informal empire? an exploration in the history of anglo-argentine relations, 1810-1914

Informal Empire? An Exploration in the History of Anglo-Argentine Relations, 1810-1914Author(s): Andrew ThompsonSource: Journal of Latin American Studies, Vol. 24, No. 2 (May, 1992), pp. 419-436Published by: Cambridge University PressStable URL: http://www.jstor.org/stable/157073 .

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COMMENTARY

Informal Empire? An Exploration in the History of Anglo-Argentine Relations, I8Io-I9I41

ANDREW THOMPSON

Introduction: the genesis of 'informal empire' In 953 John Gallagher and Ronald Robinson published an article entitled 'The Imperialism of Free Trade', which has since become a landmark in the study of nineteenth-century British imperialism. Seeking to overturn

long-cherished notions of a mid-Victorian 'indifference' and a late- Victorian 'enthusiasm' for empire, it proposed a basic continuity of policy whereby British industrialisation caused an ever-extending and intensi-

fying development of overseas regions for both strategic and economic

purposes. Hence the suggestion of a working definition of imperialism as 'the sufficient political function of this process of integrating new regions into the expanding economy'. In switching the focus of a definition of

imperialism from the way in which Britain was able to assert her

superiority over weaker, subordinate nations to the impetus and motivation behind such expansion, traditional conceptions of empire were

suddenly shattered. Indeed, as Robinson and Gallagher maintained, 'The conventional interpretation of the nineteenth century empire continues to rest on the study of formal empire alone, which is rather like judging the size and character of icebergs solely from the parts above the water-line'.2

The whole framework of reference for a study of British imperialism was being recast, the revised assumption being that the empire of formal dominion, which can loosely be defined as control through annexation and constitutional subordination, is not comprehensible in isolation. Rather, the assertion of British paramountcy, which for Robinson and

An earlier version of this article won the I991 Gladstone Prize. I am indebted to Jeremy Adelman and John Darwin for their contributions and criticisms.

2 John Gallagher and Ronald Robinson, 'The Imperialism of Free Trade', Economic History Review, second series, vol. 6, no. I (95 3).

Andrew Thompson is a research student at Nuffield College, Oxford.

J. Lat. Amer. Stud. 24, 419-436 Printed in Great Britain 419



420 Andrew Thompson

Gallagher lies close to the very heart of imperialism, was achieved by informal means if possible, or by formal annexation when this was deemed

necessary. Refusals to annex territory were no proof of reluctance to control. Essentially British strategy was to develop both formal and informal dependencies into complementary satellite economies. Therefore it follows that they are interconnected and to some extent interchangeable. The difference between them was not of kind but of degree.

'Informal empire' gradually entered into every imperial historian's

phrasebook, so much so that many writers have felt able to employ the

concept without attempting to define let alone justify it. Informal

imperialism has been a very seductive notion for it has conveniently solved our problem of what to do with all those 'awkward' nations

which, whilst clearly not fitting into the narrower and more traditional definition of empire, did seem, at least at first sight, to lie uncomfortably on its fringes, manifesting some, if not all, of the characteristics we had come to associate with an imperial relationship. It is a curious feature of Robinson and Gallagher's work that whilst the second major contention of their article, namely the denial of a 'New Imperialism' and any self- confident or aggressive spirit of expansion on the part of the late-

Victorians, has been the subject of an important work first published in

196I, the idea of informal imperialism has not enjoyed similar elaboration.3 This fact has not gone unnoticed by other imperial historians.

Although the concept of 'informal empire' has a considerable following a substantial body of dissent can now be found, including the work of H. S. Ferns and D. C. M. Platt for Latin America and Martin Lynn for West Africa.4 Platt disputes whether there was the incentive for the early- Victorian government to intervene actively in the affairs of the Latin American republics and argues that its characteristic attitude was

essentially one of reluctance to extend its responsibilities beyond the minimum required to guarantee the freeplay of the market. Lynn questions the capacity of the British government to bring power to bear outside its colonies in West Africa and emphasises the forces and constraints which curtailed the extension of British influence or control in

3 J. Gallagher and R. Robinson, Africa and the Victorians (New York, I96 ). 4 H. S. Ferns, Britain and Argentina in the nineteenth century (Oxford, 1960). D. C. M. Platt,

'The Imperialism of Free Trade, Some Reservations', Economic History Review, second

series, vol. 21, no. 2 (Aug. 1968); and 'Further Objections to an 'Imperialism of Free

Trade', I830-60', Economic History Review, second series, vol. 26, no. I (I973). M.

Lynn, 'The Imperialism of Free Trade and the Case of West Africa c. I830-c. I870', The Journal of Imperial and Commonwealth History, vol. I5, no. i (Oct. 1968). For its adherents see, P. Winn, 'British Informal Empire in Uruguay in the Nineteenth Century', Past and Present, no. 73 (Nov. 1976) and D. MacLean, 'Finance and "Informal Empire" before the First World War', Economic History Review, second series, vol. 29, no. 2 (1976).



Anglo-Argentine Relations, iSio-ii94 421

the region. Finally, in the instance of Anglo-Argentine relations Ferns

suggests that it is quite possible to make a case for as much benefit having accrued to Argentina as Britain during the nineteenth century, and so

questions whether it is instructive to cast the latter as the dominant, hegemonic partner in the relationship.

