the normal service of her foreign public debt outside the sterling block; and (b) Argentina's remaining sterling exchange would be earmarked to finance the purchases of British goods. In 1936 the amount stated in (a) was reduced to £1.5 million in order to have more sterling exchange available for Argentine purchases of British goods. See also Harcourt Johnstone to ambassador Le Bretón, London, Aug. 23 1940, FO 371 A3784/18/51 and Gravil, Roger and Rooth, Timothy, ‘A Time of Acute Dependence: Argentina in the 1930s’, Journal of European Economic History, 7, nos. 2–3 (1978), p. 368.Google Scholar
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61 Anales de legislatión argentina: Complemento años 1920–1940 (Buenos Aires, 1953), pp. 776–8.Google Scholar
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65 For the automotive competition see García Heras, Autmotores norteamericanos, caminos y modernizatión urbana en la Argentina, 1918–1939, pp. 88–94. For a brief description of this crisis see Heras, Raúl García, ‘World War II and the Frustrated Nationalization of the Argentine British-owned Railways, 1939–1943’, Journal of Latin American Studies, vol. 17 (05 1985), p. 135.CrossRefGoogle Scholar
66 The Buenos Ayres Great Southern and the Buenos Ayres & Pacific were particularly affected by this phenomenon. See Report from Mr Harris, Director General of the Buenos Ayres Great Southern Railway Co. Ltd. dated Sept. 17, 1938; Report of the General Manager of the Buenos Ayres & Pacific Railway Co. Ltd. dated Aug. 23, 1938 and The Times, 25 Oct. 1938, p. 20.
67 Due to the recovery of the world markets and the internal grain prices, at the end of 1936 the Grain Regulating Board had lifted these subsidies temporarily. Ovey to Foreign Office, Buenos Aires, 19 Nov. 1938, FO 371 A8914/183/2.
68 Balfour to Follet Holt, confidential, London, 9 Nov. 1938, FO 371 A 8429/24/2; Young to Perowne, London, 21 Nov. 1938, FO 371 A8796/24/2; Sir John Simon to Lord Davidson, London, Nov. 28 1938, FO 371 A8854/24/2.
69 Anales de legislación argentina: Complement años 1920–1940, pp. 1169–91.
70 Lord Davidson to Sir John Simon, confidential, London, 20 Nov. 1938 and Simon to Davidson, London, 28 Nov. 1938, FO 371 A8854/24/2.
71 See memorandum of the interview of railway directors John M. Eddy and Luis O'Farrell with Roberto M. Ortiz on 30 Nov. 1938, FO 371 A9410/24/2 and Eddy to Follet Holt, confidential telegram, Buenos Aires, 1 Dec. 1938, FO 371 A9197/24/2.
72 See Leguizamón to Follet Holt, Buenos Aires, 29 Sept. 1939, FO 371 A 7040/142/2.
73 In the late 1930s Whitehall strongly believed that the railway services needed a substantial modernization and that the management calibre of some companies was rather poor. See Ovey to Foreign Office, telegram, Buenos Aires, 6 Feb. 1939, FO 371 A 1005/141/2 and confidential minute by John D. Scott on the management of the Argentine British-owned railways, London, 15 Feb. 1939, FO 371 A1340/141/2.
74 Foreign official commentary dated 15 June 1938, FO 371 A4538/24/2.
