Capitalism in Argentine Culture: Torcuato di Tella and S.I.A.M. [Reprint 2016 ed.] 9781512815276

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ENTREPRENEURSHIP IN ARGENTINE CULTURE

S.I.A.M. trade-mark

ENTREPRENEURSHIP IN ARGENTINE CULTURE Torcuato Di Telia and S.I.A.M.

by

Thomas C. Cochran and Ruben E. Reina University of Pennsylvania

Research Assistant

Sue Nuttall University of California

UNIVERSITY OF PENNSYLVANIA PRESS

© 1962 by the Trustees of the University of Pennsylvania Library of Congress Catalog Card Number : 62-1899G

Published in Great Britain, India, and Pakistan By the Oxford University Press London, Bombay, and Karachi

7364 Printed in the United States of America

" T o d a y anthropology, especially American pology, studies just a b o u t everything h u m a n . "

anthro-

R o b e r t Redfield, Peasant Society and Culture, p. 10. "History is the study of m a n k i n d in all its bewildering variety." S S R C Bulletin 64, p. 16.

CONTENTS CHAPTER

PAGE

Preface

vii

I. Argentina: The Country and the People II. An Italian Family Immigrates to Argentina I I I . S.I.A.M. : The Critical Years, 1928-1938

1 37 72

IV. S.I.A.M.: Di Telia Expands in South America and Abroad V. The Rising Entrepreneur

112 142

VI. S.I.A.M.: Di Telia's Final Decade

172

V I I . What Di Telia Did Not Live to See

220

V I I I . Entrepreneurship, Industrialization, and National Culture: A Conclusion

256

Appendix A. S.I.A.M. The Corporation

271

Appendix B. Di Telia the Man

291

Appendix C. The Image of S.I.A.M: Interviews with Company Men 312 Bibliography

329

Index

333

ILLUSTRATIONS S. I.A. M. trade-mark

Frontispiece

Torcuato Di Telia

Fari^pag, 168

T h e consejo

Faring pagt 224

PREFACE

WRITTEN

BY

A

HISTORIAN

AND

TWO

ANTHROPOLOGISTS,

this book is neither a biography nor a business history in the conventional sense. It is a selection of the elements that seem historically and socially important in a case study of the introduction of mass production of machinery into the grain and cattle economy of Argentina. While Torcuato Di Telia, who was born in Italy, was undoubtedly a man of unusual ability, the steps of his entrepreneurial career provide useful insight into the general problems and attitudes arising from the process of industrialization in a prosperous agricultural and trading society already consuming American and European industrial products. T h e research was undertaken because of the increasing interest of anthropologists and social historians in economic development and the relatively small amount of study of the process in prosperous complex societies. In this sociocultural approach business is seen as an institution operating in a particular national context as well as a device for allocating the economic factors of production. Di Telia and his family are studied as part of a Latin American complex that operate« differently from family business in the United States. vii

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

Because of a lack of material on entrepreneurial development in many societies, students in the field tend to define and evaluate entrepreneurship by its American and European forms and take these as universally valid standards. The aim of the authors here is to suggest other standards of expectation fitted to the cultural setting of Argentina and the modern Latin American traditions. To accomplish this the subject matter has occasionally been seen in the framework used by the anthropologists studying non-Western societies. Consequently in describing what apparently motivated Di Telia to behave as he did, the authors have emphasized considerations of the individual and his culture rather more than the concepts of economic theory. In the words of Arthur H. Cole, "the study of entrepreneurship . . . counsels a regard for social differentiating factors and for economic and social meaning that is usually absent in the study of business administration." 1 This approach is particularly important in studying the career of a man from a more developed country building pioneer enterprise in a newer area. Thorough awareness of the values and structural forms of the Argentine society and ability to use them to the best advantage are powerful aids to business success. Argentine national culture is a particular historical expression of a broader, generic Latin American whole. Its continuity is derived from the common Spanish heritage, 2 and its distinctiveness from the sweep of historic influences and events briefly sketched in Chapter I. It must be recognized, however, that the time available for research and our association with S.I.A.M. Di Telia Ltda. was much too short for systematic exploration of 1 Business Enterprise in its Social Selling, Cambridge, Harvard Univenity Press, 1959, p. 22. 1 George M . Foster, Culture and Conquest, Viking Fund Pub. in Anthropology, No. 27, 1960, Chapter I.

»Ill

PREFACE

all the sociocultural ramifications of the case. The portrait presented is derived from a variety of sources: letters, economic reports, informants' interpretations of economic and political conditions, the literature on Argentina, and our own observations. Its implications provided insight into the ethos components and structure of interpersonal relations that seemed most relevant to Di Telia's success. Needless to say, we have abstracted from the whole of "national culture" certain distinctive aspects in which to place the entrepreneurial data. Since the book is concerned with a historical development, the material has been organized in a generally chronological form. Di Telia's company went through four broad phases: the early years to 1928; the critical years of depression when important product lines were introduced, 1928-1938; Di Telia's final decade from 1938 to 1948, in which expansion received both setbacks and impetus from World W a r II and the initial prosperity of the Perón era; and the post-Di Telia period up to 1960. Because the emphasis is more on Di Telia's personal entrepreneurship than on S.I.A.M. itself, developments in foreign countries merited treatment apart. T h e story of the early years and indeed of the company's entire history is inseparable from the life of Di Telia himself. His rise to national prominence and participation in outside activities is a necessary backdrop to business events in his final decade. For examining broad entrepreneurial problems and policies, the d a t a collected from both the records and interviews is full. I t is not, however, adequate for a detailed treatment of S.I.A.M. (Sociedad Industrial Americana de Maquinarias) as a business enterprise. T h e economist and business theorist will have unanswered questions. Because of a " c l e a n - u p " campaign in the departments of the company, no complete series can be offered on ix

E N T R E P R E N E U R S H I P IN A R C E N T I N E

CULTURE

wages, salary, prices, and some other internal accounts before 1940. T h e data for most of Di Telia's career comes chiefly from auditors' reports, interviews, and letters. T h e family has kept Di Telia's office and his personal files intact since his death; this material, graciously offered to the investigators, was the main source of data collection. It was never our privilege to meet Torcuato Di Telia personally but we have come to know him through his activities, his letters, and still more, as a person, through interviews with those who were close to him. Characteristics of his personality are well known in the company through the legends fostered since his death. At the end of the summer of 1959 his friends, relatives, colleagues and laborers made us feel that we knew Di Telia, the man, and that we could understand, in part, his career and the nature of his influence upon Argentina and other Latin American countries. In February of 1959 Dr. Cochran visited Argentina. He made preliminary arrangements with the executives of the company and the members of the immediate family. He received full cooperation and their assistance was enthusiastically promised. Dr. Reina, Argentine by birth, spent the summer of 1959 "in the field," in Buenos Aires, and returned a year later for a final recheck of data. Many important statistics for 1959 and 1960, however, have not yet been made available. In order to reconstruct the early beginnings of the corporation and the details of Di Telia's career, fifty-two persons were interviewed. The group included members of the Di Telia family, top executives, company engineers, old and recent employees, Argentine industrialists, company agents, lawyers, professors, and political leaders. To each one, all listed in the Appendix, we are most grateful for their friendly and capable assistance. Brazil, Chile, and Uruguay were also visited and special X

PREFACE

thanks are extended to the General Managers, Nestor Sozio, J u a n Robiola, and J u a n Colominas, respectively. Appropriate credit for work of this kind is difficult. T h e authors represent not only two fields, but also two societies. Dr. Cochran, as Director of the project, was responsible for establishing the original contacts. Preparation of the study for publication has been the result of an intricate process. Dr. C o c h r a n is responsible for Chapters I I I and V I ; Dr. Reina for Chapters I I , I V , V, and V I I , and Miss Sue N'uttall for C h a p t e r I. T h e m a n u script as a whole, however, was criticized and discussed by the authors. Miss Nuttall, as Research Assistant, has been largely responsible for the editing of the work and has contributed to the analysis of the data. T h e last chapter is a composite of the reactions of the three authors. T h e wholehearted encouragement and assistance of Señora M a r í a Robiola de Di Telia and of Dr. Guido Di Telia, the younger son, w a r r a n t special acknowledgment. T h e i r encouragement and support of the study are greatly appreciated. Special thanks are also owing to the chief officers of S . I . A . M . : H . R. Guido Clutterbuck, General Director, Dr. T o r c u a t o Sozio, Executive Director a n d Engineer Antonio Sudiero, Technical Director. A n u m b e r of secretaries participated in the field and in the typing of manuscripts. T o Miss Clara Levi and Beatriz Tamborini, Buenos Aires, and Mrs. Eleanor V a u g h n Marks, Philadelphia, our sincere gratitude. We would also like to express our gratitude to Mrs. Rosamond B. C o c h r a n and Mrs. Betty Burton Reina for accompanying the authors to the field a n d for their encouragement and assistance throughout the study. Finally, acknowledgment must be m a d e to the University of Pennsylvania for the academic support of this project.

XI

CHAPTER I ARGENTINA: THE COUNTRY AND THE PEOPLE

SOME K N O W L E D G E OF T H E N A T I O N A L S E T T I N G IS ESSENTIAL

for Understanding Torcuato Di Telia's entrepreneurial career. Since most Americans are unfamiliar with Argentina's past, this chapter is designed to provide a broad view of the major events in Argentine economic and political history, and some more detailed discussion of the social and cultural trends which were significant to Di Telia and S.I.A.M. (Sociedad Industrial Americana de Maquinarias). Argentina is one of the world's ten largest nations in area, second only to Brazil in South America. Like its sister republics, it shares in the cultural heritage of Spanish colonialism; unlike some Latin American countries it has retained to a considerable extent a cultural orientation toward southern Europe. The visitor to Buenos Aires sees a modern, bustling city with a cosmopolitan population today largely of recent European descent. In the Interior, however, another older, more indigenous Argentine culture still exists. The fcountry's history is essentially the story of the deep-rooted schism ι

2

E N T R E P R E N E U R S H I P IN ARGENTINE C U L T U R E

between urban and rural, the metropolis and the Interior, the modern and the traditional, of the interplay between these two Argentinas. Argentina is generally considered to lie within the southern temperate zone, but its extremities, from approximate latitudes 22° S. to 55° S., touch the subtropics and the frozen south. The majestic Andes sweep along the western front of the great inverted triangle, from the border in the north to Tierra del Fuego in the south. In the north is the Chaco, a hot, forested a n d sparsely settled plain. Far to the south stretches the cool, bleak Patagonian region, with only scattered sheep ranches. Historically and economically central Argentina has been the most important region. Of Argentina's total area of 2,776,294 square kilometers, or around 1,080,000 square miles, the plains occupy some 40 per cent. Near Buenos Aires, the eastern pampas are well-watered grasslands with rich soil which makes the region one of the world's most productive farming and stock-raising areas. T o the west the pampas gradually become arid, with rainfall fluctuating between eight and twenty inches annually. 1 O n the Atlantic seaboard, in the region between the Paraná and Uruguay rivers and around the mouth of the La Plata into which they flow is the Litoral, the h u b of Argentina. The Litoral includes the provinces of Misiones, Corrientes, Entre Rios, and Santa Fe, but it is an area oriented toward the city of Buenos Aires. Argentines are mainly city dwellers; in 1947, 28.7 per cent of the population lived in Buenos Aires, and 62 per cent of the total population of the country was listed as urban. 2 1 B r u n o A . D e f e l i p p e , Geografia Economica Argentina, B u e n o s Aire», Losange, 1959, p . 29. s G i n o G e r m a n i , Estructura Social dt la Argentina, Buenos Aires, R a i g a l ,

1955. pp. 61. 68.

ARGENTINA: THE COUNTRY AND THE PEOPLE

3

Increasing u r b a n concentration correlates with the increasing i m p o r t a n c e of the coastal area a n d of Buenos Aires in p a r t i c u l a r through Argentine history. T h e d e m o g r a p h i c imbalance of the twentieth century in t u r n h a d i m p o r t a n t implications for the economic and political developments that Di Telia faced. T H E MAKING OF MODERN ARGENTINA

A r g e n t i n a was first settled in the early sixteenth century by colonists from the wealthy a n d well-established Spanish dominions of Perù a n d Chile, who m o v e d t h r o u g h the Andes passes and established t h e i m p o r t a n t cities of the I n t e r i o r : J u j u y , Salta, T u c u m á n , Santiago del Estero, C ó r d o b a , San Luis, San J u a n , a n d Mendoza.* T h e early settlements were criollo (creole) in population a n d spirit, a n d were u n d e r the hegemony of their m o r e p o w e r f u l p a r e n t colonies. At the same time, settlers were trying to establish a b e a c h h e a d on the Atlantic coast, at the m o u t h of La Plata. I n d i a n attacks thwarted the p e r m a n e n t founding of Buenos Aires until 1580. T h i s struggling settlement was remote from the northwestern towns a n d developed great pride in its own independence. T h e colonists h a d come to Buenos Aires with herds of horses a n d cattle, which prospered on the Pampas, a n d Buenos Aires's strategic location as a port assured its growth. T h e abortive English invasions of 1806 and 1807 signaled a new era in Argentina. W i t h no help f r o m Spain, the Buenos Aires criollos repelled the invaders. But the struggle sharpened the meaning of the words criollismo4 3 T h e reader is referred to the following general English language sources on Argentine history: George Pendle, Argentina, London, Royal Institute of International Affairs, 1955; Ricardo Levene, A History of Argentina, Chapel Hill, Univ. of N. Carolina Press, 1937; Ysabel F. Rennie, The Argentine Republic, New York, Macmillan Co., 1945. 4 Being native-born, as opposed to outsiders.

4

E N T R E P R E N E U R S H I P IN A R O E N T I N E C U L T U R E

and f r e e d o m ; old grievances against the Vice-Royalty's regimentation of commerce were resurrected. I n 1810, the cabildo abierto (open council) of Buenos Aires set up a national junta to replace the viceroy. I n doing so, Buenos Aires acted without communication with the Interior; as Pendle says, " . . . the Buenos Aires leaders perpetuated the old cleavage between their town and the hinterland, thereby preparing the way for years of anarchy and a p e r m a n e n t disequilibrium in the state." 5 It was not until the leadership of San Martín, however, that Argentina formally declared independence in 1816 and went on to fight for the freedom of her sister nations. T h e Argentine people found that freedom did not ensure peace and unity. In the 1820's there was no Argentine nation; there was only a prosperous Buenos Aires province which through its port facilities controlled the wealth of the country and a number oí caudillos or local warlords in the Interior who vigorously contested the hegemony of one city over themselves. Rivadavia, the first "president," who was elected in 1826, was a farsighted statesman, but his high-handed attempts to impose a centralized government from the city of Buenos Aires were resented bitterly. T h e proposed distribution of land tracts to secure cpllateral for a loan from Great Britain failed. Disturbances brought a local caudillo from Buenos Aires province, J u a n Manuel de Rosas, to power. A self-styled federalist, or supporter of the Interior's claim to local autonomy, he in fact ruled ruthlessly to bring other caudillos under his power and indirectly furthered the cause of the Unitarios. With the exception of a three-year period from 1832-1835, Rosas ruled undisturbed until 1852, when he was defeated by another caudillo, General Urquiza of Entre Rios province. Although Rosas' followers were awarded estancias ' P e n d l e , Argentina,

op. cit., p . 2 3

A R G E N T I N A : T H E COUNTRY AND T H E P E O P L E

5

(estates), Argentina still had m u c h open land a n d a great potential for economic expansion and prosperity. T h e end to civil war, however, was necessary and both Federales and Unitarios, recognizing the need for a compromise, supported the Constitution of 1853. T h e constitution was modeled on that óf the United States, but differed in some important respects. T h e executive retained strong power, including the right to appoint and remove officials, suspend constitutional guarantees in a state of siege, intervene in provinces by removing local officials from the governor on down, and supervise elections in provinces to insure federal support. Bartolomé Mitre, the spokesman for Buenos Aires, became the first constitutional president of Argentina. T h e new constitution also m e a n t the loss of economic prerogatives, including customs income, for Buenos Aires. Throughout the next decades, civil war raged. Able administrators including Bartolomé Mitre and the national hero, Domingo Faustino Sarmiento, worked to "civilize" the Interior, but porteño ( " t o w n s m a n " ) ideas were viewed with suspicion by the isolated provincianos and opposing politicians seized on the grievances of Buenos Aires Province to contest elections. O n l y after the Indian tribes of the south h a d been subdued and a costly war with Paraguay concluded could the country resolve its domestic problems. In 1880 Buenos Aires City was stripped from its province, and a separate Federal Capital zone wiis created. By this time the development of refrigerator ships which could transport Argentine beef to Europe had brought sweeping economic change. T h e lean and stringy cattle of the gauchos, useful for their hides and tallow only, were supplanted by good European beef stock and expansion into the pampas began to proceed apace. Britain became Argentina's m a j o r market and

6

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

p r o v i d e d the m o n e y a n d resources to build railroads linking the interior with Buenos Aires. T h e g o v e r n m e n t actively e n c o u r a g e d this sort of investment a n d t h e prosperity \vas rising high. But the b o o m led to overinvestm e n t , p a r t i c u l a r l y by the g o v e r n m e n t , d e p r e c i a t i o n of the peso, a n d finally e c o n o m i c collapse in 1890-1891. T h e conservative president, M i g u e l J u a r e z C e l m a n , was forced to resign a n d was succeeded by his vice-president Pellegrini. T h e m i d d l e class of Buenos Aires a n d the I n t e r i o r , however, was restive. T h e y h a d been denied p a r t i c i p a t i o n in the g o v e r n m e n t , which was r u n by the oligarchy, a n d the R a d i c a l p a r t y was b o r n in 1891. T h r o u g h o u t the f e r m e n t of the n i n e t e e n t h c e n t u r y several trends c o n t i n u e d . T h e internal strife of the Rosas era b e t w e e n Federales a n d Unitarios, between the u r b a n porteños a n d the fiercely i n d e p e n d e n t gauchos a n d their caudillos, p e r p e t u a t e d the old rift between Buenos Aires a n d the I n t e r i o r . I n the Interior, townsfolk c l u n g to their t r a d i t i o n of a u t o n o m y a n d conservatism. T h e g a u c h o era was a l r e a d y e n d i n g b u t it h a d set the s t a m p of extreme individualism o n w h a t later generations nostalgically r e f e r r e d to as real Argentinidad. External a u t h o r i t y a n d i n t e r v e n t i o n w e r e resented. T h e leaders of sophisticated E u r o p e - o r i e n t e d Buenos Aires, on the other h a n d , worked for centralized g o v e r n m e n t t h a t would extend its hegem o n y over the interior. T h e porteño outlook has been s u m m a r i z e d by R e n n i e as: " . . . the inner conviction t h a t A r g e n t i n a exists for Buenos Aires a n d t h a t all outside the limits of Buenos Aires is oufside the limits of civilization."® R e a c h i n g out over these two societies or " t w o Argent i n a s " a n d pulling t h e m into precarious c o n j u n c t i o n was a single p o w e r elite, the latifundistas or g r e a t landholders, w h i c h g a v e A r g e n t i n a most of its political leaders. 7 • Rennie, Argentine Republic, op. cit., p. 20. See for example: José Luis Romero, Las ¡deas Políticas en Argentina, Mexico, Fondo de Cultura Económica, 1959, Chapter IV, pp. 98 ff. 7

ARGENTINA: THE COUNTRY AND T H E PEOPLE

7

Throughout the latter part of the century and on into the twentieth, these aristocratic estancieros composed the ruling oligarchy that usually controlled the central government and dictated policies which would ensure the European market for beef and grain. T h e oligarchy looked for progress through the "civilizing" force of foreign powers, especially Great Britain. At the same time, however, the oligarchy sustained strong individualism and orientation toward the land as elements of Argentine national character. Argentine leadership, whether rural or urban-oriented, continued to be basically personalistic. T h e nineteenth century was an era of strong men who ruled with the conviction that their program was the salvation of the country, and who did not hesitate to interfere with regional and local politics to implement their work. Even the liberal and scholarly president Domingo Sarmiento (1868-1874) who decried the heavy-handed measures of his predecessors, fell short of his democratic aspirations in actual practice. He resorted to personal intervention to push through his program. T h e often-used term caudillo, however, cannot be applied to all such strong men. T h e true caudillo in the nineteenth century was a provincial warlord who inspired emotionally charged loyalty among his followers. T h e believers in a caudillo were not opportunists who would forsake their leader if his promises were not fulfilled. T h e concept caudillismo was carried over into the field of purely political action in the twentieth century, and applied to statesmen who commanded mass support. MIGRATION

I n order to accomplish the development of the pampas the oligarchy encouraged immigration, a policy that was to have a far-reaching consequence for the landowners'

8

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

future status, and incidentally to bring the Di Tellas to Argentina in 1895. While in 1869 out of a total population of 1,737,076 only 210,300 or 12.1 per cent were foreign born, by 1895 the tide had swelled until, out of a total 3,954,911, 1,004,500 or 25.4 per cent were immigrants. 8 Many of the newcomers were transient farm workers, or individuals seeking easy money, and there was always a considerable amount of return migration. In 1891, for example, because of political upheavals and the economic crisis, more than twice as many people left Argentina as entered it. The newcomers poured in from many European countries, but Spanish and especially Italian immigrants predominated. Of the 211,992 foreignborn recorded in the 1869 census, 71,442 were Italians and 34,080 were Spaniards. By 1895, there were 492,636 Italian-born Argentines and 198,685 from Spain. 9 The immigrants acted as a catalyst to speed Argentine change. T h e Italians vigorously entered into farming, while Argentine criollos favored cattle and sheep raising. Hence the nation's agricultural production is primarily due to the efforts of the immigrants. Increasingly, however, the newcomers found most of the land pre-empted by the latifundistas, and were forced to take up tenant status, forming a new rural middle class. By no means all the immigrants went to the land; the rapid increase in the population of Gran Buenos Aires from 225,000 in 1869 to 767,000 in 1895, and again to 1,999,000 by 1914, came largely from the foreign influx. 1 0 Pendle states that the north Italians went into farming while the southern Italians tended to stay in the cities. 11 Many of the immigrants in urban areas became small 8

Germani, Estructura Social, op. cit., p. 81. * Carl C. Taylor, Rural Life in Argentina, Baton Rouge, Louisana State University Press, 1946, p. 59. 10 Germani, Estructura Social, op. cit., p. 74. u Pendle, Argntùia, op. cit., p. 51.

A R G E N T I N A : THE COUNTRY AND T H E P E O P L E

9

shop owners a n d industrialists, swelling the n u m b e r s of t h e e m e r g e n t m i d d l e class. O r t i z states t h a t the census of 1895 showed 84 per cent of the 19,000 business establishments w e r e owned by foreign-born persons. 1 2 Skilled laborers w e r e arriving from E u r o p e also. T h e u r b a n l a b o r force was f u r t h e r a u g m e n t e d by the beginning of w h a t was to b e a significant d e m o g r a p h i c shift in the twentieth c e n t u r y : the internal migration f r o m r u r a l areas to the cities, a n d especially to Buenos Aires. I n 1895, 15.4 per cent of the population of A r g e n t i n a h a d moved since their b i r t h ; 41.4 per cent of these h a d moved to Buenos Aires. 1 3 T h e i m m i g r a n t s from E u r o p e for the most p a r t quickly a d a p t e d to the Argentine scene. T h e y h a d come seeking profit a n d a better life, a n d they worked industriously to achieve it. For m a n y of t h e m , however, allegiance always r e m a i n e d split. For practical purposes, they readily identified themselves with Argentine economy a n d politics b u t a t t a c h m e n t to their m o t h e r c o u n t r y a n d its customs r e m a i n e d strong. T h e I t a l i a n i m m i g r a n t , for example, stuck to his accordion a n d g r a d u a l l y it supp l a n t e d the native guitar. 1 4 T h e greatest foreign i m p a c t o n A r g e n t i n e culture was in the u r b a n areas, already cosmopolitan a n d geared to the capitals of E u r o p e . Criollo culture survived in the hinterland where the i m m i grants did n o t penetrate in great n u m b e r s . M e a n w h i l e l a n d control still r e m a i n e d largely in the h a n d s of the old latifundistas or l a n d e d gentry. A r g e n t i n e social structure at the end of the nineteenth c e n t u r y could be seen as two triangles, r u r a l a n d u r b a n , whose apexes intersected in a single elite, b u t whose 11 Ricardo M . Ortiz, Historia Econòmica de la Argentina, 2 vola., Buenos Aire», Raigal, 1955, v. II, p. 226. Germani, Estructura Social, op. cit., pp. 61-63. 14 Arthur P. Whitaker, The United States and Argentina, Cambridge, Harvard University P r t » , 1954, p. 9.

10

E N T R E P R E N E U R S H J P IN A R G E N T I N E C U L T U R E

middle and lower strata remained distinct and suspicious of each other. T h e identification of estanciero with porteño was largely responsible for the paradox of a nation already heavily urban-centered in population pursuing political policies favorable to farming and pastoral interests well into the present century. Although Buenos Aires was booming, the government was not interested in largescale industrial development. At the turn of the century, tradition harked back to the exciting day of the gaucho, and the latifundistas were a secure aristocratic oligarchy. T h e members of this elite prided themselves on their cosmopolitan tastes, but Argentine domestic policy remained extremely parochial; class interests and local factions took precedence over national p r o b l e m s . / T h e economic policy of the landowners ran to laissez faire, making Argentina dependent on Europe for manufactured goods. Radical opposition to the ruling conservatives was born out of the demand for a voice in government by the rising middle class: tenant farmers, smallscale entrepreneurs, tradesmen, and intellectuals. M e a n while, immigration was increasing the number of u r b a n workers who would support middle class aims. POLITICAL

CURRENTS

T h e new century opened with dissension rumbling against the established Conservative oligarchy. T h e 1898 election had brought another presidential term for J u l i o Roca, the old hero of the "Desert C a m p a i g n " against the Indians. T h e Sociedad Rural representing the estancieros dominated the country. Hipólito Irigoyen and the socalled Radicals who represented the urban middle class realized the futility of campaigning when elections were fraudulently run, and bided their time. I n 1910, w h e n Torcuata Di Telia was entering his first business partnership, a remarkable Conservative became president. R o q u e

A R G E N T I N A : T H E COUNTRY AND THE PEOPLE

11

Saenz P e ñ a defied his own party to push through electoral reform in 1911 that guaranteed male suffrage and assured the minority party of representation in the legislature. Succeeding elections demonstrated the force of the tide of protest against the old order. I n the 1916 elections, truly multiparty for the first time in the nation's history, Irigoyen a n d the Radicals were victorious. T h e Irigoyen regime, however, was to prove almost as unsatisfactory to the classes which h a d swept it into power as it was to the ousted Conservatives. Irigoyen was a political caudillo, a m a n who c o m m a n d e d enormous popular support. Some a t t e m p t s at reform were made, and the m a n himself h a d u n d e n i a b l e personal honesty. Like his predecessors, however, he was a personalistic president lacking in a broad view of Argentine problems. Intervention in provincial a n d local government continued. Beyond the fringes of his personal associates, incompetence and graft were common.15 Irigoyen maintained Argentina's neutrality in World W a r I against considerable pressure at home and abroad. It was sound j u d g m e n t , as the national economy boomed f r o m the favorable balance of trade, rise of the value of the peso, a n d stimulus to local industry. After the war, Irigoyen chose his successor, Marcelo Alvear. Riding on the wave of Radical popularity, Alvear swept into power in 1922 and guided the nation through the glittering prosperity of the '20's. 1 6 A rift developed, however, between t h e old R a d i c a l caudillo and his heir; in 1928 Irigoyen a n n o u n c e d for the presidential candidacy and returned to office. Scandal a n d chaos predominated in the two short years 15

Rennie, Argentini Republic, op. cit., pp. 213-214. This prosperity enabled Di Telia to diversify his manufactures and launch expansion abroad. See Chapters II and IV.

12

ENTREPRENEURSHIP IN ARGENTINE CULTURE

of Irigoyen's second term. The president was old and unable to check the impact of the world depression in 1930. On September 6, 1930, the military under General José E. Uriburu struck. Irigoyen was deposed and a new provisional government under Uriburu was established by decree. Uriburu soon demonstrated that the armed forces favored a return to Conservative, oligarchical rule. When the Radicals surprisingly won the April 1931 elections in Buenos Aires Province, Uriburu was taken aback and annulled the elections. His proposals for a corporative or fascist type of government alienated factions of the army led by General Augustin P. Justo, an Anti-Personalist Radical. Unable to find effective support from any group, Uriburu had to permit an election in November 1931, in which Justo won the presidency. While Justo claimed to stand for a return to electoral rights and democracy, he proved in fact to be another military dictator. His presidency was chiefly marked by efforts to appease the British, who threatened to cut down on the beef market. The Roca-Runciman Treaty of 1933 enforced bilateral trade. Its provisions favored British exports to Argentina. Despite this policy, shortage of exchange favored Argentine industry, and Di Telia and other entrepreneurs were able to expand and diversify. Industrial growth, in turn, increased the urban proletariat, which began to be a political force, much as the middle class had been at the turn of the century. By the election of 1938 the patterns and coalitions of Argentine politics had become too complex for a brief account. Roberto M. Ortiz who won the election represented liberal anti-personalist elements, but the situation worked against him. Europe was on the brink of World War II, and fascism appealed to many disgruntled and

ARGENTINA: THE COUNTRY AND T H E PEOPLE

13

f r u s t r a t e d A r g e n t i n e nationalists. O r t i z , like S a e n z P e ñ a b e f o r e h i m , f o u g h t for d e m o c r a t i c elections by a n n u l l i n g f r a u d u l e n t C o n s e r v a t i v e victories in provincial contests. Following Irigoyen's example, he proclaimed Argentine n e u t r a l i t y w h e n w a r b e g a n in E u r o p e . But O r t i z was a sick m a n a n d g o i n g b l i n d ; in J u l y of 1940 his VicePresident R a m o n S. Castillo took c o n t r o l of the g o v e r n ment. Castillo a n d his personal followers m o v e d to c o u n t e r a c t O r t i z ' a t t e m p t s at r e f o r m , b u t stood fast o n A r g e n t i n e neutrality. T h e new government, openly anti-American, received s u p p o r t f r o m the Hispanists w h o saw F r a n c o ' s S p a i n as a resurrection of A r g e n t i n a ' s h e r i t a g e , m a n y of the resentful y o u n g intelligentsia, I t a l i a n s w h o a d m i r e d Mussolini, a n d a h o d g e p o d g e of o t h e r splinter elements, all f o r m i n g A r g e n t i n a ' s h e t e r o g e n e o u s b u t vociferous nationalistic bloc. O n the o t h e r h a n d , t h e R a d i c a l s w e r e o p e n l y pro-Ally a n d large n u m b e r s of A r g e n t i n e s w e r e repelled by N a t i o n a l Socialism. W h e n Castillo picked a s t a u n c h estancierof R o b u s t i a n o P a t r ó n Costas, to succeed h i m , the a r m y o n c e a g a i n c a m e into play. O n J u n e 4, 1943, a g r o u p of officers o v e r t h r e w Castillo, i n a u g u r a t i n g a n e w era in A r g e n t i n e politics. T h e A r m y j u n t a i n c l u d e d u p p e r middle-class m e n w i t h m i x e d motives. S o m e , such as A r t u r o R a w s o n , f a v o r e d closer ties w i t h the U n i t e d States. A r g e n t i n a ' s n e u t r a l i t y was e m b a r r a s s i n g in the otherwise u n i t e d h e m i s p h e r e , a n d h a d cost the n a t i o n ' s i n d u s t r y s u b s t a n t i a l losses in d e a l ings with t h e U n i t e d States. G e n e r a l P e d r o P. R a m i r e z took over the presidency, trying to b a l a n c e R a w s o n against the e x t r e m e nationalist Grupo de Oficiales Unidos (the G . O . U . ) led b y J u a n D o m i n g o P e r ó n . A m o n g the A r g e n t i n e m i d d l e - a n d upper-class milit a r y factions f a v o r i n g o n e or a n o t h e r b r a n d of state c o n t r o l — G e r m a n , I t a l i a n , S p a n i s h , or R o s a s ' A r g e n t i n e

14

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

v a r i e t y — P e r ó n alone fully a p p r e c i a t e d the v a l u e of strong s u p p o r t f r o m the l a b o r i n g class. As S e c r e t a r y of L a b o r a n d Social Security, h e was able to build a political m a c h i n e based on unions, p u r g e d of opposition leaders, a n d o n h a n d to act in the streets of Buenos Aires. As early as M a y D a y of 1944 he was telling h u g e l a b o r a u d i e n c e s h o w b a d l y the A r g e n t i n e workers h a d b e e n t r e a t e d b y previous regimes. Backed by the industrial workers a n d a i d e d by his f u t u r e wife E v a D u a r t e , P e r ó n successfully resisted the futile a t t e m p t s of the conservatives to send h i m into exile a n d by O c t o b e r of 1945 h a d effective c o n t r o l of the g o v e r n m e n t . T h e c o u n t r y was r e a d y for P e r ó n . Results of a quest i o n n a i r e s a m p l i n g political ideologies by o c c u p a t i o n a l class in 1945 (see T a b l e 1) i n d i c a t e d the g r e a t g a p b e t w e e n capitalistas a n d obreros (workers).

TABLE POLITICAL

1

IDEOLOGIES*

Ultra Conservative

Conservative

Indeterminate

Moderate Left

16.1 26.4

29.3 34.4

28.7

Peons O t h e r employees I n d e p e n d e n t ( s m a l l shop) Professionals

5.2 12.2 2.5 24.4

20.8 31.4

39.0 28.5

20.8 10.5

45.8 30.2

28.2 39.7

17.6

C a p i t a l i s t s (large)

55.5

31.4

6.9 4.1 0.0

Semiskilled w o r k e r s Skilled labor

19.2 11.1

17.2

Left

20.7 9.8 16.9 5.2 1.5 6.8 1.9

* S o u r c e : G e r m a n i , Estructura Social, op. cit., p . 2 5 0 .

P e r ó n d r e w his p r i m a r y s u p p o r t f r o m the m o d e r a t e left g r o u p , a n d swayed the u n d e c i d e d to his r e g i m e .

