Argentine and Australian Development Compared. Author: Barrie Dyster

8/12/2019 Argentine and Australian Development Compared. Author: Barrie Dyster

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ARGENTINEANDAUSTRALIANDEVELOPMENTCOMPAREDIN A RECENT ARTICLE IN THIS JOURNAL PETER WINN DEMONSTRATEDthe establishment f BritishInformalEmpire n Uruguay n theNineteenth Century''.1Obviously he formal political status of aterritorymustnot be confusedwith the realityof its positionwithina

.W1C r economlc ystem.Uruguay shares many of the characteristics f such differingpolitiesas Australia,New Zealand,South Africa, he United Statesand Canada,as well as neighbouringArgentina.All of these, J. W.McCarty has reminded us, are regions of recent settlement ,encompassing large open grasslands ,whose originalpopulationshavebeenoverwhelmedndrelegated o the margin, r the bottom,bythe new occupiers. The purest examples that history offers ofcapitalistic societies emerged in these areas, exporting primaryproducts o Europe n vast quantitiesand achievinghighper capitaincomes for the settlers. As McCartyargued, their striking simi-laritiesmake explanationof differencesbetween hem all the morerevealing.At one end of the continuumhe placed Australia, eastencumbered y non-capitalist on-European emnants; t the otherend, Uruguayand Argentina.2The presentpaperseeks to presentacomparative nalysisof Argentine nd Australian evelopment o asto reflect,not only on each other,but also on structural elationshipswithinnineteenth-centuryapitalism s a whole.

If the occupationof grasslands s taken to be definitive or bothregions,close parallelsappear.BuenosAiresat the beginningof theeighteenth enturywas a provisioning ort estimated o hold a mereone thousandpeople,3 orbidden o tradeby sea with the rest of theSpanishdominions, et alonewith foreigners.Althoughminorexcep-tions to this embargowere allowed as the century wore on, andsmuggling ook place, it was only in the I770S that permissionwasgiven for BuenosAires to trade openlythroughoutSpain'sempire.This was a single decadebeforethe First Fleet left for BotanyBay.1 Peter Winn, British Informal Empire in Uruguay in the Nineteenth Century ,Past andPresent,no. 73 (Nov.I 976), pp. I 00-26.

2 J. W. McCarty, Australia as a Region of Recent Settlement in the NineteenthCentury ,AustralianEcon.Hist.Rev., xiii ( I 973), esp. pp. I48-5 I .3 Aldo Ferrer, TheArgentine conomyBerkeley, I967), p. 30.


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92 PAST AND PRESENTThe variousestimatesof BuenosAires'spopulationmadeduring henext fifty yearssuggest hat at leastas manypeople ived n the city asin its immediate interland f pampas.4 ndeed t seems hat, even byI 830, only one-third f the uninterruptedweepof pastureacross heprovince f BuenosAires whosearea s almost 20X000 squaremiles)had been occupiedby Argentinegraziers.5At the same time thatgraziers anningout fromSydneywere ookingbeyond he boundariesof the NineteenCounties,6withinwhich he government navailinglyattempted o confine ettlement, astoralists n the Argentine ampaswere similarlychafingat the tight arc allowed hem by the Indiansbehind their own great seaport. Pastoralists n both regions com-plained,rightlyor wrongly,about he shortage f labour, he ratesofwagesand the difficultyof attracting abourawayfromemploymentin the city.7Given he magnitude f the city n bothcasesand he com-petition or employmenthat it offered, anwe assume hat rewards ocapitaland labourwithinthe pastoral-exportector,and the disposi-tion of its various inkages,needdifferat all significantly etween heregions?As late as the beginningof this century t was common o bracketAustralia and Argentina. Students of commercialgeography inschools in New South Wales, for instance, were taught that theArgentineRepublic... has animal and vegetableproductions erysimilar to those of Australia,and it is our chief competitor n themarketsof Europe.It owns over I00 millionsof sheep . . . . Thisschool-readereprinted he text of a lecturegiven beforethe state'schamber of commerce,where the argumentwas expressedmoreurgently: In the particulars have given it has been made abun-dantly clear that the Argentine s our most dangerous ompetitor. . .o.8 The samesternwarningwassounded y CaptainA. W. Pearse,grazier and politician,after his secondvisit to Argentina n about

4Miron Burgin, The EconomicAspects of ArgentineFederalism, 820-I852(Cambridge,Mass., I946), pp. 24-9; Ferrer,op. cit., pp. 53-7;Sir Woodbine arishBuenosAyresand the Provincesof Rio de la Plata: TheirPresentState, TradeandDebt (London, 838). Parishwas Britishconsul n BuenosAires n the 1820S andI 830S, a closestudent f affairsanda manof great ocal nfluence.

5 Ferrer,op. cit., p. 50; see the maps n HoracioC. E. Giberti,Historiaeconomicade la ganaderiaargentina BuenosAires, I96I), pp. 49, I33. Ferrer stimates hatonly I 0 percentof the province was ntegratedntothe colonial conomy y I 800.6 Similar n size, though ar morebroken n land-form:D. N. Jeans,An HistoricalGeography f NewSouth Wales o I90 I (Sydney, 972), chs.7-9.7 Burgin, op. cit., pp. 27-g, 267-8; H. S. Ferns, Britain and Argentina n theNineteenthCentury Oxford, 960), pp. 53-66, I 37-44;W. A. Sinclair, WasLabour

Scarce n the I 830s? ,AustralianEcon.Hist.Rev., xi (I 97 ), argues hat labourwassufficient or the needsof Australian astoralists;hey did, nevertheless, eek moreworkers han they couldget andat lowerratesof pay (prisoners r indenturedabouroftenbeingpreferred).8 S. H. Smith Inspector f PublicSchools),Brooks'Commercial eography f theWorld Sydney, I908), pp. 3I, 62; the publisherswere WilliamBrooks and Co.,Contractorsorthe Supplyof ReadingBooks o the PublicSchoolsof N.S.W. .

