Print this pageHistorical Text Archive © 1990 - 2017
Argentina and World War I
Argentina stayed neutral throughout the war because it didn't see the war as directly affecting its interests. There was lots of pro-British sympathy in Argentina and lots of money could be earned from the war sale of meat and grains as well as other needed items. Staying neutral facilitated that. In fact, Argentina, tilted towards the British and the Allies. Since the United States was also a neutral, there was no conflict between the two countries. Even after the United States entered the war, Argentina tended to be pro-Allies.
United States-Argentine trade expanded during the war. By 1918, Argentina foreign trade had reached $1.263 billion, almost double that of 1914. Argentina loaned some 250 million dollars to the Allies during war. By 1918, the United States was the best market for Argentine goods as well as the leading supplier.
Argentine economy, 1914-1939
Between 1913 and 1929, the value of foreign trade tripled. Argentines were able to buy more foreign-made articles per person than even the United States. Because of shortages of imported goods and petroleum during World War I, domestic and foreign capital developed new industries and petroleum sources. The war brought higher wages for labor and expansion of the school system. Cities grew as people flocked to them for jobs and prosperity encouraged higher survival rates for children.
Total US-Argentine trade peaked at $421 million in 1920. From 1914-1919, Argentina enjoyed a favorable balance of trade. In the 1921-1929 period, total trade volume ran better than two billion dollars but Argentina suffered a trade deficit with the US. The share of US trade with Argentina was increasing while Britain's share was decreasing. Reasons included:
Between 1917 and 1920, because of WWI, Argentina became a creditor and paid off its American loans. In 1922 and afterwards, the Argentine national government and some state governments started floating bonds, bought in New York, to pay for improvements. The interest was often 7%. By 1929, British creditors held $2.140 billion in Argentine notes whereas the United States held $611,428,570. The Yrigoyen administration (1928-1930) stopped the flow of loans.
Obstacles to the growth of trade included:
(1) Tariffs had been a problem since 1867 as Republicans in the United States had thrown up high tariffs. The1921 and 1922 tariffs hit Argentina hard because they put prohibitive rates on wheat, corn, meat, wool, hides, flax and sugar. Many Argentine exports had been on the free list but now only two were. Argentina protested, of course, but got little relief.
(2) Sanitary embargoes hurt trade as the US put restrictions on imports from areas infected by hoof and mouth disease. Argentina had some infections.
(3) The British had the advantage of being well integrated into the Argentine economy. They enhanced that by using anti-Americanism.
The Great Depression (1929-1940)
Argentine-US trade dropped about $47 million in 1932, the lowest since 1908. Argentine exports to the US went down to $15,779,000. Argentina's agreement with Great Britain, the Roca-Runciman Pact of 1933, discriminated against US concerns, a price the British made Argentina pay to keep British trade. President Franklin D. Roosevelt tried to negotiate reciprocal trade agreements. Argentina wanted exchange controls and bilateral balancing. The US wouldn't yield on tariff barriers or sanitary measures. There was constant conflict between the two countries in the 1930s and negotiations were unsuccessful.
In the Pan-American conferences of the 1920s and 1930s, Argentina pursued an independent line, sometimes very hostile to the United States. Argentina was not interested in an organization controlled by the United States. It opposed the unilateral Monroe Doctrine and was the champion of the doctrine of non-intervention.
World War II
When Germany invaded Poland on September 1, 1939, starting the European phase of the war, Argentina wanted to remain neutral as it has done in WWI. Although a reluctant participant in Pan-Americanism before, it was willing to willing to participate in the conference called for Panama City. When the US tried to get passage of a 300-mile security zone, Argentina refused. It also refused the proposal to exclude all submarines of belligerents from the Hemisphere. It did agree to requiring them to sail on the surface and to exclude those which committed acts of hostility. On other issues, Argentina was cooperative. When a German submarine sunk an Argentine ship in 1940 and the Nazis started operating in nearby Uruguay, Argentina sent troops to the border.
In the 1940-41 period, Argentines felt themselves pulled and torn between the Axis, on the one hand, and its commitments to the American states. It wanted to remain neutral but that was becoming increasingly difficult. It found out in 1940 that the US was secretly negotiating for bases in Uruguay, which would likely bring the war close to home.
Argentina borrowed $60 million to finance increased trade and got a fund of $50 million for currency stabilization but did not follow through with legislation. When, in 1941, the German ambassador stepped up pro-Nazi activities and propaganda, Argentina began seeking closer ties to the United States. They signed a reciprocal trade agreement. Argentine trade increased during the first months of the war but shifted. Three quarters of Argentina's exports had normally gone to Europe but now only Britain, Spain, and Portugal remained open. The total volume of trade dropped fifty per cent. Argentina das to trade more with the US to replace this deficit. Trade deficits and debt service reached $59 million by 1940 but the balance from 1941-45 shifted in Argentina's favor because the US had entered the war. By 1945, the balance in favor of Argentina was $131,270,000.