A R G E N T I N A : T H E COUNTRY AND T H E P E O P L E

15

P e r ó n r a p i d l y o r g a n i z e d his new social-economic revolution by p r o m u l g a t i n g laws for the i m p r o v e m e n t of w o r k i n g conditions, nationalizing the C e n t r a l Bank, the A m e r i c a n - o w n e d t e l e p h o n e system, a n d British-owned railways, a n d establishing the I n s t i t u t e for the P r o m o t i o n of T r a d e . T h e l a t t e r was his most p o t e n t w e a p o n against the p o w e r f u l l a n d h o l d i n g families. T h r o u g h the Institute, P e r ó n was e m p o w e r e d to b u y u p most of the c o u n t r y ' s a g r i c u l t u r a l p r o d u c e a n d m a r k e t it for the most f a v o r a b l e prices. 1 7 H e abolished the m a n u f a c t u r e r s ' associations, i n c l u d i n g the Unión Industrial in which Di T e l i a h a d been active, depriving the industrialists of a strong f r o n t against the well-organized l a b o r unions. 1 8 P e r ó n stood for the syndicalist state. A r g e n t i n a was to assume its rightful s t a t u r e a m o n g the nations of the world u n d e r the aegis of a benevolent a n d a l l - e m b r a c i n g g o v e r n m e n t . I n o r d e r to d o this, it h a d to free itself f r o m d e p e n d e n c y on the E u r o p e a n m a r k e t , a n d this could only b e a c c o m p l i s h e d by a swing to rapid industrialization : F r o m t o d a y o n w a r d s w e shall i n d u s t r i a l i z e t h e c o u n t r y so t h a t o u r w o r k m a y be d o n e by A r g e n t i n e w o r k e r s a n d so t h a t t h e y m a y e a r n w h a t foreign w o r k e r s e a r n e d b e f o r e . T h i s is w h a t i n d u s t r i a l i z a t i o n m e a n s to us. T o a c c o m p l i s h this c y c l e w e shall c o m p l e t e a n d intensify t h e e c o n o m i c cycle of p r o d u c t i o n a n d c o n s u m p t i o n , w e shall p r o d u c e m o r e , a n d use t h a t p r o d u c t i o n for o u r o w n i n d u s t r i a l i z a tion a n d c o m m e r c e , a v o i d i n g e x p l o i t a t i o n a n d i n c r e a s i n g c o n s u m p t i o n . W h e n this cycle is closed, w e shall he a b l e to p r o v i d e o u r c o u n t r y w i t h 8 0 or 9 0 p e r cent of o u r p r o d u c t i o n , a n d w e shall only i m p o r t 10 or 2 0 p e r c e n t . . . , 1 9 17 L e w i s H a n k e , South p·72· 19

America,

Princeton, X.J., V a n Nostrand,

1959,

T h e c o n f l i c t e x p e r i e n c e d b y D i T e l i a d u r i n g P e r ó n ' s s e i z u r e of p o w e r m a y h a v e h a s t e n e d his d e a t h in 1948. S e e C h a p t e r V . 19 P e r ó n , J u l y 3 0 , 1947, as q u o t e d ir, H a n k e , South Amtiica, op. cit., pp. 157-158.

16

E N T R F . P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

T h e first years of Perón's regime were flush ones. H e e x t e n d e d his p o w e r with the enthusiastic s u p p o r t of his descamisados, the "shirtless o n e s , " or poor laborers w h o saw him as a latter-day Messiah. T h e C . G . T . ( G e n e r a l C o n f e d e r a t i o n of L a b o r ) u n d e r the control of Peronist leaders was a powerful political bloc. I n 1949 h e sponsored a new constitution, giving the executive b r a n c h of g o v e r n m e n t even m o r e p o w e r a n d allowing for continuous re-election. Perón's economic policies h a d i m m e d i a t e benefits in some respects for A r g e n t i n e i n d u s t r y , b u t it was p r e d i c a t e d on high wage levels a n d c o n s u m p tion t h a t could only be m a i n t a i n e d if a g r i c u l t u r a l exports b r o u g h t large returns. T h e post-war b o o m was b r o k e n by a c o n j u n c t i o n of circumstances b o t h foreign a n d domestic, a n d serious depression set in f r o m 1949 to 1952. An o v e r s u p p l i c d world grain m a r k e t coincided with c r o p failures in A r g e n t i n a , while the p u r c h a s e of foreign-held stock in the nationalized industries h a d exhausted the w a r t i m e a c c u m u l a t i o n of foreign exchange. Political troubles quickly followed. Perón's ruthless suppression of opposition, c u l m i n a t i n g in the 1951 seizure of the great newsp a p e r , La Prensa, alienated m a n y of the intelligentsia. P e r h a p s his most serious error was to arouse the opposition of the Catholic C h u r c h t h r o u g h legalizing m a r i t a l s e p a r a t i o n a n d interfering with parochial e d u c a t i o n . By 1951 he h a d lost the s u p p o r t of the Catholic clergy. 2 0 After 1952 the c o u n t r y b e g a n to recover f r o m the depression, b u t serious d r o u g h t hit the farmers. Perón shifted his a p p r o a c h to a certain extent. T h e second Plan Quinquenal, a m b i t i o u s a n d multifaceted like the first, was being l a u n c h e d , b u t the i n t e r p r e t a t i o n s Perón m a d e of its clauses were m o r e i m p o r t a n t t h a n the Plan itself. Belatedly, P e r ó n suspended credits for i n d u s t r y while 20

W h i t a k e r , Argentina,

op. cil., p . 144.

ARGENTINA: THE COUNTRY AND THE PEOPLE

17

leaving them open for farmers. Attempts were made to induce some of his rural-born descamisados back to the land. Labor no longer received uncritical support of its claims against management. 2 1 The death of Eva Perón in J u l y 1952 lost the regime its most effective popular figure.22 After an abortive uprising early in 1955, the dictator made plans to create a workers' militia. On September 16, 1955, the military, Latin America's traditional agent of revolution, made its move against this threat. Perón was ousted on September 19 and the armed forces instituted a caretaker government under the old constitution of 1853. General Pedro A r a m b u r u was the head. By early 1958 stability seemed to warrant elections, and a Radical, Arturo Frondizi, took the reins of Argentine government. Frondizi served notice on the nation of its serious financial straits, and mapped an austerity program for the future : The time has come to face facts and to adopt heroic measures. As of J a n u a r y 1, 1959, the country will begin a new phase, under a program of financial-economic stabilization. . . . During the last fifteen years, Argentina has spent much more than it has produced, has not maintained basic capital investments, and has gone severely into debt abroad . . . in only ten years from 1948 to date the cost of living has increased more than 600 per cent. W e live in permanent deficit and if we do not react in time future generations will never forgive us the crime we are committing against their welfare and even against their freedom. 2 3 How did Perón rise to power? Immediate parallels to caudillos in Argentina's past come to mind. Certainly, Peronismo had strong overtones of this traditional pattern Pendle, Argentina, op. cil., pp. 106, 108. W h i t a k e r , Argentina, op. cit., pp. 166 ff. 8 3 Excerpted from Arturo Frondizi's address to the nation, La Prensa, December 30, 1958, as quoted in H a n k e , South America, op. cit., pp. 162-165. 21

22

18

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

of personal leadership. M o r e t h a n J u a n P e r ó n himself, h o w e v e r , his wife E v a elicited fervent response a m o n g t h e A r g e n t i n e w o r k i n g m e n , descamisados a n d peones. Evita p r e s e n t e d a n i m a g e of benevolent sainthood to the workers she visited. H e r early d e a t h reinforced t h a t i m a g e . M e a n w h i l e , o p p o s e d by most of the civilian elite, P e r ó n w a s forced to rely on the military a n d the police to m a i n t a i n his absolutist control. P e r o n i s m was rooted in historical a n d social c o n d i t i o n s as well as s u p p o r t e d b y A r g e n t i n e c u l t u r a l t h e m e s . P e r ó n a r r i v e d on a scene of disillusionment a n d a p a t h y , w h e n t h e R a d i c a l s h a d failed to p r o v i d e effective l e a d e r s h i p for the o p p o n e n t s of Conservatism. H e was a m a s t e r at m a n i p u l a t i n g A r g e n t i n e factionalism, the opposition of porteño a n d provinciano, estanciero a n d descamisado, i n d u s t r y a n d a g r i c u l t u r e : the m u l t i p l e schisms t h a t cross-cut A r g e n t i n e society. F u r t h e r m o r e , in his n a t i o n a l i s m a n d a n t i - i m p e r i a l i s m Perón f o r m e d a union of diverse g r o u p s against the c o m m o n , external e n e m y . By carefully n u r t u r i n g Argentinismo, n a t i o n a l pride, he c r e a t e d a n e m o t i o n a l i m p e t u s t h a t sustained h i m t h r o u g h d a n g e r o u s financial straits. T o m a n y Argentines, he was an e n e m y of f r e e d o m ; to others he was their c h a m p i o n a n d protector. INDUSTRIALIZ ATION

H a n d i c a p p e d by lack of easily exploitable m i n e r a l resources or fuel, industrial d e v e l o p m e n t was slow to start in A r g e n t i n a . T h e prosperity of the last d e c a d e s of the n i n e t e e n t h c e n t u r y h a d l a u n c h e d some industries, b u t these were p r i m a r i l y c o n n e c t e d with processing foodstuffs a n d o t h e r p r o d u c t s of the a g r i c u l t u r a l - p a s t o r a l sector. A m o n g such p r o d u c t s w e r e yerba mate, the S o u t h A m e r i c a n native tea, a n d quebracho, e x t r a c t e d f r o m a C h a c o h a r d w o o d for t a n n i n g . But only salting a n d freezing

A R G E N T I N A : T H E COUNTRY AND T H E P E O P L E

19

of m e a t , the l a t t e r p r e d o m i n a n t l y a f t e r the i n t r o d u c tion of frigoríficos in the n i n e t e e n t h c e n t u r y , e m p l o y e d m a n y workers. I n 1895, 22,204 industrial establishments w e r e in existence, e m p l o y i n g some 145,650 persons. M o s t of these, h o w e v e r , w e r e not real factories. T h e r e w e r e o n l y 2,348 s t e a m - o p e r a t e d m a c h i n e s a n d 31,700 o t h e r m a c h i n e s in use. 2 4 I n d u s t r y was c o n c e n t r a t e d in the region of Buenos Aires. F r o m 1887 to 1895 Buenos Aires increased the n u m b e r of f o o d - p a c k i n g plants f r o m one to seven, a n d t h e n u m b e r of m a c h i n e shops f r o m o n e to eleven. O r t i z points o u t t h a t food-processing was p r i m a r i l y destined for E u r o p e a n m a r k e t s , a n d that i n d u s t r y relied on British coal for fuel. P r o x i m i t y to ports of exit a n d e n t r y h e n c e was i m p o r t a n t , a n d the c o n c e n t r a t i o n of p o p u l a t i o n in a n d n e a r the F e d e r a l C a p i t a l p r o v i d e d the necessary l a b o r force as well as the m a r k e t for the items p r o d u c e d for i n t e r n a l c o n s u m p t i o n . 2 5 F r o m 1899 to 1914 with a c u r r e n c y stabilized on t h e gold s t a n d a r d , the g o v e r n m e n t ' s c o m m e r c i a l policy cont i n u e d to f a v o r the a g r a r i a n sector. M u l t i l a t e r a l i s m a n d laissez faire d o m i n a t e d foreign t r a d e . U n c o n d i t i o n a l mostf a v o r e d - n a t i o n a g r e e m e n t s were in existence with G r e a t Britain a n d a n u m b e r of other countries, while t h e U n i t e d States, Chile, a n d o t h e r hemispheric c o m p e t i t o r s were p l a c e d o n a conditional tariff basis. F r o m 1910 to 1914 G r e a t Britain's share of the e x p o r t m a r k e t rose f r o m 22 per cent to 29 per cent, a n d British i m p o r t s in A r g e n t i n a rose f r o m 31 p e r cent to 34 per cent. G e r m a n y was second in t r a d e , with the U n i t e d States a close t h i r d . 2 6 24 G e o r g e W y t h e , Industry in Latin Amtrica, N e w York, C o l u m b i a U n i versity Press, 1945, p . 81. 25 O r t i z , Historia Económica, op. cit., v. I I , p p . 2 1 4 - 2 1 6 . 2 · Virgil S a l e r a , Exchange Control and the Argentine Market, N e w Y o r k , C o l u m b i a U n i v e r s i t y Press, 1941, p. 26.

20

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

A r g e n t i n a ' s e x t r e m e l y f a v o r a b l e b a l a n c e of t r a d e d u r i n g this p e r i o d was increased b y W o r l d W a r I. T h e E u r o p e a n belligerents w e r e d e s p e r a t e for A r g e n t i n a ' s foodstuffs. S h i p p i n g difficulties a n d w a r t i m e priorities, h o w e v e r , m e a n t a s h a r p decline in foreign exports to A r g e n t i n a . Before this t i m e the n a t i o n h a d b e e n almost c o m p l e t e l y d e p e n d e n t o n foreign m a n u f a c t u r e s . Loss of the s u p p l y was t h e first p o w e r f u l stimulus to local i n d u s t r i a l e x p a n sion. W a r t i m e prosperity considerably a p p r e c i a t e d t h e peso. A f t e r t h e armistice, the A r g e n t i n e peso g e n e r a l l y h a d a h i g h e r e x c h a n g e r a t e in relation to its gold v a l u e than any other major national currency. T h e 1914 census h a a given 48,779 " i n d u s t r i a l " e s t a b lishments of w h i c h 24,203, i n c l u d i n g mills a n d m e a t freezing plants, could be r a n k e d as factories. F o o d processing was still the m a j o r industry, b u t f o u n d r y p r o d u c t s a n d iron m a n u f a c t u r e s e m p l o y e d 23,141 workers. 2 7 W h i l e A r g e n t i n e i n d u s t r y was still closely g e a r e d to the a g r a r i a n sector, it h a d the p o t e n t i a l for g r e a t expansion in m a n u f a c t u r e d goods. O r g a n i z e d l a b o r , starting in the skilled crafts, g r e w w i t h industry. T h e first A r g e n t i n e union, one of typog r a p h e r s , was established in 1878 a n d struck for the first time in t h a t same year. As u n i o n i z a t i o n s p r e a d a m o n g the workers, its o r g a n i z a t i o n a n d aims were g r e a t l y i n f l u e n c e d by the r a d i c a l ideas of i m m i g r a n t s from E u r o p e . S p o r a d i c strikes a n d violence d u r i n g the first decades of the twentieth c e n t u r y c u l m i n a t e d in the " T r a g i c W e e k " of J a n u a r y 1918, w h e n over 700 workers w e r e killed in the course of repression. W h i l e Irigoyen's g o v e r n m e n t m o v e d against organized labor, the president saw at t h e s a m e t i m e t h a t reforms in w o r k i n g conditions w e r e n e e d e d . By d e c r e e , the w o r k i n g d a y was fixed at eight h o u r s a n d p l a n s for bett e r m e n t in wages w e r e at least s u b m i t t e d to t h e legislature. 27

W y t h e , Industry,

op. cit., p . 8 2 .

ARGENTINA : T H E COUNTRY AND T H E PEOPLE

21

T h r o u g h o u t m u c h of the twentieth century, Argentina's economy was largely developed by foreign investment. G r e a t Britain h a d taken an early lead and continued her interest in her principal source of beef and wheat. Railroads were a m a j o r area of British development, as they served to bring produce from the Pampas into the Atlantic ports. In 1923 British investors had put 1,115 million gold pesos into the railways and only 400 million into other private enterprises. 2 8 Aided by the rise of the automobile, the United States became an important source of imports in the twenties; by 1929, 26.3 per cent of Argentina's total had an American origin as opposed to only 17.6 per cent from Great Britain. Argentina's balance of trade with the United States, however, was usually unfavorable while Britain remained far a n d away the best customer for Argentine beef. In spite of this, the government adhered to multilateralism a n d extension of its most-favored-nation agreements until the economic reorganization of 1930. Argentine industrialists were oriented to American imports as sources of needed materials and machinery; the agrarian sector, on the other hand, continued its concern with exports to G r e a t Britain. 2 9 As we have seen, the crisis of 1930, when Argentina felt the impact of the world depression, had political repercussions. T h e new government instituted measures to combat the economic disaster, and one of these had i m p o r t a n t consequences for Argentine industry. T h e Exchange Control Commission was launched by decree on October 10, 1931, to set fixed limits on peso appreciation a n d depreciation. T h e Commission further had power to regulate permits for purchasing exchange according 29 Vernon Lovell Phelps, The International Economic Position of Argentina, Philadelphia, University of Pennsylvania Press, 1938, p. 108.

" Sclera, Exchange Control, op. cit., pp. 41-45.

22

E N T R E P R E N E U R S H I P IN A R G E N T I N E

CULTURE

to a priority system. In 1932, Argentina's balance of payments with the country to which the funds were to be transferred was declared a criterion for the granting of exchange permits. This developed into exchange discrimination in favor of Great Britain, and Argentina moved toward bilateralism. 3 0 After considerable pressure from Great Britain, and threats to swing to the dominions as sources of beef a n d grain, Argentina entered into the R o c a - R u n c i m a n Treaty of 1933, which guaranteed the level of Argentine beef exports, joint control of the order of allocation of sterling exchange, a n d tariff concessions on the part of Argentina. Already by 1932, 54 per cent of British exports to Argentina were duty-free as opposed to 12 per cent for G e r m a n y , the next highest, but further downgrading in favor of British specialities was called for. I n 1935, the Central Bank decreed an exchange surcharge of 20 per cent over the official selling rate for imports which lacked prior exchange permits. In spite of the advantages given to British imports m a n y buyers of machinery favored United States products. Virgil Salera writes: I t is k n o w n t h a t the t e c h n i c a l m e n in s o m e of the G o v e r n m e n t D e p a r t m e n t s a n d a g e n c i e s . . . will f r e q u e n t l y d r a w u p specifications such t h a t only A m e r i c a n firms a r e a b l e to s u p p l y t h e i t e m in q u e s t i o n , so m a r k e d is the s u p e r i o r i t y of m a n y types of A m e r i c a n e q u i p m e n t . I n most cases of this sort, h o w e v e r , the n o n - t e c h n i c a l , p o l i t i c a l l y - m i n d e d super i o r s will o v e r r u l e t h e t e c h n i c i a n s by the s i m p l e e x p e d i e n t of p e r m i t t i n g b i d d i n g f r o m firms p r o d u c i n g s u b s t a n t i a l l y identical goods.31

Despite the continuation of economic policies oriented toward British trade, Argentine industry prospered in the 30

Ibid., pp. 57-60.

31

Ibid.,

p . 122.

ARGENTINA: THE COUNTRY AND THE PEOPLE

23

thirties. T h e domestic m a r k e t for m a n u f a c t u r e s rapidly e x p a n d e d . A n o t h e r contributing factor was active governm e n t e n c o u r a g e m e n t of private investment of A r g e n t i n e c a p i t a l . I n 1936 occurred the first public financing of a m a n u f a c t u r i n g establishment in A r g e n t i n a , a 3-millionpeso issue of d e b e n t u r e s for the Talleres Metalúrgicos S a n M a r t i n , S.A. ( T . A . M . E . T . ) . By this time, G e o r g e W y t h e estimates thai from 60 to 65 per cent of the aggregate industrial capital was owned by Argentines. Utilities a n d t r a n s p o r t a t i o n lines were still heavily foreigncontrolled, b u t metal m a n u f a c t u r e s were d o m i n a t e d by local capital. 3 2 F r o m 1935 to 1941, g r o w t h (see T a b l e 2).

industry

experienced

steady

TABLE 2 INDUSTRIAL STATISTICS SUMMARY* 1935

Number of establishments Workers

1937

1939

1941

40,606

49,375

53,927

57,940

474,420

582,934

622,064

733,968

(Data in Millions of Pesos) Raw materials used Value of production Value added by manufacture

1,964

2,881

3,002

3,851

3,458

4,709

5,127

6,337

1,377

1,686

1,955

2,220

* Source: Wvthc,

Industry,

op. cit.,

p. 85.

I n 1939, foodstuffs, beverages, a n d tobacco together f o r m e d the largest industrial bloc in the n u m b e r of employees a n d value of production, with textiles in second place. H o w e v e r , m a c h i n e r y a n d vehicles r a n k e d third, 3

- W y t h e , Industry, op. cit., p . 93.

24

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

followed by metals a n d manufactures. Argentina's traditional character as a pre-eminently agrarian nation was undergoing significant change. 3 3 All m a j o r railroad lines converged on Buenos Aires, insuring the continued concentration of industry. In 1930, the city contained 30 per cent of the nation's plants a n d 44 per cent of its workers while the province of Buenos Aires accounted for another 30 per cent of establishments and 26 per cent of the industrial labor force. 34 By 1935, the city h a d increased its percentage of factories to 32 per cent a n d that of workers to 47 per cent, a n d was accounting for 43.3 per cent of the nation's industrial production. 3 5 As discussed in more detail in C h a p t e r V I , World W a r I I h a d far-reaching effects on Argentine industry. By the end of the thirties, events in Europe were choking off Argentina's imports from that continent, a n d the government was forced to review its policy of discrimination against American goods. Restrictions were removed for m a n y categories. However, Salera points out that: . . . t h e categories with r e g a r d to which U n i t e d States importers w e r e placed on a basis of equality as of M a r c h 1940 w e r e selected solely because of the inability of Europ e a n shippers to h a n d l e A r g e n t i n e orders. W h e n e v e r delivery g u a r a n t e e s f r o m these shippers were d e e m e d adeq u a t e , the A r g e n t i n e authorities evinced no hesitation in e m b a r g o i n g or subjecting U n i t e d States m e r c h a n d i s e to q u a n t i t a t i v e restrictions. 3 6

T h e U n i t e d States government, on the other h a n d , was becoming increasingly disturbed in the early forties over Argentina's failure to join the active hemispheric stand 33

Ibid.,

p . 102.

M

Ibid.,

pp. 111-113.

3i

O r t i z , Historia Económica, op. cit., v . I I , 1955, p . 2 2 9 .

M

S a l e r a , Exchange Control, op. cit., p . 2 2 6 .

ARGENTINA: THE COUNTRY AND THE PEOPLE

25

against the Axis. Neutrality h a d not been resented in World W a r I, but in the shrinking world of the second global conflict the United States w a n t e d Western solidarity. T h e policies of the Castillo regime were viewed with open distrust by American leaders. W h e n the U n i t e d States established a priority schedule for export licenses that placed Argentina far down the list, Di Telia a n d m a n y other Argentine industrialists felt thè pinch. T o a certain extent, curtailment of the foreign supply of materials and parts was a spur to local diversification and stop-gap production of substitutes, but some needs could not be filled. T h e most serious deficits were in minerals a n d fuel. By 1945, only the oil fields of the state-controlled Yacimientos Petrolíferos Fiscales were producing sizable quantities of fuel. T h e r e was no local commercial production of coal, and only 35,000 hydroelectric horsepower of a potential five million had been developed. I m p o r t e d coal was used for the steam turbines at the large u r b a n industrial centers that generated 60 per cent of the total energy output. Remotely situated, low-grade deposits of iron ore h a d prevented an active primary iron a n d steel industry, the large foundries with the exception of T . A . M . E . T . being often subsidiaries of transport lines. 37 Argentine industry was heavily d e p e n d e n t on foreign m a d e parts for machinery. I m p o r t s from the U n i t e d States had been particularly important. Despite pressure exerted on the government to better relations with this vital source, Argentina did not come out against the Axis until very late in the war. Industry h a d not yet succeeded to the agrarian sector's d o m i n a n t political role. T h e Perón regime represented only the next stage in a trend toward State intervention and industrial p l a n n i n g that h a d been initiated in the past. Since the founding 37

Wythe, Industry, op. cit., pp. 87-89, 109.

26

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

of Yacimientos Petrolíferos Fiscales, in 1923, the government had shown increasing interest in taking over the fuel, transport, and communications sectors and in assuming responsibility for national economic stability. T h e economic liberalism of the nineteenth century was gone forever. Perón tightened his control over the economy by a number of specific programs included in the two Planes íQuinquenales (Five Year Plans), some of which are given in Chapter V I . Whitaker has quoted provisions of Articles 38 and 39 of the new Constitution of 1949 as containing the essence of Perón's economic policy: Private property has a social function, and, as a consequence, it shall be subject to the obligations which the law may establish for the common good. . . . Importing and exporting . . . shall be in the hands of the state. . . . [Otherwise] all economic activity shall be organized in accordance with free private enterprise, provided that it does not . . . aim to dominate Argentine markets, eliminate competition, or increase profits usuriously. Minerals, waterfalls, deposits of petroleum, coal and gas, and other natural sources of energy . . . belong ab initio to the state, and in no event may they be alienated or ceded for their operation. Those which are in private possession shall be transferred to the state, by means of purchase or expropriation with prior indemnity, when such is determined by a national law. 38 Perón p u t his plans into action t h r o u g h the creation of state monopolies a n d s e m i g o v e r n m e n t a l mixed companies in cooperation with p r i v a t e capital. 3 9 T h e effects of his c r a s h - p r o g r a m of industrialization m a y be seen f r o m T a b l e 3. A l t h o u g h postwar p r o d u c t i o n increased until 1948, Perón was u n a b l e to stimulate n e e d e d g r o w t h in iron, steel, fuel, a n d power p r o d u c t i o n . T h e 200,000 tons of 38

Whitaker, Argentina, op.cit., p. 1 7! *. 39 Ibid., p. 179.

ARGENTINA: THE COUNTRY AND THE PEOPLE

27

iron a n d steel p r o d u c e d in 1952 4 0 did not represent a significant increase over 1945. T h e a m o u n t was in a n y case insufficient for the industrial d e m a n d . TABLE

3

GROSS PRODUCTS, ARGENTINA,

1945-1952*

(In thousands of millions of pesos at 1950 prices) All Year activities

Agriculturalpastoral

Manufacturing

Other activities

1945

41.2

9.5

9.0

22.7

1946

47.6

12.3

10.8

24.5

1947

55.8

12.1

12.7

31.0

1948

62.3

12.3

14.0

36.0

1949

60.9

11.0

14.2

35.7

1950

53.6

9.7

12.6

31.3

1951

54.0

8.2

13.0

32.8

1952

49.3

6.0

12.5

30.8

* Source: W h i t a k e r , Argentina, op. cit., p. 182.

By 1946 the n u m b e r of industrial establishments h a d increased to 86,440. O f the total 27.9 p e r cent were still small shops, e m p l o y i n g less t h a n ten workers. Seventy-two p e r cent of the total o u t p u t was being accomplished by middle-sized establishments, employing eleven to 500 workers. But the large factories, only 0.4 per cent of the total, a c c o u n t e d for 23.7 per cent of the n a t i o n ' s p r o d u c tion. T h e era h a d seen the rise of the sociedad anónima or stockholding c o m p a n y . W h i l e only 3.3 p e r cent of the n a t i o n ' s industrial establishments fell into this category in 1946, they were a l r e a d y e m p l o y i n g 35.5 p e r cent of the l a b o r force a n d p r o d u c i n g 45.2 p e r cent of the total. 4 1 Ibid., p. 189. José M a n u e l Saravia, Argentina 1959, p. 73. 41

1959, Buenos Aires, Del Atlántico,

28

E N T R E P R E N E Z ' R S H I P IN A R G E N T I N E C U L T U R E

T h e trend toward industrial centralization a r o u n d B u e n o s A i r e s w a s reversed in t h e l a t t e r p a r t of t h e P e r ó n r e g i m e , p a r t l y f r o m industrialists' desire to e s c a p e t h e m e t r o p o l i t a n u n i o n s . I n 1946, 58.6 p e r c e n t of t h e i n d u s t r i a l e s t a b l i s h m e n t s w e r e l o c a t e d in t h e city a n d p r o v i n c e of B u e n o s A i r e s ; these e m p l o y e d 68.8 p e r c e n t of t h e n a t i o n ' s w o r k e r s a n d a c c o u n t e d for 73.5 p e r c e n t of national p r o d u c t i o n . This represents a m a r k e d increase o v e r t h e 1935 figures. By 1954, h o w e v e r , t h e p e r c e n t a g e s of f a c t o r i e s a n d w o r k e r s e m p l o y e d in t h e f e d e r a l c a p i t a l a n d B u e n o s Aires P r o v i n c e h a d d r o p p e d to 56.1 p e r c e n t a n d 64.8 p e r cent, respectively.42 A g r i c u l t u r e s u f f e r e d d u r i n g t h e first p a r t of P e r ó n ' s r e g i m e a l t h o u g h t h e n a t i o n a l e c o n o m y as a w h o l e w a s e n j o y i n g a b o o m . W i t h t h e onset of e c o n o m i c difficulties in t h e fifties, P e r ó n , as w e h a v e seen, w a s f o r c e d t o m o d i f y his p r o g r a m s s o m e w h a t . T h e i n e q u a l i t y b e t w e e n d i f f e r e n t e c o n o m i c sectors, h o w e v e r , is a n o l d p a t t e r n in A r g e n t i n a . S a r a v i a goes so f a r as to s a y : . . . The marked discrepancies which can be observed between the process of evolution of the primary, secondary and tertiary sectors, and the resulting disequilibrium in the distribution of economic power, are the source of the greatest economic-social tension, and one of the great factors of instability in Argentine society. 43 P e r ó n ' s a m b i t i o u s p r o g r a m s of social w e l f a r e a n d i m p r o v e m e n t of l a b o r c o n d i t i o n s e n d e a r e d h i m to t h e h e a r t s of his descamisados, b u t w e r e u n d e r s t a n d a b l y u n p o p u l a r with the landowners a n d industrialists. N o n e theless, t h e p r o g r a m s i n a u g u r a t e d a n e w e r a in A r g e n tine industrial p l a n n i n g ; workers would never again be c o n t e n t w i t h a lack of voice in d e t e r m i n i n g t h e i r r e l a t i o n s with management. « Hid., p. 76. Saravia, Argentina, op. cit., p. 73.

u

A R G E N T I N A : THE COUNTRY AND T H E P E O P L E

29

The large postwar exchange surplus that Perón used for repatriation of the national debt and the purchase of foreign-owned railroads and utilities had been exhausted. Under President Arturo Frondizi's "austerity r e g i m e , " which succeeded that of Perón, friendly relations with the United States were restored and Argentina moved toward economic recovery. Improvements in the development of mineral production augered well for future industrial expansion. Hopes were high for returns from the new coal mining industry, especially from the El Turbio fields at the tip of Patagonia in Santa Cruz Province. 44 By 1960 oil production was rising rapidly toward a level that would eliminate importation, and thus check one of the heaviest drains on foreign exchange. T H E C H A N G I N G F A C E OF A R G E N T I N A

Argentina's social structure has undergone significant changes during the last decades. The political and economic developments important for Torcuato Di Telia's career have, in turn, to be seen in the light of population shifts, changes in class structure, and above all Argentine attitudes. Argentina's population grew from 3,954,911 in 1895 to an estimated 20,255,600 in 1957. The period of the highest rate of growth was from 1895 to 1914, when the population doubled in nineteen years. 4 5 During the latter part of the nineteenth century and the first half of the twentieth (see Table 4) this great surge of population became increasingly concentrated in urban areas. From 1952 to 1957, the population of Gran Buenos Aires increased from 5,173,000 to an estimated 4 6 9,064,300. DcFelippc, Geografia Economica, op. cit., pp. 149, 189, 203. Germani, Estructura Social, op.cit., p. 21. " Ibid., p. 74.

44

44

30

E N T R E P R E N E U R S H I P IN A R G E N T I N E TABLE POPULATION

CULTURE

4 TRENDS*

Year

Urban

Rural

Per cent urban

Per cent rural

1869 1895 1914 1947

492,600 1,488,200 4,152,400 9,932,100

1,244,300 2,466,700 3,727,900 5,961,700

28 37 53 62

72 63 47 38

* Source: Germani, Estructura Social, op. cit., p. 68.

W h a t factors account for this population growth a n d the extreme urbanization that Argentina has u n d e r g o n e ? Large-scale immigration began, as already noted, in the nineteenth century. In proportion to population Argentina has received more immigrants than any other country. 4 7 T h e peak of immigration was reached in the decade 1901-1910, when 1,120,200 people arrived in Argentina. A sharp decline during World W r ar I was followed by another rise in succeeding years until checked by the depression of the thirties. 4 8 After 1930, the government stopped encouraging mass ipimigration and initiated a restrictive policy. 4 9 Nevertheless, after World W a r I I the inflow of immigrants again became large. T h e percentage of Argentines who were foreign-born declined from 29.9 per cent in 1914 to 15.1 per cent in 1954, but today probably 90 per cent of the Argentine population traces its descent from immigrants who arrived in the country after I860. 5 0 T h e Italians continued their lead in immigration. With the "closing of the frontier" by the twentieth century, many immigrants, 47

Whitaker, Argentina, op. cit.. p. 41. Germani, Estructura Social, op. cit., p. 82. 49 Wythe, Industry, op. cit., p. 79. 50 Germani, Estructura Social, op. cit., p. 81, and Taylor, Rural Life in Argentina, op. cit., 1948, p. 88. 48

A R G E N T I N A : T H E C O U N T R Y AND T H E P E O P L E

31

s u c h as t h e D i T e l i a f a m i l y , p r e f e r r e d city life to t e n a n t or p e o n s t a t u s o n t h e l a n d . I n 1947, 8 3 p e r c e n t of A r g e n t i n a ' s f o r e i g n - b o r n w e r e l o e a t e d in G r a n B u e n o s Aires and the eastern coastal area.51 T w e n t i e t h - c e n t u r y i m m i g r a n t s b r o u g h t new ideologies to A r g e n t i n a . M u c h of t h e r a t i o n a l e b e h i n d l a b o r a g i t a tion was s u p p l i e d by a d v o c a t e s of a n a r c h i s m , socialism, or c o m m u n i s m , c a p i t a l i z i n g o n t h e v e r y r e a l n e e d for r e f o r m . M i d d l e - a n d u p p e r - c l a s s n a t i o n a l i s t s in t h e t h i r t i e s a n d forties w e r e p r o f o u n d l y i n f l u e n c e d b y t h e elitist p h i l o s o p h y of I t a l y ' s M u s s o l i n i a n d o t h e r E u r o p e a n fascists. M a n y of t h e i m m i g r a n t s w h o h a d c o m e to e s c a p e f r o m E u r o p e ' s i d e o l o g i c a l struggles w e r e d i s t u r b e d to find these m o v e m e n t s b e c o m i n g a l m o s t e q u a l l y i m p o r t a n t in A r g e n t i n a . I n t e r n a l m i g r a t i o n , t h e d e p o p u l a t i o n of t h e I n t e r i o r , a c c o m p a n i e d t h e rise of i n d u s t r i a l i s m . B u e n o s A i r e s ' p o p u l a t i o n g r o w t h (see T a b l e 5) was v e r y l a r g e l y d u e to this e x o d u s f r o m t h e r u r a l a r e a s : TABLE COMPOSITION

OF G R E A T E R

5

BUENOS AIRES

POPULATION*

(in percentages) Born

in

Year

Buenos Aires

Internal migrants

Foreignborn

1936 1943 1947

49 44 40

16 28 37

35 28 23

* S o u r c e : Germani,

Estructura

Social, op. cit., p . 77.

T h e e x p a n s i o n of t h e g r a i n b e l t t o w a r d t h e e n d of the n i n e t e e n t h c e n t u r y h a d m o v e d t h e c e n t e r of p o p u l a t i o n to t h e e a s t e r n p a m p a s a n d t h e L i t o r a l . O r t i z a t t r i b u t e s S1

Ibid.,

p. 63.