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ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED 93I900; cheap labour n Argentinaand the entrenchment f its land-owners' enurebeyond he reachof reformingLandActs,he believed,ensured hat it would outstripAustralia n the future.9Later com-mentators, f course, ended o see in theseelements lowerwagesandmore powerfullandowners)evidence of Argentina'scomparativeweakness ather hanof its strength.In their essays comparing the developmentof Australia andArgentina both E L. Wheelwright10 nd Theodore H. Moran1located hedivergencen fortunesaboutthat veryperiod, he turn ofthe century.Theyboth concentrated n the role of the labourmove-ments,emerging n Australia s a separatepolitical orcewhichcameto supportprotectionand a deliberatepolicy of industrialization,nArgentinaubordinatingtself to a middle-classadicalpartyespous-ing liberal doctrinesof free trade. The Harvardeconomist,ArthurSmithies, n a paper implyentitled Argentina ndAustralia ,oundfundamentalimilarities etween he two countries ntilthe adventofPeron n Argentina)who allegedly hrew he nation nto chaos. Anysophomore ouldhave told Peronthat he was raisingreal wagesfarabove the marginalproduct of labor at full employment.Butunfortunately osophomore ad his ear''.l2WhyPeronism rose,andwas acclaimed, ndat that particularuncture, requestionsnot evenasked.All threeof theseessays reateverything efore he emergenceof labourmovementss prehistory. f the economic, oliticalandclassstructures f the twocountrieswerealike n previous eriods, henthedivergent political responsesof working men should become theproblem o be explainedand not the a priori explanationof laterphenomena. t is certain that Wheelwright t least, who has morerecently celebrated he work of Paul Baran and Andre GunderFrank,l3would nowpresentan analysiswhich reaches urtherbackinto the past andwhich takes seriously he action of the Europeaneconomy n theregionof recent ettlement.Accountsbeginning n I890, or in I940, omit too much of theevidence.Whatcan be said of those other essayswhich ascribed hedifferentcharacteristics f Australiaand Argentina o the politicalcultures upposedo be translated rom an idealizedBritainand anidealizedSpain?In his eclectic treatmentof Argentinaas a NewCountry CarterGoodrich, or example, mphasized hese idealized

9 A. W. Pearse,Our GreatRival: TheArgentineRepublic (Sydney, . I90I).lo E. L. Wheelwright, Australia nd Argentina:A Comparative tudy , n hisRadical Political Economy: Collected Essays (Sydney, 974).11T. H. Moran, The'Development' f Argentina nd Australia ,ComparativePolitics, iii ( I 970).12 ArthurSmithies, Argentina ndAustralia ,Amer.con. Rev., v (1965),p. 26.13 E. L. Wheelwright, Under-Developmentr Revolution?The Baran-FrankThesis , n hisRadical Political Economy: Collected Essays.


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94 NUMBER 84PAST AND PRESENTtraditions sfundamentaldenominators,'4lineof argumentimilaro, thoughlesssubtlethan, that whichgeneratedhe hypotheses fouisHartzandhis associateswhosecollection,The Foundation ofew Societies, appearedn the sameyearas the Goodricharticle.lsut Hartz's radical s as inappropriate categoryto defineustralianociety(especiallybefore I850) as feudal s for Latinmerica.EvenRichardM. Morse,writingon LatinAmerican theartzvolume, ookcareto substitute patrimonial or feudal atvery oint,andhe hasarguedelsewherehatSpanishdominionwasaintained y imperialcities rather than by feudal estates.'6harperndmorerecentanalysesarguepersuasivelyhat capitalistndnot feudal relationships hapedthe social structuresof thepanisholoniesand of the independent tates which succeededhem.7 Whenwecontrasthefreetradeprovince fBuenosAireswithheonvictcoloniesof Australian the firsthalf of the nineteenthenturyn antithesisof feudalismandradicalismeemsparticularlyifficulto sustain.The prisonand prisoner-labouromponentofarlyustralianocietywould n itselfdrastically ualifydisparitiesscribedotheparent ultures fBritainandSpain.heArgentineconomist,RaulPrebisch, dvanced differentkindfrgument o explainthe limiteddevelopment e perceivedn hisomelandndin countriesikeit.l8Primary roducingountries, nheeriphery,havefacedregularlydeterioratingermsof trade,hergued,hile the industrialized conomiesat the centre of theapitalistorldhaveretainedherewards ftheirproductivity ithinheirwn borders,partlybecausetheirworkershavebeen abletoefendlevelof wageswhichis, relative o wageselsewhere,high.nfortunatelyustralia to mentionno othereconomy)alsifies hisypothesis;t is a countryat theperiphery,xporting awmaterials,hoseelativelyhighper capita incomeis no moreskewed n itsistributionhan sthecase neconomies tthecentre.wo elpful inesof inquiry,however,haveextendedandindeedransformedhetypeof analysiswhichPrebischpropounded. ne ine4arterGoodrich, Argentinaas a New Country ,Comparative Studies inocietynd History, vii (I964-5);Goodrich itesSpanishversusBritish raditions,hearliermergencefastrongabourmovementnAustralia,hepaucityoffuelforecondaryndustrynArgentina, ndthemassiveimmigrationntoArgentina t theeginningf this centurywhichresultedn a deep f temporary ulfbetween uralrgentinand heimmigrant-dominatedities.5L.Hartz t al., TheFoundation of New Societies (NewYork,1964).6R.M. Morse, n Hartzet. al., op. cit.; R. M. Morse, SomeCharacteristicsfatinmericanUrbanHistory ,Amer. Hist. Rev., lxvii ( I 962).7eeRodolfoStavenhagen, SevenFallaciesaboutLatinAmerica ,andLuisitale,LatinAmerica:Feudalor Capitalist? ,epr. n JamesPetrasandMauriceeitlineds.),LatinAmerica:Reform orRevolution?(NewYork,1968).8SeeaulPrebisch,Toward a Dynamic Development Policy for Latin AmericaNework,962);L. E. diMarco ed.),International Economics and Development:ssaysnHonor of R. Prebisch (NewYork,1972).


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ARGENTINE AND AUSTRALIAN DEVELOPMENTCOMPARED 95is looselyknownasdependencyheory,acceptinghecentre-peripheryantithesis.I9We can still carry away from these authors theimplausible, suallyunstated,assumptionhatAustralia oo,becauseit is peripheral,mustbe dependent ndunderdevelopedn theLatinAmericanmodel;but the workof AndreGunderFrank,at least, hasstressedthat underdevelopments a dynamicprocess,and is bestunderstood s a consequence f thedeformationndsubordination foneeconomybyanother,moreaggressivelyapitalist, conomy.20 isdefinition f underdevelopments anactiveandnot a passiveprocesswillprovide his paperwith one of the instrumentsordistinguishingbetween urtworegions.Thesecond ine of inquiryhas beenfollowedbyArghiriEmmanuelin his book, Unequal Exchange.. A Study of the Imperialism ofTrade.21For him, wage differentialsunderpin nequality n inter-nationalor interregional rade.High-wage ountries,by theirverysuccess n maintaining heir level of wages,imposeterms of tradefavourable o themselveson low-wagecountries, and retain andcirculatewithin theireconomies greaterproportion f the returnsfrom rading.Thispaperwill seek oshowhow ahigher evelofwagesmight be maintained n the convictcoloniesof Australia hanin thetradingworldsurroundingBuenosAires,and it will suggestsomeoftheconsequencesfthat.The crucialperiodwas the last quarterof the eighteenthand thefirsthalfof the nineteenth enturles. n Argentina 852 was theyearin whichthe long ruleof GeneralRosaswasbroken,when hefedera-tion fellapart nto adecadeofinterprovincial arout of whicharoseafairlystable new orderattractive o Britishinvestors; n AustraliaI 85 I wasthe firstyearof goldrush.Itwill bearguedhere hat,beforeRosasdisappeared, ndgold wasdiscoveredn Australia,a decisiveshift hadoccurredn Argentina'sermsof trade owardsandholdingandproduction orexport,whereas he balance n Australiabetweenimportand export,betweenconsumption ndproduction,heldfirmthroughout.