Many readers of this journal will be familiar with much of the narrative that follows. This article is not primarily intended to be another discourse on Anglo-Argentine relations before 1914, but is rather an attempt to focus on the imperial perspective on Anglo-Argentine relations during this period and to examine whether the concept of informal empire clarifies or distorts the true nature of Argentina's relationship with Britain from independence until the outbreak of the First World War. Whilst there were other regions in which Britain arguably enjoyed an informal

empire during this period it does not seem unfair to take Latin America as the 'acid test' on which the utility of the concept must stand or fall, in much the same way as Robinson and Gallagher took the African continent to be the yardstick for the advent of a 'New Imperialism' at the end of the nineteenth century. After all, Latin America is the region to which they devote four pages of their article when discussing the concept of informal

empire. Furthermore, nowhere more than in Argentina can Britain be seen to have had such a constant interest and involvement in the region from the Wars of Independence through to 1914.

Three measures of'informal imperialism' will be employed. The first will examine the extent to which Britain exerted indirect power over the

foreign policy, internal politics and domestic economy of Argentina. Here a number of different avenues might be explored, including diplomatic pressure; military excursions; naval blockade and bombardment; institutions, particularly banks and merchant houses; technical expertise, for

example in railways and shipping; the expatriate community in Buenos Aires; and large-scale emigration.5 Secondly, the issue of benefits will be addressed to establish whether the relationship was asymmetrical and whether Britain enjoyed the sort of dividends usually associated with formal empire by exploiting her economic superiority over Argentina. This raises the question of whether Argentina's integration into the international economy obviated the need for other indirect levers of control outlined above. Finally, central to Robinson and Gallagher's formulation of'informal empire' is the idea of collaborating elites. These

5 W. M. Mathew, 'The Imperialism of Free Trade: Peru, 1820-70', Economic History Review, second series, vol. 21, no. 3 (1968). J. Osterhammel, 'Semi-Colonialism and Informal Empire in Twentieth Century China: Towards a Framework of Analysis', in W. J. Mommsen and J. Osterhammel (eds.), Imperialism and After (German Historical Institute, I986).



422 Andrew Thompson

were defined as the progressive classes on the periphery, attracted into economic partnership with the world's banker and workshop. In

Argentina this group was the landed elite, or estancieros. Were they the intermediaries of Britain's 'informal empire' or independent actors on the

Argentine political stage?

The emergence and consolidation of an independent Argentine nation

The history of Britain's involvement in Argentina after independence until 1870 does not suggest an asymmetrical or unequal relationship in which Britain exercised an informal control over Argentine affairs. In economic terms the incentive drawing the two countries together was the desire to engage in a trade that proved to be mutually advantageous although limited in volume. As Ferns has observed, the Anglo-Argentine Treaty of Friendship, Commerce and Navigation made in I825 by Rivadavia and Canning represented an effort to create a free market

relationship between an industrial community and a raw-material-

producing community, with neither country seeking to limit the liberty of the other to impose taxes, tariffs or other forms of commercial control, but

binding themselves not to discriminate against each other's subjects in so

doing.6 It remained the legal foundation of Anglo-Argentine relations until the return to mercantilism under the Roca-Runciman agreement of

1933. For Britain it constituted a recognition that good political relations in the region would emerge from good economic relations, and that it was to be the public authorities of Buenos Aires rather than the British

government who would act as protectors of this trade. This 'hands-off'

policy was to be observed throughout the rest of the century with the

exception of a brief spell under Aberdeen, when Britain joined with the French in an attempt to coerce Rosas.

The Baring Loan of 1824 was arranged by Rivadavia who was enthusiastic to attract foreign capital to the Rio de la Plata. It was borrowed at an effective rate of interest of 8.7 % when the cost on the domestic market would have been 4 %.7 But by I828 the loan had been defaulted upon and it was not until I 857 that repayment began in earnest.8 Rosas, however, was far less eager to procure British involvement in the

Argentine economy. As a porteno federalist and estanciero he was content to channel the resources of Buenos Aires into cattle production, which

required little labour and capital and was highly land-intensive. That said, Rosas never lost sight of the fact that a high proportion of the customs

6 Ferns, ibid. 7 M. Burgin, Economic Aspects of Argentine Federalism, 1820-l2 (Cambridge, 1946). 8 D. C. M. Platt, 'Foreign Finance in Argentina for the First Half-Century of

Independence', Journal of Latin American Studies, vol. I5, part I (I983).



Anglo-Argentine Relations, g810-1914 423

duties, the most vital source of government revenue, came from British trade; that Britain was an important market for Argentine produce; and that Britain provided the shipping and mercantile expertise which facilitated this exchange.9

It would be misleading therefore to suggest any commercial imbalance between the two nations. By i870 as much economic benefit had accrued to Argentina as to Britain. Since Britain received approximately 5 % of