32

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

twentieth-century movement to the great improvements in agricultural technology, which lessened the job opportunities for the rural population. With the end of land expansion, the rural population could not be absorbed at its rate of increase. Perón encouraged internal migration perhaps more for political support than for rapid industrialization. Northwestern Argentina became another important source of urban population growth. The rhythm of work in rural districts here necessitated seasonal labor, which was ensured by a high degree of control and exploitation of the local population. Labor-management relations on the farms seem to have been characterized by strain and social distance, which precluded loyalty or recognition of mutual benefit. Workers moving from this plantation system into the urban centers carried with them the image of the employer as fair game for deception and retaliatory acts. To these descamisados, Perón was a champion, a new caudillo. This attitude was less marked among workers from the estancias of central Argentina where the job hierarchy was more personalized and individual dignidad had some recognition. However, the frustrated, independent small farmers who were forced to seek urban employment posed another problem for industrial relations. 52 Industrialization had profound effects on the traditional hierarchical class structure of Argentine society. Among the most significant trends was the merging of the "two Argentinas." Perhaps Perón's most lasting contribution to his country was the accelerated breakdown of the isolation of the poor rural campesinos. The new proletariat emerging in the urban areas was a heterogeneous one: established urbanités mingled with newcomers from the Interior and immigrants from abroad. Communication 52

O r t i z , Historia

Económica,

op. cil.,

v . I I , p. 222.

ARGENTINA: T H E COUNTRY AND T H E PEOPLE

33

between r e p r e s e n t a t i v e s of the lower socio e c o n o m i c strata, r u r a l a n d u r b a n , was possible as it h a d n e v e r b e e n before. I f t h e r e c e n t d e c e n t r a l i z a t i o n of i n d u s t r y b e c o m e s a n i m p o r t a n t t r e n d , u r b a n ideas s h o u l d in t u r n flow o u t to the r u r a l areas. As i n d u s t r i a l i s m g r e w , the m e t r o p o l i t a n elite of old estanciero families w e r e forced to recognize t h e p o w e r of some of t h e n e w industrialists. S u c h e n t r e p r e n e u r s as Di T e l i a , w i t h i n t e r n a t i o n a l business c o n n e c t i o n s and interests in a r t or l e a r n i n g , w o n some a c c e p t a n c e in aristocratic social circles a n d increasing c h a n c e s for political a c t i o n . T h o s e w h o , like Di T e l i a , c o u l d i d e n t i f y with the intelligentsia e n d e d n e a r t h e top of Buenos Aires society. P e r ó n ' s e m p h a s i s o n i n d u s t r i a l i z a t i o n was prim a r i l y g e a r e d t o w a r d w o r k e r benefit, b u t in b r e a k i n g t h e p o w e r of the l a n d - h o l d i n g interests in A r g e n t i n e politics in the forties h e p a v e d the w a y for a new, m o r e b a l a n c e d class s t r u c t u r e . T h r o u g h o u t m u c h of the t w e n t i e t h c e n t u r y , h o w e v e r , the g a p b e t w e e n r u r a l a n d u r b a n m i d d l e classes r e m a i n e d wide. A c c o r d i n g to T a y l o r , small f a r m e r s in the thirties retained a c o n s i d e r a b l e a m o u n t of isolation f r o m the life of the cities a n d f r o m the o t h e r r u r a l classes. F e w subscribed to n e w s p a p e r s or h a d extensive dealings w i t h u r b a n business. I n the r u r a l U n i t e d States, i n n u m e r a b l e small towns a r e c o m m u n i t y centers of t h e i r t r a d i n g areas. A r g e n t i n e f a r m e r s m a d e occasional business trips to the few s c a t t e r e d cities, b u t d i d n o t i d e n t i f y w i t h u r b a n activities. T h e r e was little social c o n t a c t b e t w e e n migratory peons and the tenant farmers who employed t h e m . U s e of m i g r a t o r y workers also p r e c l u d e d the d e v e l o p m e n t of n e i g h b o r h o o d spirit. 5 3 T h i s isolation was b e g i n n i n g to b r e a k d o w n in the fifties. A r g e n t i n e f a r m e r s w e r e p a r t i c i p a t i n g m o r e actively 5S

Taylor, Rural Life in Argentina, op. cit., pp. 265, 292.

34

E N T R E P R E N E U R S H I P IN ARGENTINE C U L T U R E

in n a t i o n a l politics, a n d the channels of diffusion of u r b a n c u l t u r e w e r e o p e r a t i n g m u c h m o r e effectively. A m o n g these c h a n n e l s were radio, newspapers a n d m a g a z i n e s , visits by salesmen, a n d travel by a u t o m o b i l e , bus, t r a i n , or even a i r p l a n e . T h e n a t i o n ' s u n i f o r m e d u c a t i o n a l system was also p r o d u c i n g results. Literacy h a d i n c r e a s e d m a r k e d l y d u r i n g the twentieth c e n t u r y , f r o m 46.5 p e r cent of the p o p u l a t i o n fourteen years of age a n d older in 1895 to 86.4 p e r cent in 1947. 54 Even m o r e i m p o r t a n t , A r g e n t i n e children were going b e y o n d a few years of e l e m e n t a r y school e d u c a t i o n to finish t r a i n i n g in t h e s e c o n d a r y schools. Both u r b a n a n d r u r a l c h i l d r e n l e a r n e d the s a m e lessons a b o u t their c o u n t r y ; provincianos b e c a m e a w a r e of the opportunities of the metropolis. T h e r e was e m e r g i n g a new generation of A r g e n t i n e s m o r e u n i t e d culturally a n d socially t h a n ever before. N a t i o n a l i s m was a n o t h e r i m p o r t a n t u n i f y i n g f a c t o r . A r g e n t i n e s h a d always taken pride in the p h r a s e "Soy Argentino" (I a m A r g e n t i n e ) , but in most contexts regional a n d class interests, as we have seen, h a d t a k e n p r e c e d e n c e . I n the twentieth century, literary figures c r e a t e d t h e " g a u c h o r e a c t i o n , " a r o m a n t i c idealized h a r k e n i n g b a c k to the glory of life on the p a m p a . School c h i l d r e n e v e r y w h e r e r e a d the great g a u c h o epic, Martin Fierro. O p p o s i t i o n to the economic d o m i n a t i o n of British interests a n d " Y a n q u i imperialismo" smoldered a n d flared u p in the h e y d a y of the Perón era. Perón himself d e l i b e r a t e l y fostered the glorification of A r g e n t i n a ' s past a n d a belief in h e r right to i n d e p e n d e n c e a n d even h e g e m o n y in L a t i n A m e r i c a . I n 1952, Perón proclaimed the " D a y of T r a d i t i o n . " G o v e r n m e n t policy was expressed as a desire t o : . . . protect the world of the national spirit, g u a r d i n g it from exotic influences. W e will keep alive our n a t i v e music 54

G e r m a n i , Estructura Social, op. cit., p . 231.

A R G E N T I N A : T H E COUNTRY AND T H E P E O P L E

35

and primitive dances, the vivid representatives of our past, reminding us of our native genius, our respect for the family, our cult of courage, the beauty of popular poetry and our vernacular idiom. 55 By the l a t e fifties, A r g e n t i n e nationalism h a d lost most of its violent t e n o r of reaction as the weaknesses in P e r ó n ' s policies w e r e realized. T o c h a r a c t e r i z e A r g e n t i n a as a unified c o u n t r y , h o w ever, is to lose sight of schism between Buenos Aires a n d the I n t e r i o r . P e r ó n shrewdly exploited this ; indeed, P e n d l e sees factionalism as a m a j o r tool by which the d i c t a t o r maintained power: . . . justicialismo . . . was useful as a standard vindication of Perón's habit of playing off one section of the community against another in turn >r example, the descamisados and the industrialists against the landowning ''oligarchy" and army officers; the general public against the industrialists, merchants, and shopkeepers; and l a t e r . . . the employers against the workers. 5 6

M u c h of the u n d e r l y i n g basis for A r g e n t i n e factionalism is to be f o u n d in w h a t observers h a v e c h a r a c t e r i z e d as the e x t r e m e i n d i v i d u a l i s m of the people. Argentines a r e not only c o n v i n c e d of the high value of Argentinismo, b u t also of t h e i n a l i e n a b l e w o r t h of each person's dignidad. F u r t h e r m o r e , e a c h m a n cherishes his right to selfexpression in o p p o s i t i o n to others. O n e t h o u g h t f u l A r g e n tine, H . A. M u r e n a , fears t h a t his c o u n t r y ' s p e r p e t u a l crisis is r o o t e d in a basic lack of cohesion : . . . the problem is precisely the lack of community. . . . There is no community in Argentina. . . . We do not form a body, though we may form a conglomeration. We behave as if each one were unique and as if he were alone. . . . 55 5

H a n k e , South America, op. cit., p . 6 4 . « P e n d l e , Argentina, op.cit., p p . 1 0 7 - 1 0 8 .

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Instead of life, Argentina has rancorous, factious chaos, periodically illuminated by coups d'etat. It is not an organism of which all feel themselves a part. Each organ believes itself the whole, and functions as if it were more important than the whole. . . . 57

This tendency toward relatively unstructured fission is perhaps a generic Latin American trait. In Argentina it is so deeply bound up with attitudes and values that it appears to transcend and find new expression with population shifts, economic change, and political trends. 47

Hanke, South America, op. cil., p. 161.

CHAPTER II

AN ITALIAN FAMILY IMMIGRATES TO ARGENTINA

T O R C U A T O DI T E L L A WAS A MAN W H O

HAD THE

DRIVE TO

be his own boss; in Carnegie's words, to begin a company of his own and "plunge into and toss upon the waves of human affairs without a life-preserver in the shape of a salary." 1 FAMILY B A C K G R O U N D

Di Telia's career had its beginning in the mountains of Abruzzo, Italy, a rugged land where terrain and climate limit agricultural productivity. The regional economy is based on sheepherding and the textile industry. Abruzzo is a proud land, where cultural traditions from northern and southern Italy have met and blended to produce a unique local flavor. This was the setting into which Torcuato Di Telia was born, on May* 15, 1892 in the town of Capracotta in the province of Campobasso. Torcuato's father, Nicolás, appears to have been overshadowed by his forceful brother Salvador. Salvador had been educated in a monastery and left at the outbreak of 1 William Miller (ed.), Men in Business, C a m b r i d g e , H a r v a r d University P r e » , 1952, p. 289.

37

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E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

civil war to join Garibaldi's army in the north. Garibaldi's forces stood against the Church and the landed gentry. W h e n Salvador returned after ten years of service in northern Italy his advocacy of radical reform drew fire f r o m Abruzzo's powerful land-holding interests. T h e position of the entire family was affected. It is held by the family that a grain mill into which the Di Tellas a n d certain friends had sunk their capital was ruined by the hostility of the landholders, and the Di Tellas were left with emigration as their only recourse. T h e family had been aware of the possibilities of a new life in Argentina. Nicolás's cousin, Cesario Di Telia, h a d migrated there earlier. His reports on its opportunities, together with the general popularity of Argentina among Italians, were finally decisive. T h e brothers had intended to purchase land with their remaining capital. W h e n they arrived in 1895, however, the best acreage was already in the hands of large landlords (latifundistas). 2 Salvador and Nicolás Di Telia, accordingly, relinquished their original plans and started a business in tobacco processing. For unknown reasons the business failed and Nicolás became very ill. Homesick and discouraged, he and his family returned to Italy where he hoped to find better medical attention. Shortly after his return, however, Nicolás died. His children came under Salvador's supervision, in accordance with the traditional system of the Italian extended family. Salvador still believed that p e r m a n e n t residence in Argentina was the family's best hope, and in 1905 the Di Tellas were resettled in Buenos Aires. 2 G u i d o D i T e l i a a n d M a n u e l Z v m e l m a n , Hisloty of the Economic Development of Argentina, 1880-1955, P h . D . Dissertation, Massachusetts Institute of T e c h n o l o g y , C a m b r i d g e , M a s s . ( M i m e o g r a p h 1958), p . 3 6 . T h e p o w e r f u l c e n t r a l i z e d g o v e r n m e n t h a d i n a u g u r a t e d a n a g r i c u l t u r a l l y o r i e n t e d econ o m i c policy t h r o u g h w h i c h , by 1895, m o s t of t h e u s a b l e l a n d w a s a l r e a d y o w n e d . . . " a i d e d by a t r e m e n d o u s inflow of foreign c a p i t a ] , a n d b y t h e large migratory movement that peopled the country."

AN I T A L I A N F A M I L Y I M M I G R A T E S T O A R G E N T I N A

39

T o r c u a t o was t h e n t h i r t e e n years o l d , a n d h a d b e e n a t t e n d i n g I t a l i a n schools r e g u l a r l y . H e c o n t i n u e d his secondary e d u c a t i o n in A r g e n t i n a u n d e r the t u t e l a g e of his w e l l - e d u c a t e d uncle. W h e n T o r c u a t o ' s m o t h e r d i e d three years l a t e r S a l v a d o r a s s u m e d full responsibility for the boy a n d his t h r e e sisters. As h e a d of the family, h e carefully p r e s e r v e d I t a l i a n speech a n d t r a d i t i o n s so t h a t the c h i l d r e n b e c a m e fluent in two l a n g u a g e s .

E A R L Y BUSINESS A C T I V I T I E S

T o r c u a t o a n d his sisters w e r e e x p e c t e d to h e l p s u p p o r t the family, a n d a t the age of f o u r t e e n T o r c u a t o took his first j o b with a salary of t w e n t y - e i g h t pesos p e r m o n t h in a small, d o w n t o w n Buenos Aires shop. H o w e v e r , his uncle felt t h a t the d e m a n d s w e r e excessive for his a g e a n d advised h i m to q u i t . I n 1906 his u n c l e signed a d o c u m e n t p e r m i t t i n g T o r c u a t o to w o r k in the Banco Italiano but this lasted as a f u l l - t i m e j o b for o n l y t h r e e m o n t h s . W h i l e still d o i n g some work for the b a n k , T o r c u a t o f o u n d a n o p p o r t u n i t y for a d d i t i o n a l e m p l o y m e n t in a b r o k e r a g e firm r u n by a n I t a l i a n i m m i g r a n t , Alfredo Allegrucci. I n the n e w position T o r c u a t o l e a r n e d the p r o b l e m s of the i m p o r t - e x p o r t business, a n d in d o i n g so, the needs a n d p o t e n t i a l s of the A r g e n t i n e m a r k e t . Alfredo Allegrucci h a d a y o u n g e r b r o t h e r , G u i d o , w h o was a m e c h a n i c interested in i m p r o v i n g the c u r r e n t d o u g h - k n e a d i n g t e c h n o l o g y for bakeries. T h e a c q u a i n t ance with G u i d o , t o g e t h e r w i t h the e x p e r i e n c e g a i n e d in the b r o k e r a g e firm, was to s h a p e the course of T o r c u a t o ' s life. G u i d o was highly impressed w i t h y o u n g T o r c u a t o , w h o m he d e s c r i b e d a s : A neat young person, intelligent, a steady worker, eager to improve himself financially and intellectually. Torcuato took advantage of the situation and learned while working

40

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

part-time for the bank and the brokerage office during the day and by attending classes at night. 3 T h e y o u n g e r Allegrucci, therefore, was n o t too surprised w h e n , early o n e S u n d a y m o r n i n g in 1910, T o r c u a t o asked, " C a n y o u b u i l d a b r e a d - k n e a d i n g m a c h i n e w h i c h will be b e t t e r t h a n the i m p o r t e d o n e s ? " 4 H e h a d s t u d i e d t h e m a r k e t , a n d h a d c a l c u l a t e d t h a t because of a m u n i c i p a l o r d i n a n c e ρ o h i b i t i n g t h e h a n d k n e a d i n g of d o u g h , Buenos Aires could use 700 m i x i n g m a c h i n e s i m m e d i a t e l y . If t h e I n t e r i o r of t h e r e p u b l i c a d o p t e d the s a m e regulation, t h e r e w o u l d b e a d e m a n d for a n a d d i t i o n a l 5,000. I m p o r t e d m a c h i n e s w e r e m o r e efficient t h a n a n y prod u c e d in A r g e n t i n a at t h a t time, b u t T o r c u a t o , with c r e a t i v e insight, a r g u e d t h a t a m o d e l superior to either c o u l d b e d e v e l o p e d . T h e t e c h n i c a l aspects w e r e convincing to G u i d o , a n d T o r c u a t o p u r s u a d e d the b r o t h e r s to p u t u p t h e c a p i t a l for a business p a r t n e r s h i p f o r m e d by t h e two Allegruccis a n d himself. T h e final decision to p r o d u c e a m a c h i n e for t h e eighteen-year-old e n t r e p r e n e u r was the f u l f i l l m e n t of T o r c u a t o ' s d r e a m s ; he was l a u n c h ing his o w n business c a r e e r . Di T e l i a ' s y o u t h m a y seem surprising, b u t in those days, w h e n higher e d u c a t i o n was r a r e , a n e i g h t e e n - y e a r - o l d was a l r e a d y a m a n . A n old g a r a g e was r e n t e d at 121 R i o j a Street on D e c e m b e r 27, 1910 a n d G u i d o Allegrucci b e g a n m a k i n g m a c h i n e s . T h e n e w m o d e l b e c a m e k n o w n in the m a r k e t t h r o u g h its long m i x i n g t r o u g h , w h i c h left p a r t s of the d o u g h resting for a few m i n u t e s while the large mixers m o v e d f r o m o n e e n d to the o t h e r . W i t h this f e a t u r e the m a c h i n e was p a t e n t e d u n d e r the a b b r e v i a t i o n of S . I . A . M . (Sección Industria Amasadoras Mecánicas) in the y e a r 1911. 5 T h e c a p i t a l of the p a r t n e r s h i p a m o u n t e d to 10,000 s

Allegrucci's manuscript, company files. José A. Gilli, Torcuato Di Telia, Vida, Ideas y obra de un Pionero Industrial, 1958 (ms.). • Catalog brochure issued July, 1911. 4

AN I T A L I A N FAMILY I M M I G R A T E S T O A R G E N T I N A

41

pesos,® 5,000 of which the Allegruccis p u t up in their own name. T h e remaining 5,000 was in Di Telia's n a m e , although it had been lent to him by the brothers. No fixed price was attached to the machines at first since sales depended on personal contacts a n d bargaining with individual purchasers, but 1,650 pesos may be given as a general base line. Before the success of the first machine had been proved, Di Telia spent 400 pesos to advertise the product in the weekly baker's trade j o u r n a l . T h e results justified his calculations, and agreeably surprised the Allegruccis. I n fact, the rate of growth soon o u t r a n the limited facilities for production. When T o r c u a t o returned from a nine-day trip to the Interior of the republic with an order for nine machines to be delivered at a specific date, the Allegruccis with some misgivings agreed to hire fifteen new employees. These first steps in T o r c u a t o Di Telia's entrepreneurial career reveal a pattern that he consistently followed. Di Telia liked to take all the business available and promise delivery at specific dates. Technological obstacles were challenges to be overcome rather t h a n deterrents. T h e partnership formed by the Allegrucci brothers and Di Telia was an excellent arrangement, combining the experience a n d business connections of Alfredo, Guido's mechanical skill, and Di Telia's technological insight and enthusiastic salesmanship. Encouraged by his uncle, T o r c u a t o applied himself to the developing business with all the force of his vision and dynamic personality. Expansion during the first five years was rapid for the time, as indicated by T a b l e 6. T h e Allegruccis and Di Telia accumulated a substantial 8 T h e exchange rate at the time was about 2.4 pesos to the United States dollar. This figure becomes significantly large if we consider the devaluation of the buying power of the dollar since that time.

42

ENTREPRENEURSHIP IN ARGENTINE CULTURE

p r i v a t e c a p i t a l f r o m t h e profits. I t is also e v i d e n t t h a t t h e l i b e r a l c r e d i t system e x t e n d e d to clients was a successful policy. TABLE ASSETS—DECEMBER

6

1 9 1 4 , IN ARGENTINE

PESOS*

Pesos Cash Merchandise Outstanding credits Machinery Furniture Licenses Private capital : Allegrucci Di Telia

3,822.75 13,160.15 44,740.25 5,500.00 3,227.70 306.66 41,374.39 39,356.60

151,488.50 * Source: Index Diario, 1911-1915; " p r i v a t e c a p i t a l " represents investments presumably in real estate and buildings, beyond itemized assets. T h e firm at this time was not a stock-holding corporation.

T h e p a r t n e r s h i p of A l l e g r u c c i Hermanos (Brothers) a n d Di T e l i a , as first f o r m e d , e n d e d A u g u s t 10, 1915" w h e n A l f r e d o A l l e g r u c c i left t h e firm a n d m o v e d to S p a i n . T h e business t h e n b e c a m e k n o w n as " A l l e g r u c c i a n d D i T e l i a . " T h e c a p i t a l h a d e x p a n d e d to 100,000 pesos. P a r t of this success c a m e f r o m aggressive selling t e c h n i q u e s a n d g e n e r o u s c r e d i t t e r m s . B a k e r y o w n e r s freq u e n t l y signed a p r o m i s s o r y n o t e a g a i n s t p r o p e r t y , o t h e r securities, e v e n t h e b a k e r y business itself for a p e r i o d of t w e n t y - f o u r m o n t h s . T h e s e notes w e r e t h e n n e g o t i a t e d at t h e b a n k s . I n this w a y c a p i t a l w a s m a d e a v a i l a b l e for 7

" N o t i c i a s S . I . A . M . , " Special Issue.

AN I T A L I A N FAMILY IMMIGRATES T O A R G E N T I N A

43

c o n t i n u e d o p e r a t i o n . As is so often the case with p a r t n e r ships, n o f u r t h e r details are available for these early years of activity. DI T E L L A I N W O R L D W A R I

Di T e l i a ' s direct p a r t i c i p a t i o n in the firm was interr u p t e d in 1915 w h e n he d e p a r t e d for I t a l y to j o i n the A r m y . H e left the business in the h a n d s of G u i d o Allegrucci, w h o was now his trusted friend as well as business p a r t n e r . 8 His uncle S a l v a d o r Di T e l i a a n d the rest of the family w e r e deeply stirred by T o r c u a t o ' s decision. I n spite of the sadness caused by his d e p a r t u r e , the w o m a n w h o later b e c a m e his wife declares: " I was a very p r o u d sweetheart at t h a t m o m e n t . " His I t a l i a n friends also saw in his decision a heroic d e m o n s t r a t i o n of I t a l i a n n a t i o n a l i s m , a n d Argentines a d m i r e d the decision as s y m p t o m a t i c of a strong d e m o c r a t i c idealism. I t a l i a n s were not wholly u n i t e d in their response to the w a r , however. W h e n Di T e l i a p a i d a last visit to a f o r m e r teacher, he was told that his decision was " v e r y s t u p i d and idiotic." His e d u c a t i o n a c q u i r e d t h r o u g h evening courses at the University a n d his experience with m a c h i n e r y qualified Di T e l i a to c o n t i n u e his training in the M i l i t a r y A c a d e m y of T u r i n w h e r e he received the rank of L i e u t e n a n t of E n g i n e e r i n g . H e then was assigned to the Genio Division of the A r m y . By the e n d of the w a r his p a r t i c i p a t i o n a n d b e h a v i o r d u r i n g c o m b a t were considered o u t s t a n d i n g a n d recognized b y t h r e e a w a r d s : T h e Encomio Solenne, Medaglia per Meriti di Guerra, a n d Medaglia Internazionale. The Encomio Solenne reads : Officer Torcuato Di Telia, of the 45th Company of Communication, under an intense fire of artillery and ' T h e legal formalities arranged between Allegrucci and Di Telia, if any, have not been found in the company's files.

44

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

gunnery, directed the extension of telephone lines Sdraussina Nod-loguen on the 17th of September. He went to the battle zone several times in order to repair the telephone lines, without being ordered to do so. November 27, 1916. T h e impression that Di Telia left with individual superiors is shown by a letter of recommendation written by a Chief C o m m a n d e r requesting a long leave of absence for Di Telia in order to visit Argentina in 1918: This person has shown great patriotism and has been an example of courage. For all his good qualities he has been given the award bestowed only on excellent soldiers. One must consider also the sacrifice made by this young man to leave behind all his economic interests in order to cooperate and participate in the defense of his country. Even in the midst of war Di Telia maintained a close relationship with his family in Argentina and in Italy. Military news cards were sent every day to his uncle and sister, Blanca, who were in Italy during the war. Frequently he wrote long letters expressing his views of the war, his hopes, aspirations, and disappointments in the world and in people. His family vividly shared his experiences through these letters. T h e following selections from letters written in 1917 show Di Telia's unusual sensitivity: . . . In wishing the best for you I also wish the same thing for me because if people are happy I am happy too; when a few people are suffering, I am suffering a thousand times more. . . . We cannot forget what we learn and the intense affection which links me to you has been born with me— it was given to me—with the life that our holy mother created and to whom I owe every good thing I have. This is a sad Christmas for us Italians. Thousands and thousands of families are not able to make their traditional chimney fires. To them we give our brotherly thoughts, moral support and assistance. Here we are thinking only of returning

AN I T A L I A N F A M I L Y IMMIGRATES T O A R G E N T I N A

45

to them the home they have lost. This is our Christmas greeting to them . . . I have spent terrible days which are equivalent to years; I have suffered in such a manner that I have wished death and this is not a rhetorical phrase. I have thought several times whether the pain caused by the death of our mother could be compared to what I have experienced ; and I can assure you that it was much greater. I do not mean to be unkind to our mother but the death of one person is something our mind will accept. But the invasion of the enemy's forces, the evacuation of Del Carso bathed in the blood of many Italians, the abandonment of our lands and fields . . . Ah ! You have not seen this and you cannot even dream what it was. I have seen everything. Drop by drop I had to swallow very bitter moments. For three days I had not eaten and I was wet to my bones, but I was not hungry, I was not cold, I was not sleepy—I was insensitive to external factors. I was stupefied. No solution was in view and I saw so many other things! . . . I believe that in those few days the number of my already abundant white hairs increased. . . . I am sending you through various ways many letters and I hope that some will reach you. I am well. Do not worry. As for the rest, my heart has been broken. By the end of the war, Di Telia was eager to return to Argentina. H e wrote to his relatives: I am in command of an entire Company but I am not a Captain. I have said that I am not, will not, and do not want to become a Captain. I want to become a civilian because I now have the right to it. W h a t do you think ? H e left the command of his Company on February 19, 1919 with the following written message: I am leaving you, my dear soldiers, after thirty months of living together in a Company which has distinguished itself

46

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

and has lived through the most difficult missions, a Company that is noted for its brilliant manner of conducting missions. To the old veterans who will soon return to their homes and to the young people who will remain behind until the day of complete peace, I am sending my warm greetings. These years of pain and sacrifice, crowned by our great victories, should leave in us a religious memory and a great stimulus to work for the betterment of our country.

I n mid-1919 the war hero returned home to an admiring circle of family and friends. His Italian associates, from Allegrucci to old laborers now retired, felt a strong moral debt to the "defender of the motherland." Within the family, Di Telia's record and his letters had a profound impact. Prior to the war, he had assumed all the economic and administrative responsibility for the family but Salvador remained the spiritual head. Within a decade Torcuato took over full leadership of the Di Telia kindred. 9 It is doubtful whether Di Telia at this time realized the potentialities of the kindred as a factor supporting his entrepreneurial career. His increasing leadership of the family group, however, was to have significant implications for the development of the firm. BUSINESS

EXPANSION

AFTER

WORLD

WAR

i:

THE

FIRST

PLATEAU

Argentina suffered from the outbreak of World W a r I. T h e interruption of trade resulted in shortages of imported coal and raw material for industry. Industrial production and national income declined; unemployment rose to nearly 20 per cent, yet in spite of growing unemployment, • " K i n d r e d " is an anthropological term used here to refer to a network of those kin relations on both sides of the family who are socially important to the individual. The term " D i Telia family" as used ir· the following contexts will refer to this wider group and not to the small, nuclear family.

AN I T A L I A N FAMILY IMMIGRATES T O A R G E N T I N A

47

scarcity of i m p o r t s led to inflation a n d prices rose 27 p e r cent.10 W h i l e fighting in t h e w a r Di T e l i a d i d n o t lose c o n t a c t w i t h A l l e g r u c c i ' s a d m i n i s t r a t i o n in A r g e n t i n a . T h e r e was a c o n s t a n t flow of letters r e p o r t i n g t h e business a n d r e q u e s t i n g D i T e l i a ' s ideas a n d a p p r o v a l of p l a n s . H o w ever, it was i m p o s s i b l e to secure sufficient i r o n to m e e t t h e d e m a n d . S o m e a r r a n g e m e n t s w e r e m a d e to i m p o r t bakery machines from Spain, with Alfredo Allegrucci a c t i n g as a g e n t . I n t h e s p r i n g of 1916 G u i d o w r o t e : " I h a v e sent 10,000 pesetas to A l f r e d o in o r d e r to receive t h e first units a n d regardless of o r i g i n I h o p e to receive t h e m as soon as possible to solve this difficult s i t u a t i o n . " 1 1 T h e s e a t t e m p t s did not meet w i t h success, b u t in a l e t t e r of N o v e m b e r 20, 1916 Allegrucci spoke of i m p o r t i n g ten I t a l i a n b a k e r y m a c h i n e s a n d also of a n e w , l i g h t e r a n d s i m p l e r m a c h i n e , w h i c h h e h a d d e v e l o p e d . Business in g e n e r a l , h o w e v e r , was s t a g n a t i n g . T h e w a r a n d a d e v a s t a ting d r o u g h t h a d seriously a f f e c t e d the A r g e n t i n e m a r k e t , a n d d a m p e n e d Allegrucci's o p t i m i s m . H e was forced to e x t e n d t h e c r e d i t t e r m s on previously m a d e sales, a n d this led h i m to c u r t a i l p r o d u c t i o n . T o r c u a t o ' s l o n g leave f r o m the f r o n t in 1918 w a s a d e s p e r a t e l y n e e d e d booster to the s t r u g g l i n g firm. Effective l e a d e r s h i p was t e m p o r a r i l y restored t h r o u g h Di T e l i a ' s will to s u c c e e d . Allegrucci's g r o w i n g d e p e n d e n c e o n his p a r t n e r ' s j u d g m e n t is show n in t h e following l e t t e r : Shortly after your d e p a r t u r e the steel sheets arrived for the building of the new storage rooms. But they are not exactly the kind of thing we requested . . . and I think it is impossible to a d a p t this material to the building plans you left with me. . . . Therefore, I ask that you give me instructions immediately in order to protect our m u t u a l interests. 1 2 10 11 12

Di Telia a n d Z y m e l m a n , Economic Divelopmtnt, op. cit., p. 37. Letter from G u i d o Allegrucci to Di T e l i a , April 11, 1916, family's file. G u i d o Allegrucci to Di T e l i a , August 14, 1918.

48

ENTREPRENEURSHIP IN ARGENTINE CULTURE

When Di Telia returned to Argentina in 1919 he was still optimistic, yet matured and tempered by the experience of the war. T h e national economy had been favored that year by a good harvest and high prices abroad. This brief prosperity was followed in late 1920 by world crisis; Argentina suffered as meat prices plummeted. Di Telia, however, benefited from the inauguration of a government protectionistic policy, which reduced imports. T h u s encouraged, local industry was able to increase output. T h e partnership had not expanded since 1914, as indicated by T a b l e 7. Di Telia, however, still with an interest in customs brokerage, was sensitive to the economic situation and stood prepared to take advantage of new opportunities as they were presented. TABLE

7

ALLEGRUCCI AND D I

TELLA*

General Balance, May 31, 1919, in Argentine Pesos Assets On hand Securities M a c h i n e shop and equipment G e n e r a l inventory Production : P u m p s , tanks, gasoline p u m p s D e b t s owed to firm A c c o u n t s receivable Miscellaneous

Liabilities 14,694.00 7,526.12 9,920.00 12,417.88

C a p i t a l stock Argentine bank G . Allegrucci's private account I n t e r e s t on promissorv notes r e c o r d e d

100,000.00 12,000.00 12,416.87 1,415.70

24,588.10 17,897.33 37,036.70 1,752.44 125,832.57

125,832.57

* S o u r c e : C o m p a n y ' s files. T h e e x c h a n g e r a t e at this time was 2 . 3 0 5 pesos to the U n i t e d States d o l l a r .

Business expansion, however, was menaced by serious labor problems resulting in general unrest and violently

AN ITALIAN FAMILY IMMIGRATES T O A R G E N T I N A

49

repressed strikes. 13 T h e strikes of the early 1920's were stimulated primarily by political ideologies. M a n y laborers were looking toward a "Russian Revolution" in Argentina. T h e anarchists were actively involved in directing politically oriented strikes rather than bargaining for increases in wages, better working conditions, or other benefits. Anecdotal material reveals that Di Telia had to cope with labor difficulties in his small plant on several occasions. At one time he fired all his personnel except one. O n another occasion he spotted a particular worker as the key trouble-maker. Instead of taking disciplinary action, Di Telia promoted him to the position of foreman. This position in the power structure of the plant was the agitator's political downfall; he could not cope with demands put u p o n him by the rest of the workers. Despite labor unrest, Di Telia began mapping expansion early in 1920. New lines of production were planned. T h e dawn of the automobile age in Argentina meant a potential demand for gasoline pumps and other service station equipment. Apparently, experimentation with p u m p production based on ideas from foreign models began at this time, an early example of Di Telia's strategy of anticipating future markets. In 1923 Di Telia exemplified another of his long-run policies by entering into a licensing agreement with the Wayne P u m p C o m p a n y of the United States rather than trying to develop a competing model. S.I.A.M. became an agent for Wayne, and began manufacturing and assembling parts for the American pumps. T h e association continued until 1927. Experimentation with pumps, together with expansion in the output of bakery machinery, needed enlarged 1S

D i T e l i a a n d Z y m e l m a n , Economic Development,

op. cit., p . 47.

50

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

facilities.