19 From ts first ssue n 1974, LatinAmericanPerspective as carried greatdealof debateabout dependencyheory .Seealso the symposiumn the Economics fImperialism t the 1970 annualmeetingof the AmericanEconomicAssociation,published n a supplement o Amer. Econ. Rev., lx (I970), pp. 225-46j SusanneBodenheimer, Dependency nd Imperialism: he Rootsof LatinAmericanUnder-development , oliticsandSociety, ( I 9'7 I ) j J. D. Cockcroft t al., Dependence ndUnderdevelopmentNewYork,I972)j Alainde Janvry, The PoliticalEconomy fRural Development n Latin America:An Interpretation ,Amer. 31. Agric.Economics,vii ( I 975).

20 Andre Gunder Frank,Capitalismand Underdevelopmentn Latin America(NewYork,1969);KeithGriffin,UnderdevelopmentndSpanishAmerica London,69).21 A. Emmanuel,UnequalExchange:A Study of theImperialism f Trade Lon-don, 1972).


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96 NUMBER 84AST AND PRESENTAustralia eveloped s a regionof highwagesand,two-thirds f theway through he century,of high andpricesalso; n Argentina,wages

remained ower and landholdershad paid little for their land. InAustralia, hat is, the relativelyhigh costs of labourand land weretolerable o capitalists ecause heyunderwrote urchasing owerandforcedruralproprietorso come to termswith urban nvestors.Themagnates f Argentina, n the otherhand,saw abourand andsimplyas costs that must be minimized o as to enlarge he marginof profitwon from producing or non-Argentine onsumption.As a conse-quenceArgentina's istory its the specifications f dependency ndexpropriationmuch better than does Australia's;Australia hasdevelopedas a provincewithin the metropolitan conomy,whereasArgentinahas beenfar more ributary in the senseof thesubmitteroftribute ) o the metropolis.The analysis runs counter to widely held assumptionsaboutArgentineand Australianhistory.The heavy inflow of people andcapitalduring he secondhalfof the nineteenth enturyhas oftenbeenthought o have transformed oth countries; his paper uggests hatthe inflow deepenedand broadened hannels hat had been sharplycarved already,before the middleof the century.The explanationadvancedhere for Argentinaavoids nvoking eudalism a conceptcurrentlydisputed or Latin Americaas a whole, let alone for theenvironsof BuenosAires)and nationalcharacter , nd tries to gobeyond brute lust for power. The explanationadvancedhere forAustralia rejects the common belief, explicit or implicit, that itsdevelopmentwas export-led, sually at the sheep's ail . EvenJ. W.McCarty's brilliant restatementof staple theory,22whereby theBritish commissariat uring the first two generations f settlementactedas the externalmarketwhichcreatedand defined ocalproduc-tion for export by virtueof its own demand,has been inverted nthis paper,whichpresents he commissariat s the coreof a consumereconomywithin Australiawhose appetitewas fed as much by prod-ucts fromoverseasas by itemsgrownor fashioned ocally.To restatethe formulae, and and labour n Argentinawereseen as costs,whoseincrease would diminish returns on capital; land and labour inAustralia ame to be seen by the dominantcapitalistsas resources,ensuring apitalgains (or intereston funds ent to landowners)n thecaseof land, and sustaining ffective onsumer emandamongwage-earners.

22 J. W. McCarty, The Staple Approach n AustralianEconomicHistory ,BusinessArchivesand History, v (I964); see the critiqueby G. J. Abbott, StapleTheory and AustralianEconomicGrowth, I788-I820 , Business Archives andHistory,v (I 965)


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ARGENTINE AND AUSTRALIAN DEVELOPMENTCOMPARED 97II

Buenos Aires, it has been implied already, was largely a creation ofthe late eighteenth century.23At the beginning of that century it waslittle more than a provisioning station on the routearound Cape Horn.The Spanish crown had simplified its administration by prohibitingthe movement of goods into or out of South America through BuenosAires, thus protecting Lima's monopoly over intercontinental tradewith the silver-producing areas of the Andes. In the interior ofArgentina, however, provinces existed (holdingperhaps a quarter of amillion people) which were encouraged to producefoodstuffs, wines,crude textiles, hides and draught animals for use in Potosi andthroughout the Andes, receiving silver in payment. A sturdy if ratherunsophisticated economy developed in these provinces. Inland townslike Tucuman, Salta and Cordoba flourished, while Buenos Airesremained a distant village away on the periphery.An increase in the numberof aggressiveforeigntraders n the SouthAtlantic, Brazil's expansionsouthwards, a declinein silver productionin the mountains, and growing pressure within Spain itself to adoptcommercially liberal policies at least within the empire, all contributedto a more 'rational use of Buenos Aires under royal regulationstowards the end of the century. Trade through the port was freed bystages, bringing about a reversal of relationships within Argentina.Buenos Aires moved from the periphery of the Argentine economy tobecome its gateway. The interior was now many months closer toEurope. Goods flowed acrossthe Atlantic to a market which could payin silver. Although the cost of overland transport still limited thenumber of these goods which could reach the interior profitably,imports began to displacelocal produce in the oldArgentine provinces.This process accelerated in the nineteenth century as productionand freight costs of European exports halved over the first fourdecades.24Long-standing Argentine wine production first of all, and

23 The followingparagraphs wemost to Parish,BuenosAyresand the Provincesof Rio de la Plata, pp. 338-44j Ferrer,ArgentineEconomy, p.20-73; JohnLynch,SpanishColonialAdministration,782-I8I0: TheIntendantSystem in the Vice-royaltyof the Rio de la Plata (London, 958), pp. I-45, I62-71; AdolfoDorfman,Historiade la industriaargentina(Buenos Aires, I970), pp. 25-74; Sir HerbertGibson, The History and PresentState of the Sheep BreedingIndustry in theArgentineRepublic BuenosAires, 893), ch. I; JoseM. MariluzUrquijo,Estadoeindustria,8I0-I862 (Cordoba,969), esp. pp. 57-63,7I-9; TulioHalperinDonghi,Historia contemporanea e America latina (Madrid,I975), pp. I94-204; TulioHalperinDonghi,Politics,Economics ndSociety nArgentina n theRevolutionaryPeriod Cambridge,975) .