Argentine exports and accounted for about 39 % of Argentine imports this trade helped to supply an abundant and constant customs revenue, which was vital in sustaining the heavy government expenditure of the Rosas regime.1? Britain was also one of the two most important markets for Argentine hides, although after 1820 the gradual expansion of wool

production in Argentina undermined Britain's position as a leading market for Argentine exports. Britain's importance was only restored by the advent of wheat production and refined pastoral exports at the end of the century.1 There is little evidence therefore of Argentina becoming dependent on either British markets or capital during this period. Nor was British produce likely to flood the Argentine market because here, as Platt has demonstrated, the limitations of this commercial relationship soon became apparent.12 For a short period after the Napoleonic wars, whilst the rest of the European continent was in turmoil, Argentina appeared to be an attractive alternative outlet for British produce. However, high transport costs, low purchasing power, and the resilience of local

production posed extreme difficulties to the creation of a mass market for

English goods.13 The estancieros, realising that theirs was a country rich in land but poor

in capital and labour, successfully exploited the only resource Argentina had. As a result the economy of Buenos Aires prospered and Argentina embarked on the transition from a viceregal capital of the Spanish empire, with an economy which relied heavily upon the exploitation of her mineral resources, to an increasingly diversified pastoral and livestock

producer. Enlightened self-interest encouraged Rosas to cultivate these ties. He was not duped or beguiled into doing so. As Martin Lynn has

opined, 'mutual collaboration if taken to its logical conclusion is the

9 J. Lynch, Argentine Dictator, Juan Manuel De Rosas, 1829-18A2 (Oxford, I98I).

10 W. Page, Commerce and Industry, Tables and Statistics for the British Empire from i8Is

(London, 919). 1 J. Brown, A Socio-Economic History of Argentina, I776-186o (Cambridge, I979).

12 D. C. M. Platt, Latin America and British Trade, 1806-I914 (London, I972). 13 See B. Dean, 'British Informal Empire: The Case of China', Journal of Commonwealth

and Comparative Politics, vol. 14, no. i (March 1976) who, for similar reasons, concludes that the economic dimension to Britain's relations with China in this period did not amount to 'informal empire'.



424 Andrew Thompson

reverse of imperialism'. For this reason it would be better to describe the interaction between the Buenos Aires estancieros and Britain during this

period as co-operation, stressing the essential equality of the relationship, rather than collaboration, with its sinister and imperial nuances.14

But there is another dimension to Anglo-Argentine relations before 870, namely Britain's rather reluctant involvement in the internal politics

and foreign relations of Argentina.15 This may seem ironical in view of the terms of the I825 Treaty but in practice commerce and politics could never be partitioned. Britain's desire to foster trade in the Rio de la Plata

necessarily led her into Argentine politics. Britain assumed the role of an

intermediary between Argentina and her Latin American neighbours and

European aggressors, facilitated the evolution of an Argentine Con- federation and acted as a source of support to unstable regimes.

British diplomacy aimed to preserve or enhance existing trade. During the i82os in the Banda Oriental Britain worked hard to appease Argentina and Brazil and foster Uruguayan independence. Although Rivadavia failed to enlist British support Britain never formally acknowledged the

incorporation of Uruguay into the Brazilian Empire, despite its alliance with Portugal and the special commercial privileges enjoyed there. In

1827 Ponsonby, British ambassador to the United Provinces, began a

complex series of negotiations, which even included an attempt to convince the Brazilian Emperor of a fictitious plot to overthrow him, in order to press both sides to accept the creation of an independent state in the Banda Oriental. When the French threatened to undo everything by installing Rivera as the President of Uruguay during the naval blockade of Buenos Aires in 18 38-9, Palmerston quickly intervened and negotiated formal recognition for French nationals resident in the Argentine.

Again the diplomatic pressure exerted on Urquiza and the Buenos Aires

government to form an Argentine Confederation was intended to foster British trade with the interior provinces. A succession of British

diplomats, including the distinguished Admiral Sir Charles Hotham, worked for a united, peaceful, and liberal Argentina, assigning exactly that order to their objectives. Britain backed those provinces which favoured an economically and politically integrated state and opposed the

monopolistic customs policy of Buenos Aires. When about to despair of the intransigence of Buenos Aires in I852 Urquiza was persuaded not to

14 A similar observation is made by L. Whitehead, 'Mexico and the " Hegemony

" of the US: Past, Present, and Future', in R. Roett (ed.), Mexico's External Relations in the 99os (London, I99i), where the harmony in Mexican-US relations since the Second World War is attributed to the convergence of assumptions and outlook between the two

governments. 15 This section is heavily based on Ferns, Britain and Argentina; and T. Halperin-Donghi,

Politics, Economics and Society in Argentina in the Revolutionary Period (Cambridge, 1975).



Anglo-Argentine Relations, 1810-1g14 425

dismantle the Confederation into small republics, being warned that the creation of a number of such petty landlord states would damage trade. Later in March I853 Hotham engineered a treaty of free navigation, signed by Britain, France and the Argentine Confederation, which made all three parties guarantors of the free movement of vessels in the River

Plate, giving Britain and France a treaty right and interest to prevent the blockade of the River Parana by Buenos Aires. The government of Buenos Aires would have confronted a considerable array of powers if its cruisers had interfered with the river traffic proceeding to the ports of the Confederation.

But did British diplomatic intervention amount to an 'indirect political hegemony over new regions for the purposes of trade' in the Argentine? It is doubtful that British diplomacy was ever that aggressive, consistent or effective. It was rarely all three. Britain's involvement in Argentine domestic politics and foreign relations was just as circumscribed as was her economic presence in the region. Lacking a military dimension, Britain's political muscle was seriously weakened and there was little alternative to peaceful intercourse between the two nations. Indeed the inherent weakness of informal systems of control lay in the possibility that the so-called subject territory would call the bluff of the metropolitan power. In these circumstances there was little Britain could do unless she was prepared to pay the price of backing up her demands with military force, which she was not, or could impose damaging economic sanctions, which in the Argentine she could not. British diplomacy might on occasions therefore have induced forces in Argentina to take decisions favourable to British interests, but this certainly did not amount to the 'indirect political hegemony' to which Robinson and Gallagher refer. There was a price tag attached to enjoying this sort of influence in the Rio de la Plata and ultimately Britain decided that it was too expensive.