In

1920 D i T e l i a a p p l i e d for credit to

the

D i r e c t o r o f the Banco Popular Argentino : . . . W e a r e in the process of e x p a n d i n g our workshop. T h e average production of bakery m a c h i n e s last year was 50 units a n d currently we a r e p r o d u c i n g 100 units. W e p l a n to increase the n u m b e r of units to 200 per year. O f this n u m b e r we have promised a m i n i m u m of 60 machines to the very i m p o r t a n t firm of Ercole Marelli of Brazil. Logically in o r d e r to double our p r o d u c t i o n we need newm a c h i n e r y a n d a large q u a n t i t y of r a w m a t e r i a l . O u r c o m p a n y ' s financial statement speaks for itself, a n d we a r e pleased to submit a copy to y o u . u P r o d u c t i o n of b a k e r y u n i t s u p to this p o i n t h a d b e e n d e p e n d e n t o n o u t s i d e services f o r c a s t i n g p a r t s . T h e s h o r t a g e of c a p i t a l a n d skilled l a b o r d u r i n g t h e w a r h a d p r e v e n t e d t h e c o m p a n y f r o m p r o v i d i n g t h e i r o w n facilities f o r this o p e r a t i o n . W i t h t h e s u p p o r t of t h e b a n k l o a n , D i T e l i a t o o k steps to e s t a b l i s h his o w n f o u n d r y . T o w a r d t h e e n d of 1920, h e f o u n d in E u l a d i o N i e v e s t h e necessary k n o w - h o w for r u n n i n g t h e o p e r a t i o n . T h e f o u n d r y is r e p o r t e d to h a v e m o r e t h a n j u s t i f i e d t h e i n i t i a l investm e n t . W h e n D i T e l i a ' s o r d e r s d i d n o t e m p l o y its full c a p a c i t y t h e f o u n d r y took o n o u t s i d e c o n t r a c t s . T h e f o u n d r y w a s l o c a t e d o n J e a n J a u r è s , a side s t r e e t leading away from C o r d o b a Street. It was a very small p l a c e at first, "un lugar muy humilde,'" b u t D i T e l i a w a s s o o n f o r c e d to e x p a n d his i n s t a l l a t i o n s . T h e f o u n d r y o p e r a t i o n s w e r e t r a n s f e r r e d to V e l e z S a r s f i e l d S t r e e t ( B a r r a c a s ) in 1928; t h e f o u n d r y w o u l d r e m a i n a t this l o c a t i o n u n t i l 1940. A s business e x p a n d e d D i T e l i a c a m e to rely m o r e a n d m o r e o n G o t a r d o S c h i b l i . S w i s s - b o r n a n d a m e m b e r of t h e S . I . A . M . f a m i l y since 1912, S c h i b l i b e c a m e D i T e l i a ' s 14 L e t t e r , c o m p a n y files. U n f o r t u n a t e l y , n o t h i n g c a n r e g a r d i n g the t e r m s of this first i m p o r t a n t l o a n .

be

discovered

AN ITALIAN FAMILY IMMIGRATES TO ARGENTINA

51

right-hand man. H e has been characterized as a conservative businessman whose ideas Di Telia seems to have valued as a balance to his own aggressive optimism. Schibli trained new personnel for administration, received a great deal of managerial power, was left in charge of Di Telia's business while Di Telia went a b r o a d , a n d loaned a large part of his private savings to the firm. " M r . Schibli," stated old employee Oscar Fussatti, "was another great fellow-worker of the house." 1 5 Although there is evidence of a division of assignments a m o n g those first employees, Di Telia continued a multifaceted rhythm of activities establishing business contacts, selling his products, and personally supervising p r o d u c tion and administration. Both small and large problems were considered personally and everyone in the organization moved according to his decisions. T h e municipal ordinance of 1910 that had created Di Telia's bakery machine business had not been strong enough to end hand mixing. Informants said that bakers still paid little attention to hygiene. Workers mixed a n d kneaded the flour and water with their feet. In the overheated rooms, workers' perspiration mixed with the dough. By 1922 public complaint brought out a new a n d stronger ordinance which read: a. F o r t h e m a k i n g of b r e a d a n d s i m i l a r p r o d u c t s , e v e r y o n e is d i r e c t e d to use m a c h i n e r y a p p r o v e d b y t h e g o v e r n ment. b. The i n s t a l l a t i o n s of m a c h i n e r y a n d m o t o r s s h o u l d h a v e a p r o p e r protection a n d be placed at the distance of o n e m e t e r Iroin t h e walls. c. The c o n n e c t i o n s w i t h t h e m o t o r s s h o u l d be e n t i r e l y i n d e p e n d e n t of walls a n d r o o f . 1 6

But even with a better ordinance more vigorously 15 le

Interview with Fussatti. Digesto Municipal de le Ciudad

de Buenos Aires,

1922.

52

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

enforced, D i T e l i a had the problem of c o n v i n c i n g A r g e n tine bakers that his m a c h i n e , although novel in design, was efficient a n d practical, and furthermore that m e c h a nization of a bakery w o u l d show an i m m e d i a t e increase in profit that w o u l d more than c o m p e n s a t e for the time p a y m e n t s o n the e q u i p m e n t . Furthermore, there was strong but ultimately ineffective resistance to m e c h a n i z a tion from bakery labor. A Di Telia e m p l o y e e reported: When mechanization was enforced by public regulations, particularly in Buenos Aires, there was much protest against it and the workers tried to boycott it. They were afraid they would lose their jobs. The organization of bakers was against the machine. The workers frequently were newly arrived immigrants brought by the bakery owners and they were very poorly paid and forced to work long hours. There were many bakeries burned down and many attacks against owners during those days. 17 W i t h t h e o p e r a t i o n of the f o u n d r y D i T e l i a e x p a n d e d i n the p r o d u c t i o n of ovens, b e a t e r s , a n d o t h e r accessories f o r t h e m a n u f a c t u r e of b r e a d a n d p a s t r y . T h e e x p a n s i o n w a s r a p i d a n d p a r t of t h e success of those y e a r s rested o n p r o g r e s s i v e selling t e c h n i q u e s , t h r o u g h t h e e x t e n s i o n of l o n g - t e r m c r e d i t s as s h o w n in T a b l e 8. T h i s i n v o l v e d c o n s i d e r a b l e risk, a n d h a d h a r d times c o m e s u d d e n l y it m i g h t h a v e b e e n e c o n o m i c suicide. But t i m e s w e r e g o o d a n d the Allegrucci—Di Telia firm established a reliable r e p u t a t i o n with both national a n d foreign banks. O n the basis of t h e d e c l a r e d c a p i t a l of 100,000 pesos t h e Banco de la Nación e x t e n d e d a l o a n of 15,000 pesos w i t h o n l y D i T e l i a ' s p e r s o n a l g u a r a n t e e . 1 8 I n a d d i t i o n to t h e local A r g e n t i n e e s t a b l i s h m e n t s , g o o d r e l a t i o n s a r e also r e p o r t e d 17

Interview with Isidoro Lasgoity. Mimeographed report in Company files. 1921. Whether the Banco Popular Argentino was still extending credit or whether the new loan was applied against the older one is not known. 18

AN ITALIAN FAMILY IMMIGRATES TO ARGENTINA

with the branches of the Boston, Anglo, Sud

53

Americano,

Frances del Rio de la Plata, and Español del Rio de la

Plata

banks. TABLE PRICES Q U O T E D

8

FOR K N E A D I N G

INSTALLATION

MACHINES

AND

SERVICE*

M a r c h 9, 1921 Argentine pesos O n e S . I . A . M . kneader, latest model, with a tray, 2 meters long; capacity up to 5 seventy-kilo bags of flour, Buenos Aires Installation material Total

2,250.00 200.00 2,450.00

Terms of p a y m e n t : S250.00 Down payment 500.00 T o mechanic 200.00 Installation material Notes of S100 each due monthly for the rem a i n i n g S1500. * S o u r c c : C o m p a n y files. T h e e x c h a n g e r a t e was 3.141 pesos p e r U n i t e d States d o l l a r .

T h e m o n e y for expansion apparently w e n t into w o r k i n g capital rather than modernization of productive facilities. A n informant stated that "the factory in 1922 w a s just a large shed and under it there was a great deal of crowding a n d confusion. M i x i n g and kneading m a c h i n e s were produced together with gasoline p u m p s . " 1 9 S u c h an operation was j a u n t i l y characterized as a big boliche, organized o n an informal, face-to-face basis. In those "

Interview with Ermette Venturini.

54

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

d a y s t h e r e w e r e a p p r o x i m a t e l y 75 l a b o r e r s a n d 15 office workers. I n t h e e a r l y 1920's, A l l e g r u c c i a n d D i T e l i a b e c a m e g a s o l i n e r e t a i l i n g a g e n t s f o r t h e British oil c o m p a n y , Shell M e x . T h e D i T e l i a firm p l a y e d a d u a l r o l e ; it provided b o t h the gasoline p u m p s a n d the m e n to r u n the service stations. I n 1924 D i T e l i a w e n t t o L o n d o n a n d n e g o t i a t e d a n e w a r r a n g e m e n t w i t h S h e l l M e x . T h e y took c o n t r o l of a m a r k e t i n g c o m p a n y in A r g e n t i n a , Compania Mercantil 20 Energina, S . A . , a n d a p p o i n t e d D i T e l i a its p r e s i d e n t . This position was held for only o n e year, after w h i c h he b e c a m e t h e síndico ( a g e n t of t h e c o r p o r a t i o n ) . H e t r a n s f e r r e d his o w n p u m p s a n d m u n i c i p a l c o n c e s s i o n s to E n e r g i n a , in r e t u r n for a r o y a l t y of 1 c e n t p e r l i t e r of g a s o l i n e sold. U l t i m a t e l y t h e c o m p a n y i n s t a l l a t i o n s w e r e absorbed by the g o v e r n m e n t monopoly, yacimientos Petrolíferos Fiscales. T h e i m p e n d i n g n a t i o n a l i z a t i o n of t h e oil i n d u s t r y d i d n o t h i n d e r p l a n s for e x p a n s i o n . T h r o u g h a personalismo21 r e l a t i o n s h i p w i t h t h e D i r e c t o r of Y . P . F . , G e n e r a l E n r i q u e M o s c o n i , Di T e l i a w a s a b l e to m a n i p u l a t e t h e s i t u a t i o n to t h e a d v a n t a g e of his firm. As e a r l y as 1922 o n e single p u m p w a s f u r n i s h e d by D i T e l i a to Y . P . F . a n d i n s t a l l e d in A v e l l a n e d a a t t h e i n t e r s e c t i o n of R o s a l e s a n d M i t r e S t r e e t s , b u t Y . P . F . d i d n o t a c t i v e l y e n t e r service s t a t i o n d i s t r i b u t i o n of g a s o l i n e u n t i l 1926, a n d t h e n o n l y t h r o u g h a g e n t s o r concesionarios. T h e r e c o r d s i n d i c a t e t h a t t h e 1926 a g r e e m e n t w i t h D i T e l i a c a l l e d f o r a p r o d u c t i o n of u p to 200 gasoline p u m p s m o n t h l y . T h i s p a r t i c u l a r a r r a n g e m e n t w a s i n t e r r u p t e d in t h e e a r l y 1930's b u t Y . P . F . a n d S . I . A . M . m a i n t a i n e d a close a s s o c i a t i o n for m a n y y e a r s . 10 S . A . is a n a b b r e v i a t i o n for Sociedad Anónima, a term referring c o m p a n i e s i n c o r p o r a t e d as s t o c k - h o l d i n g o r g a n i z a t i o n s . 21 T h e c o n c e p t of personalismo is a p p l i e d at length in C h a p t e r I V .

to

AN ITALIAN FAMILY IMMIGRATES T O

ARGENTINA

55

T h e Y . P . F . c o n t r a c t s w e r e a m a j o r r e a s o n for t h e e x p a n sion of f o u n d r y facilities. Di T e l i a ' s c o m b i n e d f u n c t i o n of b o t h a g e n t a n d m a n u f a c t u r e r h a d p l a c e d h i m in a v u l n e r a b l e position d u r i n g t h e l a b o r crisis of t h e e a r l y t w e n t i e s . Dissident w o r k e r s c o u l d easily c a u s e serious d a m a g e b y a t t a c k i n g t h e g a s o l i n e p u m p s a n d t h e i r a t t e n d a n t s . T h e s e difficulties w e r e w e a t h e r e d , but a c o n t i n u i n g l a b o r p r o b l e m was t h e lack of skilled w o r k e r s in A r g e n t i n a . F o r c e d to look a b r o a d D i T e l i a t u r n e d , of c o u r s e , to I t a l y . H e p u t his e l d e r b r o t h e r a n d a f r i e n d n a m e d R i c c a r d o C u g i n i in I t a l y in c h a r g e oí' a d v e r t i s i n g , i n t e r v i e w i n g , a n d m a k i n g t r a n s p o r t a t i o n a r r a n g e m e n t s for e n g i n e e r s a n d o t h e r skilled w o r k e r s . S o m e of t h e p e o p l e s e c u r e d at this t i m e w e r e w i t h t h e c o m p a n y in 1960 a n d h a d b e e n r e s p o n s i b l e f o r t h e t r a i n i n g of A r g e n t i n e p e r s o n n e l . I n 1923, G u i d o C l u t t e r b u c k j o i n e d t h e a d m i n i s t r a t i v e staff. B i l i n g u a l by v i r t u e of his British h e r i t a g e , this y o u n g m a n first b e c a m e Di T e l i a ' s p r i v a t e s e c r e t a r y . W i t h i n five y e a r s h e rose t h r o u g h t h e positions of jefe of t h e b a k e r y a n d gasoline p u m p divisions to a d i r e c t o r s h i p of the c o m p a n y , and twenty years later b e c a m e General M a n a g e r , a t the a p e x of t h e p o w e r s t r u c t u r e . I n 1923 D i Telia d e c i d e d to s e p a r a t e t h e a d m i n i s t r a t i v e a n d sales d e p a r t m e n t s f r o m t h e w o r k s h o p . T h i s was t h e first a n d m a j o r step t o w a r d s p a t i a l d e c e n t r a l i z a t i o n , a n d Di Telia's friendship with T . M . Schmidt, the m a n a g e r of t h e Banco Alemán Transatlántico p r o v e d a v a l u a b l e asset. A l o a n of 5 0 , 0 0 0 pesos was e x t e n d e d to D i T e l i a b e c a u s e of " t h e g o o d p e r s o n a l i m p r e s s i o n r e c e i v e d w h i l e visiting the f a c t o r y . " This loan was applied toward renting the n e w h e a d q u a r t e r s a t 115 P u e y r r e d o n S t r e e t . T h e s a m e b a n k e x t e n d e d l o a n s several t i m e s in l a t e r y e a r s . T h e r e w e r e n o laws g o v e r n i n g c r e d i t s e x t e n d e d b y p r i v a t e b a n k s a n d , t h e r e f o r e , Di T e l i a relied g r e a t l y o n t h e i r assistance.

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Di T e l i a ' s n e p h e w , Agustín Sozio, r e m e m b e r s this time as a period of t r e m e n d o u s activity in the w o r k s h o p a n d f o u n d r y . A p p r o x i m a t e l y 150 people w e r e then e m p l o y e d by Di T e l i a a n d Allegrucci. C l u t t e r b u c k stated t h a t : " t h e business in those days was no l o n g e r considered j u s t a tallercito (small shop), b u t r a t h e r a gran taller a n d this was d u e to the fact t h a t we did r a t h e r well with the gasoline p u m p business." T h e expansion in the shop necessitated m o r e a g e n t s to represent the c o m p a n y in the I n t e r i o r of the R e p u b l i c , in M e n d o z a , Bahia Blanca, a n d the n o r t h . W h i l e a large area was covered directly by c o m p a n y salesmen, indep e n d e n t agents were used in m a n y places. A r t u r o S a n t o n i of M e n d o z a , for e x a m p l e , w h o b e g a n his work for the c o m p a n y in 1918, was initially a very successful a g e n t for b a k e r y e q u i p m e n t in the provinces of C u y o . I n 1926 S a n t o n i b e c a m e an a g e n t for Y . P . F . p r o d u c t s a n d S . I . A . M . ' s gasoline p u m p s , which p r o v e d to b e a successful business v e n t u r e for b o t h Di T e l i a a n d S a n t o n i . T h e close personal friendship t h a t s p r a n g u p b e t w e e n the two was, as usual, essential for c o n t i n u i n g agency relations. T h e early agents w e r e b r o u g h t into the S . I . A . M . family a n d identified themselves with its f u t u r e . C o m m u n i c a t i o n was direct a n d i n f o r m a l in the p r e b u r e a u c r a t i c era, a n d considerable leeway for b o t h initiative a n d outside p r i v a t e interests was allowed. W h i l e this period was o n e of g e n e r a l progress for Allegrucci a n d Di T e l i a , a n d a solid relationship with the banks h a d b e e n established on the basis of S . I . A . M . ' s r e p o r t e d l y " v e r y good business e t h i c s , " w h i c h p e r m i t t e d the c o m p a n y to e x p a n d its facilities, Allegrucci was nevertheless g r e a t l y c o n c e r n e d over the risks in Di T e l i a ' s p l a n s for expansion. A cautious m a n , whose original aims h a d a l r e a d y b e e n m o r e t h a n satisfied, Allegrucci dissolved the p a r t n e r s h i p a n d m a d e p l a n s to r e t u r n to

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Italy. But he agreed to terms that would not put an undue financial burden on Di Telia. The settlement signed on September 2, 1924 reads: M r . G u i d o Allegrucci leaves in the custody of M r . Di Telia t h e sum of 330,000 pesos . . . this sum will b r i n g a n a n n u a l r e t u r n of 8 per cent. M r . Allegrucci m a y remove the sum of money a c c o r d i n g to the following a g r e e d prescribed rules. a. 30,000 at a n y time, a l t h o u g h M r . Di Telia should have 45 days' a d v a n c e notice. b. T h e r e m a i n i n g 300,000 m a y be requested in yearly quotas of 50,000 each. In this case M r . Allegrucci should give six m o n t h s ' notice. 2 2

The name of the firm was changed to "Torcuato Di Telia." Di Telia's business continued to grow much faster than Argentine industry as a whole. His name was brought to public attention in 1924 through an industrial exhibit in which Di Telia displayed his products with particular emphasis on the gasoline pump, S.I.A.M. Blok 88. S.I.A.M.'s increasing impact on the market engendered antagonism in some quarters, leading to a number of legal actions against the company. A lawsuit of basic importance, known as the Caputo case, began in 1924 and ended in 1926. An Officer of Justice came to the firm one day and confiscated all the bakery machines, making Di Telia liable for all those available and already sold. While Di Telia secured the release of his machines the charge of infringement of patents could have seriously injured both his reputation And the firm's sales. But Di Telia was able to secure an interview with the Minister of Agriculture explaining that he suspected a state officer 22 Allegrucci returned to Argentina shortly before World War II and renewed his business relationship with Di Telia, as a shareholder and salaried executive, until hU death on M a y 16, 1958.

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of h a v i n g copied the S . I . A . M . p a t e n t . After serious investigation it was legally proved t h a t Di T e l i a h a d t h e exclusive rights to the S . I . A . M . p a t e n t . T h e able defense of this case was carried out by his lawyer, D r . P a b l o C a l a t a y u d . 2 3 O n D e c e m b e r 15, 1926 the case was a d j u d i c a t e d by the Federal C o u r t a n d Di Telia was a c q u i t t e d . T h e y e a r 1927 was m a r k e d by a n accelerated u p w a r d t r e n d in profits for the c o m p a n y , as the figures in T a b l e 9 indicate. Di Telia's relations with Y . P . F . a n d Shell M e x as practically exclusive suppliers of gasoline p u m p s were p r i m a r i l y responsible for the growth. I n this year, because of disagreements with their A r g e n t i n e r e p r e s e n t a t i v e , the W a y n e contract was d r o p p e d a n d Di T e l i a ' s S . I . A . M . Blok p u m p s a p p e a r e d on the m a r k e t . I n a d d i t i o n to expansion in the p u m p line, the sales a n d p r o d u c t i o n of b a k e r y e q u i p m e n t increased. TABLE

9

FINANCIAL STATEMENT,

1923-1927*

(S Argentine Paper) Date October 192 March 1924 July 1925 July 1926 July 1927

Assets 834,176 967,729 1,925,199 2,876,973 4,335,750

Capital 451,864 550,279 1,008,037 1,888,040 2,929,952

Net sales

Net profit

457,465 2,433,763 3,113,891 4,756,567

103,467t 457,070» 412,519+ 1,406,789

* Source: Deloitte, Plender, Griffiths & Co., Adjusted Profit and IMS Account Report, Buenos Aires, J u l y 14, 1928. T h e exchange rale was 2.362 pesos to the U n i t e d States dollar in 1927. + 6 m o n t h s ' period. J 8 m o n t h s ' period.

T h e favorable business conditions e n c o u r a g e d Di T e l i a ' s optimism and led him to m a k e two of his most i m p o r t a n t decisions: (1) to i n c o r p o r a t e , a n d (2) to * Document filed in Buenos Aires court, 52.134.

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purchase land for the construction of a large plant, the Avellaneda Talleres. T h e large investment at Avellaneda indicated to his employees and to the public that Di Telia was committed to stay in Argentina and to become more deeply involved with the industrialization of the agrarian society. His employees felt a new drive in the m a n ; Di Telia had covertly begun to nurse another dream, to " b e c o m e the Henry Ford of A r g e n t i n a . " VENTURES INTO OTHER

BUSINESSES

T h e high earnings of this period of expansion provided Di Telia with sufficient capital to explore other lines of business such as the construction of yachts in the Tiger Delta at the m o u t h of the Rio de la Plata. He m a d e an investment of 50,000 pesos in this enterprise, which was run by another person. Faulty administration led to the liquidation of the company after two and a half years of losses. Fortunately, Di Telia was able to save his investment through the skillful manipulations of Oscar Fussatti, w h o had been hired as bookkeeper to check on the m a n a g e m e n t of the business. 24 Within a period of three years, 1923 to 1926, Di Telia had been disappointed in business relationships with the Allegrucci brothers, the shipyard, and other small enterprises. For various reasons the partnership pattern h a d not been successful; in the future he consciously avoided such affiliations. He may have become convinced that a pyramidal structure, with himself at the apex, was the most fruitful and efficient pattern of organization. F r o m 1926 until his death, " h e was not a m a n for p a r t n e r s h i p . " T H E S.I.A.M. FAMILY AND ARGENTINISMO

T h e expansion of the company between 1920 a n d 1930 cannot be attributed solely to Di Telia's energetic personal m a n a g e m e n t . A great deal necessarily depended on 24

O s c a r Fussatti is currently General Accountant o f the C o m p a n y .

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the q u a l i t y of his workers a n d administrative personnel. A single i n d i v i d u a l could not alone supervise all the angles of a rapidly g r o w i n g business. H e r e a n d there, cases of employee dishonesty inevitably occurred. Di Telia was forced to seek o u t m e n w h o could be trained and trusted. T h e y o u n g e r g e n e r a t i o n s of the Di Telia family w e r e not yet r e a d y for this responsibility a n d he t u r n e d to nonrelatives, chiefly G o t a r d o Schibli, H . R . G u i d o C l u t t e r buck, A n t o n i o Sudiero a n d also J u a n Caserta, O s c a r Fussatti, Eladio Nieves, Francisco T r u c o , E r m e t e V e n t u rini, Isidoro Lasgoity a n d others. Di T e l i a exerted great personal influence over these y o u n g m e n . T h e y considered themselves a p a r t of the S . I . A . M . family, a n d they h a v e been largely responsible for the creation a n d m a i n t e n a n c e of w h a t a n t h r o p o l o gists can well call the S . I . A . M . subculture. 2 5 T h e y trained l a b o r a n d personnel, i n d o c t r i n a t i n g t h e m with t h e developing n o r m s of c o m p a n y life. F r o m an over-all perspective, these key m e n were indispensable in Di Telia's efforts to b r i n g the c o m p a n y t h r o u g h the growing pains of each new expansion. T h e i r b e h a v i o u r manifested unswerving loyalty to Di T e l i a a n d S . I . A . M . I n d i v i d u a l w o r t h in L a t i n America is j u d g e d b y r a t h e r different criteria t h a n are used in the U n i t e d States. I n the L a t i n A m e r i c a n tradition, all persons are, theoretically, believed to be e n d o w e d with equal intelligence a n d ability. Success is seen as entirely d e p e n d e n t on initiative a n d special o p p o r t u n i t y to develop one's talents.. I n the early years Di T e l i a , k n o w i n g t h a t h e could provide the o p p o r t u n i t y for their d e v e l o p m e n t , took simpàtico (congenial) individuals on this basis. But in the last analysis it is a p r o b l e m of individual motivation. T h e r e is a saying 24 " S u b c u l t u r e " is used in the sense of an organized complex of attitudes and behavior patterns, which are shared by a certain group within the framework of a larger society.

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f r e q u e n t l y u s e d : "querer es poder." R e a l l y to w a n t s o m e t h i n g is to find it within one's r e a c h . M e d i o c r i t y o r failure is not necessarily seen as d u e to lack of ability. I t is m o r e often e x p l a i n e d as a lack of desire to succeed. Di T e l i a was able to c o m m u n i c a t e his o w n intense m o t i v a t i o n to his lieutenants. Largely t h r o u g h his personal r e l a t i o n s h i p s w i t h individuals, b o t h w i t h i n a n d w i t h o u t the c o m p a n y , Di T e l i a was able to steer S . I . A . M . t h r o u g h the e x p a n s i o n of t h e 1920's. T h e m e n of the c o m p a n y also g a i n e d s t r e n g t h a n d enthusiasm f r o m Argentinismo, a n a t i o n a l p r i d e a n d a w a r e ness of their c o n t r i b u t i o n to the role p l a y e d b y A r g e n t i n a in world affairs. W i t h each n e w e x p a n s i o n , Di T e l i a w a s c o m m i t t i n g himself to l o n g - t e r m p a r t i c i p a t i o n in the national c c o n o m y ; h e w as investing in A r g e n t i n a ' s i n d u s trial f u t u r e . M a n y i n d i v i d u a l s a n d c o m p a n i e s e n t e r e d t h e industrial scene in the 1920's in o r d e r to m a k e a q u i c k profit, a f t e r w h i c h they a b a n d o n e d the m a r k e t . E v e n m o r e i m p o r t a n t l y , Di T e l i a h a d b e c o m e a n A r g e n t i n e n a t i o n a l a n d S . I . A . M . ' s profits r e m a i n e d w i t h i n t h e c o u n t r y . T h i s a p p e a l e d to an e m e r g e n t n a t i o n a l i s m , w h i c h resented t h e t r a d i t i o n a l d o m i n a n c e of foreign c a p i t a l in Argentina's economic development. T H E DI T E L I . Λ F A M I L Y A N D S . I . A . M .

T h e w a r years a n d early business e x p a n s i o n h a d m a t u r e d Di T e l i a ' s j u d g m e n t a n d e n h a n c e d his r e p u t a tion as h e a d of the entire family. Both i m m e d i a t e kin a n d relatives b y m a r r i a g e a c k n o w l e d g e d his decisionm a k i n g a u t h o r i t y a n d the o b l i g a t i o n s for m u t u a l coo p e r a t i o n . I n a d d i t i o n Di T e l i a h a d established t h e " S . I . A . M . f a m i l y , " originally a core of u n r e l a t e d , t r u s t e d individuals t h r o u g h w h o m h e could direct m a n a g e m e n t a n d p r o d u c t i o n . As soon as m e m b e r s of t h e Di T e l i a f a m i l y b e g a n to c o m e of age a n d the n e t w o r k of kinship

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was extended through marriage links, relatives were increasingly d r a w n into company activity. T o understand the later history of the company one must know w h o the relatives were and the major outlines of the movement toward identification of the Di Telia family with S . I . A . M . Di Telia's brother José, who had remained in Italy at the University of Firenze and later T u r i n , played a role in the early expansion of the business, but his informal participation in S . I . A . M . diminished as the n u m b e r of skilled laborers increased within Argentina and Di Telia no longer had continually to recruit from Italy. José visited Argentina once under his brother's sponsorship, b u t soon returned to Italy to his major interest of forestry. Di Telia married M a r i a Robiola in 1928. Two sons were born from this marriage in the early 1930's. Di Telia saw young T o r c u a t o a n d Guido as the eventual heirs to his industrial empire. H e felt that familiarizing them with the r h y t h m of business was his clear paternal duty. H e undertook this forcefully, taking for granted that his aspirations would naturally become the aims of his children. Di Telia's sister Blanca married Angel Armetta, a machinist with the Italian M e r c h a n t Marine. Armetta established residence in Buenos Aires, where his skill as a machinist was useful to S.I.A.M. in the installation of burners and bakery ovens. Blanca and Angel were childless, and his retirement terminated the participation of this line in the development of the firm. Another sister, L a u r a , married J u a n Di Telia, a cousin. They h a d three children: Emilia, Blanca M a r i a , and Alberto. J u a n was made a substantial shareholder when the corporation was formed in 1928. Although the capital invested was T o r c u a t o Di Telia's, ten of the fifty

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preferred shares which formed the initial c a p i t a l of the c o m p a n y were u n d e r J u a n ' s n a m e . T h e children of L a u r a a n d J u a n w e r e to p l a y i m p o r t a n t roles, directly or indirectly, in the c o m p a n y . E m i l i a m a r r i e d an I t a l i a n engineer, J u a n C a s e r t a , who f i g u r e d i m p o r t a n t l y in the development of A v e l l a n e d a , r a n k i n g after S u d i e r o a m o n g the c o m p a n y ' s top engineers. His c a r e e r c a m e to a sudden end w h e n he w a s assassinated in the factory in 1957 by a berserk I t a l i a n l a b o r e r . C a s e r t a a n d Emilia were childless, but other m e m b e r s of the C a s e r t a f a m i l y were b r o u g h t into the kinship s t r u c t u r e of S . I . A . M . m a n a g e m e n t . T h e case of Alberto Di T e l i a is a w e l l - d o c u m e n t e d e x a m p l e of the n a t u r e of f a m i l i a l interaction a n d Di T e l i a ' s leadership a m o n g his relatives. Di T e l i a gave special attention to his n e p h e w . Alberto r e m e m b e r s t h a t : . . . H e sponsored m e t h r o u g h the i n d u s t r i a l school. T h e n he a r r a n g e d for m e to r e c e i v e special t r a i n i n g in r e f r i g e r a t i o n , s u r e l y w i t h the i d e a of s e n d i n g m e e v e n t u a l l y to s u p e r v i s e his new line of p r o d u c t i o n . I h a v e the feeling that he w a n t e d to give us o p p o r t u n i t i e s o u t s i d e of B u e n o s A i r e s , 111 p l a c e s w h e r e he h a d p e r s o n a l i n v e s t m e n t s such a s in B r a z i l , C h i l e or U r u g u a y . H e felt he could g i v e us a c h a n c e lor a better c a r e e r m o r e r a p i d l y in those p l a c e s . I w e n t to C h i l e in 1935 a n d I r e m a i n e d t h e r e until 1947. His d e a t h affcctcd m e as if I h a d lost m y o w n f a t h e r . . . . A f t e r w a r d I r e t u r n e d to A r g e n t i n a , w o r k i n g for some t i m e in a new s u b s i d i a r y of S . I . A . M . 2 6

In a letter written to Alberto, August 25, 1944, Di T e l i a w a s explicit in defining his concern for relatives w o r k i n g for h i m , but the letter most of all manifests his firm g r i p on the affairs of the f a m i l y as an a u t h o r i t a t i v e h e a d : 2 e In 1959 Alberto was an agent for S . I . A . M . in the city of Córdoba and also engaged in the manufacturing of automobile pistons. T h e new firm received capital support from Caserta's widow, the Di T e l i a family, and S . I . A . M . Di T e l i a L t d a .

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You have told me in your letter that you want to return to Buenos Aires. As you know, my only object has been to find an a d e q u a t e position where you could develop in the best possible m a n n e r and a position which would offer you the probabilities of success. In Buenos Aires m a n y of the positions have been filled by individuals we have h a d here for some time, while in Chile you have had from the very beginning a responsible position. If you and your wife have decided to r e t u r n to Buenos Aires and you would enjoy life here, I d o n ' t have any objection to your return. You must recognize, however, that although I might have a great love for my nephews I cannot overlook the rights of other employees. Which position would you like to h a v e ? You know the factory well and you know the organization. You know the persons with whom you would like to work and under w h a t conditions. O f course, you shall give me enough time to select someone to send to Chile to occupy your position. At this particular m o m e n t , the beginning of the season for refrigeration, we cannot a b a n d o n this position a n d I should have enough time to train somebody. Before you answer, I would prefer that you wait for the return of your wife a n d , after consulting her, you make your decision. This is a momentous decision for you. A l b e r t o ' s sister, B l a n c a , m a r r i e d A r t u r o U r i a r t e , w h o w a s b r o u g h t i n t o the c o m p a n y r a n k s a n d b y 1960 h a d b e c o m e Assistant to t h e C o n t r o l l e r . A n o t h e r b r a n c h of the Di T e l i a f a m i l y c a m e to be ver)' i m p o r t a n t . T o r c u a t o ' s sister A d e l a m a r r i e d another i m m i g r a n t f r o m A b r u z z o , H e r c u l e s Sozio, in 1903. A l t h o u g h H e r c u l e s was associated w i t h t h e S . I . A . M . f a c t o r y o n l y f r o m 1925 to 1926, his t h r e e b o y s a n d o n e girl r e p r e s e n t e d g r e a t p o t e n t i a l s n o t to b e o v e r l o o k e d by their uncle. A g u s t í n Sozio, the eldest of the boys, b e g a n his p r a c t i cal training in S . I . A . M . at C ó r d o b a S t r e e t . H e received

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specialized training in an industrial school and simultaneously worked part-time as a designer for Di Telia. With the growth of the company, he was asked by his uncle to undertake the supervision of one of the Sales Departments in order to check m a n y irregularities in the business. Agustin's investigations resulted in the dismissal of several salesmen and sales supervisors. Di Telia gave him broad practical experience in the field, which m a d e him a valuable individual in the organization. He became the supervisor of the bakery machinery division (1937) and of the production of water softening units. Later, he became manager of the bakery sales department and director of the metallurgical plant at Bahía Blanca. Nestor Sozio, the second oldest son, began his career in the thirties. Di Telia placed him in the foundry but in 1934 he was transferred to the Accounting D e p a r t m e n t to work under Schibli. In the year 1934 irregularities were suspected in the operation in Brazil, and Nestor, with very little experience but as a man in whom Di Telia had confidence, was sent to audit the company's books. His competence led to an extension of his powers, and Nestor took up permanent residence in Brazil. He married a Brazilian and through the years he has pushed the development of S.I.A.M. Brazil to an important industrial position. In 1960, as General Manager, he was responsible for the new business development with Westinghouse in Brazil—Westingbraz. T o r c u a t o Sozio, the last of the nephews, was brought into S.I.A.M. through different channels. Torcuato studied law at the University of Buenos Aires, receiving a Doctor's degree in 1941. Di Telia encouraged him to gain experience by placing him in the offices of Mrs. Di Telia's brother who was a lawyer for the company with a large outside law practice. From the office Torcuato Sozio

66

E N T R E P R E N E Z R S H I P IN A R G E N T I N E C U L T U R E

handled some of the company's legal problems and in 1945 he received Power of Attorney for the company. Torcuato's legal work kept him in close touch with his uncle's business. Di Telia was searching among his relatives for a person who could inherit his position. Some of his friends and family thought he was considering retirement in 1947 or, at least, the need to slow down as his health was failing. On several occasions he displayed confidence in his nephew Torcuato Sozio. For instance, during his trip abroad in 1945 Di Telia's two sons were left in Argentina under the supervision of Sozio. Throughout this period of absenteeism Torcuato Sozio was careful to write to his uncle in great detail all the events of those days. His letters express the attitudes that he had toward his uncle: Dear Uncle and Aunt: The news of your arrival in Miami has brought us tranquility, happiness, and gratitude. Tranquility, because inconvenience at the beginning of the trip has kept us in suspense; happiness, to know that the air travel, certainly the most dangerous, has ended; and gratitude to God who listened to our prayers. . . . (Buenos Aires, June 16, 1945.)

