board for the mutual consideration of difficulties with their employees. But unless by some means the cost of living is reduced, it is difficult to see how satisfactory conclusions can be attained. If prices continue to rise as, in all probability they will, a rise in wages will be imperative. This, in the case of railways would mean an increase in rates, as there are few who are earning more than a reasonable dividend, while an increase in rates would cause great dissatisfaction to the whole agrarian population; after all by far the most important in the country. It is even doubtful whether cereals could stand any heavier rates than they bear at present.

The root of the labourer’s dissatisfaction lies, as has been said, in the high cost of living. Unless this can be lowered, there can be no hope of a final settlement. And the only means of lowering it is a reduction in the tariff and a greater mobility of trade in the interior.

CHAPTER IV.

FOREIGN CAPITAL AND PUBLIC DEBT.

It is not the intention to deal in this work with the market fluctuations, the arrangements made between provincial banks and their creditors, nor with any of the financial aspects which these questions have recently assumed. Such a course would not only be out of place, but would be of little interest or value, owing to the unstable state in which the negotiations are at present. The object will be rather to indicate the part that foreign capital has played in the development of the country and that played by politics in finance.

An important fact to realise is that the liberation of the country from the Spanish colonial system is comparatively recent, and that a people unfitted in every way for political independence was suddenly put in possession of a country of quite exceptional richness but absolutely undeveloped and almost unpopulated. Men with no political experience nor education found the road open to responsible positions requiring statesmanlike qualities in an unusually high degree—not only financial, but diplomatic and administrative ability combined with absolute integrity. It is sufficiently well known how far they came up to the requirements. For it is only at the present day that political morality has found a place in the national executive. In provincial administration and in the ranks of the deputies it is doubtful whether it will ever predominate.

It is a favourite complaint of Argentines that their country is regarded in Europe as a hot-bed of revolution. They are never weary of complaining that their claim to be a civilized power is disregarded. In the absence of a definition of civilization the question must be left open. But as regards revolutions the European idea is substantially correct. Argentines have undoubtedly not yet realised a sane conception of government.

If those in power fail to convince the country of any sincerity or appreciation of their responsibilities, the people themselves do not treat the authority of government with the respect that alone permits the growth of those qualities of statesmanship whose absence is so very obvious.

One improvement, however, must be noted, an improvement of the very greatest importance. Whereas in former years little respect was paid to non-partisans, the people have now learnt that it is to everyone’s interest to confine political differences to the actual disputants—to fight their battles in their own garden, and to leave neighbours at peace. Capital, therefore, is tolerably safe, especially as the federal executive is a body which, if not possessed in every branch of the greatest intelligence or even honesty, is at least controlled by men who realise their position and have sympathies and knowledge beyond the limits of their country.

The considerations just mentioned bear more especially on capital sunk in land and its immediate connexions, or in industrial concerns. As regards public debt, the question is more involved. The laxity of public morality has here the disastrous tendency of making a party temporarily in power regard the actions of its predecessors as invalid. The temptation is certainly great. When a foreign loan has been contracted in the name of a municipality or provincial government, at the expense of the people at large, but is used purely for party or even private ends, it is at least comprehensible that an opposing party should regard the loan as an unwarrantable exploitation of the public, and should think it justifiable to allow the creditors to suffer instead of their own countrymen, who were no party to the transaction. The policy and ethics of such a view are another matter. And it is, as usual, the honest who suffer. For, if the succeeding party are possessed of higher views in the sphere of political morality, owing to the necessity of regarding their predecessors’ really fraudulent contracts as binding on themselves for fulfilment, the profit goes to the malefactors, while the odium incurred in realising the money to cancel the obligation falls on the unoffending upholders of honesty.

The extraordinary feature that impresses itself on the mind when looking through the history of Argentine loans is the readiness with which London financiers responded to the invitations. No more remarkable case, probably, could be found in the whole history of finance than that of the Buenos Aires Provincial Bank, its absolutely reckless mismanagement and of the inevitable collapse which followed—resulting, as everyone knows, in the failure of Messrs. Baring. This catastrophe set back Argentine progress several years, and it is only now that the recovery is at all complete.

But it can scarcely be emphasised too strongly that the recovery is complete. Argentine national credit is as sound as that of any civilised power. Indeed, the fact that the national Government undertook the responsibility of so great a part of the debts of the provinces is in itself sufficient indication of the Government’s policy. With regard to municipal loans, it must be admitted that as these are regarded nowhere as other than a highly speculative investment, future irregularities would fall on the heads of people who had full knowledge of their risks. But the risks are extremely small compared with those which existed formerly; and the national executive seems inclined to exert pressure on recalcitrant bodies, compelling them to adhere to their agreements. In a recent case, indeed, intervention was necessary, not in the interests of the financiers, but in that of the municipality, the extraordinary exactions of the French port-concessionnaires at Rosario, having had very disastrous effects on that town’s development. For once the municipal authorities were not the only gainers and the people themselves were the sufferers.

Before presenting figures of Argentine loans in detail it may be of interest to show the proportion which was taken up in London. Of the total raised by the Republic from its emancipation in 1822 until 1904, amounting to £152,326,460, Great Britain supplied nearly four-fifths, namely, £125,082,710. This total is made up of the National, Provincial and Municipal external debts, which amount severally to $540,770,156, $202,067,716, $24,868,480 gold, or roughly £108,000,000, £40,000,000 and £4,500,000 sterling, of which England provided approximately six-sevenths, two-thirds and of the last, all. When it is remembered that of the capital invested in the country commercially three-quarters (or 250 out of 326 million pounds sterling) are also British, the influence which this country has had on Argentine progress cannot be over-estimated.

It is a point, by the way, that a preference on colonial produce would be a preference against these interests