Economic take-off and a new chapter in Anglo-Argentine relations

After 1870 a new era of Argentine economic expansion began as more

goods were exported to Britain and a fresh wave of British capital flooded

Argentina. In consequence a new chapter was opened in Anglo-Argentine relations. Argentine capital formation was heavily influenced by the overall policies of British overseas lending, Britain providing the bulk of

Argentina's borrowing. Figures published for UK issues for Argentina on the London Stock Exchange illustrate that Britain was the predominant foreign investor in Argentina, with peaks of ?2 3.2 million issued in 889 and f24.3 million in I909.16 By the time of the Baring crisis in I890 British

16 I. Stone, 'British Investment in Argentina', Journal of Economic History, vol. 32, no. 2

(June I972).



426 Andrew Thompson

investment in Argentina was approaching Io50 million, with the year 1889 having been an annus mirabilis absorbing 40-50 % of all British funds invested outside the U.K.17 At the same time there was a rapid expansion in the volume and value of Argentine exports to the U.K. from about 71.7 million gold pesos in 880 to 335.3 million gold pesos in i 9 . Much of this increase occurred after I890.18 Between I870 and 1914 the value of

exports increased at an annual rate of 5.7 %. This phenomenal export growth was sustained by wool in the I87os and early I88os, then succeeded by cereals in the late i88os and i890s, with the predominance of frozen beef in the first decades of the twentieth century. With the transition to cereals and beef the proportion of Argentine exports destined for British markets began to rise. Official Argentine statistics estimate that the U.K. absorbed nearly 3o % of Argentina's exports by 1 914, a rise from ten per cent in i878.19

In light of these developments is it plausible to talk of British control over Argentine economic affairs after 1870? Argentina's reliance upon one creditor engendered some instability but the effects of this are better seen as a series of unconsummated examples of British influence rather than a

general pattern of control. Again this is best illustrated by delineating the limits to Britain's economic influence in the region. For example, the

Argentine government skilfully played different European banks off

against one another. It resisted attempts to control Argentine finances either through the appropriation of customs duties, or the extraction of

guarantees on loans via a temporary cessation of borrowing or a pledge that funds offered as security be placed under the supervision of European creditors. Thus in 1881 when Barings refused to accept that the time was

ripe to launch a new loan in London a French syndicate was able to move

in, seize the contract, and establish themselves for some time afterwards as the leading money raiser for the Argentine government. This in turn led to an intense rivalry between European banks and to their taking unwarranted risks, believing that if they did not participate in the loan boom they would forfeit valuable business in the future.20 As a result

Barings continued to handle Argentine bonds for the U.K. long after they had ceased to be marketable, a factor which certainly contributed to the near collapse of one of Britain's major securities houses in I890.21

17 Ferns, Britain and Argentina. 18 R. Cortes Conde and S. J. Hunt (eds.), The Latin American Economies: Growth and the Export Sector, I880-I930 (London, 1985).

19 D. Rock, Argentina IJ16-1982 (London, 1986). 20 D. C. M. Platt (ed.), Cambridge Working Papers on Informal Imperialism in Spanish America

(1974). 21 P. Ziegler, The Sixth Great Power: Barings, 1762-1929 (London, I988).



Anglo-Argentine Relations, 18g10-I14 427

Britain's temporary monopoly of the meatpacking industry at the turn of the century was broken down when United States capital moved into the industry with Swift and Company's purchase of the giant La Plata cold

storage plant in 1907. All attempts to curtail the activities of the American

packers failed. British meatpackers sought allies amongst the Argentine producers, but it was the Argentine cattlemen supplying the Chicago- based packing houses who had the economic and political power to influence the Saenz Pefia administration. This demonstrated the clear failure of the collaborative mechanism in the beef industry.22 Nor was the

Foreign Office or Board of Trade prepared to help British packers since the British consumer benefited from the increased competition and lower

prices. Nonetheless the dependentistas would see the issue of control as a red

herring. They maintain that there was little need for direct intervention of this sort because during the latter part of the nineteenth century Britain succeeded in shaping an Argentine economy that was both dependent upon and subservient to her.23 As Theotonio Dos Santos has opined, 'The relation of interdependence between two countries assumes the form of dependence when some countries, the dominant ones, can expand and be self-sustaining whilst other countries, the subservient ones, can only do this as a reflection of that expansion'.24

But is this a useful way of looking at Anglo-Argentine economic relations during this period? Ford has argued that there were two fundamental weaknesses in Argentina's specialist primary-producing export economy. The first was a lack of control over export prices.25 However, it is perhaps pertinent to ask what producers do have control over these prices unless they monopolise the markets. Competitive prices secured for Argentina a large share of the international market, and did not prevent a substantial increase in the value of exports from I890

onwards. Secondly, Ford claims that there was little opportunity for

import-substitution because of the small scale of local production. As a result Argentina had little control over the prices paid for the capital

22 P. Smith, Politics and Beef in Argentina. Patterns of Conflict and Change (New York, I969). 23 For the precursor to this theory and in many ways to the idea of' informal empire' itself

see V. I. Lenin, Imperialism. The Highest Stage of Capitalism (London, I933). For Lenin imperialism was an explanation of the configuration of the industrial world- monopoly capitalism - of which colonialism was only one derivative. Imperialism was a system of economic domination not coterminous with formal empire and embracing so-called 'semi-colonies', countries exploited but not formally occupied. Lenin went on to discuss 'a number of transitional forms of national dependence' including the 'financial dependence' of Argentina on the London capital market.

