INVESTMENTS IN ARGENTINA

New Zealand Herald, Volume LXXIII, Issue 22461, 3 July 1936, Page 10

INVESTMENTS IN ARGENTINA

British investments in South America amounted to £785,000,000 at the end of 1935, according to the answer given to a question in the House of Commons. Of this amount, £•135,000,000, or considerably more than half, was held in Argentina. Interest and dividends on this latter sum were estimated to have been £8,500,000 during the year. This comes to a little less than 2 per cent, which does not seem impressive. It must be realised, however, that a large proportion of the British capital in Argentina is invested in private enterprise. The portion represented by public debt is by far the smaller. Thus the position differs materially from that in Australia and New Zealand. This feature of the financial structure has two effects. If the companies in which British funds are invested reduce or pass their dividends in times of adversity, the decision has to be accepted as an ordinary commercial risk. There is no question of default. Again, the shareholders with an interest in Argentine enterprise realise that the prosperity of the country is their prosperity, and are concerned to 'see it receive the best possible treatment. Holders of public securities issued by Australia or New Zealand do not show similar zeal in the interests of the issuing countries. Those who do hold Argentine loans have been paid in full under the trade and exchange agreement of 1933. As the Financial News said recently, " British bondholders have received full and prompt paymentat a time when their difficulties in other countries have certainly not been diminishing. Shareholders who have invested capital in Argentina have received at least some return —though possibly an inadequate one—upon their money." There should be a moral in all this for New Zealand.