T h e letters include intimate details of family life. One recounts the birthday of one of the Di Telia boys and describes the family's reactions when Di Telia telephoned them on this occasion. In the letter of J u n e 16, Sozio wrote Di Telia about his work at the company: I divide my time between my law practice and your office where I look over the mail received by l i our President" . . . and I am assisted by your secretary. I answer what I feel is important. For instance, a letter from the

Banco Popular Argentino confirming your appointment as a director, and another similar letter from the Instituto

de

Conferencias of the Unión Industrial notifying you that your

A N I T A L I A N FAMILY I M M I G R A T E S T O A R G E N T I N A

67

resignation was unanimously rejected. . . . T h e rest of my function is reduced to signing checks. T h e p e r s o n a l relationship of uncle a n d n e p h e w was spoken of as a " j o k i n g r e l a t i o n s h i p " f r e q u e n t l y s h o w n in letters: " M r . G e n e r a l S e c r e t a r y of the Presidency, T o r c u a t o S o z i o ; " " M r . President of S . I . A . M . Di T e l i a L t d a . , E n g i n e e r T o r c u a t o Di T e l i a . " It has b e e n n o t e d t h a t uncle a n d n e p h e w shared m a n y personality traits. Both h a d m o m e n t s of g r e a t e n t h u s i a s m in w h i c h significant decisions w e r e r e a c h e d a n d i m p o r t a n t innovations p l a n n e d ; these peaks of c r e a t i v e o u t p u t , h o w e v e r , w e r e followed by s h a r p descent into periods of relative inertia a n d a m e c h a n i c a l consolidation of gains. I n this respect, Di T e l i a has been c o n t r a s t e d with Schibli a n d C l u t t e r buck, w h o s e work was m o r e m e t h o d i c a l a n d e q u a l in intensity f r o m d a y to d a y . D r . Sozio has p l a y e d a n i m p o r t a n t role in the f a m i l y a n d the c o m p a n y since Di T e l i a ' s d e a t h . H e has s u p e r vised f a m i l y affairs a n d advised M r s . Di T e l i a ; h e is a director of the c o m p a n y a n d shares t o p p o l i c y - m a k i n g with the G e n e r a l M a n a g e r , G u i d o C l u t t e r b u c k . Sozio is D i r e c t o r of S . I . A . M . Brazil a n d U r u g u a y ; President of S . I . A . M . C h i l e ; a n d d i r e c t o r of several subsidiaries of S . I . A . M . H e has achieved p r o m i n e n c e in A r g e n t i n e society t h r o u g h such positions as r e p r e s e n t i n g A r g e n t i n a in a n i n t e r - A m e r i c a n c o n f e r e n c e on c o m m e r c e a n d p r o d u c t i o n in W a s h i n g t o n in 1949, a n d D i r e c t o r of t h e Banco de la Xación of A r g e n t i n a f r o m 1950 to 1952. H e has also b e e n well k n o w n for his p a r t i c i p a t i o n in n a t i o n a l industrial o r g a n i z a t i o n s , a n d for his h a n d l i n g of t h e c o m p a n y t h r o u g h the difficult years of P e r ó n ' s g o v e r n ment. Mrs. D i T e l i a ' s b r o t h e r s , t h e R o b i o l a s , also h a v e been p a r t i c i p a n t s in the c o m p a n y ' s d e v e l o p m e n t . D r . M a r i o

68

ENTREPRENEURSHIP IN ARGENTINE CULTURE

R o b i o l a , Director of S . I . A . M . Buenos Aires, has been the c o m p a n y ' s l a w y e r for m a n y years. Dr. R o b i o l a w a s one of the l a w y e r s responsible for h a n d l i n g the c o m p a n y ' s case in the g o v e r n m e n t investigation after the d o w n f a l l of Perón. His brother, J u a n R o b i o l a , b e g a n a c a r e e r in S . I . A . M . Buenos Aires a n d in 1933 w a s sent to S . I . A . M . Chile. Di T e l i a h a d o r i g i n a l l y indicated that this was to be a t e m p o r a r y a r r a n g e m e n t . However, J u a n R o b i o l a r e m a i n e d in C h i l e a n d in 1960 was Director a n d M a n a g e r of S . I . A . M . C h i l e . Di T e l i a ' s i m m e d i a t e f a m i l y was limited to his wife a n d two sons. T o r c u a t o , his eldest son, m a r r i e d K a m a l a A p p a r a o of I n d i a a n d Guido m a r r i e d Neli R u v i r a of Buenos Aires Province. In d e a l i n g with his c h i l d r e n : He didn't waste time getting around to the point . . . he was always v e r y direct. W h e n he did something for enjoyment with the family it had a practical application and was connected with some facet of his activities. 2 7

During the e a r l y years, the f a m i l y a c c o m p a n i e d Di T e l i a to his factory on S a t u r d a y afternoons a n d S u n d a y m o r n i n g s ; l a t e r on, after a c q u i r i n g a l a r g e ranch at N a v a r r o , he spent the week ends with his f a m i l y p l a n n i n g a n d developing the d a i r y business. T h i s constant activity on the part of Di T e l i a did not leave much time for participation in Buenos Aires social life. I n d e e d he w a s critical of people who spent their time in meaningless social affairs. His close friends were selected carefully for intellect a n d c h a r a c t e r ( s i m p à t i c o ) , hoping that association with such people w o u l d favorably influence his children's development. D u r i n g his political activities against Fascism he favored relationships with Italians, particul a r l y those w h o s h a r e d his views. Di T e l i a took for g r a n t e d that his sons w e r e to continue 17

I n t e r v i e w w i t h M r s . Di T e l i a .

AN I T A L I A N F A M I L Y I M M I G R A T E S T O A R G E N T I N A

69

in the development of S.I.A.M. and was careful to provide incentives and facilities toward that goal. Both sons received the degree of engineer. Shortly before Di Telia's death, however, the eldest son chose to become a sociologist, and pursued his training at Columbia University and in England. In 1960 he was teaching Sociology at the University of Buenos Aires a n d had no direct participation in S.I.A.M.'s affairs. Guido officially joined the c o m p a n y in 1957 as a member of the top m a n a g e m e n t . T r a i n i n g in engineering at the University of Buenos Aires and in industrial and economic study at Massachusetts Institute of Technology, where he completed the requirements for the Ph.D. in 1960, prepared him for an active role in the company. Guido's concern with the continuity of the business tradition established by his father led him to plan the Di Telia Foundation. T h e Foundation and the Institute, subdivided into various centers of activities, will sponsor realization of Di Telia's interest in research and community development. T h e kinship chart (Table 10) shows that fourteen members of the Di Telia family have h a d careers with the company. Students of m a n a g e m e n t often assume that nepotism breeds inefficiency and difficulties in succession. An examination of the context in which Di Telia was working and the n a t u r e of the S . I . A . M . structure ç^sts doubt on the universal validity of this assumption. In the period before 1940, Di Telia had to build from a supply of local m a n a g e m e n t which was i n a d e q u a t e in quantity, training a n d 'discipline. T h r o u g h w a r m ties of kinship, Di Telia could c o m m a n d the loyalty of his relatives. He could rely on their honesty and their willingness, once trained, to stay with the company. This m a y be contrasted to the nineteenth-century situation in the United States, when large sections of industry were built

70

E N T R E P R E NE l - R S H I P IN A R G E N T I N E C U L T U R E

u p by supervisors w h o q u i t their original employers for o t h e r positions or f o u n d e d their o w n firms, or to t h e experience S . I . A . M . h a d with some n o n f a m i l y m i d d l e m a n a g e r s . Before a n y m e m b e r s of the Di T e l i a family b e c a m e i m p o r t a n t in the o r g a n i z a t i o n , however, m e n w i t h strong loyalties to the person a n d leadership of Di T e l i a h a d b e e n r e c r u i t e d for the S . I . A . M . family a n d p u t in the most responsible positions. F u r t h e r m o r e , in fitting his relatives to t h e i r v a r i o u s j o b s , Di T e l i a used the same good j u d g m e n t t h a t c h a r a c t e r i z e d his choice of outside personnel. M e n w h o w e r e p r i m a r i l y mechanics, such as Angel A r m e t t a , w e r e kept in this capacity. A m b i t i o u s m a n a g e r s such as A l b e r t o Di T e l i a were held to jobs t h a t suited their e x p e r i e n c e a n d capacity. W h e n a relative of o u t s t a n d i n g ability such as T o r c u a t o Sozio c a m c along, h e was e n c o u r a g e d to e d u c a t e himself t h o r o u g h l y a n d t h e n t a k e n in at the t o p . 2 8 Relatives were not given f a v o r e d financial t r e a t m e n t at the expense of the c o m p a n y . C l u t t e r b u c k r e m e m b e r s t h a t Di T e l i a p a i d e x t r a b e n e fits for m e m b e r s of his family out of his own pocket. F o r e x a m p l e , A l b e r t o Di T e l i a was ill for three years a n d c o n t i n u e d to receive a salary, b u t this was p a i d by his uncle personally a n d not by the c o r p o r a t i o n . 2 9 I n s u m , the S . I . A . M . family, a core of a b l e individ u a l s o p e r a t i n g close to Di Telia, were reinforced by m e m b e r s of the Di T e l i a family to constitute a strong a n d stable g r o u p . T h i s c o m b i n e d g r o u p p a r t i c i p a t e d in S . I . A . M . ' s d e v e l o p m e n t by p r o t e c t i n g the c o r p o r a t i o n ' s interests, a n d the d e g r e e of their identification with the c o m p a n y has s u p p o r t e d a gemeinschaft t r a d i t i o n in the o r g a n i z a t i o n . F u r t h e r m o r e , the use of familial relationships as a source of c o m p a n y personnel h a d the a d v a n t a g e 28 The above statements regarding nepotism and the use of relatives in S.I.A.M. were suggested by Dr. Thomas Cochran. Ie Interview with Clutterbuck.

AN I T A L I A N F A M I L Y I M M I G R A T E S T O A R G E N T I N A

71

of c r e a t i n g a c o n t i n u o u s pool f r o m w h i c h f u t u r e generations of S . I . A . M . p e r s o n n e l could be selected in a m a r k e t w h e r e such m a n a g e r i a l l a b o r was h a r d to secure a n d to h o l d . P u t a n o t h e r way, the scarcity of reliable o u t s i d e m a n a g e r s m a y well h a v e m a d e the inevitable u n e v e n n e s s of f a m i l y talent the lesser disadvantage.

" Relatives" Agustín Sozio

Δ —

KINDRED

Teresa Di Telia

Pablo Di Telia Δ =

Teresa Di Telia

Salvador

Di Telia

i_L Felipa Sozio

Elena Gonzales O Carman

Cesar Di Telia

O = +

A Armando Nélida O i- Di Telia

Δ Emilio Soresina

= Δ Jose +

Adela O +

/

CHART

TADLE

10

OF T H E

DI

Τ Nicolas Δ + Di Telia

TEMA

I O Ana M:

Laura

A Hercules Sozio

/ / / / /

1 o Armando Jorge

1 A+

/

Δ Giulio Δ = O Ana Cesar Presutti Marie ι

María Alicia

O +

Adela

Agustín

/ / f

— A =0

^Ο 0 = Α Albert. 1 Torcuíto Τ Τ + Juan j Emilia Caserta Nestor Laura Τ Lunardeli Marta Fouquet

/ / Γ Δ Enzo

/

Δ Jose'

Δ Carlos

"Real Family"

* Source: Guido Di Telia interview.

Δ Nestor

Δ Luis Torcuato

Ι TF.M.A

Kindred by "adoption"

FAMILY*

Di Telia O = Δ Zurlo .

+

l

+

I Francisco Λ = O Virginia + Robiola + Ricotti

Ana Maria Zurlo Di Telia

1 ura Ο = Δ

Juan Di Telia

1 Blanca O = A

Angel Armetta

1 A +

TORCUATO

π 1 ι Alberto A = O Elfrieder Blanca O = A Arturo 0 = Δ Torcuata fuan Fisher Uriarte .serta Kamala Apparao

φ

N

1 Gina Ricotti O = Δ Piero Sacchi

Mario A = O Delia J u a n A = O Julia Gigena Mariani

MARIA

" Ί ο Julia

ι \ r Guido A = O Neli ^ O Ruvira \ Graciele ~ \ \ \

\

\ \

Γ Δ Arturo

Δ Carlos

A O + = Φ

1

Γ Ο Δ Ana Victor Maria

Γ

Ί Δ Δ Andrew Luciano

María Clara

Individuals who worked for S.I.Α.M. or subsidiaries Male Female Deceased Marriage Divorced

Τ Δ Santiago

1 Mana Paula

\ \

Piero

Sacchi

CHAPTER III S.I.A.M.—THE CRITICAL YEARS 1 9 2 8 - 1938

ALONG W I T H MANY O T H E R E N T R E P R E N E U R S , DI T E L L A W E N T

from a time in the late twenties when ever)· prospect seemed favorable into the most severe business ordeal of his career. But the true impact of the world-wide collapse was not realized in most countries until late in 1930. Meanwhile Di Telia's enterprises were expanding so fast that it was almost impossible to keep finance, production, and sales in adjustment. T o a considerable extent Di Telia's successes were feats of personal salesmanship. He had a wide range of contacts, which were helpful when he moved into new fields of production. At every turn in the history of his business operations, one is impressed by the c h a r m of the Di Telia personality. Since Di Telia believed in the maxim u m use of bank credit, charm and tact were needed in early problems of financing.1 1 Interview, T . M . Schmidt, one-time head of the Banco Transatlántico Alemán, February 1959. Di Telia also kept closc track of banking opinion regarding the company, as indicated by a n u m b e r of confidential reports f r o m 1927 to 1931 in the files.

72

S . I . A . M . — T H E CRITICAL YEARS

1928-1938

73

T h e gradual increase in the bakery machinery business and the soaring sales of gasoline pumps, tanks, and other service station equipment increased net sales from around a million pesos a year in 1924 to over three million in the twelve months from August 1925 to J u l y 1926, to 4,800,000 in the following fiscal year, and to nearly 6.000.000 in-the year ending in J u l y 1929. By 1927 orders were outrunning production facilities. T h e -factories at Cordoba and J e a n J a u r è s Streets and the small foundry at Velez Sarsfield Street could not turn out much more. Di Telia had two alternatives: he could make piecemeal additions to facilities within the city, or he could build a big factory in the suburbs. He probably never seriously considered the first alternative. A new, modern plant was sound business j u d g m e n t and fitted his plans for expansion. 5.1.A.M., he felt, was destined for great things. T h e year 1928, therefore, was inevitably a year of major decisions. But the events of the year went beyond problems of production. It was the year of an important trip to the United States a n d , E u r o p e ; of important investments for factories in Sào Paulo, Brazil, Santiago, Chile, and Montevideo, U r u g u a y ; of the incorporation of S.I.A.M.; of the beginning of the factory at Avellaneda ; and of Di Telia's marriage to Maria Robiola. O n his trip to the United States Di Telia studied methods of finance. " I t brought as a consequence an expansion of sales on credit paid for in monthly installments, which increased to an extraordinary extent the commercial activities of the enterprise." 2 He also established a London sales and purchasing subsidiary run by Clutterbuck's brother-in-law, M. S. Guermont. T h e details of the London firm as well as the expansion in New York, Brazil, Chile, and Uruguay will be discussed 8

I n t e r v i e w w i t h O s c a r Fussatti.

74

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E 3

later, but they must be seen here as a substantial part of the enormous burden of new costs, which Di Telia assumed in the flush times of the late twenties. Bakery machinery h a d done extremely well in its pioneer phase in Argentina and there was no reason to suppose that with the same moderate investment the same success could not be achieved in the three neighboring countries. T h e one element that was modestly left out of the calculations was Torcuato Di Telia. T h e bakery machines had succeeded quickly because of his selling and attention to details. T h e Chilean and U r u g u a y a n ventures struggled along for many years before they became really profitable operations. T h e Brazilian company, the largest of the three, had more than a decade of costly failures. S.I.A.M. AND

AVELLANEDA

I n the fall of 1928 Di Telia incorporated his proprietorship into the Sociedad Industrial Americana Maquinarias Di Telia Limitada, (still S.I.A.M., for short). Capital in the new corporation consisted of 50 six per cent preferred shares, without votes, and 450 ordinary shares, each with one vote. Both types of shares had a par value of $10,000. Di Telia turned over the assets of his proprietorship, rated by the accountants at S3,267,313.36 as o f j u l y 31st, plus SI,732,686.64 representing the additional value of patents, trade-marks, and good will in return for all of both types of stock of the company, and 8300,000 a year for five years for the right to use the patents. 4 T h e preferred shares were partly distributed by Di Telia to J u a n Di Telia, Clutterbuck, and Schibli. Di Telia became President of the new corporation, and Schibli was » Chapter IV. 4 Board Minutes, Number 14. ( " $ " refers to Argentine pesos.)

S.I.A.M.

THE CRITICAL YEARS

1928-1938

75

named General Director. Other directors included Eduardo G. Drabble, J u a n Di Telia, Pablo C a l a t a y u d , and Clutterbuck. The corporation not only left control and ownership with the family and trusted executives, but also suited the more exact accounting procedures demanded by the bankers. 5 In an attempt to market debenture bonds in London, Di Telia had his accountants draw up a series of statements in English covering his proprietorship from 1924 to 1927. 8 Undoubtedly Di Telia had been thinking of a new factory for sortie time. When the rapid rise of the gasoline pump and seitvice station business made action necessary he purchased some twenty acres of land in three lots along the Riachuelo River about four miles east and south from the center of the city. Di Telia hoped that the river might offer an added means of transportation. Keeping a channel open proved to be too expensive, but the river frontage added greatly to the value of the land. In fact, the property proved one of Di Telia's most successful investments. Its rising value was an excellent security for bank loans. In spite of his pressing business problems in both finance and sales Di Telia personally supervised the move to Avellaneda, and the setting up of the machines. Since most of the latter were already well worn, there was always some fear of trouble. According to Sudiero, Activities started at A v e l l a n e d a in J u l y 1 9 2 9 . Di Telia wanted to move from C o r d o b a to A v e l l a n e d a as quickly as possible and start making new models of pumps for filling stations, because in all parts of the world there w e r e new types and Di Telia w a s a f r a i d of being left behind. T h e model of the p u m p they started to m a n u f a c t u r e was w h o l l y 5 Interview with Fussatti. * The bond issue was not negotiated. All references to the book· of account, unless otherwise specified, are to the annual audits by Deloitte Plender, Griffiths & Co.

76

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

Mr. Di Telia's idea. He would stay beside the project designer and give him instructions. As an engineer Di Telia was very good . . . he had a very good eye.7 W h e n operations were going full speed at Avellaneda in D e c e m b e r of 1930, there were 367 m a n u a l workers and a score or more of salaried employees. 8 T h e price of the land at Avellaneda h a d been initially entered in the books at $509,000. T o construct a factory large enough to allow for expanding operations, then increasing at the rate of 50 per cent a year, an additional investment of over a million pesos was needed for buildings and machinery. Di Telia h a d n o private resources of a n y i m p o r t a n c e outside of S . I . A . M . a n d his three foreign companies. Expansion had been so continuous since hit r e t u r n from the war that most of his available funds h a d been p u t back into the business, a n d those invested outside had brought no returns. 9 T h e c o m p a n y still owed Allegrucci S328,000 at 8 per cent and Schibli $202,000 at 8J per cent. While neither of these loans was a pressing obligation, they testified to the need for cash. Consequently the new factory forced Di Telia to raise money on a scale far beyond his previous experience. I n 1927 the old plants and offices were appraised at $717,000. Now Di Telia h a d to convince the bankers that the §700,000 works were worth expanding to the $2,000,000 level on the basis of current business prospects. Meanwhile, he was expanding his foreign operations and securing local credits in Brazil, Chile, and U r u g u a y . I n Argentina he enlisted the help of the Banco Alemán, the Banco de la Nación, and the Banco de landres y Sud Amemano. 7

Interview with Antonio Sudiero. T h e interpretation of the figures from the Personnel Office files is not clear. Company officials believe the 367 manual workers were all at Avellaneda. About 70 or 80 more were at Velez Sarafield Street. Total salaried employees at all locations was apparently 119. » See Chapter I I . 8

S.I.A.M.

THE CRITICAL YEARS 1 9 2 8 - 1 9 3 8

77

P e n d i n g the negotiations of a m o r t g a g e on the new f a c t o r y in 1929, the cost of construction was carried by b a n k loans. O f nearly S900,000 a p p a r e n t l y used for this purpose, t h e Banco Alemán a d v a n c e d 8500,000. T o serve as a b e t t e r base for the m o r t g a g e the Avellaneda l a n d h a d been rea p p r a i s e d at S 1,016,000 in 1928. In S e p t e m b e r of 1929 a m o r t g a g e of S 1,200,000 on Avellaneda was n e g o t i a t e d with the Banco de Londres y Sud Americano.10 Di T e l i a ' s optimistic view of the situation at the close of 1929 is shown in a m e m o r a n d u m on the c o m p a n y position. I n gasoline p u m p s , wrote Di Telia, . . . practically all the business was obtained not only from the individual buyers, but from the oil companies, who in the past had imported pumps direct. The great increase of business necessitated a new works building, which was also required to handle the increasing bakery business. (About 90 per cent of the total latter business lias been ours for the last five or six years.) The major part of the bakery equipment is sold on the hire purchase plan (with notes) ; the terms vary from twelve to thirty monthly installments.

(«) · · · (b) Bakery Ovens: This is an extraordinarily important and profitable line which has not been developed for lack of capital. (c) Gasoline Pumps : A new law of Weights & Measures obliges all pumps to be changed by December 31, 1931. This law is already being enforced, and all pumps installed must be approved. At present only two pumps meet with the regulations' requirements, and soon there will be a third. T h e number of pumps to be changed is more or less 9,000 and we can expect at least 60 per cent of the business. (The balance is Standard Oil Company business.) 1930 promises to be our first really big year in oil pumps. 10

Directors' Minutes, acta 34, 1929.

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E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

O u r p u m p section has never been able to sell to the S t a n d a r d Oil C o m p a n y a n d this is the largest single consumer in South A m e r i c a . At present they buy their tanks locally while the p u m p s a r e Gilbert & Barker i m p o r t e d . Should they be willing to enter into a g r e e m e n t t h e r e would be a n i m p o r t a n t gain. (d) Service Stations: T h i s section has the greatest possibilities for expansion a n d there is a vast u n t o u c h e d m a r k e t . I n six m o n t h s we have a b o u t 50 per cent of the total business, a n d in a few m o n t h s m o r e our selling force all over the c o u n t r y will have practically d o m i n a t e d the m a r k e t . W e can expect between 80 per cent a n d 90 per cent of the total business. T h e r e is a high import duty on service station equipment. (e) Steel Construction W o r k : W e only m a k e u n d e r g r o u n d storage tanks for gasoline a n d we a r e not able to cope with t h e oil companies' other necessities such as truck tanks, bulk storage tanks, etc. ( f ) W a t e r Softeners: T h i s is a new line which we work in c o n j u n c t i o n with the P e r m u t i t C o m p a n y . T h e r e is practically no competition. T h e r e a r e several other i m p o r t a n t lines in development such as oil b u r n e r s (industrial, bakery & domestic) a n d fire extinguishers. T h e Yacimientos Petrolíferos Fiscales continually ask for materials which we a r e not able to supply for lack of production capacity. M a n y years experience a n d the profitable results achieved (all the present capital is a c c u m u l a t e d profits) prove t h a t local m a n u f a c t u r e provided it is carried out with m o d e r n m e t h o d s a n d m a c h i n e r y is basically a n d economically sound. A striking example is provided by t h e b a k e r y machines, which enter the country d u t y free. I n spite of this, we sell cheaper t h a n the imported machines a n d have 90 per cent of t h e business. Again, the a d v a n t a g e of being able to construct machines in a c c o r d a n c e with local customs, regulations a n d other r e q u i r e m e n t s o r fancies is

S.I.A.M.

THE CRITICAL YEARS 1928-1938

79

manifest in all our lines and gives a decidedly privileged position in the market. 1 1

If sales had continued to grow as Di Telia expected when he composed the m e m o r a n d u m , indebtedness on loans and mortgages would not have been serious, but in the first year of the world-wide depression, mid-1929 to mid-1930, the volume of S.I.A.M.'s sales fell off 12 per cent, and net profits fell 25 per cent. Because of the expense and interruptions in production caused by moving, profits had never attained the 1926-27 level of S 1,326,000, but by 1929-30 they had sunk to S909,000, barely better than the pre-expansion level of 1925-26. Meanwhile, the foreign operations were showing a net loss. O n August 1, 1930, S 1,184,000 in time loans was due within the next twelve months. T H E B A T T L E OF T H E PUMPS

Over 50 per cent of the peso value of sales for the fiscal year 1929-1930 was from gasoline pumps, but for several reasons this large volume was unstable. In order to understand the financial problems of succeeding years, it is necessary to analyze the gasoline p u m p situation in some detail. As noted earlier, from 1923 on, Di Telia had assembled a n d sold Wayne Pumps under an exclusive license. By 1927 many Argentines were alarmed by the n u m b e r of service stations that tampered with their pumps to deliver short measure. Of a 200,000,000-peso annual consumption of gas, Di Telia estimated that the dishonest practices cost consumers 10,000,000 pesos. 12 T o Di Telia the answer seemed to be a glass container on the p u m p , which would be filled to five gallons and then be emptied 11

M e m o r a n d u m , company files. Letter from Di Telia to the Editor of La Prensa, O c t o b e r 3, 1930, C o m p a n y files. 12

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E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

into the automobile. This part of the pump was not too difficult to design, and Di Telia employees were familiar with pump mechanism. After a personal argument with J . H. Williams, the W a y n e Pump representative, Di Telia terminated the licensing agreement and the S.I.A.M.Blok pump was put on the market. 1 3 Throughout most of the twenties, there had been fierce competition between foreign oil companies and, later, Y.P.F. The 1926 expansion of Y.P.F.'s gasoline marketing facilities was a stimulus to pump manufacture, but with the agitation from 1927 to 1930 for nationalization of the oil industry, the demand for pumps by other companies dropped sharply. M a n y pumps were removed and stockpiled by the private oil firms. Di Telia secured several contracts with Y.P.F. during this period. By the fall of 1930 Y.P.F. had contracted for 780 pumps, or about 20 per cent of the total S.I.A.M. sales. 14 Political factors, however, made the relationship unstable. Y.P.F. had been able to buy S.I.A.M. pumps because the liberal Irigoyen government favored largescale expansion for the state monopoly in gasoline distribution and sales. The 1930 revolution meant a new attitude toward Y.P.F.'s development. The old directors, including Di Telia's close personal friend General Enrique Mosconi, were ousted. Expansion was halted and S.I.A.M.'s contracts were terminated. Meanwhile, Di Telia had turned setback into advantage with a development in government regulations. French interests, the S.A.T.A.M. Company under J u a n Borotra, had been trying to get into the pump market in Argentina. 1 5 The Office of Weights and Measures of the Ministry of Agriculture was urged to adopt specifications similar 1 3 This is an example of the importance of good personal relations in L a t i n American business. 1 4 Letter, op. cit. T h e company has no copies of these early contracts. " Interview with H. R . G. Clutterbuck.

S.I.A.M.

THE CRITICAL YEARS 1928-1938

81

to the prevailing French ones; these would exclude any American-made pumps from license. Early in 1928 the Office refused to license for installation any p u m p s except the French models. In this, however, it was exceeding its legal powers under the existing regulations. Di Telia immediately protested that his measurement device was equally accurate, and was able to win recognition of this when the new regulation was issued on October 9, 1928. Article 5 stated that: " I n every p u m p , measurement shall be done by means of a recipient measurer, adjusted and inalterable once sealed;" and Article 11 provided t h a t : "Different quantities will be indicated in the measuring recipient, by means of graduations marked in a form clearly visible and inalterable. . . . " Installations of the machines previously approved was permitted to March 31, 1929, and as noted in Di Telia's m e m o r a n d u m , all existing pumps had to be changed to comply with the law by December 31, 1931. O n J u l y 25, 1929, Di Telia won official approval for his pumps as the only locally made ones meeting the new requirements. "By October of 1930 there were 10,000 old p u m p s not complying with the regulations, 3,000 installed in the transition period that partially met the requirements, and 2,000 completely legal S.I.A.M. p u m p s . " 1 6 Although S.I.A.M. shared its temporary monopoly with the French pumps, it was apparently seen by American interests as a far more dangerous competitor. Di Telia received full blame for the setback to Wayne P u m p and other American firms. T h e battle lines were drawn. T h e United States Consul reported to the D e p a r t m e n t of Commerce, as released in December of 1929, that S.I.A.M. was an "undesirable connection" for United States firms. A confidential report to a Boston banker in April 1930, claimed that Di Telia h a d "copied various pumps for "

Ibid.

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CULTURE

gasoline, p a t e n t i n g t h e m with few modifications u n d e r his n a m e . I t [ S . I . A . M . ] is a firm whose morality or r a t h e r t h a t of its h e a d is w o r t h absolutely n o t h i n g . " 1 7 M a n y interests in the U n i t e d States, feeling the allegations w e r e unjustified, rose to Di Telia's defense. F. B. Y o u n g , Assistant M a n a g e r of the Boston Bank, suggested t h a t Di T e l i a " t a k e the m a t t e r u p direct with the D e p a r t m e n t of C o m m e r c e in W a s h i n g t o n . . . . " 1 8 O t h e r banks, firms dealing with S . I . A . M . , a n d the D u n Credit Agency r e p o r t e d f a v o r a b l y on the c o m p a n y ' s standing with t h e m . W a y n e P u m p , t h r o u g h its local representative J . H . Williams, hotly contested the Argentine g o v e r n m e n t ' s r u l i n g . F r o m J a n u a r y 1930 until the end of J u l y , Williams tried unsuccessfully to d e m o n s t r a t e to the Office of W e i g h t s a n d Measures t h a t the S.I.A.M.-Blok 88 could give f r a u d u l e n t m e a s u r e . T h e net result, according to Di T e l i a , was t h a t " i t has been p r o v e d t h a t it is impossible to d e f r a u d a c u s t o m e r " . O n the contrary, " b y violent a n d a b n o r m a l operations, 315 to 370 g r a m s extra c a n be dispensed."19 M o r e d a n g e r o u s to Di T e l i a was the c h a n g e in governm e n t , which m a d e Y . P . F . a n d firms dealing with it, vuln e r a b l e to political attack. O n S e p t e m b e r 27, 1930 La Prensa ran a n article u n d e r the h e a d l i n e : " A Serious M o n o p o l y has been A t t a c k e d in the Installation of Gasoline P u m p s , " with a s u b h e a d l i n e : " O n l y a selected firm can p a r t i c i p a t e in the bids of the a d m i n i s t r a t i o n of Yacimientos Petrolíferos Fiscales." W i t h o u t n a m i n g S.I. Α . M . , t h e article s a i d : " b i d s . . . h a v e been a mockery, i n a s m u c h as only one could be presented, d e m a n d i n g the price [ S . I . A . M . ] desired. . . . " T h e new Minister of A g r i c u l t u r e was said to b e studying the m a t t e r . 17

Confidential reports collected by D i T e l i a . Letter f r o m F. B. Y o u n g to Di T e l i a , M a r c h 7, 1930, c o m p a n y files. ι» Letter f r o m Di Telia to La Prensa, O c t o b e r 3, 1930.

18

S.I.A.M.

THE CRITICAL YEARS

1928-1938

83

Di Telia replied by sending a long memorandum, the source for much of this narrative, to the editor of La Prensa, and to Horacio Beccar Varela, the new Minister of Agriculture. In the covering letter to the memorandum he defended his company against malpractice charges and emphasized that S.I.A.M. was building a new industry in Argentina. While the new government curtailed the activities of Y.P.F., excluding it from the distribution of pumps, the. ruling of the Office of Weights and Measures apparently remained. Additional firms, however, were able to meet the requirements. Gasoline pump sales were being hit not only by increasing competition and the loss of Y.P.F. orders but also by the collapse of the automobile boom. With fewer new cars on the road the spread of stations slowed down. From the fiscal year 1929-30 to 1930-31 pump sales fell nearly 50 per cent. The promise of a growing business had been the immediate impetus behind the move to Avellaneda; this promise was not being fulfilled. SKILLED P E R S O N N E L A N D L A B O R BENEFITS

Financial trouble brought on by the severe decline of the business cycle was a temporary rather than a basic problem. The long-run success of Avellaneda depended more on an organization of technicians and skilled workers that would operate efficiently. Much of the designing and process initiation was done by engineers borrowed from established foreign plants. For example, in 1927 when Di Telia decided to manufacture more parts of the gasoline pumps, he contracted for a man from FIAT. In order to expand in new products, however, S.I.A.M. needed more young engineers and skilled technicians on its own staff. Working through his brother at the University of Turin, Di Telia advertised in Italian newspapers for an engineer. Sudiero, who had a

84

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CULTURE

good technical position but an incompetent boss, decided to apply. He got the job and sailed for Buenos Aires early in 1928. In addition to Sudiero, who was to be one of the most important technical men in the history of the company, six or seven other young Italian engineers were recruited. During this period, the engineers at S.I.A.M. were all Italians and the foremen were predominantly so. Through these additions to its staff S.I.A.M. was supplied with technical men who had the imagination and confidence of youth. Flexible and in most cases intensely loyal, they were instrumental in sustaining company morale through the depression. They joined eagerly with Di Telia in looking for new products, in experimenting with the manufacture of more of the parts of the pumps and other machines that they assembled, and in entering into contracts for special equipment. They became deeply identified with S.I.A.M.'s success. An example of the energy of the young men was Sudiero's check on prices for machinery. Normally Di Telia purchased machine imports through Juan José Guastavino, a director of S.I.A.M. and President of the Italian importing firm of Italo Negroni & Hnos., at 5 per cent commission. In general Negroni had a good price, but frequently Sudiero, on his own initiative, wrote to a number of European firms for comparisons. The recruiting process was not always this successful. In some cases young Italian engineers turned out to be temperamentally unsuited to the trying conditions of pioneer factory work. In other cases the Italians literally succeeded too well. Venturini mentions a number of young technicians, who having acquired production experience at Avellaneda, left to go into business for themselves. Three of these émigrés from Avellaneda developed businesses ultimately worth, in the aggregate, some 20 million

S.I.A.M.

THE CRITICAL YEARS 1928-1938

85

pesos, and Venturini estimated that all in all his exworkers accumulated a capital of over thirty-five million pesos. 20 Such losses of skill to the companies that provided the initial training were probably an inevitable part of early industrial expansion. Nonetheless, while figures are lacking, there is a prevailing impression that S.I.A.M.'s labor turnover was low during the twenties and thirties. Di Telia was the first Argentine industrialist regularly to offer á bonus for extra production. T h e Italian immigrants, either coming independently or brought under contract, were generally anxious to work hard and save money. There were very few specialized Argentine-born personnel at this early time. Aside from Italians, there was a sprinkling of Germans and a few from other European nations. T h e discipline of foremen and superintendents was readily accepted. 2 1 U p until the later thirties the work force was small enough for Di Telia to know personally the men who had been on the j o b for several years. This personal contact between labor and management created a morale that was doubtless important in the low rate of turnover. Furthermore, traditional Argentine labor practices bolstered job security. Once hired, an employee was not laid off or fired cxcept under extreme provocation, sincc dismissal was viewed as a blow to the individual's integrity. Argentine employers were far mere apt to transfer mediocre personnel in key jobs to positions of token responsibility, and replace them with more efficient men. T h e relatively isolated location of Avellaneda presented an initial problem. There were no company cafeterias or nearby restaurants. The workers made campfires around the grounds and roasted beefsteaks. Some are reported to 20

«

Interview with Venturini. Ibid.