24 Theotonio dos Santos, La crisis norteamericanay America Latina (Chile, 197I). 25 A. G. Ford, 'British Investment and Argentine Economic Development I880-I914',

in D. Rock (ed.), Argentina in the Twentieth Century (London, 1975).



428 Andrew Thompson

goods she badly needed. But by the beginning of the twentieth century this proposition needs to be qualified. The I914 Census indicates that local

industry supplied 90% of food products, 88% of clothing, 80% of construction and 33 % of metals.26

Certainly, substantial British investment in Argentina caused the two economies to become closely entwined. Britain exerted some leverage over the Argentine economy, which became responsive to domestic

developments within the U.K. This is well illustrated by recent work on debt theory by Carlos Marichal and Simon Kuznets. Marichal has described the cyclical nature of loan flows to Latin America with booms

occurring as a result of phases of expansion in the world economy which stimulated the export of excess capital from the international markets to Latin America, and crises corresponding with widespread downswings in the economies of the industrialised nations which sharply reduced the outward flow of funds.27 Kuznets has observed the inverse relationship between British domestic investment and British overseas investment.28 Lack of opportunity and low yields within the European markets themselves, particularly linked to construction cycles, led to an outflow of

capital abroad. Taken together, these theories imply that the whole edifice of Argentine borrowing was structured by developments within Europe, and especially the U.K. But one would need to be careful before pressing such a conclusion too far, for neither Marichal nor Kuznets offer water-

tight models for the pattern of overseas investment in Argentina. Significantly, Marichal concedes that the debt crisis of I890 was

unleased by the crash in the Argentine economy itself.29 What made the crisis probable, if not inevitable, was less the short-sightedness of British investors than Argentine economic demand for increased imports to

promote exports. The most important characteristic of British investment in social overhead projects like the railways was the time lapse between the

borrowing of funds and the completion of the project in which those funds were invested, for only then would exports rise and Argentina be able to repay. However, with investment taking the form of fixed-interest-

bearing bonds repayment was due long before the projects matured. As

imports outstripped exports and trade deficits and balance of payment 26 Tercer Censo Nacional 1914. 27 C. Marichal, A Century of Debt Crises in Latin America: From Independence to the Great

Depression, 1820-1930 (Princeton, I989). 28 S. Kuznets, Modern Economic Growth: Rate, Structure, and Spread (New Haven, I966). 29 For a more detailed analysis of the crisis of I890 and the way it was resolved see H.

Ferns, 'The Baring Crisis Revisited', in this issue of J.L.A.S. The measures put into

place by Finance Minister Vicente L6pez in the summer of i890, as well as General Roca's proposal to buy back the Obras de Salubridad from the Buenos Ayres Water

Supply & Drainage Company Limited, were just as important as the actions taken by the Bank of England in ensuring the survival of Barings.



Anglo-Argentine Relations, I8IO--I94 429

problems became more acute, Argentina borrowed more money to keep her creditors at bay and paper over the cracks in the domestic economy. But this could not have continued indefinitely. As soon as the reservoir of new credits was drained crisis set in. The British and Argentine economies had become enmeshed but the resolution of the 1890 crisis is an excellent

example of how this fact had repercussions for both nations. After the false start of the original settlement the Romero agreement of 1893 recognised that not only had Argentina to be given longer to repay, but that this process could only begin when Argentina had the revenue to do so. It was an equitable settlement but the bottom line was that Britain had no choice but to show some largess if she was to recover her investment and preserve a growing market for her imports.

The primary weakness in the argument of the dependentistas, however, lies in their assumptions that had Argentina not pursued export growth she would have been better off, and that somehow Argentina was constrained or deceived by Britain into following this path. It is

questionable whether there was an alternative path along which Argentina might have developed. Argentina's frontier economy had a wealth of natural resources, but a shortage of labour and capital. In these circumstances the best option was to exploit the resources she had and

import the ones she lacked. For leading Argentine thinkers the early reliance on the export trade was a necessary prelude to the ultimate and desirable goal of industrialisation. Most manufacturing industry that did

develop before 1914 processed products from the land and, sharing common interests with the export sector, did not clamour for protection.30

There were those within Argentina who began to call for national economic independence from the more powerful countries of Europe and the United States and their alleged 'imperialist' designs. Maintaining that the major corrupting agent in Argentina was foreign economic penetration they called for foreigners to be expelled. Others favoured a gradual relaxation of commercial links with the outside world, to embark on an extensive programme of industrialisation, leading to economic self-

sufficiency.31 Ferns believes that these politically-inspired Argentine 30 D. Guy, 'Dependency, the Credit Market, and Argentine Industrialisation, I86o-I940',

Business History Review, vol. 58, no. 4 (Winter i984). 31 T. H. Moran, 'The Development of Argentina and Australia. The Radical Party of

Argentina and the Labour Party of Australia in the Process of Economic and Political

Development', Comparative Politics, no. I (Oct. 1970). Moran discusses the failure of the Radical Civic Union to honour the pledges made before g916 to destroy the traditional

export system and reliance on foreign capital, and to promote national industry and land reform. He argues that because protection was not in the interests of any powerful section of the community it was not supported. Thus although the landed elite were excluded from political power between I916-30 their economic power was

strengthened.