24 Parish, op. cit., pp. 35I-2; A. Imlah, The Terms of Trade of the UnitedKingdom, 798-I9I3 , 1. Econ. Hist., x (I950), p. 183; D. C. M. Platt, LatinAmericaand British Trade, 806-I9I4 (London, 972); Paul Bairoch, EuropeanForeignTrade n the XIXCentury:The Development f the Valueand VolumeofExportsPreliminary esults) ,Zl.EuropeanEcon.Hist., ii (I 973), p.20.


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98 PAST AND PRESENTtextileproduction oonafter,weresappedby the competition. oreignshipping gentsandporteno25merchantsooked orpaymentn silver.The declineof the Andeanmines,moreover,meantthat no reliancecould be placedon that traditionalmarketand sourceof income orArgentine roducers. he stockof silver n the nteriormust nevitablydwindle, given the speed of the outflow. There was, therefore,abullion and speciedrain at the very time that local productionwasbeing eroded.The old provinces f Argentina, hen, providea case-studyof the dynamicprocessknownas underdevelopment ,hich sthe process f dismantling functioning conomy.26In so far as theporteno merchants nd the foreign hippingagentsreliedon the size and liquidityof the inlandeconomy o underwritetheirflowof imports, heywerecountingon two wastingassets-theproductive owerof the old provinces nd the silverhoard.When hefirstassetrandown,Argentina cquired vastunderdevelopedegion,perennially epressingo the nationalmarketand a sourceultimatelyof cheap surplus abour. When the second ran down by the earlyI830S,27 ven more of the resourcesof the state were devoted toextending he boundaries f pastoral ccupation gainst he resistanceof resident ndians,so that availablepasturewithin the provinceofBuenos Aires increasedalmost threefold n the course of the nexttwenty years; some of the landownerswere also provoked ntoimprovementsn technique,as well as the consciouscultivationofoverseasmarkets,all to compensateor the loss in exchange.28Thisparallels he slightlyearlierreactionof theirAustralian ounterpartswhen reductionsweremade n the issueof treasurybills through hecommissariat, r when traders n Calcuttamade more urgentcallsthan usual on Sydney for payment;pastoral and export activityincreasedsignificantly n response o the squeezeon exchange.)29Prior o this time,however, he availability f silverand the cheapen-ing of importshadmadeeconomic ndpoliticaldecision-makersn theseaport complacentabout the need actively to foster an internalmarket.Purchasing owerwas, f anything, ontracting.Once ndependence asproclaimedn I 8Io it became pparenthatthree regionallydistinct interestswould vie for dominancewithinArgentina, ach powerful nough o make he defenceof its own con-cernscostly o, andperhapsdestructive f, thoseof its rivals.Porteno

25The wordused o distinguish esidents f thecity of BuenosAires.26See note20 above.27Parish,op. cit., pp. 354, 358-9. The supplyof silverwas also affectedby thecaptureby the new Bolivianrepublic f a port on the Pacificcoast, throughwhichmostof its trade henpassed.

28 Gibson,op. cit., pp. 50, I 87-290;Giberti,Historia economica de la ganaderiaargentina, pp. I 16-44; Dorfman, p. cit., pp. 57-60;WilfridLatham,The States ofthe River Plate, 2ndedn.(London, 868), p. 367.29 G. J. Abbott,The Pastoral Age: A Re-Examination (Melbourne,97 I ), pp. 7- I 3,25-6, 36-45-

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ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED 99merchants nd intellectuals, epresenting ne of thesethree nterests,had immediately eclared he formervice-royalty pen to tradewiththe whole world, relatively free of tariff except for purposesofrevenue.BuenosAireswas a mercantile ndnot a manufacturingity.High tariffs on the coast or between provinceswould impede tsbusinessand raisethe cost of living.30Admittedlyherewereartisansin the city who asked or tariffprotection ut they acked he numbersand wealth o havetheirdemandsmet.3'The inlandprovinces, ne ofthe other contending egions,had long been dominatedby familieswho now recognized hat the basis of their wealthand local positionwas jeopardized y the unhamperedlowof goods.Between he coastand the high plains lay, geographically nd politically,the thirdregion, he pampasof the province f BuenosAires.For the graziersthere, as producersand as employers, he free movementof cargothrough he port n bothdirectionswas highlydesirable.Yet althoughtheydid not have o facecompetitionromEuropeanmports, heydidwelcome ariffsbetweenprovinces o as to stiflecompetitionromthelong-establishedasturesnland.32This contestbetween hreegreat nterests theportenos, the inlandelites and the graziersof the pampas)precipitatedhree exhaustingwarsduring he I 820S-a warbetween he province f BuenosAiresandthe restof the country, hat keptrecurring ntilthe 1860s at least;a war with Brazil;and a war against he Indianson the pampas hatflared poradicallyor half a century o come.Noneof thesewarscanbe reduced imply o the clicheof a brawlbetween audillos.It was the civil war that grew most directlyout of the clash ofinterests.The underdeveloping reas fought for a full federalistconstitution o confine the power of the metropolisand to enforceboth a high nationaltariff and interprovincialustomsduties. Theportenos fought or a unitary tate without nternalbarriers.Andtheownersof the pampas whoprovidedmuchof the cavalry or BuenosAires) took the intermediateposition, favouring nternational reetradeand provincial rotection.The compromise rrangements adeafter each truce came, quite logically,closest to that intermediateposition.The resultantmodified ederalism hus gave the advantageamong he threecontendingnterests o the pastoralists f the coastalprovince.The second war, against Brazil, was fought to keep the Plataestuaryaporteno monopoly, o preventa hostile radingor privateer-ing rival from controlling he oppositebank. Neitherside won, but

30 Mariano Moreno, Free Trade versus Monopoly , in R. A. Humphreys andJohn Lynch (eds.), The Origins f the LatinAmericanRevolutions, 808-I 826 (NewYork, I965); Wendell C. Gordon, The PoliticalEconomyof Latin America NewYork, I 964), ch. I .31 Mariluz Urquijo,Estadoe industriapassim.32 Burgin, EconomicAspectsfArgentineFederalism,p. 76- I45.