86

E N T R E P R E N E U R S H I P IN A R G E N T I N E

CULTURE

h a v e left because of the long trip from their homes a n d the lack of eating facilities 2 2 —a very i m p o r t a n t m a t t e r to b o t h Argentines a n d Italians. T h e r e is no indication t h a t S . I . A . M . a t t r a c t e d workers by wages above the going rate. A notice issued in S e p t e m b e r of 1934, however, provided a c o m p a n y - a d m i n i s t e r e d welfare p r o g r a m . I n the event of sickness, employees w h o h a d been with the c o m p a n y m o r e t h a n one year, would be paid for a period of three m o n t h s ; those with m o r e t h a n ten years' service would be paid for six months. After r e t u r n i n g f r o m sick leave the employee of over a year h a d his j o b security g u a r a n t e e d for fifteen months, a n d the worker of over ten years' s t a n d i n g could not be dismissed within eighteen months. Notice of dismissal was given, if necessary, one m o n t h in a d v a n c e to any employee a n d two m o n t h s in a d v a n c e to those of over five years' service. Severance p a y of half a m o n t h ' s salary for every year worked, with a one m o n t h ' s salary m i n i m u m , was put into effect starting S e p t e m b e r 24, 1934. This was calculated on a basis of the average p a y received d u r i n g the last five years. T h e same a m o u n t s would be paid in case of d e a t h , b u t a more generous schedule of survivor benefits was set u p for laborers, starting at 200 pesos for over one y e a r of employment. I n addition lo the above there were benefits that illustrate the paternalistic Latin employer-employee relationship. For weddings the c o m p a n y presented one m o n t h ' s salary to those with at least two years of service, u p to a m a x i m u m of 250 pesos. A laborer employed for a year would receive fifty pesos. If both spouses were working for S . I . A . M . at the time of the wedding, they b o t h received the gift. T h e birth of each child b r o u g h t a fifty-peso gift to laborers of over one year in service. Workers of over «

Ibid.

S.I.A.M.

T H E C R I T I C A L YEARS

1928-1938

87

twenty-five years' standing were eligible for pensions of sixty pesos a m o n t h . A schedule for vacations was established, r a n g i n g f r o m ten days for those employed for less t h a n five years u p to thirty days for those w h o h a d been with S . I . A . M . for m o r e t h a n twenty years. T h u s , in the same y e a r t h a t the Roosevelt a d m i n i s t r a tion in the U n i t e d States was f r a m i n g its first social security bill, not passed until August of 1935, Di T e l i a put into effect his o w n system for those who h a d been his employees for at least o n e year. T h e plan was u n d o u b t e d l y a n o t h e r factor in r e d u c i n g t u r n o v e r a n d in p r o m o t i n g efficiency a n d loyalty. . . . T h e existence of this welfare system m a d e the Perón l a b o r p r o g r a m , l a u n c h e d m o r e t h a n a d e c a d e later, seem unnecessary to S . I . A . M . ' s executives. NEW

PRODUCTS

T o r e t u r n to the g r i m financial problems of 1930, Di Telia's chances for credit f r o m the banks were declining. T h e additional strain o n his personal finances f r o m losses on operations in Brazil, Chile, a n d U r u g u a y (see p p . 1 1 5 , 1 1 9 , 1 3 3 ) a d d e d to the difficulties a n d m a d e it imperative to take steps to halt losses at S . I . A . M . Buenos .Aires. Expenses h a d to be reduced a n d new products developed to offset the decline in sales. T h e former course was distasteful to Di T e l i a , as wage cuts a n d lay-offs were antithetical to t r a d i t i o n a l A r g e n t i n e practice. O n the other h a n d , the search for new products was a m a j o r element in his e n t r e p r e n e u r i a l career, a n d he readily intensified his efforts in this direction. Di Telia was always on the lookout for new products t h a t were within S . I . A . M . ' s ability to p r o d u c e or assemble. As V e n t u r i n i p u t it, Di Telia h a d arrived at a fairly a c c u r a t e estimation of his personnel's ability to h a n d l e new operations. H e continually experimented b u t did not press for m a c h i n e s t h a t could not b e mastered. O n his trip

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to the United States in 1928, for example, he saw a watersoftening process, much needed in parts of Argentina. He obtained a license from Permutit, the producer, and had one of their representatives sent to Argentina to instruct S.I.A.M. on manufacturing the container, valves, and control devices. T h e necessary material (zeolite) was imported. For the year ending in J u l y 1930 sales amounted to 195,000 pesos. In order to m a n a g e the new product, personnel had to acquaint themselves with all aspects of its production, distribution and sales. As already noted, young Agustín Sozio, Di Telia's nephew, was m a d e director of the water softener line. In this line and in the organization in general, S.I.A.M. did not fix rigid j o b specifications. As "director" Sozio said he sold, installed, serviced and reclaimed units, 2 3 receiving excellent training for the Argentine goal of individual flexibility. But water softeners were not a satisfactory answer to S.I.A.M.'s troubles. By 1932 Di Telia detected Permutit marketing English-made units under a separate agency and canceled the contract. This was followed by a major potential client, the Britishowned railway system, refusing to accept quotations on water softeners from S.I.A.M. because it was an Argentine manufacturer. Di Telia continued to make softeners, but the volume was small. Meanwhile, the business situation was steadily deteriorating. In addition to the loss in gasoline p u m p business between the year ending in J u l y of 1930 and the following year, bakery machine sales dropped by a third. Considering that both of these were producer's goods, it may be surprising that the fall was not greater. Continued sales, particularly of service station equipment, probably resulted from the fact that the market in 1929 was far from saturated. 0

Interview with Agustín Sozio.

S.I.A.M.

THE CRITICAL YEARS 1928-1938

89

T h e last seven classes of products listed in T a b l e 11 with a total sales volume of nearly 8400,000, none of which had appeared on the J u l y 31, 1930 account, represent not only special contracts for metalwork that could be made in a general machine shop such as Avellaneda but also the results of the major new lines. Without these new items the $12,600 loss on operations might have been alarmingly high. As it was, installment payments from the sales of earlier years produced a book profit of 8217,000. Sales continued to fall during the last half of 1931 and the first half of 1932. For the year they were 10 per cent less than for the preceding period and lower than at any time since 1926, when the great investment in Avellaneda had not even been planned. T h e foreign enterprises also continued to operate at a loss. But the decline in the major item, gasoline p u m p sales, had been checked (see Table 14). Again there was a net loss in operations, compensated for by a high level of reliability in installment payments owing from previous years. 2 4 This reliability was based on the Argentine pattern of loans and installment buying. Credit for the individual was hard to obtain without a high credit rating. In addition, the person seeking credit had to be vouched for by another, usually a close friend, who assumed responsibility in case the borrower defaulted. This interweaving of friendship with credit-seeking was a strong factor in the low incidence of past-due payments. Early in 1931, the Banco Alemán refused to renew credits for S.I.A.M. Accountant Fussatti says that this threatened bankruptcy for the firm. Di Telia broke down at home and wept. 2 5 He was able to save the situation, 24 R e t u r n s of p r i n c i p a l a n d interest on installment sales held u p surprisingly well. As of J u l y 1931 a n d 1932 the a c c o u n t a n t s still t h o u g h t t h a t 3 p e r cent of the o u t s t a n d i n g obligations was an a d e q u a t e reserve for b a d debts. a Interview with M r s . Di T e l i a .

YU

ENTREPRENEURS!«? IN ARGENTINE CULTURE

b u t in r e t u r n for the extension of credit h e h a d to m a k e salary' a n d payroll cuts of 25 to 30 p e r cent, close new b r a n c h e s , a n d sell a n u m b e r of acres of unused l a n d at TABLE MAJOR LINE SALES,

11

1930-1931,

IN ARGENTINE PESOS*

Year ending July 31 1930 1931

Increase or decrease

$2,749,687 Gasoline pumps 1,520,054 Bakery equipment 649,624 Service stations Industrial burners 213,663 Water softeners 195,298 — Boilers Hydraulic pumps — — Aluminum — Electric motors — Ice boxes — Domestic burners Miscellaneous —

$1,422,733

$( 1,326,954) T

1,072,105

(447,949)

Total Minus Adjustments, rebates

85,328,326

83,919,927

9,238

15,006

85,319,088

S3,904,921

740,029

90,405

161,993

(51,670)

153,616

(41,682)

280,825

280,825

46,627

46,627

14,799

14,799

13,722

13,722

7,442

7,442

5,401

5,401

635

635 S( 1 , 4 0 8 , 3 9 9 ) 5.768 8(1,414,167)

* Source: Deloitte, Plender, Griffiths & Co. T h e exchange rate was 2.74 pesos to the United States dollar in 1930 a n d 3.46 in 1931. t Figures in parentheses indicate a decrease.

A v e l l a n e d a . 2 6 W i t h the benefit of hindsight one can say t h a t S . I . A . M . was b e t t e r off t h a n m a n y big industrial concerns a r o u n d the w o r l d . At the time, however, no one could predict the u p t u r n in 1933. *· Santa Fe, Rosario, and Bahía Blanca were closed. Rosario was then taken over by F u n a t t i .

S.I.A.M.

THE CRITICAL YEARS 1928-1938

91

As a result of the cuts, wages a n d salaries were a smaller p e r c e n t a g e of sales for 1930-31 t h a n for the previous year. A d m i n i s t r a t i v e salaries never r e t u r n e d to the relative levels of the twenties. In the prosperous year 1938 these salaries were a b o u t 2 per cent of sales whereas in 1930 they h a d been over 8 per cent. As Di T e l i a a n d C l u t t e r b u c k saw the situation in 1931, m o r e m a j o r n e w p r o d u c t s h a d t o b e i n t r o d u c e d to s u p p o r t sales at a point high e n o u g h to reduce the b a n k loans. T w o basic policies c a m e increasingly to govern Di Telia's choice of new p r o d u c t s : (1) to m a k e m a c h i n e s t h a t required skilled engineers a n d workers, which A v e l l a n e d a possessed a n d m a n y competitors did n o t ; a n d 2) to work on models licensed by leading foreign c o m p a n i e s r a t h e r t h a n risk the costs a n d delays of e x p e r i m e n t a t i o n . At first, the most promising of the new p r o d u c t s were water p u m p s for household use. A S . I . A . M . engineer designed the first p u m p for a d e e p well, b u t it did not work satisfactorily. Next, they b o u g h t a p u m p f r o m the U n i t e d States a n d copied it, with some m i n o r changes. Early in 1931 a p u m p was put into p r o d u c t i o n with a motor p r o b a b l y p u r c h a s e d f r o m G e n e r a l Electric. It would raise a small stream of water forty or fifty meters. T h e p r o d u c t i o n records of Avellaneda indicate t h a t 500 p u m p s were p r o d u c e d d u r i n g 1931. Sudiero, w h o was at A v e n i d a de M a y o supervising p u r c h a s i n g , was interested in hydraulics a n d m a d e an a d a p t a t i o n of a n Italian centrifugal p u m p t h a t proved highly successful. This type was useful for raising large quantities of w a t e r a few feet, as in the case of a factory using river or lake w a t e r . T h e 1933 model was c a p a b l e of delivering 1,000 litres per h o u r ; two years later models with a c a p a c i t y of 1,000,000 litres per h o u r were being p r o d u c e d . Prior to 1930 Di Telia h a d t h o u g h t a b o u t m a n u f a c t u r i n g e q u i p m e n t , especially presses, for wineries. His

92

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IN A R G E N T I N E

CULTURE

attention had been drawn to this possibility by Santoni, his agent in the vineyard province of Mendoza, who had Di Telia visit a number of wineries there. 2 7 In 1933 Di Telia produced a very small number of presses for wine, b u t he lost interest when he found the market too limited to justify investing in large-scale production. 2 8 Another new venture, however, was to open the way to the later great successes of S.I.A.M. After studying the sales statistics of commercial refrigeration in industrially advanced countries, Di Telia and Clutterbuck could see no reason why similar success could not be attained in Argentina. But according to Sudiero, "Schibli was very much against this idea. . . . He was conservative . . . ; the only good business was with bakery and service stations" 2 9 At this juncture, as in many others, Di Telia's well-based optimism, his refusal to think in terms of limitations and contraction, carried the day. These big ice boxes selling at three to four thousand pesos were essentially custom rather than mass production items. No new assembly line or battery of tools would be required. Except for the chest itself all parts could be purchased and then assembled at Avellaneda. Refrigerators could also be sold and serviced in much the same way as bakery machinery. Since refrigerators would pay large returns to the businessmen who installed them, and competitive foreign firms had scarcely opened the market, prices could be set at levels that would insure profits. Allowing for long-term time payments, a price of three and a third times manufacturing costs was regarded as practical. T h e problem was to sell the idea of refrigeration. Price competition was relatively unimportant. Difficulties in p u m p manufacture had taught Di Telia 27 28 20

Interview with S a n t o n i . Letter, Di T e l i a to Clelio Pallucchini of M e n d o z a , August 15, 1933. Interview with Sudiero.

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1928-1938

93

to combine aggressive entry into new fields with cautious development of the product. No unnecessary chances were taken in the manufacturing end of refrigeration. An Argentine firm, Ditlevsen, handling imported refrigerators had two managers, Bartolomé Piciochi and Joseph Lézard, who were competent at both selling and service. Di Telia was able to pursuade these men to come to S.I.A.M. to help design the original commercial refrigerator cabinets. He did this by appointing them agents for the Buenos Aires metropolitan area and giving them a commission on national sales. T h e first model was called PL-20 and the second PL-24. 3 0 For the manufacture of cabinets Piciochi and Lézard brought with them an Italian factory technician, Osvaldo Cossolini. He set men to work in the carpentry shop where the wooden frames for bakery equipment were made. The remainder of the refrigerator was bought from foreign companies such as General Electric, for motors, and Universal Cooler, for compressors. 31 Di Telia also had Otto Imlauer, the agent for Electrolux kerosene refrigerators, lend him a mechanic to help in the operations. Soon after he began, the mechanic "was so discouraged that he requested Imlauer to forget S.I.A.M. refrigerators." 3 2 T h e first experimental models were finished in 1931, but mcchanical difficulties held back sales until 1933. Thus two potentially important new products did not prevent 1932 from being a low point for S.I.A.M. Commercial refrigerator sales were still negligible and hydraulic p u m p sales increased only 10 per cent over 1931, a result some United States companies would have envied, but much too little to make up for the falling off in the 30 31 82

Interview with Cornelio O s w a l d . Interview with Sudiero. Interview with O t t o I m l a u e r , a g e n t for Misiones Province.

94

E N T R E P R E N E L ' R S H I P IN A R G E N T I N E C U L T U R E

two major lines, gasoline pumps and bakery machinen,·. T h e foreign operations were still losing money. O n e way of cutting costs would be to manufacture the electric motors for small domestic pumps. At this time S.I.A.M. was buying the half-horsepower Marelli motor. Sudiero calculated the cost of constructing such a threephase motor and thought the result favorable. But Di Telia did not express much enthusiasm. Working secretly on Saturdays and Sundays, Sudiero copied a halfhorsepower Marelli motor. W h e n Di Telia saw the model perform he ordered it put into production. He thought, however, that he should get some expert advice on motors, and asked Riccardo Cugini, S.I.A.M.'s purchasing agent in Italy, to contract with a specialist in motor design for drawings and specifications of motors from one-half to ten horsepower. Certain dies were also imported from Italy. In 1933 S.I.A.M. produced 1,180 one-half to two horsepower motors, chiefly used for pumps. By 1935 3,170 motors were produced, some having as much as 100 horsepower. T h e single phase motor, used in refrigerators, was not attempted until close relations were formed with Westinghouse in 1941. HOUSEHOLD

REFRIGERATORS

The household refrigerator, ultimately to make S.I.A.M. a big business on an international scale, was a far more difficult product to manufacture than pumps, small electric motors, or commercial refrigerators. T h e latter continued to be essentially high-priced, custommade products designed to fit the particular needs of the buyer. European or United States mass production techniques had little or no advantage over those of Argentine shops that installed imported machinery in a wide range of cabinets constructed to suit local needs. I n contrast, household refrigerators had to be produced in

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95

q u a n t i t y , t o b e f o o l - p r o o f , a n d to b e c a r e f u l l y d e s i g n e d to k e e p m a c h i n e r y s p a c e a t t h e m i n i m u m a n d c o o l i n g s p a c e a t t h e m a x i m u m . T h e m a c h i n e n , ' , t h e r e f o r e , h a d to be small a n d delicate. I n o r d e r to u n d e r s t a n d t h e b a c k g r o u n d for D i T e l i a ' s i m p o r t a n t v e n t u r e into t h e d i f f i c u l t a n d costly business of d o m e s t i c r e f r i g e r a t o r p r o d u c t i o n , it is n e c e s s a r y to e x a m i n e s o m e c h a n g e s in A r g e n t i n e g o v e r n m e n t p o l i c y a l l u d e d to briefly o n p p . 2 4 - 2 5 . P r i o r to 1931 A r g e n t i n e t a r i f f s h a d been m o d e r a t e a n d the U n i t e d States shared, because of a " m o s t f a v o r e d n a t i o n " a g r e e m e n t , in concessions g r a n t e d to o t h e r c o u n t r i e s . P a r t l y f r o m t h e p r e s s u r e s of t h e Unión Industrial, a m a n u f a c t u r e r s ' a s s o c i a t i o n d a t i n g b a c k to 1884, c o m p o n e n t e l e m e n t s a n d u n f i n i s h e d g o o d s g e n e r a l l y c a m e in d u t y - f r e e or a t low r a t e s , w h i l e c o m p l e t e m a c h i n e s c o m p e t i t i v e w i t h t h o s e a s s e m b l e d in A r g e n t i n a m i g h t p a y 35 to 50 p e r c e n t d u t y . B u t in v i e w of t h e difficulties i n v o l v e d it w a s f a r f r o m c e r t a i n t h a t S . I . A . M . c o u l d a s s e m b l e a n d sell r e f r i g e r a t o r s in c o m p e t i t i o n w i t h c o m p a n i e s like G e n e r a l E l e c t r i c a n d Frigidaire. As Di T e l i a t h o u g h t o v e r t h e financial, m a r k e t i n g , a n d t e c h n o l o g i c a l p r o b l e m s i n v o l v e d in d o m e s t i c r e f r i g e r a t o r s , g o v e r n m e n t policy o f f e r e d b o t h a c h a l l e n g e a n d a n o p p o r t u n i t y . A d e c r e e of t h e c o n s e r v a t i v e U r i b u r u g o v e r n m e n t , O c t o b e r 10, 1931, e n d e d f r e e i n t e r n a t i o n a l e x c h a n g e of g o l d a n d e s t a b l i s h e d a n E x c h a n g e C o n t r o l C o m m i s s i o n . T h i s b o d y set t h e official e x c h a n g e r a t e for t h e peso w i t h i n t h e l i m i t s 160 to 171 to t h e g o l d d o l l a r , a n d s t a r t e d p r i o r i t y lists f o r o b t a i n i n g e x c h a n g e . 3 3 I n t h e b e g i n n i n g t h e r e w a s n o d i s c r i m i n a t i o n b e t w e e n n a t i o n s in g r a n t i n g e x c h a n g e w i t h i n a p r i o r i t y g r o u p , b u t o n J a n u a r y 25, 1932 t h e M i n i s t r y of F i n a n c e m a d e t h e b a l a n c e of ** For this a n d other details see Virgil Salera, Exchange Control and the Argentine Market, N e w York, C o l u m b i a University Press, 1941, p p . 59 ff.

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E N T R E P R E N E U R S H I P IN ARGENTINE C U L T U R E

payments with the country to which the funds were to be transferred a factor in determining the granting of exchange permits. Since the balance with the United States was adverse to Argentina this amounted to a nearly prohibitive tariff on nonessential imports from the United States. Paradoxically, therefore, this policy of the aristocratic agrarian government in some respects aided domestic industry. But since the manufacture of most of the constituent parts of household refrigerators could not be quickly developed, and the best suppliers were in the United States, Di Telia was faced with the problem of cither trying to convince the government to grant official exchange for United States purchases or else buying exchange on the free market at high rates. This situation provided the incentive for many abortive efforts at manufacturing refrigerator parts. T h e Central Bank Law of March 28, 1935 placed a surcharge of 20 per cent of the selling price on all imports brought in without prior permit. 3 4 In practice the measure appears to have been applied only against imports from countries with which Argentina had an adverse balance. By 1937 the United States moved out of this category, and importation became temporarily easier. Strongly urged by Clutterbuck, Di Telia decided in 1933 to attempt production of household refrigerators. Some experimentation had already gone on in the shop, but experience with commercial refrigerators was of little use in producing the domestic type. T h e compressor was the most difficult element in the assembly. At first a onesixth horsepower water-cooled compressor was imported from Universal Cooler. There were numerous troubles, however; Sudiero thought the first year's efforts a failure. 34

I.aws of A r g e n t i n a , N u m b e r 12,160.

S.I.A.M.

THE CRITICAL YEARS 1928-1938

97

Next, they tried a rotary compressor f r o m Sears R o e b u c k and then tried to m a n u f a c t u r e a rotary compressor using sulfur dioxide, but these operations also were unsatisfactory. " W e decided t h e n , " said Sudiero, " t o copy a piston type compressor similar to the one-sixth horsepower Universal Cooler model. T h e result was m u c h better than with the rotary compressor althpugh we h a d plenty of trouble with the rotary seal." 3 5 By 1937, with the improvement in United States exchange, Di Telia decided to contract with Kelvinator for a licensc to i m p o r t parts or m a n u f a c t u r e their entire refrigerator, which proved to be the most economical solution to the problem. These difficulties in a big shop staffed by able Italian engineers and technicians are evidence of the problems of transferring complex technological know-how from one nation to another. SALES

ORGANIZATION

Domestic refrigerators required a greatly expanded sales force, and led eventually to a more formalized organization of representatives. T h e latter was slow to develop. Bakery machinery, with a market of some thousands of small shops, had required some salesmen. By the late twenties, five or six men covered the e r e a a r o u n d Buenos Aires and three or four additional men roamed the other provinces. Gasoline pumps, with a few exceptions, were sold personally by Di Telia, Clutterbuck, or other top executives directly to the gasoline companies that supplied them to the stations. Additional filling station equipment seems to have been sold following the installation of Wayne, or later S.I.A.M. pumps, with only one m a n at the home office taking care of the sales. Di Telia himself gave continuous attention to all selling. In the middle twenties he was his own sales manager, although >5

Interview with Suidero.

98

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

C l u t t e r b u c k was b e i n g t r a i n e d to t a k e over supervision of this p a r t of t h e business. Di T e l i a ' s m a n a g e m e n t r e m a i n e d highly personalized. H e was e v e r y w h e r e , d e a l i n g directly w i t h t h e salesmen, supervising t h e installation of m a c h i n e r y , advising o n p r o d u c t i o n , a n d c a r r y i n g on the relations w i t h the b a n k s . N o n e t h e l e s s , h e relied heavily o n t r u s t e d l i e u t e n a n t s such as Schibli in a d m i n i s t r a t i o n , C l u t t e r b u c k in sales a n d finance, S u d i e r o a n d C a s e r t a in p r o d u c t i o n , a n d a n u m b e r of o t h e r e m p l o y e e s w h o could b e shifted into t r o u b l e spots. T h e s e lesser employees looked directly to Di T e l i a f o r u l t i m a t e d e c i s i o n - m a k i n g , r a t h e r t h a n to some i m m e d i a t e supervisor or c o - a d m i n i s t r a t o r . At the same time, t h e y a i d e d Di T e l i a in f o r m u l a t i n g i m p o r t a n t policies. All the S . I . A . M . p r o d u c t s f r o m b a k e r y m a c h i n e r y to d o m e s t i c r e f r i g e r a t o r s r e q u i r e d not o n l y selling b u t installation a n d servicing. By a n a l o g y to N o r t h A m e r i c a n e x p e r i e n c e in o p e n i n g n e w m a r k e t s for c o m p l i c a t e d m a c h i n e r y , service m a y h a v e b e e n the most i m p o r t a n t i t e m in the long r u n . It was p r o b a b l y the n e e d for service closer t h a n Buenos Aires t h a t h a d led in the late twenties to b r a n c h e s at B a h í a Blanca, Rosario, a n d S a n t a Fe. Most selling, therefore, was c a r r i e d out b y salesmen f r o m the h o m e office a n d the m a n a g e r s of b r a n c h e s . W i t h the exception of a few such m e n as S a n t o n i of M e n d o z a , t h e r e was n o g e n e r a l commissioning of i n d e p e n d e n t agents until a f t e r the d e v e l o p m e n t of domestic refrigerators in the early thirties. Bakery p r o d u c t s were advertised t h r o u g h the S . I . A . M . m a g a z i n e Panificación,36 A small a m o u n t of baker)' a d v e r tising was d o n e t h r o u g h local n e w s p a p e r s , a n d a n even smaller a m o u n t for the early gasoline p u m p s . T h i s a d v e r tising was p l a c e d b y the Wisner a g e n c y of Buenos Aires. M T h e file oí Panificación h a s b e e n c o m p l e t e l y p r e s e r v e d , b u t s c r a p b o o l u lor n e w s p a p e r a d v e r t i s i n g a r e l a c k i n g

S . I . A . M . — T H E CRITICAL Y E A R S

1928-1938

99

As usual in opening markets in Latin American countries, however, main reliance was on the salesman. He made friends, won confidence and stood by the product. In the early period of S.I.A.M.'s expansion, several cases of employee dishonesty in the sales staff occurred. Industrial discipline or, perhaps more important, company loyalty was as necessary in the field as in the factory, and had to be built. Agustín Sozio found a salesman splitting discounts with customers in the sale of filling station equipment, and another salesman who was dishonest in buying bricks for bakery ovens. Lasgoity, who had been brought back to Avenida de Mayo in 1930 because bakery sales did not seem to warrant his traveling, took the place of a hydraulic pump salesman who was secretly working for competitors. The heads of the branches in the cities of Rosario and Santa Fe had to be removed and law suits developed in each case. As we have seen, bank pressure for economy led to the closing of all the branches in 1931. In assessing the practicality of conducting all marketing from the home office, it must be remembered that population in Argentina was concentrated around Buenos Aires and up the Uruguay and Paraná rivers. An arc of 400-mile radius from Avenida de Mayo would cover all the area in which a good volume of sales could be anticipated. Even in Entre Rios, the first province north of Buenos Aires, Modesto José Bertoli claimed that it was hard to sell because of the poverty of the people and their lack of experience with machinery. In Corrientes and Misiones in the northeast and Chaco and Formosa in the north, life was too primitive to make enforcement of the laws against hand kneading of bread seem practical. Backcountry people also lacked money to buy or any familarity with machinery. In Santiago del Estero, a little north of Córdoba,

100

E N T R E P R E N E U R S H I P IN A R G E N T I N E

CULTURE

employees were so scared by the noise of bakery machinery that they ran out of the shop. There were no local mechanics to make repairs, and either an ex-technician like Lasgoity had to roll up his sleeves and go to work on the spot or faulty equipment had to be sent back to Buenos Aires. In all the outlying areas, particularly in the great stretches of ranch land south, of Buenos Aires Province, roads were plain dirt, troughs of mud much of the time, or were altogether lacking. Often Lasgoity was the first driver over newly completed roads. With customers few and far between, salesmen could not effectively cover the territory by automobile. During the depression the best solution for selling in these regions seemed to be to wait for the customers to come to Buenos Aires. T h e commission agreement with Piciochi and Lézard in 1931 for marketing commercial refrigerators, and the hiring of a few salesmen for hydraulic pumps reversed the trend toward contraction. Apparently Piciochi and Lézard made quite a success through their personal efforts. Oswald reports, "they knew the market because they had been with another firm. They were salesmen." 3 7 Their efforts warranted the production of two hundred and fifty commercial refrigerators in 1933. T o bring electric refrigerators to thousands of homes S.I. A.M. needed a new type of sales organization. Agents, concesionarios, would have to be secured to do "doorbell ringing" over relatively small territories. In selecting such representatives Clutterbuck looked for those who had both sales and mechanical ability or who employed a skilled mechanic. T h e agents did not need capital as Di Telia's banking connections enabled the company to refinance installment paper in Buenos Aires. While these men controlled refrigerator selling, both commercial and domestic. 37

Interview with Oswald.

S.I.A.M.

THE CRITICAL YEARS 1928-1938

101

in their area, they were visited from time to time by sales and service inspectors f r o m the c o m p a n y w h o made suggestions for improved methods. Undoubtedly Di Telia was overoptimistic regarding potential sales, as well as a b o u t the problems in m a n u facturing refrigerators. Argentines h a d h a d little experience in buying expensive mechanical products. Looking back on the years 1933 a n d 1934, Oswald did not think the household market was ready for a 450-peso item. Santoni, the agent for Mendoza, reported that the first S.I.A.M. models were not quite the equal of i m p o r t e d refrigerators. While tariff protection and exchange controls permitted a high price, this in turn undoubtedly increased sales resistance. Widely scattered purchasers m a d e selling expensive and formed part of a vicious circle of costs. Breaking out of this circle is one of the major problems in the exploitation of all underdeveloped markets by local concerns. These pioneer companies start with relatively high factory and selling costs a n d are tempted into the business only by high profit margins. Yet this means that the purchasers are having to pay higher prices than do the richer people of a more developed area. S.I.A.M. did not really progress to a reverse cycle of increasing efficiency and decreasing cost until 1938, after they had entered into a licensing agreement with Kelvinator. For many years it was necessary for salesmen to travel with refrigerators in a truck so that they could be demonstrated at the customer's home. Frequently the refrigerator had to be left on trial for several days. Equal installments over nine months were the desired terms of sale but longer periods up to thirty-six months were soon allowed. Commercial refrigerators were usually carried in the same trucks so that both types of customers could be covered. According to Lasgoity, who was one of the

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CULTURE

" t r o u b l e s h o o t e r s " f r o m t h e h o m e office (he called himself the " s w e e p i n g b r o o m " ) , d o m e s t i c refrigerators h a d to b e sold o n t h e basis of f r i e n d s h i p by t h e local agents. T h i s fits w i t h t r a d i t i o n a l A r g e n t i n e m a r k e t p a t t e r n s . M e a n w h i l e the h o m e office m a n c o u l d sell c o m m e r c i a l r e f r i g e r a t o r s a n d b a k e r y m a c h i n e r y to t h e business consumers. F r o m 1932 to 1936, t h e p e r i o d of g e n e r a l l y unsatisf a c t o r y e x p e r i m e n t s w i t h refrigerators, models w e r e advertised u n d e r special n a m e s : J u n i o r , A c o n c a g u a , C o r d o b a , a n d R i v a d a v i a . A f t e r the K e l v i n a t o r a g r e e m e n t these w e r e s u p e r s e d e d b y a u n i f o r m S . I . A . M . label. Exp e n d i t u r e s for a d v e r t i s i n g d i d not follow a set b u d g e t , b u t w e r e o n a " p a y as you g o " basis. If t h e r e was m o n e y for large-scale advertising, it was a l l o c a t e d , a n d big c a m paigns c o r r e l a t e d w i t h e x p a n d e d p r o d u c t i o n . Advertising, h o w e v e r , n e v e r a s s u m e d the ipso facto i m p o r t a n c e t h a t it has in N o r t h A m e r i c a n i n d u s t r y . R a t h e r , it was a n e x t r a expense, necessary to a c e r t a i n e x t e n t , b u t n o t f o r m a l l y m a p p e d o u t as a m a j o r c o n c e r n . T h e c o m p a n y ' s early, specialized products, i n c l u d i n g b a k e r y m a c h i n e r y a n d gasoline p u m p s , h a d b e e n m a n u f a c t u r e d for the c o m m e r c i a l m a r k e t . Di Telia h a d relied heavily o n a p e r s o n a l i z e d a p p r o a c h . Prospects were o n a d i r e c t - m a i l i n g list. Periodically t h e c o m p a n y m a i l e d inf o r m a t i o n on i m p r o v e m e n t s a n d n e w e q u i p m e n t to these p o t e n t i a l customers. D o m e s t i c r e f r i g e r a t i o n m a d e a n e w kind of advertising necessary. S . I . A . M . ' s m a r k e t was n o w the g e n e r a l p u b l i c ; e a c h h o u s e h o l d a b o v e a c e r t a i n i n c o m e b r a c k e t h a d to b e r e a c h e d . T h e l i m i t e d mass m e d i a h a d to be exploited a n d sales p r o m o t i o n b e c a m e m o r e i m p e r s o n a l . Advertising e x p e n d i t u r e s a c c o r d i n g l y soared (see T a b l e 12). I n 1932 a n a g r e e m e n t was m a d e with t h e Exitus A g e n c y , a small advertising o r g a n i z a t i o n in Buenos Aires. S . I . A . M . was Exitus' m a j o r client, a n d the c o m p a n y ' s

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103

top m a n a g e m e n t dealt directly with J o s é M o l l á , the agency head. T h e indications are that Clutterbuck took much more interest in advertising than Di T e l i a at this time. T o Di T e l i a , mass advertising seemed secondary in importance to personal contacts. When Clutterbuck, for example, urged that effective refrigerator advertising needed an illustration of a model, Di T e l i a pulled out the first pictures at hand a n d said, " J u s t use anything. . . . " 3 8 From the 1930's on several themes ran through S . I . A . M . advertising. Prominent was the bigness and reliability of S.I. A . M . as " a world u n d e r t a k i n g , " " a c o m p a n y of giant stature." Nationalism was also a p p e a l e d to. S . I . A . M . as a strictly Argentine organization whose profits stayed in the country was implicitly contrasted with foreign-controlled TABLE ANNUAL

EXPENDITURES

12 FOR

ADVERTISING*

Year

Per cent of sales

Pesos

Year

Per cent of sales

Pesos

1932 1933 1934 1935

.015 .014 .016 .008

54,000 55,000 66,000 41,000

1936 1937 1938

.012 .014 .025

60,000 104,000 209,000f

* Source: Company files, t Nine months only.

firms. S . I . A . M . ' s growth was equated with national development. Color a n d expensive art work were not used to full effect. Appeals to fear, social status, or other indirect inducements were avoided. S . I . A . M . generally a i m e d at M

Interview with Clutterbuck.

