Argentina found it difficult to get loans in London in the first years of the war but
needed money for public improvements already under way, so it went to New York for money.
It did not want to pay 7% interest, so went to short-term funding. By 1917,
the J.P. Morgan group
and First National City Bank held $80 million in Argentine notes.
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.