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IOO PAST AND PRESENT NUMBER 84BuenosAires ost more n the shortrun because he outcomewas theestablishment f the independent epublicof Uruguay across thewater.33While fighting continuedfrom I826 to I828, moreover,Britainhelped o applya Brazilianblockade f the estuary,actingasmidwife o the birthof Uruguayas a checkon, and competitorwith,BuenosAires.The port itself suffered,and importing lmostceased,but the graziers' upplyof hides,horns,horsehair nd tallowmerelywaiteda yearor two longer o be unloaded n to the worldmarket, rwas diverted o domestic ndmilitary onsumption. uring he lull ininternationalrade,fundstrapped n Argentina ad little alternativebut to flow into land- and livestock-holding.34his vested thoseinterestswith mobilecapitalmore irmly n the rural-exportector.AFrenchblockade rom I838 to I840 and an Anglo-French lockadefrom I845 to I847 repeated he process.Overseas onsignors ouldnot expect unbrokenrelationships;mporting ended to become atrade n speculative argoes.The compensatorylut of importsaftereach blockade,moreover,undersoldwhateverold or incipient ocalproduction here was, and contributednothingto an orderly truc-tureof importing.35BuenosAires's hirdseriesof campaigns atheredn more erritoryon the pampas.Determined roupsof Indians, eelingtheir libertiesthreatenedand valuing livestockhighly, would attack the frontierestancias and driveoff horsesand cattle. At the same ime the exporttradewas a lucrativeone and range andswere n strongdemandbyexistinggraziersand orteno capitalists.Military xpeditionso pushthe Indiansback and downcontinued o be outfitted ight up to theI 8 80s .The conflictswere expensive.Ferrerestimated hat no less thansixty per cent of the expenditure f the Litoralgovernmentswas formilitarypurposes .36 axes were unpopularand customsrevenue,with the low duties, was limited. The provincialgovernmenthadraised one international oan, in I824, when Baring Brothers, nassociationwith a British merchanthouse in Buenos Aires, placedbondson the Londonmarket, ace value?I millionat 85 per cent ofpar. That marginof ? 5o,ooo Baringscountedas commission, ndthe merchanthouse retained or itself a sum sufficient o pay theinterest and amortizationcharges for two years. The provincialgovernment eceivedat most ?600,000, with annual paymentsof?6s,ooo to make. Not surprisingly t 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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ARGENTINE AND AUSTRALIAN DEVELOPMENTCOMPARED I OIespecially n time of war, anddefaulted n I827; repayments eganagain at the end of the I850S (a few instalmentswere paid in theI840S) as the price of gettingback into the Londonmoney-market.Butduring heintervening ecadesbothBritishnvestors ndportenoauthoritieswere understandablyeluctantto resortto new inter-nationalbond ssues.37Instead oans werefloateddomestically.38hedislocation f tradeduringthe variouswarsmade it difficult o meetpaymenton thesealso, and from I826 onwards he provincialgovernmentused theprinting-presso meetold debtsand to avoidcontractingnewones.Thedepreciation f thecurrencywas sosteep hat at the end of I 830thepeso wasworth,againstgold,only about I 5 percent of its valuein January 826. Depreciation ccurredntermittentlyhrough heI830s untilthe FrenchblockaderomI 838,whenmorepapermoneywas printedand the peso fell to one-fifthof its rateagainstgoldinI830, whilethe issue of moneyduring he blockadeof I 845-7(sup-posedly o assertfreedomof trade on the Plata andits tributaries)more hanequalled hatalready ncirculation.39Regulardepreciation edistributedwealthtowards he employerwho paid (at leasttemporarily)ower realwages, the exporterwhofoundinternationalpricestranslatedbackinto inflatedand incon-vertiblepesosX nd the pampasgrazierwhose instalmentson thepurchase f his tractfrom the provincehurthim lessand less as thecurrencydeteriorated. s theemployer, heexporter nd thepampasgrazierwereoften oneand thesameperson)his was a redistributionto a specificclass.40Capitalgravitatedowardspastoralism ndtheoccupation f new landas itsprofitabilityecame onspicuous. hosemerchantswho retainedheleadershipn importingended o neglecttheinterestsof everyday ustomerswhopresented nstableandnon-negotiablepesos(althoughthey still movedwhateverbulkcargoesturnedup intheharbour) ndpreferrednstead ransactions ymeansof foreignexchange,whichmeant that they pitchedtheirconsign-mentsevenmore o thetasteandpocketof the families arning xportincome. The depreciation onsequenton the warsand the Anglo-Frenchblockades ccentuated he shifttowardspastoralnvestmentandpastoralpower,aswell as a narrowing f thepreferredmarketofimporters,odegreesnotevident nAustralia.TheSpanishmonopoly efore 8 I Ohadpreventedheemergence fan Argentinemerchantmarine,and mostoceanshipping n theport

37 Letters romBuenosAiresby theRobertsonBrothers nd the DuguidBrotherscan be found in BaringPapers,PublicArchives f Canada,Ottawa,MG24,D21,vols.5, Io8, Ferns Op. Cit., Index,p. 457,under 'BaringLoanof 1824 ;Burgin,Op.Clt., pp. 38, 54-6

38 Foracontemporaryiscussion f thepublicdebt seeParish,Op. Cit., pp.374-89.39 Burgin,Op. Ctt. pp. 35, 50, 58, I 60, I 65, 206-g.40 Ferrer, p. Cit., pp. 57-64.


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NUMBER 8402 PAST AND PRESENTafterthatdatewasownedandmannedby foreigners.41 f the threemajor raderswithBuenosAires n thisperiod, heUnitedStatesstilltendedto visit it as a stationon the way to Chinaor the whalinggrounds; many passing Americanships off-loaded flour fromBaltimoreuntil t wasexcludedn the I830s)ordumped oarseNewEnglandcottons,pickingup jerkedbeef for Cubanslaveson thehomewardun,butveryfewYankeemerchantsettled oregulate ndprofit romthesefreights.ThereweremanyFrenchshopkeepersnbothshoresof the Platasellinggoodsof somequality,butrelativelyfewshipsorwholesale ouses lew heFrenchlag.42It was the British whose navy, merchantmen,diplomatsandwholesalers vincedthe greatest, f fluctuating,ambition.Britain'strade oArgentina adgrown teadilyuntil I 824, whenexportsothecountryhad beenworthoverj;I million.This figurewas not to bereachedagainuntil I 849. BuenosAires'swarwithBrazildisruptedthemovement f Britishgoodsdecisively.n I 825 ninety-fiveBritishshipsentered he port,in I826 seven, n I827 one.Britishequity nArgentina,mainlygoods for exportand specie,was estimatedat?I,536,000 whenfightingbegan,to whichshouldbeaddedholdingsof governmentand bank stock (not countingthe Baringloan) ofroughly?75?,???.herewas,firstof all,a greatrushto shipout asmuchproduce spossiblebefore heblockade ecameabsolute.Whenthatopeningclosed,Britishmerchantsonvertedo bullionandsentall theycouldget theirhandson in the Britishgovernment acket,which carrieddispatchesand mail and which the Brazilians etthrough.TheswiftoutflowdepletedArgentinetocks tillfurtherandhelpedprecipitatehemonetary epreciation.nresponseodeprecia-tionandto theabsenceof alternatives,manyof theremainingBritishfundswereswitchedo land,livestockandstockpiling ides. Bytheendof I827 ritishassets n BuenosAireshaddeclinedo ?4g2,000. . . of which?220,000 wererepresentedytheholdingsof hidesand?75,ooonland 43Capitalrelationswere urther onstrainedythefactthatBarings,who had underwrittenand undermined)he defaulted oan, alsofinanceda majorpartof Britain'sAtlantic radeandthetradeof theUnitedStatesaround he Hornto China.44Giventheimportancefmultilateralndpassingrade, hepolicyandexample fBaringswere

41 Table of shipping in Parish, op.cit.,p. 4I I; RobertG. Albion, British Shippingand 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 Com-mercial 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, StatesoftheRiverPlate,pp. 3 I 6-19.44Ralph W. Hidy, The House of Baring in AmericanTrade and Finance(Cambridge,Mass., I 949), esp. pp. I 03-5.