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an undifferentiated "common m a n " public, with arguments for quality and economy. A 1936 advertisement, for instance, showed a closed household refrigerator starkly outlined against a black background and headed simply by: " O n l y S19 a month." IMPORTANT NEW

CONTRACTS

Although domestic refrigerator sales started upward late in 1935 and rose spectacularly in 1936 (see Table 13) S.I.A.M. was still having trouble with production. Neither Di Telia nor Sudiero was satisfied with the efforts at manufacturing cabinets and parts. The solution, now that import policy was more favorable to the United States, of buying more and inore of the parts from the Nash-Kelvinator Company, the only large refrigerator manufacturer not represented in Argentina, led to a general contract with the North American firm. TABLE REFRIGERATOR

13 PRODUCTION*

Year

Domestic

Commercial

1934 1935 1936 1937 1938

480 760 1,755 4,010 5,480

530 810 1,089 1,297 1,401

* Source: Company files.

The major conditions of the agreement effective March 25, 1937, were that S.I.A.M. would purchase all refrigerator parts, with mutually agreed exceptions, from

S.I.A.M. THE CRITICAL YEARS 1928-1938

105

Kelvinator. The prices would be cost at the time of manufacture plus 20 per cent. S.I.A.M. would pay Kelvinator } of 1 per cent royalty on all domestic refrigerator billings, but not over S25,000 in any year. Kelvinator would give S.I.A.M. a 3 per cent discount on purchases in excess of S50,000 a year as an offset to the royalty payments. In addition Kelvinator would provide blueprints and sales literature, and allow S.I.A.M. employees the same freedom in Kelvinator plants as officers of Kelvinator subsidiaries. S.I.A.M. had either to market 20 per cent of the refrigerators under the name Kelvinator, or else put the inscription "Kelvinator System" or some other words linking the Kelvinator and S.I.A.M. trade names on all refrigerators. The contract was to continue in force until March 31, 1941, but could be terminated by either party on six months' notice. In the original contract, freezing trays, motors, controls, valves, condensers, and cooling units were excepted from the parts that had to be purchased from Kelvinator. While the correspondence is lacking, it appears that in 1938 this list of exceptions was reduced. At all events, in the first year of the Kelvinator contract production more than doubled. This was not yet "mass production" in the sense of moving assembly lines with minute division of labor, but it meant that the domestic refrigerator project had succeeded. While domestic refrigerators were ultimately of the greatest importance, other promising developments occurred between 1935 and 1938. In 1935, after Mr. and Mrs. Di Telia's first plane flight from Panama to the United States, he entered into negotiations for distributing the electrical appliances of Sears Roebuck and Company. This agreement, however, was never signed. In July 1936 the government restrictions imposed on the activities of Y.P.F. in 1930 were removed. It was given

106

E N T R E P R E N E U R S H I P IN ARGENTINE CULTURE

a monopoly of petroleum distribution with power to license private companies. This led to a resumption of Y.P.F. gasoline pump purchases from S.I.A.M., and an increase in the sales of service station equipment. As in the case of refrigerators, Di Telia saw advantages in supplementing local manufacture of gasoline pumps by the technological improvements of foreign products. S.I.A.M. had perfected a reliable pump, the S.I.A.M.Blok 88, with an open measuring device, but according to Enrique Maldonado it was slow, and lacked the automatic price calculator introduced by Wayne. S.I.A.M. did not have engineers for the development research necessary to keep up with the improvements made by a company such as Wayne Pump, yet S.I.A.M. had sales contacts that made it difficult for Wayne to compete. In 1937 with the market again lively in Argentina, and with a new friendly representative of Wayne in Buenos Aires, it seemed desirable to both companies to renew their old relationships. By April 1937 a contract had been agreed to making S.I.A.M. the sole representative of Wayne in Argentina, Chile, and Uruguay. S.I.A.M. had to purchase at least 100 pumps every year or pay penalties. If parts were purchased, S.I.A.M. received a 6 per cent discount from an appended price list. If whole pumps were bought the discount was 30 per cent. While S.I.A.M. might not buy parts from anyone else they could substitute those of their own manufacture by paying a royalty equal to 7è per cent of the Wayne price. Wayne agreed to turn over any business in liquid measuring devices arising in Argentina, Chile or Uruguay to S.I.A.M., and it agreed, in turn, not to sell such machinery' in any country except the three named. S.I.A.M. could market under its own name or S.I.A.M.-Wayne, or Wayne, but the mechanisms of the pumps must conform to the terms of the agreement.

S I.A.M. THE CRITICAL YEARS 1928-1938

107

CHANGING PRODUCTS

Since the advantages of the Wayne Pump contract were not immediately reflected in sales, S.I.A.M. by early 1938 appeared to have become chiefly a manufacturer of refrigerators. Table 14 shows the sales revolution of the nineteen thirties. For the year ending in July 1932 gasoline pumps and bakery machines accounted for 62 per cent of the sales income, for the nine months ending in April 1938 refrigerators accounted for 70 per cent. For the first time an Argentine company was successfully manufacturing complex consumer durable goods on a scale approaching North American conceptions of mass production. Service station equipment and bakery machine sales remained relatively steady, and hydraulic pump sales increased. No other items were of much individual importance, although as a group the minor products contributed 12 per cent of the sales for the period ending in April 1938. While the company arrested the downswing in sales and earnings from 1932 to 1934, and began to move ahead more rapidly in 1935, it was not until the year ending in July of 1937 that sales in current and less valuable pesos exceeded those of 1929. Since the bigger S.I.A.M. of 1937 with far greater sales efforts and more technicians had a higher break-even point, profits were barely above those of the alarming period ending in mid-1930. But by April 1938 there could be no doubt about S.I.A.M.'s recovery. While the change in the fiscal year from August 1-July 31 to May 1-April 30 understated the results for 1937-1938 by 25 or 30 per cent, even on this nine-month basis sales were higher than ever before and net profits were at the rate of the best previous periods (1926-1928). Some part of the upswing in S.I.A.M. sales was a reflection of the world-wide increase in business from 1935 to 1937 which in Argentina was accelerated by the improvement of

108

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S.I.Α.M.

THE CRITICAL YEARS 1928-1938

prices for beef and wheat. But from 1936 to 1938 S.I. A . M . expanded much faster than Argentine industry as a whole. CONCLUSIONS

By 1938 S.I.A.M. had lived through its critical years. Di Telia had learned how to run a large industrial plant economically. In the course of this he had experimented both with independent m a n u f a c t u r e and foreign license. T h e difficulties encountered when the former policy was tried with complicated machinery convinced Di Telia and Clutterbuck that design and m a n u f a c t u r e of new machines without direct advice from experienced industrialists abroad was risky business. Because of import difficulties and relatively low wage rates, S . I . A . M . was best served by making machinery with high labor and low raw material costs. Diversification of products had also become characteristic of Di Telia's planning. This had definite advantages in a growing industrial nation with m a n y u n t a p p e d potential markets, and it was at the same time an asset in the Argentine interplay of politics and economic policy. Exchange controls and tariff restrictions in the thirties fluctuated, but usually favored Great Britain. If S . I . A . M . was to rely on American technology in the future, it had to be extremely flexible. Furthermore, Argentine culture traditionally valued the adaptable m a n who was not narrowly specialized. O n e might speculate on correlation between this concept and Di Telia's interest in diversification. During the thirties, basic themes in S.I.A.M. advertising were established. They afford insight into the company's estimation of its market and into Argentine consumer values. S.I.A.M. advertising was noteworthy in its absence of prestige, high-status appeal. T h e company aimed at an undifferentiated, middle-class market for its

110

E N T R E P R E N E U R S H I P IN A R G E N T I N E C l ' L T l R E

household lines. Practical considerations—economy, efficiency, durability—\vere stressed. T h e recurrence of appeal to Argentine nationalism reflects the economic scene a n d the n a t u r e of S.I.A.M.'s competition. Foreign, especially British, interests that h a d long dominated Argentina and much of its industry were vulnerable to attack. Foreign makes directly represented by their own agents were a m o n g S.I.A.M.'s m a j o r competitors. Resentment against foreign "imperialism" that was to erupt in the Perón regime had been slowly building u p in Argentina. While S.I.A.M. itself often operated under foreign license, its stockholders were Argentines a n d profits were reinvested in local activity. Hence, it continually called attention to itself as a strictly Argentine enterprise. O n e of the earliest household refrigerator advertisements, in 1934, carried a picture of a gaucho w o m a n with a S.I.A.M. product, captioned: "Argentine . . .and with great h o n o r . " T h e advertisements also stressed S.I.A.M.'s bigness. Both copy and design projected a monolithic impression quite in line with company pride. S.I.A.M. has been characterized as having a "sense of destiny." This is perhaps most clearly expressed in its advertisements. Perhaps because of his experience with the commercial market where he had dealt with a relatively few businessmen, Di Telia himself remained indifferent to the details of advertising campaigns. Disinterest in advertising is also related to the traditional face-to-face mode of buying in Latin America. Argentine shoppers took into consideration the possibilities of bargaining, the context of the transaction, and the personality of the vendor. For this reason, Di Telia felt that salesmen, not advertising, would be most important in opening u p a Latin American market. S.I.A.M.'s survival and growth through the decade of

S.I.A.M.

THE CRITICAL YEARS 1928-1938

111

1928-1938 was largely d u e to Di Telia's leadership. H e was able to maintain or restore good relations with bankers, government officials, and executives from other companies. T h e n a t u r e of these relationships, however, cannot be j u d g e d by United States standards. M a n y of them were based on sincere friendship and mutual trust. Others, including a n n u a l gift-giving, were expected patterns of Argentine behavior with no connotations of influence-peddling. Di Telia's personal charm and flexibility were important assets for his company during the critical years. By 1938, with major policies firmly established, and proved markets for its new products, S . I . A . M . looked ahead to rapid expansion and increased association with foreign companies. 3 9 39 Miss N'uttall c o l l a b o r a t e d with D r . C o c h r a n in writing this c o n c l u d i n g section.

CHAPTER IV S.I.Α.M.: DI TELLA EXPANDS IN S O U T H A M E R I C A AND A B R O A D

SINCE T H E A R G E N T I N E M A R K E T OF T H E I . A T E T W E N T I E S W A S

still fairly limited, diversification of m a n u f a c t u r e or expansion into neighboring countries were logical measures to ensure continued growth. By the late twenties, Di T e l i a felt he was r e a d y for expansion a b r o a d . His readiness to v e n t u r e beyond the frontiers of A r g e n t i n a was no doubt increased by the fact that his domestic attempts at partnership aside from S . I . A . M . had brought neither personal nor economic satisfaction. Once h a v i n g decided on foreign expansion, he pushed it with his usual energy and optimism, setting up companies in Brazil, Chile, U r u g u a y , a n d London between 1927 and 1929. BRAZIL

Di T e l i a ' s plan to open a business in Brazil took form in 1927. A Shell M e x m a n a g e r from R i o de J a n e i r o who h a d seen the successful business in gasoline p u m p s built by S . I . A . M . for Shell a n d Y . P . F . in A r g e n t i n a suggested 112

S . I . A . M . : DI T E L L A EXPANDS IN SOUTH AMERICA AND ABROAD

113

that Di Telia initiate a similar relation with Shell Mex in Brazil, a virgin market and potentially one of the best in South America. Di Telia entered into the agreement as a private individual, although the equipment for the Brazilian workshop was supplied by S . I . A . M . Argentina. Construction of the factory began February 15, 1928 and was completed in J u n e of the same year. One month later gasoline pumps were in production. The fixed assets in 1928 were listed as Rs. 445: 168S497 which at the free exchange of 8.38 came to 53,122 pesos. The authorized capital for the firm, " S . I . A . M . Torcuato Di Telia, S.A., Brazil," registered at the Junta Comercial on M a y 28, 1928 amounted to Rs. 100: OOOSOOO. By 1930 the capital was raised to Rs. 5.000: OOOSOOO or about 500,000 pesos, divided into 5,000 shares of 1: 000 S000 each, all owned by Torcuato Di Telia. 1 The subsidiary had hardly begun operations when a change of management in Shell Mex caused Di Telia to lose Shell's backing. Di Telia was caught in a power struggle between Shell's former manager and his successor, who disapproved of Di Telia's pump design. The sudden loss of support was the turning point in the Brazilian venture. With gasoline pump production languishing the company undertook a variety of activities. But Di Telia was unfortunate in his manager. A contract to convert thirty locomotives from coal to oil burners within a period of two months was not carried out satisfactorily. Improper placement of the burners produced excessive heat, damaging the boilers. Called in by Di Telia to analyze the Brazilian operations, Deloitte, Plender, Griffiths and Company reported that S.I.A.M. Brazil's trouble in the conversion of 1 Deloitte et αι., Sào Paulo, Brazil, Vol. 1, 1928-1939, company files. The 1930 exchange rate was 9.27 reis to the peso, and 2.74 pesos to the dollar.

1 14

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

locomotives was o n e of several instances in w h i c h the adm i n i s t r a t o r u n d e r t o o k a n o p e r a t i o n " w i t h o u t first carefully s t u d y i n g the p r o b l e m s , f o r m i n g j u d g m e n t f r o m insufficient d a t a . " 2 S m a l l orders p l a c e d b y o t h e r oil c o m p a n i e s w e r e f r e q u e n t l y altered a n d allowed to disrupt production: T h e workshop spent much time and labor on experiments in the production of articles out of series. T h e companies will not confine themselves to the standard article produced by the branch, but require many insignificant changes to be m a d e in the different types of oil and gasoline pumps which, although not improving the finished product, cause many difficulties in manufacturing, since new designs and models have to be made and the whole of the manufacture in series is interrupted during the experimental period. 3 I n a d d i t i o n to a weak m a n a g e r the inefficiency of S . I . A . M . Brazil s t e m m e d f r o m the lack of industrial o r i e n t a t i o n a m o n g Brazilians. A c c o r d i n g to the r e p o r t : . . . T h e majority of the workmen in Brazil understood n o t h i n g about administration. In fact, it is not the custom in the country for factories to keep cost accounts, with the result that such forms as requisitions for material are entirely new to them and they do not understand their use. 4 T h e analysis m a d e the following suggestions: (1) that the factory b e r e o r g a n i z e d in o r d e r to p r o d u c e r a p i d l y a n d efficiently; (2) t h a t the positions of office m a n a g e r a n d p r o d u c t i o n m a n a g e r be filled by t w o a b l e individuals; (3) t h a t the c o m p a n y receive financial s u p p o r t f r o m Buenos Aires t h r o u g h the critical years. 5 2 Private 1929, p . 2 7 , » Ibid., p . « Ibid., p . 5 Ibid., p .

a n d Confidential R e p o r t , Sào P a u l o , Brazil, D e c e m b e r c o m p a n y files. 7. IB. 3.

15,

S.I.A.M. : DI T E L L A EXPANDS IN SOUTH AMERICA AND A B R O A D

11 5

T h e increasing depression in 1930 affecting all business in the State of Sáo P a u l o adversely, m a d e it difficult to follow the advice of the report. Di T e l i a c o n t i n u e d , however, to be optimistic. " T h e Brazilian m a r k e t , " he wrote, "is like a tropical flower which has its ups a n d downs, even collapses, b u t revives rapidly and blooms beautifully a g a i n . " 6 T h e m a r k e t was c o m p l e x a n d the cycles not as r h y t h m i c a l as Di Telia h a d predicted. Brazil was also seriously affected by the world-wide economic decline in the early thirties 7 (see T a b l e 15). I n the years to follow,

TABLE S.I.A.M.

Year 1929 1930 1931 1932

15

BRAZIL:

DEFICITS*

Amount

Rs. 97:941 S708 (10,565 Argentine pesos) Rs.770:505S319 (53,922 Argentine pesos) Rs.292:918S840 (22,007 Argentine pesos)

* S o u r c e : D e l o i t t e it al., S ä o P a u l o , Brazil. V o l . 1, 1 9 2 8 - 1 9 3 9 , c o m p a n y files. ( T h e r e a r e n o r e p o r t s for the y e a r s 1933 to 1937.) E x c h a n g e r a t e s w e r e : 1 9 3 0 : 9 . 2 7 ; 1931: 14.29; 1932: 14.31.

the losses went b e y o n d all expectations. I n the light of this situation the Brazilian banks, a n d p a r t i c u l a r l y the Banco Aleniao Transatlantico, stopped extending c r e d i t . 8 T h e r e fore, S . I . A . M . Brazil b e c a m e totally d e p e n d e n t on Di T e l i a a n d the capital of S . I . A . M . Argentina. 6 7

Interview with Clutterbuck. H u b e r t H e r r i n g , A History of Latin America,

N e w Y o r k , K n o p f , 1955, p . 78. 8 D e l o i t t e et at., S â o P a u l o , Brazil, V o l . 1, 1 9 2 8 - 1 9 3 9 , c o m p a n y fila.

1 16

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

His e x p e r i m e n t in m a n u f a c t u r i n g c o m p l e x m a c h i n e r y w i t h o u t foreign licenses failed in Brazil, a5 it h a d in A r g e n tina, b u t in the f o r m e r the f a i l u r e was m o r e c o m p l e t e . T h e Brazilian t e c h n i c a l p e r s o n n e l h a d p r o v e d u n q u a l i f i e d to p r o d u c e gasoline p u m p s a n d related e q u i p m e n t efficiently e n o u g h to sell at a profit, w h e r e a s in Buenos Aires the weakness h a d been i n a b i l i t y to finance the extensive research necessary to keep u p with n e w foreign designs. O b v i o u s l y t h e technicians' inability to h a n d l e even o n e line of p r o d u c t i o n kept Di T e l i a f r o m i n t r o d u c i n g the refrigerators a n d o t h e r p r o d u c t s t h a t w e r e h e l p i n g S . I . A . M . A r g e n t i n a to m e e t expenses. I n g e n e r a l , the failure in Brazil m a y be linked to o r g a n i z a t i o n a l weakness, inefficient a d m i n i s t r a t i o n , a n d lack of technical k n o w - h o w o n the p r o d u c t i o n line. By 1932 the situation could not h a v e b e e n m o r e a l a r m ing. Di T e l i a p e r h a p s feared t h a t his failures in Brazil w o u l d d a m a g e his business relations with the b a n k s t h a t h a d s u p p o r t e d his A r g e n t i n e o p e r a t i o n s t h r o u g h t h e critical years. Banco de Londres a n d Banco Alemán Transatlántico h a d b r a n c h e s in most of the S o u t h A m e r i c a n countries. O b v i o u s l y a new m a n a g e r was n e e d e d in Brazil, b u t a reliable a n d c o m p e t e n t m a n was h a r d to find. Di T e l i a invited several m e m b e r s of the S . I . A . M . f a m i l y to take over the b r a n c h . A m o n g t h e m w e r e such v a l u a b l e m e n to the h o m e office as S a n t o n i , the trusted f r i e n d a n d agent of M e n d o z a Province, a n d C l u t t e r b u c k . T h e i r d e c l a r e d p r e f e r e n c e to r e m a i n in A r g e n t i n a was respected in spite of the d a n g e r t h a t a failure to secure a n a b l e , experienced hombre de confianza w o u l d m e a n g r e a t loss. 9 Finally in 1937 Di T e l i a sent his y o u n g n e p h e w , N e s t o r Sozio, a n e m p l o y e e of S . I . A . M . A r g e n t i n a . T r a i n e d in a c c o u n t i n g , Sozio was instructed to l i q u i d a t e the business a n d to salvage as m u c h of the i n v e s t m e n t as possible. * There are no auditors' reports for the years from 1932 to 1937.

S.I.Α.M. : DI T E L L A EXPANDS IN SOUTH AMERICA A N D A B R O A D

1 1 7.

Sozio stopped production, dismantled the costly factory, and shipped the equipment to Chile and Buenos Aires. 1 0 T h e Brazilian office continued in business, using the salvaged capital (exact a m o u n t unknown) to carry on a small operation as the agent of S.I.A.M. Argentina. Records indicated a profit for 1938 of Rs. 22: 691 S257 and Rs. 52: 283S346 in 1939, or SI,283 and S2,726, respectively. 1 1 While Sozio was auditing the books, he sent reports to Di Telia commenting on a few business activities that he had undertaken. It is apparent from the correspondence that Di Telia had new hope for S.I.A.M.'s future in Brazil. Since the Brazilian political and economic scene showed promise of future stability, total a b a n d o n m e n t of the market appeared unwise. It would also mean a loss of prestige in terms of his business reputation. Di Telia would not admit defeat as long as there were alternatives. His acquaintance with and liking for Brazilians, based on frequent visits, and Sozio's marriage in Brazil reinforced his belief that the enterprise should continue in Sào Paulo. He had in Sozio a conscientious, able worker. Moreover, the success of a new Di Telia venture in the mining of sulphur in Chile depended on steady outlets, and a Brazilian office with a manager of his nephew's caliber could provide one such outlet. By the mid-forties Sozio began to consider a new expansion into industrial production, although the initial book capital of five million reis had been reduced to 10 As a n i n d i c a t i o n of t h e fixed assets i n v o l v e d in this l i q u i d a t i o n , t h e f o l l o w i n g figures for 1928 a r e p r e s e n t e d : Machinery R s . 2 6 2 : 3 0 7 $ 175 O t h e r I n s t a l l a t i o n s a n d Process E q u i p m e n t R s . 2 5 : 5 0 1 $310 Tools and Office E q u i p m e n t Rs. 4 9 : 0 7 4 $ 0 6 4

Total ( F r e e e x c h a n g e r a t e : 8 . 3 8 reis to t h e peso.)

Rs. 3 3 6 : 8 8 3 $589

D e l o i t t e et ai., S à o P a u l o , B r a z i l , V o l . 1, 1 9 2 8 - 1 9 3 9 , c o m p a n y

files.

118

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500,000. H e took e v e r y o p p o r t u n i t y to u r g e s u c h a c t i o n , b u t Di T e l i a v a c i l l a t e d . H e w a s f e a r f u l of a n o t h e r o v e r e x p a n s i o n . T o k e n r e p r e s e n t a t i o n of S . I . A . M . in Brazil as a s m a l l b u s i n e s s o p e r a t i o n w a s sufficient for m a i n t a i n i n g his o w n a n d t h e c o m p a n y ' s p r e s t i g e . N o real p l a n n i n g for e x p a n s i o n was u n d e r t a k e n b e f o r e D i T e l i a ' s d e a t h in 1948. I n 1957 a f a c t o r y w a s p u r c h a s e d to r e s u m e p r o d u c t i o n of c o m m e r c i a l r e f r i g e r a t o r s a n d b a k e r y machinery·. W i t h t h e f o r m a t i o n of W e s t i n g b r a z , a c o r p o r a t i o n including Westinghouse, a Sào Paulo businessman, and S.I.A.M., a s u b s t a n t i a l p l a c e in t h e B r a z i l i a n m a r k e t w a s first achieved12. CHILE

Di T e l i a ' s C h i l e a n a c t i v i t y w a s i n i t i a t e d t h r o u g h t h e assistance of a n I t a l i a n f a m i l y , t h e Fazios, w h o o w n e d a f o u n d r y in S a n t i a g o . L a t e in 1926, O . M . F a z i o b e c a m e t h e S . I . A . M . C h i l e a n a g e n t in S a n t i a g o . Business b o o m e d in t h e first m o n t h of 1927. I m p o r t s f r o m B u e n o s Aires to fill t h e g r e a t C h i l e a n d e m a n d for k n e a d i n g m a c h i n e s , b r e a d mixers, gasoline p u m p s a n d t a n k s , b u r n e r s a n d c u t t e r s r e s u l t e d in a c o n s i d e r a b l e p r o f i t . Sales w e r e s u p p o r t e d b y F a z i o ' s h a n d l i n g of i n s t a l l a t i o n s a n d services. T h e b a l a n c e sheet for 1927 s h o w s a p r o f i t of 8 7 7 , 9 0 0 . 9 0 , 1 3 w i t h b a k e r y e q u i p m e n t a n d b u r n e r s as t h e most successful lines. T h e p r o f i t w a s o n l y a t o k e n of p o t e n t i a l d e v e l o p m e n t , a n d D i T e l i a ' s e n t h u s i a s m was f u r t h e r e n h a n c e d by t h e i n c r e a s i n g confianza of Di T e l i a a n d F a z i o in e a c h o t h e r . T h i s c o n fidence soon d e v e l o p e d i n t o a b o n d of f r i e n d s h i p , o r personalismo. T h e s i t u a t i o n e n c o u r a g e d Di T e l i a to p l a n for r a p i d e x p a n s i o n . H e c o n v e r t e d S 3 5 2 , 2 5 1 . 5 9 A r g e n t i n e pesos to 12 See Chapter V I I , " W h a t Di Telia Did Not Live to See," ior further details on Brazil. 13 Amounts are given in Chilean pesos. T h e rate of exchange in 1927-28 was 8.27 pesos to the dollar.

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$1,197,655.40 Chilean money. T h e a m o u n t constituted the liability under Chilean law of the proprietorship " T o r c u a t o Di Telia, Santiago de Chile," under Fazio's management. Early in 1928 Di Telia accepted promissory notes for merchandise sold a m o u n t i n g to Si 58,618.01 in Chilean pesos, but considered sales of an additional S32,812.49 as bad risks. 14 I n the same year, S.I.A.M. Buenos Aires shipped merchandise to Chile amounting to 8584,720.91. In contrast to the promising start m a d e in 1927, however, the year 1928 was economically unsuccessful. $32,245.29 was lost, primarily as a result of two factors: the initial cost of going into production, and an official decrease in interest rates that could be charged on credits to purchasers. This loss did not discourage Di Telia; since the volume was satisfactory, he felt that more efficiency would guarantee profits. 1929 marked a considerable financial recovery, based on growing experience in import procedures, increased efficiency in the Fazio shop, and success of S.I.A.M.'s products on the Chilean market. T h e auditors reported a substantial profit of 8302,355.46. Di Telia applied the same liberal credit policy in Chile that he used in Argentina. T h e records indicate that Si,276,385.87 was tied up in promissory notes financed by Chilean and foreign banks. 1 5 T h e Chilean national economy gave an illusion of great prosperity. T h e Anglo Mexican Oil C o m p a n y opened business in 1929 and 10,000 automobiles were imported into Chile during that same year. T h e dictator, Carlos Ibañez, had at his disposal in 1930 a $300,000,000 loan by New York banks, with which he initiated a great 14 Deloitte ri al., Vol. 1, Chile. T h e 1928 exchange rate was 8.28 pesos to the United States dollar. 15

T h e 1929 exchange rate was 8.25 pesos to the United States dollar.

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n u m b e r of p u b l i c projects a n d a t t e m p t e d to revive the n i t r a t e i n d u s t r y . 1 6 T h e s e developments presented Di Telia with new business possibilities. Gasoline p u m p s a n d other e q u i p m e n t for service stations were in great d e m a n d . Di Telia m o v e d rapidly, a i m i n g for the same control of the Chilean m a r k e t in p u m p s that he had established in A r g e n t i n a . H e asked S . I . A . M . L o n d o n to establish c o n t a c t with the oil c o m p a n y ' s h e a d q u a r t e r s . In a letter to Fazio, Di T e l i a suggested that S . I . A . M . Buenos Aires would p r o d u c e most of the frames for the p u m p s . Fazio was to develop p r o d u c t i o n in Chile of the simple a n d lighter parts. 1 7 T o ensure efficiency, several skilled Italian workers were transferred f r o m Buenos Aires to Santiago. I n Fazio, Di T e l i a h a d found an able a n d nationally k n o w n hombre de confianza. This relationship and the f a v o r a b l e economic situation of 1930 led him to a m a j o r decision for large-scale expansion. His first step was to i n c o r p o r a t e his proprietorship into "Sociedad Industrial Americana Maquinarias Di Telia, S.A. Santiago, Chile.'''' T h e a u t h o r i z e d capital was three million Chilean pesos. Di Telia a n d the m e m b e r s of his family, the Fazios, and close friends of b o t h families b e c a m e the stockholders of the c o m p a n y . T h e Di Telia g r o u p in S . I . A . M . Buenos Aires a n d Di Telia's co-workers in Argentina were the strongest stockholders. Di T e l i a , as president of the c o m p a n y , welc o m e d the participation of the Corporación de Fomento of Chile, a g o v e r n m e n t agency interested in the industrial d e v e l o p m e n t of Chile. A total of 45,000 of the 262,500 shares distributed was p u r c h a s e d by t h e m . M e m b e r s of the Fazio a n d Carrasco families were o n the Board of Directors. This m e t the g o v e r n m e n t r e q u i r e m e n t s of a representation of Chileans on the Board. O . M . Fazio b e c a m e t h e m a n a g e r - d i r e c t o r of the c o r p o r a t i o n . S . I . A . M . Chile 14 17

Herring, op. cit., 1955, p. 561. Company files, 1930.

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completed a small factory in Santiago, some 3,000 square meters in area. Di Telia, using his Argentine business as a model for Chile, was on the lookout for anything the branch could manufacture, but to begin with only bakery machines and oil and coal burners were attempted. In contrast to S.I.A.M. Brazil the Chilean corporation achieved a measure of success even in the critical year 1930. T h e r e is no detailed record of how Fazio's business mangement was carried on. Relationships with government officials were very good. Chilean administrators were impressed by enthusiasm, patriotism, and intellectualism, and Di Telia had all three qualities. Furthermore, the government encouraged local m a n u f a c t u r e that would foster Chile's industrial development. Fazio wrote Di Telia in mid-1930: Yesterday the Chief of the Industrial Division of the government came to visit our factory. H e is the one who should intervene on our behalf for the increase of the taxes on the importation of gasoline pumps frpm foreign companies. After looking at the four S.I.A.M.-BIok p u m p s made in Chile he showed great enthusiasm. H e also indicated that he would try to obtain a tax increase on the imported articles but unfortunately, because of the laws of Chile, he will be unable to raise the amount we wished ; however, we are sure he will make a 25 per cent increase from the present rate. 1 8

President Ibañez ended his term of office as the effects of the world depression hit Chile. In 1931 the national budget was drastically curtailed, leaving m a n y thousands of people unemployed and reducing the consumer goods to a bare m i n i m u m ; only forty-nine automobiles were imported that year. Subsequently, this economic crisis resulted in labor conflicts and serious political upheaval. 1 9 18 Letter from Fazio to Di Telia, May 29, 1930. 10

Herring, op. cit., 1955, p. 562.

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Inevitably the new corporation's sales dropped drastically, thus curtailing their production plans. The net profit in February 1932 was 62,512 Chilean pesos, as compared with 240,000 in 1931: a drop of 177,488. 20 With the depression, the future of the company seemed dubious. At this juncture, however, as on many other occasions, Di Telia refused to think in terms of liquidation. His immediate policy was one of flexibility and accommodation. He persuaded the stockholders to shift business emphasis to exports: sulfur, chickpeas, beans, lentils, and wood. Fazio bought Chilean surplus commodities while S.I.A.M. Buenos Aires and S.I.A.M. Brazil marketed the products. The company also considered the importation of items currently unavailable in Chile, such as soya oil, iron, nails, and caustic soda. In order to determine market needs accurately, the company ran newspaper advertisements requesting information. Like other businessmen at the time, Di Telia was often able to profit by the difference between the official and the free rates of exchange, but this required constant vigilance. As indicated in a letter to Robiola such transactions could result in a loss : T h e situation is as follows: O n that sent to Brazil before February 11th, the Bank of Brazil will not give an exchange of any sort whatsoever, so the famous books on Santiago actually do not exist. They say that when the commission sent to the United States and Europe returns, it is possible that the Commission of Exchange will look into the matter. T h e only thing that can be done is to deposit the Brazilian money in the account of the Central Bank. It is clear that in this manner we will have a loss. T h e buyers will deposit the Brazilian money at the official exchange of sixty and at the free market of forty, but at any rate this is the best solution. O n the importations arriving in Brazil after 10

Deloitte, pp. 3-4. T h e 193! exchange rate was 8.26 pesos to the dollar.

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February 11, there are no restrictions; all the buyers will pay at the free rate of exchange. . . . 2 1 Arturo Allesandri took over the government in 1932 and started a vigorous program to save Chile from economic chaos. From an industrial and business standstill, the nation moved rapidly toward recovery. The president promoted national industry and stimulated economic growth by subsidies and tax reductions. The S . I . A . M . corporation was equipped to benefit from these measures and Di Telia immediately went into action. Fixed assets of the company were increased from 1,550,964 to 2,598,392 Chilean pesos. 22 Production was moved to a larger factory, some 6,000 square meters in area, and a line of domestic gas ranges was added. Company offices were set up on B. O'Higgins Avenue in Santiago. In 1933, the company began importing spare automobile parts. As S.I.A.M. Argentina continued to earn substantial profits Di Telia was, as usual, on the lookout for new lines of development. A promising opportunity for capital investment presented itself when the Carrasco mining activities were seriously affected by the depression. Sulfur mining in the northern part of Chile by the Carrasco brothers went back to 1915. J u a n B. Carrasco was an active shareholder in the first S . l . A . M . corporation in Chile, and an early friendship with Di Telia had been established. In 1933 S . l . A . M . Carrasco S.A. (Sociedad Anónima) was organized with a capital of 8,200,000 Chilean pesos. Di Telia became the president of the corporation and J u a n B. Carrasco was appointed to the position of director-manager. Di Telia was sure that if the Chilean mineral deposits were properly financed, Letter from Di Telia to Robiola, October 31, 1932, company files. In 1933, the depression's aftermath, the peso value sank to 34.02 to the dollar. 21

11

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equipped, and managed, he could compete successfully in the world market. Production had to be increased and prices lowered for successful competition. Di Telia visited the isolated region of northern Chile, studied methods of mining, and favored the suggestion of Italian engineers for further improvement in the refining of sulfur. A new method was tried to obtain a greater sulfur yield. He also made contact with several United States firms interested in obtaining Chilean sulfur at a low price. Samples were sent to and analyzed in California. Nothing resulted, however, from this contact. During World War II, however, excess demand for sulfur made the Chilean operations extremely profitable. The figures in Table 16 show the net earnings of S.I.A.M. Carrasco S. A. from 1936 to 1944. TABLE FINANCIAL

Year

Net earnings, Chilean pesos

1936 1937 1938 1939 1940 1941 1942 1943 1944

405,152.94 385,604.42 303,963.65 477,891.53 446,870.65 583,219.21 1,455,263.00 3,261,714.77 6,321,850.97

16

STATEMENT*

Cost of production as percentage of gross income 7 ?

? 59.14 53.74 68.18 76.83 60.37 47.79

* S o u r c e : Deloitte el a¿., Chile. Production costs were not available fot 1936-38. E x c h a n g e rates for these years in Chilean pesos per U.S. dollar were 1936: 27.85; 1937: 26.11; 1938: 27.14; 1939: 32.03; 1940: 32.82; 1941: 31.54; 1942: 31.63; 1943: 32.16; 1944: 31.53.