LAS 24 16



430 Andrew Thompson

economic nationalists and Marxists have done much to distort the Anglo- Argentine historical record. Whilst he may underestimate their signi- ficance, it would be fair to say that before I914 it was the liberal and laissez-faire element in Argentine politics which predominated.

The liberal response to the Anglo-Argentine connection was largely conditioned by their appreciation of the benefits which had accrued to

Argentina as it developed into one of the world's leading specialist primary producers. Realising that only a burgeoning export sector could sustain such growth they looked forward to the day when Argentina might enlarge its economic base and diversify industrial production. In the meantime they were prepared to live with the occasional British intrusion which resulted from the interdependence of their two economies. The alternative was economic isolation, and if not stagnation certainly a far slower rate of growth. British capital and imports had been channelled into certain strategic sectors to get them off the ground. Argentina was now closer to Britain than ever before, but her autonomy had not been

prejudiced. Britain no more exercised an informal empire in Argentina after I870 than before.

The railways

To test the above conclusion this article will finish by putting one

particular sector of Argentine economy - the railways -under the

microscope in order to see what measure of influence or control British

railways companies enjoyed as a result of their near-monopoly in this niche of the economy, and what power the Argentine government had to

shape or limit this. At the same time it will provide the opportunity to assess how far it was to Argentina's advantage to allow a foreign country to become so extensively involved in this sector. Between I907 and 1913 10.5 % of British investment in Argentina was subscribed to British- owned railway companies. The I88os witnessed the most phenomenal expansion - a quadrupling of total railway mileage from 8,000 km in i 880 to 32,02I km in I890.32 Wright claims that by I915 Argentina had the

third largest railway system in the Western hemisphere, behind the U.S.A. and Canada, and that Argentina had more track per capita than the U.S.A.33

What were the consequences of this spectacular growth ? Lewis believes that it was the intensification of railway development from the late i88os that enabled Argentina to realise the productive potential of the pampas by expanding the area under cultivation, raising agricultural output and

32 Extracto estadistico de la Reprblica Argentina. Correspondiente al aio 191J. 33 W. Wright, British-owned Railways in Argentina - Their Effect on Economic Nationalism

I8y4-1948 (Austin, 1979).



Anglo-Argentine Relations, 181o-1914 43

increasing the volume of freight.34 Of course one has to be careful in

attributing causality. Did railway expansion help Argentina emerge as a

leading exporter of primary produce, or did the expanding volumes of wheat exported after I880 facilitate the development of the railway system? Lewis' t-tested correlation co-efficients reveal a positive relationship between rates of railway expansion and the growth of the arable sector between I890 and 1914. Wright assumes the opposite, that increased agricultural output in the I89os accounted for the upswing in fortunes of the British railways. It is probably the case that railway expansion led the development of the export sector prior to I890. After 1890 the demand of the export sector for development of the branch line

system inverted the relationship. Railways were also viewed as a means of effecting social cohesion and

increasing the productivity of the interior. It seems probable that they did contribute to the political stability of Argentina. In 1874 the railways facilitated the suppression of one of the periodic rural revolts by enabling the movement of 2,600 troops from Rosario to Cordoba in one day, thereby ensuring Colonel Roca's victory over the rebel forces. However, Wright argues that despite the fact that the railways helped to unite diverse parts of the republic they emasculated local industries and

destroyed the regional markets of the interior by making them increasingly dependent on east-coast port cities. In this way a regional imbalance was consolidated in Argentina that has never since been fully overcome. It is true that the pattern of railway development, determined principally by topography, did radiate from Buenos Aires. This encouraged a process observable from late colonial times, namely the rise to economic

hegemony of the littoral. It is doubtful, though, that this was a conscious

objective of railway policy. In practice it tended to work against railway efficiency. Indeed after 1890 an overriding aim was to remedy the

operational defects caused by the convergence of lines on the federal

capital. The advent of zonal amalgamation in the early twentieth century helped to improve intra-regional communication between the interior

provinces with different regions being served by different companies. What seems to have determined whether or not a province prospered was its endowment of natural resources. By and large railways were built to

any region with economic potential. The dependentistas have argued that the British-owned railways impeded

Argentine industrial development. Lewis disagrees. He maintains that

railways invigorated the local economy, inundating it with the purchasing

3 C. Lewis, British Railways in Argentina, 187-19r4, A Case Study of Foreign Investment (London, I983).

16-2



43 2 Andrew Thompson

power of construction workers and thereby stimulating demand for artisan production.35 Furthermore, by expediting the supply of cheap and

plentiful foodstuffs to growing regional markets, railways increased

purchasing power for manufactures. Finally, Lewis sees railway labour as

being a crucial factor in the development of an Argentine trade union movement. However, although railways may not have been an anathema to Argentine industrialisation they were built primarily to serve the export economy and in doing so the railways inevitably reinforced the constraints this sector placed upon industrial development.