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ARGENTINE AND AUSTRALIANDEVELOPMENTCOMPARED I 03of critical importance.The firm'sreluctance o extend credit toArgentineconsumersuntil the provincialgovernment ommencedrepayment,and its insistence hat Argentineproduce valuedat aheavy discount)shouldcover all transactions,urther skewedtheterms of trade, hamperingmportsand undervaluing xports romBuenosAires.Thusboth BritishandArgentineapitalbecamemoreheavilycom-mitted o the pastoral-exportector,while he importingunctionwascharacterizedy its discontinuities. he exuberant eturnof Britishinvestmento Argentina fterI 862simply onfirmedhisbias.

IIIIf explanationof Argentina'sparticular ine of development e-quiresreferenceo theactiveunderdevelopmentf a major egion, owastingwarfarewhichresultedpartlyfrom the underdevelopingfthat region(not to mentionperiodicblockadeby the Britishand theFrench),and to consequentevereboutsof monetary epreciation,strong contrastwith Australia s alreadyapparent.The argumentbelowattemptso establisha frameworkf explanationorAustraliathat counterpointshe analysisof Argentina.The conclusionwill bethat the balancebetween mportand export,betweenconsumptionand production,holds firm for Australia,makinglife and deathstruggleor debasementf the currencyamong therpossibilities)arless ikely here.The negativeassertionswill be amplified irst.None of the threekinds of warfareravagingArgentina eriouslydisrupted he whiteAustralianconomy.The Australian quivalent f aggression gainstthe Indians was, of course, the piecemealdefeat of Aboriginalresistance.Aboriginesarelymassedn the numbers, orpossessedhecavalry,of the Indians.Settlersandshepherds ngagedn many ace-to-face encounterswith the originalAustralians,he costs to theinvading conomy f labour, ire-power,oisonandso on being acitlyborne by the privatesector. Officialexpeditions gainstAboriginalpeopleswere eitherpaid for by the British reasuryand the Britishmilitarybudget as wasthe casegenerallyn NewZealandandSouthAfricaas well) or by funds raisedsolelyfor thatpurpose hroughanassessmentax leviedperheadof livestock,whichwas not regarded sonerous.In either case it was not a chargeon the colonies'con-ventional evenue.Internationalwarsof other kindsmade ittledirect mpacton theAustralianontinent.The British,understandably,everblockaded(white)Australian ortand the Frenchwerekeptawayat theBritishtaxpayer'sxpense.TherewasnoSouthPacific quivalent fBrazil.The third class of warfare,civil strife, whether t aroseout of


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NUMBER 84o4 PAST AND PRESENTregionalunderdevelopmentr not, was absentfromAustralia.Theinvasionof Australiaby the Britisheconomyafter I788 admittedlyvisited drastic underdevelopmentn the pre-existingAboriginaleconomies.But the Aborigines rovidedneithera marketnor a sig-nificantlabourpool, let alone a storeof currency,unlikethe oldArgentinians, o the derangement f their economiesdid little todisturb he newcolonialorderof things.Nordidthe convicts it theArgentinianpecificationsor underdevelopment.heywerenot thesurvivorsof a formerlyfunctioningeconomicregion. They hadmigrated romthe sameeconomyas the non-convict olonists,andalthoughtheir temporary onditionsas labourand as consumersdifferednmanydetails rom hoseobtainingnBritain, heysufferedessentiallyunderan extensionof the stringentclass structuresofEnglandandIreland. ndeedconvictswereactivelypromoted scon-sumers. Because they had neither bullion nor prior productiveenterprises heir exploitationas a marketdid not entail under-development nthesensealreadyused.Warfaresuch as absorbed60 per cent of the coastalprovinces'budgets in Argentinathus imposedfew if any burdenson theAustralian olonists.The Britishtaxpayerspaidmostof whatbillstherewere.Therewasconsequently o pressure n currencywithinAustraliaromthatcause.Thegovernors adreason o maintainheexchangevalueof sterlingwithinthe colonies,andcommissary ndotherofficialsthemorecorrupthebetter) haredhat nterest.The formativeyearsof the colonialeconomyweredominatedbythegovernmentnd tscommissariatxpenditurenthedemand ide,and by the activityof privatetraderson the sideof supply.45 oralmosthalfacentury heofficialpay-roll ndadministrativeecisionsexpressed hroughspendingon rations,material,house rent andpublicworks(or through he allocationof land)werepreponderantelements n establishinghe amountandpricesof commoditieson-sumedin New South Walesand Van Diemen'sLand. The com-missariatwasalsoimportanto thecoloniesasthefirstmajor ource,whencombinedwiththeofficers' ay,offunds nsterling,whichwereindispensableorthosepeoplewhoweresaving oranopulentreturnhomeor at least for the purchaseof importedgoodsto maintainBritish tandardsfconsumption.This,overandabove hesheerprofitabilityf theactivity,mpelledthemostambitiousolonistsoseekoutasmuchofthecommissariat's

4S The evidence n the next few paragraphs, lthoughnot necessarilyhe inter-pretation, anbecheckedagainst hearticlesn G. J. AbbottandN. B. Nairn(eds.),EconomicGrowthof Australia, 788-I82I (Melbourne,969), esp. thoseby G. J.Abbott,MargaretJ. E. Steven,D. R. Hainsworth nd W. G. Rimmer-and KenBuckley, PrimaryAccumulation: he Genesisof AustralianCapitalism ,n E. L.WheelwrightndKenBuckley eds.),Essays n thePoliticalEconomyofAustralianCapitalism, vols.(Sydney, 975-7), i.


