THREE years ago Argentina displayed all the phenomena of the world depression: low commodity prices, unemployment, debtors faced with foreclosure, an unbalanced budget, declining foreign trade. Today she has emerged from the crisis to an extent beyond any other American country.
The depression reached its nadir in South America in the course of the year 1933. It made frightful ravages there because of the catastrophic declines in the price of basic raw materials on the export of which the continent chiefly depends. Recovery has been due to the combined action of a number of factors, some of them measures taken by local authorities, others of them world-wide in operation. The domestic measures grew out of the determination of governments to set their house in order, and comprised a variety of expedients, many of them inspired by the policies of the Roosevelt Administration in the United States. Of much greater importance has been the influence of two other factors in play since the beginning of 1934. One is the slight but substantial rise in world markets of the prices of most of South America's principal exports. The other is the depreciation of the national currencies, which enhanced the benefit of rising prices for the native producer. In most of these countries the currency is today more or less stabilized at from 30 to 90 percent below the gold parity of six years ago. And despite this depreciation, the cost of living has not risen in proportion, largely because these countries themselves produce the elements necessary for their subsistence.
In Argentina circumstances have been especially propitious. An agricultural and pastoral country of vast extent, she is developing a diversified range of exportable products. Thanks to her extremely fertile soil, her industrious white population, and a favorable climate, she is able to meet competition in the outside world with unusual success. Moreover she is fortunate in having a government which has conjured her economic ills with expertness and intelligence.
The management of the national finances is perhaps Argentina's [i] Although in 1933 there was open talk in some quarters of the desirability of suspending the debt service, in 1934 and 1935 the public credit was so far consolidated that various foreign and domestic loans, both federal and provincial, were successfully converted from 6 percent to 5 percent and 4½ percent.[ii] The system of taxation has also been remodeled and simplified, the federal government assuming the entire responsibility of collecting most of the internal taxes formerly belonging to the provinces, and distributing the proceeds to them on a quota basis adjustable every ten years. This innovation, while emphasizing the tendency to federal encroachment upon provincial autonomy, should result in more efficient administration and largely increased revenues.
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