The effect of the railways in terms of backward linkages merits

consideration, in view of Argentina's failure to develop its own iron and steel industry to supply rails, unlike Canada. Three reasons may be

suggested for this. Firstly, Argentina had only a very limited supply of the

requisite minerals - iron ore deposits and a cheap source of fuel - so both were imported. Secondly, Canada protected strategic goods such as rails

by high tariff walls. Finally, the nature of investment differed between Canada and Argentina. Argentine railways were financed by direct investment in joint-stock companies, owned and registered abroad and

bringing with them the elements needed to construct railways. Canada relied on 'portfolio' investment whereby the state borrowed the capital to construct the railways. This was largely due to the fact that the Argentine landed elite was more interested in developing their agricultural enterprises, unlike their counterparts in Toronto and Montreal, the Canadian financial and industrial elite, whose structural characteristics inclined them to become involved in 'portfolio' investment.

So even though the railways may have played an integral part in the economic boom which Argentina experienced on the back of her export production not everyone benefited from this expansion. By the turn of the

century vociferous sections of Argentine society called for a more

geographically even economic development. In less than a century Argentina had been turned from a colonial outpost into a thriving primary producer with an international market for her produce, while working within the constraints of a frontier economy rich in land, but poor in labour and capital. So long as Argentina possessed an open frontier where new land was continuously being brought into production all was well. When this frontier closed, as it had by the beginning of the twentieth

century, the urban masses joined forces with provincial politicians and economic nationalists to challenge the wisdom of placing all Argentina's

35 C. Lewis, 'Railways and Industrialisation in Argentina and Brazil', in C. Lewis and C. G. Abel (eds.), Latin America - Economic Imperialism and the State: the political economy of the external connection from independence to the present (London, 1985).



Anglo-Argentine Relations, 1810-1914 433

eggs in the well-worn basket of agricultural and pastoral production.36 Thus the railways catalysed a developing political rift in Argentina and in some ways became the yardstick by which political opinion was measured.

This rift resulted from a fear of the emergence of a British 'railway trust' which would not only increase prices but also constitute the thin end of the wedge of a British stranglehold over the Argentine economy. This anxiety intensified in 1889 when a British concern, the Buenos Aires and Great Western Railway Company, bought the prosperous Oeste

railway from the provincial government. The sale removed one of the

major obstacles to the British company operating in the province. Between 1887 and I889 the Oeste had been authorised to construct 900 miles of new lines in areas that would have brought it into direct

competition with the Great Western. It seemed to Argentines that the

provincial government had removed itself from direct control of a large company and left the British the rewarding task of constructing railways to the richest part of the nation. When in I907 the President Jose Figueroa Alcorta introduced a bill to sell the Andina railway, the last major link of the state-owned railway system, the hostile reaction to the prospect of a British monopoly peaked. By 910o the so-called big four British railway companies 'lionised' the Argentine railway system and the government, it appeared, could not or would not do anything to control their activities.

But appearances deceived. The British railway companies were allowed to dominate Argentina's railway network, but the government showed itself both able and willing to intervene when this so-called 'trust'

overstepped the limits of government tolerance. When it suspected abuse of the guarantee system it was not slow to intervene and purchase rolling stock on a company's behalf, deducting its expenditure from subsequent guarantee claims. The government also consistently refused to recognise joint British representations by the Railway Committee in the i89os and insisted on dealing with each line separately. No one company was

indispensable, and until they could act in concert the government could

always afford to sacrifice one fish in the sea by exercising its right of

expropriation in order to assert its will. Finally, it never allowed the

proposed merger of the Great Southern and Western railway companies

36 The interests of the elite and the urban working and middle classes came into sharpest conflict over monetary policy where the paper currency and high rates of inflation greatly benefited the estancieros who sold meat and hides abroad and then converted their foreign currency into depreciated pesos, but meant that merchants and their customers found it increasingly difficult to pay for their imported goods in pesos. This in effect became a powerful instrument of income distribution in favour of the elite. P. G. Snow, Argentine Radicalism: The History and Doctrine of the Radical Civic Union (Iowa, I965) and D. Rock, Politics in Argentina, 1890-1930: The Rise and Fall of Radicalism 189o0-19o Cambridge, 1975).



434 Andrew Thompson

in 1912, believing the amalgamation of these two British-owned giants to be incompatible with wider Argentine economic interests.

The foothold gained by the British railway companies in the Argentine economy was due to the acquiescence of the politically powerful landed elite rather than their own manipulation.37 On the government's initiative

they could easily have been expropriated. But as long as this elite considered such collaboration was to their advantage, the relationship continued. What is significant is that towards the end of our period a substantial minority of Argentines disagreed. The British-owned railway companies elicited much vitriolic anti-foreign sentiment and economic nationalism. Writers like Ricardo Rojas worked to instil a sense of

argentinidad or national identity. But in the end the words 'imperialism' or

'hegemony' as used by such Argentines should be seen as political tools

employed by forces in Argentina seeking to challenge the established social and economic order. They tell us much more about the nature of

political rifts developing within the Argentine than they do about the true nature of Anglo-Argentine relations before I914.