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ARGENTINE AND AUSTRALIAN DEVELOPMENTCOMPARED I05businessas possible,by standingas middlemen etween he govern-mentandtheshipswhichbroughtoverseas argoes o port,bystand-ing as middlemenbetween the governmentand those domesticproducerswhowere ndebtedothem,and(aslowerandmorearduousbusiness)by raisingproducethemselves.Becausethere were alsosmall-scalearmerscraftsmenandretailerswho solddirectly o thecommissariat,heearlyentrepreneurs eredoublynterestedn thesepeopleas customers,not onlyto expand he market orimportsbutadditionally, o possess n exchaxlgehe storereceipts(conrertible,whenaggregated ntobillson theBritish reasury)which hesmallersettlershad themselves eceivedas payment romthe commissariatstore.The firstgenerationof entrepreneurs,hen)weretraders. f theybecameproducerst was to augmentand diversifytheir trading.Macarthurand the officers,Riley and Berry,even CampbellandLord,mightberememberedowadays slandownersutintheirdaythis was only one aspect of theirramified radingactivities.Theirprime nterest ay in substantial xpenditure y the administration,promotinga highlevelof consumption y the government's epen-dantsanda fairlywidedistribution f storereceipts cross heprivatesector,whosedemand or textiles,toolsXlcoholor teacouldonlybemet by the importingnetworkwhichthe largeentrepreneurson-trolled.JohnPalmerandDavidAllan,whoheaded hecommissariatfor mostof the earlyyearsbeforeI820, werethemselvesubstantialimporters ndused)successfully,a varietyof stratagems,ncludingtheirownoverdrafts,oinvolve hecommissariatnfarmoreexpendi-ture than governorsand the Britishtreasuryfound acceptable.46Whatever imits leadingcitizensinsistedshould be placedon thesocialandpoliticalrights of convictsandex-convicts,heydidurgea measure feconomic nfranchisementothatprisoners ndemanci-pistscouldtakepart n energetic,f unequal, ransactions.Manyof thenotables, hen,byvirtueof officeor of thenarrownessof society, could significantly nfluencedecisionsmade by theadministration.herewere imeswhenamerchant ratightgroupoftraders hreatenedmonopoly.CampbellandPalmeror theSelfishSordidFirm of JonesandRiley4'were at various imesthought ohavecorneredhemarket hroughofficial avour.In I 808thegover-nor was deposedby a collectiveof officer-traders. ut GovernorBligh'ssupplanters,ncesuccessfulfellapart ntocommerciallyon-tendingparties. In such cases a governoror a concert of rivals

46 T. G. Parsons, PublicMoneyandPrivateEnterprise: he AdministrationftheN.S.W.Commissariat,8 I 3- 820 ,71. Roy.AustralianHist.Soc., lx(X974).47GovernorMacquarie o Lord Bathurst, I Mar. I819, in Hist. RecordsofAustralia, St er.,x (I925), pp. I8-20.


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ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED I 07Four of the five major English receiversof Australianwool byI8405l the Gores, the Montefiores, he Walkersand the Don-

aldsons had sons or nephewsplaced as agents in Sydney.Thefamily connectionemphasized he singlemindednessf theirinvest-ment n what he fifthof the ma or raders,RobertBrooks, alledcom-prehensively the New South WalesTrade''.52Although herewereovertwo hundred mporters f Australianwool n England, hese ivehousesaccounted or one-third f the amount.Given he smallsharesparcelled ut to most of the remainder, his was enoughto leadthemarket.It can be established,moreover, hat almostno importer fAustralianwoolhandled leeces romSpain,Russia,Germany revenSouthAfrica whichwasdirectly n the routeback o England); ine-tenths of the wool, to be precise,came to peoplewho had no otherstake in wool-trading.53 hey were not in the wool but the NewSouth WalesTrade ,receivingproduce romAustralia o covercon-. . .slgnments revlously entout.RobertBrooks'sown activitiesmay be taken as indicativeof theinstitutionalstructureand flow of this trade.54He had begunbytravellingwith a shiploadof his own goods to Sydney n I823, andfromthen on he sent out a growing leetto dropcargoes n Australia,the skippersbeing empowered o negotiate or returnfreights.His

most trustedcaptainof the I 820S, RanulphDacre,stayed n Sydneyafter I830 as Brooks'sagent. Throughhim, stockswere sent to thetown's leading drapers, ronmongers, rocersand publicans,whileassisted immigrants tepped ashore from Brooks's ships in theirhundreds.By I842 he had nine vesselsregularly arryingconsign-ments to his agents n Sydney,Launceston,HobartandMelbourne.The voyage home brought thousandsof wool bales and, also inquantitywhen available, perm-oil,whalebone, allow,mimosabark.Brooks was thus a general exporterfrom London and a generalimporter romAustralia.55 e and Dacreclosely tudied he pricesofcommodities, nd the overallstate of the market,at both ends of therun. WhenDacrewent bankrupt n 1844 he was replacedbyRobertTowns, who had made many voyagesduring he previousdecadeasBrooks'spartner n movingpeopleandgoods o Australia.Townswasas keenas Dacrehadbeen,but morecarefulandmoreruthless, obindcustomerso his sources f supplyand o diversify xports.

51 Lists of British importers of Australian wool, with the amounts for the precedingyears, in the Australian [Sydney newspaper], 27 June 1840; Sydney Herald, 26 May842; 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 AustralianWoolMarket, I 840-I 900 (Melbourne, I 95 8)) pp- 5 ?-60, 69 ff


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Io8 PAST AND PRESENT NUMBER 84Meanwhile,n Britain,Brookshelped o regulate he trade.He wasone of a small group which established reight rates and terms of

exchangeon bills betweenLondonand Sydney.He sat on the com-mittee setting the times and supervising he conditionsof the woolsales. He joined delegations o ministersrecommending olicies inregard o Australia.Gore, Montefiore,Walkerand Donaldsonmethim at each of thesegatherings.56WhenGoresandMontefioresacedbankruptcyhrough ver-extensionf credit o Australia t the begin-ning of the I 840s Brooksbecamea trustee or bothhouses, trugglingmanfully o findtwentyshillings or each poundof theirdebts.57Hisinvolvement ad nothingnecessarilyo do withfriendship.No matterhowsharp he rivalry, he creditof the large irms n the tradeconcern-ed all the others, generallybecause t underwrotehe flow of fundswithinthe coloniesand between he coloniesand the metropolis, ndspecificallybecauseeach firm held paperendorsedby the others aspayment or cargoessold within Australia.Brooks's orrespolldenceis full of concern hat bills and scripcirculatingwithinAustralia, ndthereforeavailable or tenderto him throughhis agents, shouldbeprudently egulated.58 e worked specially ard o monitorall notesissuingfrom London o as to prevent heir debasement. pectacularfailures,moreover,would make financeor creditfor the Australiantradeharder o find n Britain,andraise he rateof interest.This vigilancefound its fullest institutionalembodiment n theUnion Hankof Australia nd the Bank of Australasia, oth foundedin London n the I 830S.59 By the time goldhad beendiscoveredhesetwo companieseach held more funds in Australia,and were morestable, than any of the banks of colonial origin.60Robert Brooksclaimed o havebeen instrumentaln starting he UnionBank,thelargerand morestableof the two, adding hat he himselfhad insistedon specificand strictsafeguardswhichallegedly reed t fromspecula-tive pressures.61 he bank'schairman,J. J. Cumminswas Brooks'ssuretybefore he ColonialLandand EmigrationCommissioners,hedeputy was Brooks's riend and competitorJohn Gore, and otherAustralian merchants oinedhim on the board.Dacrewas one of

