(These notes are meant to supplement the Argentina Study Guide from MLA)
Analysis of the 1930’s: Overall, the “economic crisis and the immediate response adopted to deal with it had created a series of new conditions that made a return to the status quo difficult. It could be debated whether the stability and relative prosperity apparent by 1936-reflected in a renewal of union protest-should be attributed to these changes or whether it was merely a temporary prosperity in exports. But the closing-off of the economy, state intervention, and a certain industrial growth seemed to be features that were to stay.” (Romero 68-69)
In addition, the decision was made to maintain and even strengthen the relationship between Argentina and Great Britain.
This quote pertains to the rule of Uriburu in 1931 and then Justo between 1932 and 1936 and it shows that the Great Depression was the first major impetus towards state control or at least involvement in the economy and ISI!
Some key policies and outcomes:
Conditions: During Great Depression the flow of foreign capital had ceased, export prices had declined sharply but still trade did exist, imports and state spending were reduced as a result. Foreign debt still existed and government was still obligated to pay it off. Key trading country, Great Britain resorted to protectionist policies.
Centralization of the purchase and sale of foreign exchange – This means that the government could determine priorities for spending such as paying off debt, buying imports (consumer and capital goods) and purchasing certain companies like railroads.
Creation of Central Bank to provide credit and control money supply to try to prevent fluctuations
Adoption of Keynesian model (government primes the pump to inject money in the economy)
ISI develops partly due to Great Depression (lack of foreign exchange) but also due to a conscious effort and the prosperity of a viable agricultural export economy prior to the 1930’s resulting in a consumer market
Government continues to “close off the economy” (67) through tariffs also stimulates ISI
Guaranteed importation of such commodities as coal
Guaranteed British right to repatriate their profits from railroads that had become unprofitable because of failure to modernize and maintain
What is interesting about these policies is that they actually had some success and became a foundation for Peron’s policies. Even the Roca-Runciman Treaty, as a reminder of the dependent economic relationship, would serve to influence Peron’s emphasis on ridding Argentina of foreign influence.