TANGLED ECONOMICS.

Auckland Star, Volume LXV, Issue 239, 9 October 1934, Page 11

TANGLED ECONOMICS.

THE ARGENTINE PESO.

FINANCIAL CONTRASTS

BUEXOS AIRES, September 2. With the recent jump in grain prices and the exchange value of the peso, and the consequent enforced relaxation of some of the most resented restrictions on exchange movements, Argentina's "managed economics" are getting sadly tangled up. But as the Ministry of Finance has kept many of its methods of "management" a profound secret, commentators are at a loss to suggest the remedy, and their criticisms are therefore mostly of the destructive variety. AH of them, however, agree that although returning prosperity, if maintained, may force a partial relinquishment of exchange control, the Government is not likely to forego such a fruitful source of revenue without a struggle. Rising prices and a keen demand for the surplus wheat stocks, a surplus which under the London agreement Argentina was supposed to keep off the market, has had the natural effect of forcing up the peso as against the dollar 41 nd the pound sterling, with the result that the margin hctween the official and the free market quotations is tending to disappear. Private remittances arcxio longer mulcted to the tune they were, and importers unable to obtain permits entitling them to special exchange quotations can now remit through the free market without losing a great deal of money.

Some business quarters predict that a further strengthening of the grain market may force the exchange control board out of business, and they are openly curious to know how the Government is going to control the country's importations if that should happen in the near future. Those business men whose well being may be said to depend upon the continued prosperity of the country, as distinct from those whose business interests are confined to some particular line of activity, are mostly strong supporters of the official allocation of exchange, although not necessarily supporters of arbitrary exchange rates, and these men are viewing the developing situation with interest and some misgiving. In the meantime, the failure of the special trade mission to Brazil to come to any agreement likely to increase the languishing business between the two countries, and the similar failure of the recent half-hearted Chilian-Argentine arrangement to foster enough trade to warrant the rebuilding of the destroyed section of the Trans-Andine railway, furnish two striking examples of the evils of economic nationalism which "managed economies" have failed to remove. The fact that business all around is manifestly improving in spite of such handicaps k-nds colour to the old saying here that "Heaven is mainly populated by Argentines,"