S6 For example, ee lettersby R. Brooks, 3 Apr.and I 8 Nov. I 84 1, 4 Jan. and 23May I 842, 8 Mar.and 24 Apr.I 843: BrooksPapers; ohnAbelSmithandothers oLordGlenelg,3I Jan. I 839:Macarthur apers,MitchellLib.,A2g18, vol. 22.57 Lettersby R. Brooks,25 Feb., I0 and I3 Mar., I7 and 26 Apr.,23 Aug., 28Sept- 6 Oct- 184I, 18 Apr-, May (p- 497), I8 June (p. 50I) I842: BrooksPapers.Brooks ndthe othersurvivors bsorbedmuchof the business ormerly ransacted y

thebankruptBritish irms, onfirmingather handisruptinghe existing tructure.S8 See, for example, he case of the Britishand ColonialLoan Co.: lettersby R.Brooks, and I8 Dec. I84I, I5, I8 and 2I Jan., 2, I0 andI5 Feb., 8 Mar., 14 MayI 842, 30 Mar. 843: BrooksPapers.ss S J. Butlin,Australia and New Zealand Bank (London, 96 ), chs. 3-7

60 Butlin,Foandations of theA ustralian Monetary System, pp. 586-6 0.61 R. Brooks o R. Campbell uniorandCo., 8 MayI 841:BrooksPapers.


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ARGENTINE AND AUSTRALIAN DEVELOPMENT COMPARED I O9the Sydney directorsand James Sea, Dacre's father-in-law,wasSydney manager. Fewer tradersappearedon the Bank of Aust-ralasia'sboard;JacobMontefiore, owever,was a director,HoratioMontefiorets Londonstockbroker,. B. Montefiore stablishedheSydneyboardandoffice,and hispartnerDavidFurtadodid the samein Hobart.The Anglo-Australian anks complemented he family agencysystem nsuring rderly ransfer s closeas possible o par.Becauseofthe interests of their directorsand customers, hey resistedanymassiveoutflowof funds fromAustraliaand were not preparedoslash Australian and and incomevaluesfor the sake of export romAustralia t the lowestpossible ost.The movement f freightandthemovement f fundsrequired olvencyandwidelydistributedpendingpower within the Australiancolonies. Merchants n Londonandmerchantsn Sydneyunderstoodhis. Theymaynot havebeenable ocreateunaided he requisite onditions, lthough hesehaddevelopedout of the colonies' ecognized rimary ropensityo import,but theirvarious nstitutionalarrangements ere ntended o safeguard heseconditions nce heyexisted.Banks in Buenos Aires, on the other hand, had shallow, fitfulexistences.The provincial overnment ad used them to expand hesupplyof money, and discardedhem when they exploded ike bal-loons.The first ransatlantic ankopenedas late as I 864 in order,notsurprisingly,o serve he entrenchedxport ector.62 ritishbanks nAustralia,almost thirty yearsolder, operatedmore evenhandedly,forestalling depreciationof its currency: British-basedbanks inArgentina ppeared nly n thewakeof depreciationhere.

IVAs Peter Winn has shown for Uruguay,63 pastoraleconomygeneratesof itself very few linkagesfor the region in which thegrasslands re located.Once hecrudeextraction f the primary om-modityhas takenplace, all thatis needed n the countryof origin s aset of railsor a caravan f drays,a longwharfandsome turdy ellowsto load and unload.UruguayandArgentina id not suffer he drasticsimplification f the economyvisited,say, on Angolaor Guatemala;the long-standing ope of fosteringa consumermarketaround hePlata estuarydiscouragedmeasureswhich would blight purchasing

power otally.Neverthelesswholeprovinces f Argentina adbecome62 Burgin, Economic Aspects of Argentine Federalism, Index, p. 295, underBanco de Buenos Aires , Banco Nacional ; Ferns, Britain and Argentina in theNineteenth 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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NUMBER 84IO PAST AND PRESENTimpoverished,ryinguplocaldemandhereandallowingwage evelsacross henation obehelddown.Monetary epreciationnddisrup-tionsto tradereinforcedhe advantageswhich andedgentrygainedover heirmercantileivals.Anexport-orientedconomyhasaninterestn lowwages, owlandcostsanda weakened urrency.Theinterests f capital n Australia,however, adgrownwitharelatively ighrateofconsumption, idelydistributed;hemostpowerfulnterestswerevestedequally,ormore,in trade and exchangeas in exportproduction.The Australianpastoralists'demand for cheap labour (convicts,or indenturedworkersromAsiaandthePacific)andforcheap andconflictedwiththe merchants'demand or an expanding onsumermarketandforthecapitalizationf land;Australia'sncome, hemerchants rgued,mustnot be earnedat the expenseof thedomesticmarket orgoodsand real estate.64The merchantsprevailed.The revivalof convicttransportation assuccessfully esisted,andLandActswerepassedwhich orced heoccupants fgrazing uns opayfortheiruse,andtopayagain.CaptainA. W. Pearse n I900 enviedthe cheapnessof land andlabour n Argentina.The twentiethwouldbe Argentina'sentury.65Butthestructure fAustralianradewithBritainwas,andremained,reciprocal, otmerely tributary . hiswasreflectednstitutionally.Britishcompaniesassembledmuchof the capitalthat flowed ntoArgentinaand Uruguayin the secondhalf of the century.Aust-ralian nstitutionsgovernments,anks,pastoral ompanies, uildingsocietiesandso on) assembledmuchof thecapital lowing here.Re-turnson capital n Australia amefromaninternalbalancebetweenconsumption ndproduction; eturns n SouthAmerica amefromconcentrationtowards production.Differences in developmentbetweenArgentina ndAustraliaderive romdifferencesn thecon-formationandneedsof capital n eachregion unctioningwithintheone nternationalxchange conomy.UniversityfNewSouthWales BarrieDyster

64 Barrie Dyster, The Discrete Interest of the Bourgeoisie before the Age ofGold , 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 ofAustralia(Melbourne, I 974).65 See note g above.

Documents

Argentine and Australian Development Compared. Author: Barrie Dyster