CRISIS IN SOUTH AMERICA

Hawke's Bay Tribune, Volume XXII, Issue 221, 1 September 1932, Page 4

CRISIS IN SOUTH AMERICA

LOW PRICES FOLLOWING OVER*PROIiUCTICN. RGENTINA REMAINS STABLE. falling prices after a period of over.duction and a stoppage of the inflow capital have precipitated a crisis in nth America, and since the middle 1630 almost every one of the Latin .ites has had its revolution. Mr H. A. ark, a Canterbury Coll.ge graduate uo has returned to Christchurch after i absence of 11 years in Buenos Aires, hile, and Bolivia, said in an interview ..ith the “Press" that Western South America was in a state of unrest, and that practically all the States with the exception of Argentina had defaulted in their overseas interest payments. Since the Great War, Mr Stark pointed out, a great amount of capital from the L tinted States had been in* vested in South America, with the re- , suit that production there had been ; over-stimulated. This over-production ■ accentuated the effect of a drastic fall in the prices of copper (Chile and Peru), nitrates (Chilo), and tin (Bolivia), and at the same time United States investors, themselves hardpressed, were forced to withhold further investments of capital. Finally, the United States imposed a tariff against copper. Peru at once retaliated by levying a 300 per cent, tariff on imports from the United States, and sought to establish a united front among all the South American republics. SERIES OF REVOLUTIONS. , “The total effect of these changes ! was to increase unemployment marked- ■ ly,” said Mr Stark. “Not only were ■ men thrown out of employment by in- ■ creasing mechanical facilities, but the ; world market for the products of most [ of the republics was cut off, and, conse- [ quent upon the restriction of capital, J there was an end to Government and i private construction work. The result ! nas been a series of revolutions, begini ning in the middle of 1930.” ■ The Argentine had been able to meet ■ its obligations and maintain a stable ■ Government largely on account of the ■ fact that its produce was still accept- ■ able abroad. Mr Stark described this ! republic as a most interesting country, ■ which offered a great deal of scope for ■ development. It had already been de- ■ veloped largely on British capital, and British and foreign laud companies still controlled enormous tracts or land. The

general attitude to Britain was most amicable, but while the Argentine, had exported chiefly to the United Kingdom she had been importing chiefly from the United States. Mr Stark expected that this position would be remedied- by a trade agreement in the near future. BUSINESS AND THE STATE. “Keener competition in shipping and other services has kept costs down in the Argentine," continued Mr Stark, "and 1 have heard it said that they never had such an absurd inflation of land values as we did in New Zealand, inflation in the Dominion, of course, was one effect o'f the Government being in business. In the Argentine, as far as I am aware, the Government is not in business, and taxation is derived chiefly from export-and import duties. The railways in general are free from political control, and they show all the benefits of private enterprise. They are privately operated, for the most part on British capital, so that in bad times the community does not have to pay interest charges—as we do on the capital invested in the New Zealand railways — and the reduced earnings affect only the dividends of the private investor." Mr Stark said that the produce of the three countries was so similar that there was little commercial intercourse between Australia and New Zealand on the one hand and the Argentine on the other. The only New Zealand products he had seen in Buenos Aires were apples and prize Corriedale sheep. In conclusion, he remarked that the Argentine was one of the Dominion’s chief competitors and was well worth her interest and study.