Conclusion

The idea of Britain's enjoying an 'informal empire' in Argentina can be looked at on a number of levels.38 The most obvious is that of an 'indirect

political hegemony'. If one looks for concrete examples of control it is

possible to find a few occasions where Britain successfully intervened on behalf of her own interests. It soon becomes apparent, however, that these are in no way typical of the general course of Anglo-Argentine relations

during the period. The next step would be to consider the extent to which there was an

asymmetry or inequality in Anglo-Argentine relations before 19I4. The most extreme form of this argument is posed by the economic dependency school. Drawing up a benefits balance sheet is not easy. The whole exercise is bedevilled by a number of divergent views of what constitutes the optimum path for economic development. For Argentina, these differences relate primarily to the choice between rapid rates of growth

37 P. B. Goodwin, 'The Central Argentine Railway and the economic development of

Argentina, 8 54-I88 1', Hispanic American Historical Review, vol. 57 (Nov. I977). 38 For the distinction between the first two levels see, S. Strange, States and Markets

(London, 1988). Strange talks of' relational power', the power of one nation to coerce another to do something it would not otherwise do, and 'structural power' the power to determine the rules and customs which govern international economic relations. Also S. Lukes, Power: A Radical View (London, I974) which offers a definition of

power based on a capacity to control the political agenda in such a way as to avert

potential conflicts of interest. This would allow one nation, 'A', to exert power over

another, 'B', in a manner contrary to the real interests of 'B', without 'B' being conscious of what those interests were.



Anglo-Argentine Relations, I8o0-I9I4 435

and a more geographically even and sectorally balanced development, with a greater degree of industrialisation. These biases are still with us

today and it is very difficult to be impartial. When an advanced industrialised nation and an emerging primary producer engage in a debtor-creditor relationship and provide substantial markets for each other's produce the latter will inevitably feel the pulses of the former's

economy. This article has attempted to show that in economic terms Britain did not benefit disproportionately from the relationship. What was

clearly a mutually 'advantageous commercial relationship refuses to be

pressed into the hegemonic/subservient mould that Robinson and

Gallagher and the dependency school have shaped for it. Furthermore when looking at benefits in purely economic terms

Robinson and Gallagher's work displays alarming inconsistencies.

Although the 'Imperialism of Free Trade' article argues that empire, formal or informal, is essentially the 'sufficient political function of

integrating new regions into the metropolitan economy', Africa and the Victorians argues that the evidence of government policy-making does not

support the thesis that economic factors propelled Britain into the scramble for African territory. Of course benefits can be looked at in other

ways as well, perhaps the most important being strategic. Although there are plenty of good reasons for thinking that US involvement in South America later in the twentieth century was influenced by wider international considerations, it is clear that Argentina featured very low if at all on Britain's strategic agenda. It hardly needs repeating that India remained the jewel in the crown as far as British strategy was concerned.

The final level of analysis, which is beyond the scope of this article, is the Gramscian notion of cultural and ideological imperialism.39 This model would be best applied to the white settler dependencies of Australia, New Zealand, Canada, and also the U.S.A. After all, if these countries, heavily populated by British settlers, were not receptive to British ideas, constitutional structures, and religion, one wonders who was. But the first three of these countries were part of Britain's formal rather than informal empire, and by the end of our period over I 5o years had elapsed since the United States declared its independence. If it were to be argued that Argentina was culturally or ideologically assimilated into the British empire then one would either need to consider the nineteenth century U.S.A. as well, or show how Argentina really differed.

Writing on Britain's colonial legacy in the U.S.A. Jones concluded that

39 R. Robinson defines this as 'some form of social integration with the stronger country, which tends to insert its beliefs and institutions into the weaker society' in 'The Excentric Idea of Imperialism, with or without Empire', in Mommsen and Osterhammel (eds.) Imperialism and After.



436 Andrew Thompson

although North America began as, and in some important respects has remained, an extension of Europe, it has never been an exact cultural

replica. US society diverged from European models because the US environment modified and dissolved the several European traditions it drew upon.40 This divergence is all the more striking in the case of

Argentina. As far as the settler dependencies are concerned perhaps it is the many

striking parallels between these temperate colonies and Argentina that have made it all too easy to see Argentina as effectively part of the British

empire. Interestingly enough the bulk of Argentina's immigrant population came from the European continent rather than Britain. This is

important because the study of Argentina's appropriation of European ideology and culture must lead one to ask whether and to what extent

Argentina was borrowing from continental Europe rather than just specifically Britain. There is also the further question of how the existence of cultural or ideological imperialism is established. One needs to ask what

exactly the possession of ideas means and what difference it makes if a

country adopts them rather than cultivating them itself.

Despite the fact, then, that this article does not explore the Gramscian line, it concludes that Britain's 'informal empire' in Argentina is in essence a myth. However, it would issue a caution against throwing the

baby out with the bath water. Robinson and Gallagher's work is a

pioneering attempt to establish what, in the context of international

relations, power is. They have shown how unsatisfactory it is to restrict our horizons to formal systems of control. Military invasion and constitutional subordination need not after all be the only ways for one state to establish its ascendancy over another. Even if more subtle mechanisms of control failed to extend Britain's empire to South America in this period, as the case of Argentina shows, Robinson and Gallagher have focused our attention on issues which must be addressed and

suggested new ways of looking at the relationships of South American nations with the outside world.

40 M. A. Jones, The limits of Liberty. American History r6o7-I980 (Oxford, 1983).



informal empire? an exploration in the history of anglo-argentine relations, 1810-1914

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