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M e a n w h i l e , the s u d d e n d e a t h of Fazio in 1933 left S . I . A . M . Chile w i t h o u t a m a n a g e r . R a t h e r t h a n p r o m o t e a local m a n , Di T e l i a p r e f e r r e d a m e m b e r of S . I . A . M . Buenos Aires or the Di T e l i a family. A c c o r d i n g l y h e asked his b r o t h e r - i n - l a w , J u a n R o b i o l a , t r a i n e d in S . I . A . M . Buenos Aires, to go to Chile. R o b i o l a viewed his t r a n s f e r with little e n t h u s i a s m b u t felt t h a t t e m p o r a r y e x p e r i e n c e in Chile could i m p r o v e his social a n d e c o n o m i c status in A r g e n t i n a . 2 3 His business letters of the first two years rem i n d e d Di T e l i a r e p e a t e d l y t h a t the position in Chile was " s e c o n d - b e s t " a n d t h a t he e x p e c t e d a new a p p o i n t m e n t in Buenos Aires. Di T e l i a neglected R o b i o l a ' s requests, p r o b a b l y in the h o p e t h a t R o b i o l a w o u l d m a k e a n eventual a d j u s t m e n t to C h i l e a n life a n d w o u l d b e c o m e p e r sonally interested in t h e business. R o b i o l a ' s lack of e x p e r i e n c e in r u n n i n g a business c o u l d h a v e been a g r e a t h a n d i c a p if he were left on his o w n . F o r m a n y years Di T e l i a took d e c i s i o n - m a k i n g responsibility u p o n himself, based u p o n detailed reports w r i t t e n b y Robiola. Besides g o i n g into s u l f u r m i n i n g , Di T e l i a invested 29,875 C h i l e a n pesos in a r a d i o station in 1935. W i t h i n the next several years he i m p r o v e d the e q u i p m e n t a n d increased the value to 94,751 pesos. President A l l e s a n d r i ' s political bias in favor of Axis ideologies p e r m i t t e d a flood of p r o p a g a n d a t h r o u g h the G e r m a n E m b a s s y . A f t e r the o u t b r e a k of w a r , G e r m a n s c o n n e c t e d with the Banco Alemán Transatlántico p u t pressure on J u a n R o b i o l a . T h e y suggested t h a t since he was f a v o r e d w i t h credit a n d b a n k ing facilities they s h o u l d use Di T e l i a ' s r a d i o station for G e r m a n p r o p a g a n d a . I n r e p l y to a letter in w h i c h R o b i o l a p o i n t e d out the business a d v a n t a g e s of a c c e p t i n g the G e r m a n offer, Di T e l i a m a d e clear his ideas r e g a r d i n g political ideology a n d business policy: a

I n t e r v i e w with J u a n R o b i o l a , Chile, 1959.

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I a m answering . . . your letter of November 18th. . . . Let's take this point by point. No. 1—The favors—We have been working here with the G e r m a n bank on a much larger scale than you have been able to. Bank business is business, like any other; they need clients to operate and to make money. If the clients didn't seek loans, they would have to close up. When we sell a machine to a baker, we open a credit. According to your point of view, it's a " f a v o r " to do this and possibly this is true, but for trying to do "favors" we pay commissions to the salesmen and we're happy at the end of the month if the sales figures give us an appreciable number of "favors" granted during the month, the same as a banker is happy when the figures of loans accorded (favors accorded) rises, and worries when business declines (when the favors accorded decline). Finally, both of them should be acknowledged, both he who gives and he who receives. Consequently, I don't admit even as a joke that one should speak of "favors." It's a matter of business and if at any moment the bankers had glimpsed the remotest possibility of bad business, any of the English, American or Germans would have certainly closed the account. If they've done business, it's because they were sure it would be good—and it has been very good. No. 2 — " W e are doing business with the Americans with German money." I ' m surprised that, having so many banker friends, you've written this phrase. T h e German Bank doesn't lend G e r m a n money, nor does the City Bank lend American money, nor the London Bank English money. These bankers lend only Chilean money from Chileans or the inhabitants of Chile, for your information! In the beginning when these banks are founded, they bring over some capital but that's very small compared to what they control, and what they control is the savings of the Chileans there, the Argentines here, etc. T h e Chileans, Argentines, etc., have been and are naive people who instead of depositing their money in the Bank of Chile or in the Nation Bank, deposit it in foreign banks.

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N o . 3 — Y o u ask if f r o m n o w o n y o u s h o u l d g o to C i t y B a n k , etc. Y o u ' r e still c o n f u s e d . F r o m n o w o n y o u will c o n t i n u e as u p till n o w . Y o u will c o n t i n u e w i t h t h e G e r m a n s if it suits you to g o to t h e G e r m a n s . A n d t h e G e r m a n s will c o n t i n u e d o i n g you " f a v o r s " if it suits t h e m to d o so. T h e r e a l " f a v o r " is w h a t w e a r e d o i n g o u r s e l v e s ; t h e n , in t h e s e t i m e s w h e n we a r e losing a lot of c l i e n t e l e it is a r e a l ' " f a v o r " if w e c o n t i n u e g i v i n g t h e m b u s i n e s s . H a v e n ' t y o u e v e r m a d e a r e c k o n i n g of w h a t t h e Banco Alemán Transatlántico g a i n s w i t h o u r a c c o u n t ? N o . 4 — F o r y e a r s , all t h o s e w h o w a n t e d t o — a n d also those w h o have not w a n t e d t o — k n o w w h a t I think a b o u t politics, a n d t h e f r i e n d s of t h e Banco Alemán Transatlántico k n o w v e r y well. I ' m t i r e d of r e p e a t i n g it to t h e m . A t t h e b e g i n n i n g of t h e w a r , t h e y a s k e d m e to p u b l i s h n o t i c e s in t h e Pampero, a d a i l y p a p e r w h i c h t h e G e r m a n s p u b l i s h h e r e in S p a n i s h . I t ' s a m a t t e r to w h i c h t h e y a t t a c h g r e a t i m p o r t a n c e . T h e y all c a m e f r o m t h e p a p e r . F i r s t Sr. S c h m i d t , t h e n Sr. H e r m a n n h i m s e l f ( t h e G e n e r a l M a n a g e r ) , a n d I r e f u s e d t h e m all. T h e y all k n o w t h a t w e p u b l i s h e d n o t i c e s in t h e English p a p e r a n d e v e n in t h e J e w i s h p a p e r . T h e m a n a g e r of P e r u is h e r e a n d n o w h e h a s b e e n n a m e d G e n e r a l M a n a g e r in Berlin. I ' v e c l e a r l y told h i m j u s t w h a t 1 t h i n k of his p a t r o n s . H o w c a n y o u i m a g i n e t h a t I ' m g o i n g to r e t r a c t m y ideas for t h e f e a r of a possible t h r e a t ? B e c a u s e of m y i d e a s , I w e n t to w a r , i n t e r r u p t i n g m y c a r e e r in a b u s i n e s s w h i c h w a s j u s t b e g i n n i n g to d e v e l o p a n d in s p i t e of t h e responsibility of a f a m i l y ; b e c a u s e of m y i d e a s I c a n n o l o n g e r r e t u r n to I t a l y w h e r e I left f r o z e n ( a n d lost) 2 million lira, a n d today you believe t h a t w h e n there's n o t a single b l a c k h a i r left o n m y h e a d , I ' d b e f r i g h t e n e d a n d give u p m y dignidad a n d m y i d e a l s for t h e f e a r of a t h r e a t by t h e g e n t l e m e n of t h e G e r m a n b a n k ! It seems to me that you don't know me at all, dear Juan.24 A l t h o u g h it cost m e all S . I . A . M . of B u e n o s A i r e s a n d C h i l e ( a n d e v e n U r u g u a y a n d B r a z i l ) I h o p e I s h a l l never retreat f r o m m y ideals f o r f e a r of losing m o n e y . M Italics are ours.

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I realize that I have gone much further than I intended. It doesn't seem to me that I have to take too seriously a matter which seems simple. It's very good that you suspend simultaneously the transmissions of the Axis and those of the Loyalist Spanish, although these Loyalist Spanish are the only ones in a Europe of cowards who've demonstrated those old-fashioned manly virtues. Now you see I permit you to be neutral and still you go so far as to throw the responsibility on my shoulders. We have handled worse things. . . . 2 5 During the war the radio station was a main political target; finally, Di Telia sold the station to the British. Chile followed Argentina's lead in acceptance of the refrigerator. T h e sharp increase in consumer demand spurred Di Telia into action, and S.I.A.M. Chile also signed a contract with Kelvinator. Recalling the nearfailure in Brazil, Di Telia in undertaking refrigerator manufacture decided to split responsibilities in Chile. Robiola remained in charge of the entire business administration but J o s é Chito, an Italian engineer sent to Chile from Argentina, assisted by Di Telia's nephew, Alberto Di Telia, w h o arrived from Buenos Aires in 1935, supervised the production lines. Di Telia wanted Chile to stick to a few models and not undertake new lines too rapidly. O n water coolers, for example, his advice was: W i t h respect to water coolers, we told you that we had manufactured some using Kelvinator parts. Until now we have manufactured them only in Buenos Aires with very bad results. These water coolers seemed very simple but they had many complexities which, if not done to perfecttion, can cause many headaches. O u r advice is not to concern yourself with them. If you want water coolers, ask " Letter from Di Telia to J u a n Robiola, November 20, 1940, in Chile's file.

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for information from Kelvinator, calculate importing costs, and then sell them at a good price. 2 6 By 1938 t h e letters show t h a t Di T e l i a was g i v i n g R o b i o l a m o r e f r e e d o m of a c t i o n . H e n o w m a d e i m p o r t a n t decisions w i t h o u t consultation w i t h Di T e l i a . Di T e l i a h a d successfully t r a i n e d a n o t h e r m e m b e r of his f a m i l y a n d h a d w o n his loyalty. W h i l e S . I . A . M . C h i l e c o u l d n o w t a k e c a r e of itself, Di T e l i a c o n t i n u e d to w a t c h d e v e l o p m e n t s carefully a n d reasserted control w h e n overextension was threatened. As c o n s u m e r d e m a n d i n c r e a s e d , the shop p r o d u c i n g gasoline p u m p s , b a k e r y m a c h i n e s , a n d r e f r i g e r a t o r units n e e d e d m o r e space. I n 1942 S . I . A . M . Chile a c q u i r e d 20,000 s q u a r e m e t e r s of l a n d a n d c o n s t r u c t e d a n e w 10,000-square-meter factory'. 2 7 E x p a n s i o n in the Brazilian m a r k e t for C h i l e a n p r o d u c t s e n c o u r a g e d a d d i t i o n a l inv e s t m e n t . I n 1944 the a u t h o r i z e d c a p i t a l for the c o r p o r a tion was increased to 14,159,280 pesos. 2 8 T h e success of the o p e r a t i o n in Chile presents a p a r a d o x : objectively, t h e limitations of Chile's m a r k e t d i d n o t w a r r a n t large-scale p r o d u c t i o n . I t is unlikely t h a t D i T e l i a e x p e n d e d t i m e a n d m o n e y in this risky business because h e visualized l a r g e profits in the f u t u r e . A n i m p o r t a n t c o n s i d e r a t i o n was t h e s t r o n g f r i e n d s h i p established b y Di T e l i a w i t h distinguished Chileans, like Fazio. T h r o u g h t h e m Di T e l i a b e c a m e interested in C h i l e a n n a t i o n a l p r o b l e m s . His f r i e n d s h i p w i t h Desiderio G a r c i a , D i r e c t o r of the Corporación de Fomento, led to his p a r t i c i p a t i o n in its p r o g r a m , a n d in t h a t of Fomento Fdbnl, a n o t h e r state a g e n c y w o r k i n g for t h e i n d u s t r i a l e x p a n s i o n of Chile. D i T e l i a saw in t h e serious n a t i o n a l crisis of the e a r l y thirties a situation t h a t a r o u s e d his interest a n d s y m p a t h y . H e 2e 27 28

Letter dated 9/14/36 , company file. Data from J u a n Robiola. Deloitte et al.

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E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

sincerely attempeted to formulate solutions that would benefit labor. Since Di Telia's death the business in Chile has been studied and supervised by Torcuato Sozio and the program of expansion in the 1950's will be noted later. 2 9 URUGVAY

Di Telia entered Uruguay by accident. In 1922 he learned that J u a n Colominas, a Spaniard operating in Montevideo, was manufacturing exact reproductions of Di Telia's bakery machines. A trip to Uruguay convinced Di Telia that he and Colominas could work together, so instead of taking legal action Di Telia offered Colominas the agency for S.I.A.M. machines and he accepted. 30 Colominas had experience in Uruguay and was a good mechanic. His oldest son could be brought in immediately as a salesman, and three other sons could be groomed for positions in the S.I.A.M. companies. The firm of S.I.A.M. Torcuato Di Telia Uruguay was registered in 1928 but run as a branch of S.I.A.M. Buenos Aires. Francisco Belgrano was sent down from Buenos Aires to supervise the offices and workshop on Santa Fe Street in Montevideo. J u a n Colominas & Cia. continued operating independently as Di Telia's agents, with exclusive rights for bakery machinery and gasoline pumps. Colominas depended for supply on S.I.A.M. Buenos Aires through the Montevideo office. He also took care of repairs, service, and other mechanical work. The two firms maintained a close relationship. In 1931, when losses were great, Di Telia moved his office to Colominas' location on Flores Street. Thirteen S.I.A.M. employees joined the Colominas workers. Although the *» For details of this expansion, see Chapter V I I , " W h a t Di Telia Did Not Live to See." Interview with J u a n Colominas, J r .

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1 31

former c o n t i n u e d to receive their salaries f r o m S . I . A . M . , the c o m b i n e d business was u n d e r the supervision of J u a n Colominas' eldest son. T h e a r r a n g e m e n t was n o t satisfactory for t h e Colominas g r o u p , a n d in D e c e m b e r of 1932 S . I . A . M . in U r u g u a y r e t u r n e d to its old location on Santa F e Street, while Colominas & Cia. r e m a i n e d o n Flores Street as agents. I n 1933 the economic crisis a n d the d e v a l u a t i o n of t h e U r u g u a y a n peso seriously affected operations for b o t h Di Telia a n d Colominas. Despite the precarious situation, the existence of S . I . A . M . in U r u g u a y was justified by several profitable transactions in gold e x c h a n g e . 3 1 D u r i n g the 1930's, the leadership of J u a n Colominas, Sr., passed to his eldest son, a l t h o u g h the f a t h e r c o n t i n u e d to work in t h e shop. W h e n expansion in Buenos Aires required more hombres de confianza at h o m e , Belgrano, the m a n a g e r of S . I . A . M . in U r u g u a y since 1928, was asked to return. T h i s left an o p e n i n g t h a t was filled b y J u a n Colominas, J r . , in 1939. I n a n interview, he r e m a r k e d : " D i Telia trusted m e entirely a n d left m e alone so m u c h that I even h a d to p a y my o w n salary. T h i s was almost f r i g h t e n i n g . " 3 2 H e found t h e S . I . A . M . o r g a n i z a t i o n in a shaky position. " I was very c o n c e r n e d a b o u t the fact t h a t I was left solely responsible for Di Telia's investment a n d the books h a d not been a u d i t e d . . . . Di T e l i a sent Deloitte, Plender, Griffiths & C o m p a n y to a u d i t the books a n d it gave me peace of m i n d w h e n everything was fine a n d in p r o p e r o r d e r . " 3 3 Colominas c o n t i n u e d in his d u a l role as m a n a g e r of the family business a n d a d m i n i s t r a t o r for Di Telia for several years, a l t h o u g h he assumed t h a t the latter was a t e m p o r a r y a r r a n g e m e n t only. T h e unsuccessful joint-office m o v e in 1931 h a d been in « "

Ibid. Ibid.

»an.

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CULTURE

a n t i c i p a t i o n of merger. W h e n Di Telia a g a i n proposed a m e r g e r in 1946, the C o l o m i n a s family a g r e e d , a n d a stock c o m p a n y was established o n J u l y 1, 1947. J u a n Colominas, J r . , b e c a m e M a n a g i n g Director a n d his f a t h e r c o n t i n u e d in the shop. Colominas, J r . , said: " T h e stock c o m p a n y was Di T e l i a ' s idea. O u r alternatives w e r e either to fight Di T e l i a or to accept it. W e accepted, a n d t h e n we w o n d e r e d w h e t h e r Di T e l i a ' s convincing a r g u m e n t s were practical."34 Colominas' p r o p e r t y , business e q u i p m e n t , a n d clientele w e r e t r a n s f e r r e d to Di T e l i a for o n e million gold U r u g u a y a n pesos. T h e new o r g a n i z a t i o n was n o longer a b r a n c h of S.I. A . M . Buenos Aires b u t a n i n d e p e n d e n t enterprise with T o r c u a t o Di T e l i a as controlling stockholder a n d C o l o m i n a s as the hombre de confianza. A l t h o u g h formally i n d e p e n d e n t , the new c o m p a n y c o n t i n u e d a n inf o r m a l relationship with S . I . A . M . Buenos Aires. Di T e l i a ' s plans for the new S . I . A . M . U r u g u a y i n c l u d e d : conversion of the workshop into a factory; p u r c h a s e of p r o p e r t y to provide for f u t u r e expansion, a n d domestic refrigeration i n d e p e n d e n t of A r g e n t i n a . T h e s e projects w e r e c a r r i e d o u t after Di Telia's d e a t h . For m a n y years Di Telia's v e n t u r e in U r u g u a y was not justifiable in terms of profit. T h e records f r o m 1928 to 1933 (see T a b l e 17) showed a constant loss. Did S . I . A . M . ' s expansion in U r u g u a y h a v e potential value for S . I . A . M . Buenos Aires? D i d Di T e l i a conceive U r u g u a y , Brazil, Chile, a n d A r g e n t i n a as p a r t of o n e business o p e r a t i o n , or must we seek t h e justification for the U r u g u a y a n v e n t u r e in Di T e l i a ' s personal feelings? T h i s a p p e a r s to be a n o t h e r case in w h i c h "ties of i n t i m a c y " must be considered with relation to business policy. T h e Colominas, f a t h e r a n d son, a n d Di T e l i a established bonds of inner u n d e r s t a n d i n g . T h e i m m e d i a t e r a p p o r t of M

Interview with J u a n Colominas, J r .

S.I.Α.M. : DI T E L L A E X P A N D S IN SOUTH AMERICA A N D A B R O A D

1 33

personalismo established a high degree of m u t u a l confidence. Colominas, J r . , stated t h a t : " D i Telia was a m a n of great capacity, imagination, mental ability . . . h a r d to m a t c h . " T h e Colominas group was d r a w n into the S . I . A . M . family, identifying with the c o m p a n y a n d its future. I n turn, Di Telia was obligated to ensure the security of the U r u g u a y a n operations. T h e complex network of privileges and responsibilities implicit in personalismo was expressed in a feeling that U r u g u a y could not be a b a n d o n e d . TABLE URUGUAY:

PROFIT

Year

AND

Loss

17 SUMMARY,

Profit

1928

1928-1934*

Loss

8,593.48

1929

1,611.09

1930 1931 1932 1933 1934

2,169.83 27,130.84 29,755.10 20,095.1,7 1,450

* S o u r c e : D c l o i t t e el al. T h e e x c h a n g e r a t e s in t e r m s of U . S . d o l l a r s t o t h e U r u g u a y a n p e s o f r o m 1928 to 1934 w e r e 1 9 2 8 : 1 . 0 3 ; 1 9 2 9 : . 9 4 ; 1 9 3 0 : . 7 2 ; 1931 : . 7 2 ; 1 9 3 2 : . 4 7 ; 1 9 3 3 : . 7 4 ; 1 9 3 4 : . 8 0

In 1953 all four of the Colominas brothers were firm. Sincc Di Telia's death, T o r c u a t o Sozio ultimate supervision of the operations and has new expansion, including the factory equipped to refrigerators that Di Telia had planned. 3 5

with the has h a d initiated produce

LONDON

In 1928, Di Telia's great year of expansion, an office was also opened in London. This English company, 35

F o r d e t a i l s of e x p a n s i o n , see C h a p t e r V I I .

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managed by Cluttcrbuck's brother-in-law, M. S. Guermont, was registered as S.I.A.M. Ltd., Engineers. Di Telia was one of the directors. T h e exact reasons for this investment are not clear from either documents or interviews. However, the investments of British businessmen in South America and the activities of the oil companies undoubtedly were of great concern to Di Telia. Perhaps S.I.A.M. London was viewed as an information agency. T h r o u g h British businessmen, the plans of European commerce and industry affecting Latin America and particularly Argentina could be learned. Good forecasting of market and political changes in Europe and South America could often reveal possibilities for profit. Information from London could also help him to remain a step ahead of foreign corporations backed with powerful capital based on the pound sterling. In the depressed situation of the 1930's Di Telia believed and proved that " I f we are prepared to act promptly there is still chance for a small profit." However, maintaining an office in London merely for general information would be an expensive opeiation. To carry the overhead Guermont was to manufacture S.I.A.M.'s service station equipment in London. This would be supplemented by some importation of gasoline pumps from Argentina. Guermont's enthusiasm is evident in his letters to Clutterbuck. On August 29, 1928 he requested photographs of S.I.A.M.'s branches for advertising purposes: "This is important . . . Kingsway, as you are probably aware, is the finest business street in London. Actually, S.I.A.M. has a d d e d tone to it." 3 6 In November he enlarged on his hopes for the London office: M a n y t h a n k s for y o u r c a b l e of t h e 2 7 t h a n d

particu-

l a r l y for t h e n e w s c o n t a i n e d in it. I a m g l a d you a r e s e n d ing m e f o u r p u m p s by first b o a t , a n d I h o p e t h e y will a r r i v e "

L e t t e r , G u e r m o n t to C l u t t e r b u c k , A u g u s t 29, 1928.

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soon. I a m sending one to Shell for their a p p r o v a l ; another is going to the British Petroleum, and a third to the Blue Bird, a new company which has just started, and of which you will already have had full details in the November issue of Service and Filling Station. British Petroleum has given up its own p u m p . T h e y h a d spent over 25,000 pound sterling to perfect this without any success, and the Director responsible for incurring the expenditure was asked to resign. They are without a p u m p of their own, and I am pulling the nccessary strings to try to get t h e m to adopt the S.I.A.M.-Blok . . . should this come off, it will mean at least 1,500 p u m p s per year in England alone . . . I can best push this p u m p here by making use of the fact that petrol sells in this country by the mileage it will give per gallon. T o get the m a x i m u m miles per gallon, therefore, the oil companies must make sure that the purchasers of their product get the exact quantity they pay for. P u m p s which can supply less by being manipulated can be relied u p o n to be manipulated as much as possible to the d e t r i m e n t of the particular product concerned. I think this a r g u m e n t will pull a lot of weight . . , 37 G u e r m o n t f a c e d the p r o b l e m of m a r k e t i n g the g o o d s of a firm u n k n o w n in E n g l a n d . C o n s e q u e n t l y , h e a t t e m p t e d in 1929 to establish useful c o n n e c t i o n s w i t h key i n d i v i d u a l s i n British business o r g a n i z a t i o n s . H e tried to get f r i e n d l y c o m p a n i e s s u c h as Shell to h e l p i n t r o d u c e S . I . A . M . - B l o k gasoline p u m p s on t h e British m a r k e t . G u e r m o n t also s o u g h t c o n n e c t i o n s in the a u t o m o b i l e m a n u f a c t u r i n g industry, h o p i n g that the S.I.A.M.-Blok p u m p could be a d v e r t i s e d in p i c t u r e s of n e w c a r m o d e l s . But his somew h a t o v e r o p t i m i s t i c h o p e s failed to m a t e r i a l i z e . G u e r m o n t also h o p e d t h a t f r o m L o n d o n he m i g h t o p e n a c o n t i n e n t a l m a r k e t for S . I . A . M . p r o d u c t s , especially the " All Guermont's correspondence was in English and therefore carried on with Clutterbuck; letter, Guermont to Clutterhuck, November 2, 1928.

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CULTIRE

S . I . A . M . - B l o k p u m p . O n J u l y 25, 1930 G u c r m o n t wrote Cluttcrbuck that negotiations with the Anglo-Belgian Petroleum C o m p a n y were in progress, but that the S . I . A . M . p u m p did not meet certain specifications of the Belgian W e i g h t s a n d Measures Bureau. Markets in Spain w e r e also b e i n g considered. Clutterbuck answered on A u g u s t 28, 1930: Your inquiries for service station equipment for Spain are indeed interesting, and we are going to quote t h e m lower prices t h a n they can get from the States. It would be a very good thing if we could have distributors in other European countries, as it would give an outlet to our works, and provided they paid cash we could assure them lower prices and better materials. . . . Your remarks about the Belgian Weights a n d Measures—objections to our S.I.A.M.-Blok could surely be overcome. Otherwise, it might pay you to design a special p u m p for them on the old chassis. 38 S . I . A . M . L o n d o n p l a y e d a n o t h e r role, as p u b l i c i t y a g e n t for S . I . A . M . B u e n o s Aires. R e c o g n i t i o n as a n intern a t i o n a l o r g a n i z a t i o n m i g h t , it was felt, i m p r o v e t h e c h a n c e s for l a r g e b a n k l o a n s . I n S e p t e m b e r of 1929 t h e L o n d o n office p r e p a r e d a r e q u e s t for a l o a n 3 9 of 1,250,000 p o u n d s for S . I . A . M . B u e n o s Aires. G u e r m o n t w r o t e a n e n t h u s i a s t i c l e t t e r to a c c o m p a n y this l a r g e request : Alter r e a d i n g these papers one cannot help being struck by the r e m a r k a b l e opportunities which present themselves in the Argentine for a m a n of knowledge, j u d g m e n t , and energy. H e r e we have the history of such a m a n who started in business barely ten years ago with, I believe, a capital of about 3,000 p o u n d s and who in t h a t short time has built up and developed a m a n u f a c t u r i n g business which is 38 38

Letter, company files. Company files.

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b r i n g i n g h i m a n i n c o m e of o v e r 1 0 0 , 0 0 0 s t e r l i n g a y e a r , a n d t h e r e h a r d l y seems to be a limit to t h e possible e x p a n s i o n s a n d f u t u r e p r o f i t s of t h e business. T h e b u s i n e s s h a s b e e n , a n d still is, r u n o n t h e s o u n d e s t possible lines. . . . The history of t h e b u s i n e s s r e m i n d s o n e of t h e h i s t o r y of M o r r i s , of m o t o r f a m e in this c o u n t r y . I u n d e r s t a n d t h a t t h e i n t e n t i o n of t h e p r o p r i e t o r is to c o n t i n u e to r u n t h e business o n t h e s a m e lines. T h e d e m a n d for his p r o d u c t s is i n c r e a s i n g faster t h a n his r a p i d l y a c c u m u lating c a p i t a l c a n f i n a n c e a n d it w o u l d , of c o u r s e , b e folly to d r i v e t h e s a t i s f a c t i o n of this d e m a n d i n t o o t h e r h a n d s a n d t h u s c r e a t e serious c( m p e t i t i o n to his ow n b u s i n e s s w h i c h a t p r e s e n t d o e s not exist. 4 0

T h e r e is n o record of which banks w e r e a p p r o a c h c d , b u t quite u n d e r s t a n d a b l y the negotiation was unsuccessful. As noted in C h a p t e r I I I , before Di T e l i a ' s policy of buying k n o w - h o w a n d m a c h i n e r y u n d e r foreign license was fully developed in the mid-thirties, the securing of trained engineers for S . I . A . M . Buenos Aires p r e s e n t e d a serious p r o b l e m . Di T e l i a was convinced t h a t foreign engineers, well t r a i n e d a n d e x p e r i e n c e d in mass p r o d u c t i o n , while more expensive were less risky t h a n leaving p r o d u c tion in the h a n d s of u n i m a g i n a t i v e a n d b a d l y t r a i n e d people. H e r e the services of S . I . A . M . L o n d o n could be utilized. But L o n d o n succeeded in p l a c i n g only two engineers u n d e r contract. For a period of two years S . I . A . M . L o n d o n was prom o t e d for business a n d p e r h a p s prestige reasons. U n d e r the great e c o n o m i c stress of the early thirties Di T e l i a could not a f f o r d a distant office whose v a l u e in the S . I . A . M . set-up was u n c e r t a i n . C l u t t e r b u c k w r o t e to G u e r m o n t on S e p t e m b e r 5, 1930, m a k i n g clear t h a t Di T e l i a was greatly affected by the depression a n d was u n willing to c o n t i n u e the s u p p o r t of S . I . A . M . L o n d o n : 40

L e t t e r , S e p t e m b e r 21, 1929, c o m p a n y files.

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. . . Brazil started with what seemed a good business, but has lost lots of money for us . . . the boss 'Di Telia) does not want a second Brazil. Although yours may be a fine business, it is almost sure to require capital and as the situation stands now, we have none to give you . . . positively everything that is to mean outlay of money in England must be stopped. . . . There are a number of possible solutions to the London office situation. One is to find one or more people with money in England who are willing to buy up the business of S.I.A.M. Ltd. and no doubt you can persuade them there is lots of money to be made. . . . A second solution is to find some firm in England willing to take on the agency of our firm, to sell our lifts, compressors, oil pumps and soon our duplex pump. . . . A third and last solution is to stop all expenses and you remain in London, with an eye open to make one of the preceding arrangements. 4 1 O n N o v e m b e r 30, 1931 the L o n d o n office was p u r chased by the L o n d o n Industrial Finance Trust, L t d . , partly to secure the rights to a car j a c k p a t e n t e d by Di Telia. T h e world depression was an i m p o r t a n t factor in the failure of the L o n d o n opération. Bccause of the acute shortage of credit, Di Telia could not invest enough to give G u e r m o n t time a n d money to m a k e S.I.A.M. k n o w n in British business circles. H a d the plans succeeded, as they might h a v e in better times, an enormous m a r k e t could have been opened for S . I . A . M . products. T h e records d o not indicate that Di Telia blamed the failure on m i s j u d g m e n t , as was the case in Brazil. R a t h e r , he a p p e a r e d dissatisfied with the British operation for personal reasons. It seems p r o b a b l e t h a t the impersonal a n d r a t h e r reserved British social setting discouraged Di T e l i a . W a r m , friendly business relations with fellow Latin Americans h a d , as we have seen, spurred him to retain his 41

Letters, c o m p a n y

files.

S . I . Α . M . : DI T E L L A EXPANDS IN SOL Τ Η AMERICA AND A B R O A D

interests

in

their

countries

despite

economic

1 39

setbacks.

S u c h r e l a t i o n s w e r e n e v e r e s t a b l i s h e d in E n g l a n d .

Hence

i n t h e a b s e n c e of e i t h e r s t r o n g s o c i a l o r e c o n o m i c m o t i v a tion to c o n t i n u e , he did not hesitate to p u t a h a s t y e n d to o p e r a t i o n s in L o n d o n . NEW

YORK

T h e Di I e l l a C o r p o r a t i o n in .New Y o r k w a s f o r m e d i n 1942 s h o r t l y a l t e r t h e s i g n i n g o f t h e W e s t i n g h o u s c

con-

t r a c t . Di T e l i a w a s a n x i o u s to e x p a n d his b u s i n e s s r e l a t i o n s in t h e U n i t e d S t a t e s . T h i s w a s s h o w n b y t h e n u m b e r of trips t h a t h e m a d e to the U n i t e d States, t h e n u m b e r of e n g i n e e r s a n d a d m i n i s t r a t i v e p e r s o n n e l sent to be t r a i n e d with

Westinghousc,

the n u m b e r

of A m e r i c a n

technical

a s s i s t a n t s b r o u g h t to A r g e n t i n a , a n d t h e a m o u n t o f e q u i p ment and machinery bought on the United States market. A n a g e n c y in N e w Y o r k c o u l d f a c i l i t a t e r e l a t i o n s b e t w e e n S . l . A . M . Buenos Aires a n d the A m e r i c a n contacts, especially W e s t i n g h o u s c . 4 2 T h e n e e d for a n a g e n t w a s

par-

ticularly a c u t e d u r i n g W o r l d W a r I I w h e n business policies w e r e c o n s t a n t l y a f f e c t e d b y d e c i s i o n s m a d e in W a s h i n g t o n . As

with

the

other

non-Argentine

S.l.A.M.

com-

p a n i e s , t h e o p e r a t i o n of S . l . A . M . in N e w Y o r k w a s f o r m a l i ) i n d e p e n d e n t f r o m B u e n o s Aires. B u t for all p r a c t i c a l p u r p o s e s , t h e D i T e l i a c o r p o r a t i o n in N e w Y o r k n o w a c t s as a g e n t , not only for B u e n o s Aires, b u t also for Brazil, Chile, and U r u g u a y . J o s é Terrile, an Argentine m e m b e r of the S.l.A.M.

family, b e c a m e

t h e hombre

de confianza

in

N e w Y o r k w i t h o u t s h i f t i n g his b a s i c l o y a l t i e s to S . l . A . M . a n d the Di Telia family.43 SUMMARY

T h e e x p a n s i o n of S . l . A . M . i n o t h e r L a t i n 42

American

S.I.A.M.'s dealings with Westinghousc through the New York office are described at length in Chapter VI. ** November 17, 1942, letter in company file.

140

E N T R E P R E N E l / R S H I P IN A R G E N T I N E CULTI RE

n a t i o n s a n d E n g l a n d w a s u n d e r t a k e n in a n a t m o s p h e r e of great personal enthusiasm by both Di Telia a n d the m e m b e r s of t h e S . I . A . M . f a m i l y . T h e r e l a t i o n s h i p of this e n t h u s i a s m t o t h e L a t i n A m e r i c a n p a t t e r n of personalismo w a s i m p o r t a n t . T h e p a t t e r n p r e s c r i b e s t h a t for t h e " m o d e r n L a t i n A m e r i c a n only those persons with w h o m h e is in p e r s o n a l , t h a t is, i n t i m a t e , r e l a t i o n s h i p c a n b e e x p e c t e d to h a v e w i t h i n h i m a r e c i p r o c a l a p p r e c i a t i o n " of h i s i n n e r q u a l i t i e s , " h i s soul." 4 " 1 T h i s personalismo, g e n e r a t i n g a s p o n t a n e o u s o p t i m i s m , is a perv asive L a t i n A m e r i c a n ethos t h a t s u p p o r t e d Di T e l i a ' s a m b i t i o n for expansion a n d g r e a t l y a i d e d his success. D i T e l i a ' s o p e r a t i o n s in o t h e r L a t i n A m e r i c a n c o u n t r i e s h a d , first of all, t h e p r a c t i c a l p u r p o s e of d e v e l o p i n g p o t e n tially g o o d S o u t h A m e r i c a n m a r k e t s w h i c h , t o g e t h e r w i t h A r g e n t i n a ' s , would justify rapid industrial expansion. But Di T e l i a ' s m o t i v a t i o n for expansion c a n n o t be explained e n t i r e l y in e c o n o m i c t e r m s . O p e r a t i n g o n a n i n t e r n a t i o n a l level h a d i m p o r t a n t i m p l i c a t i o n s for Di T e l i a ' s s t a t u s in A r g e n t i n e s o c i e t y . P e r s o n a l r e p u t a t i o n a n d s t a t u s a r e p a r t i c u l a r l y i m p o r t a n t in L a t i n A m e r i c a , w h e r e " t h e i n d i v i d u a l is v a l u e d p r e c i s e l y b e c a u s e h e is n o t e x a c t l y ' l i k e ' a n y o n e else. H e is s p e c i a l a n d u n i q u e . " 4 5 I t s e e m s p r o b a b l e t h a t Di T e l i a ' s e x p a n s i o n b r o u g h t h i m m o r e personal satisfaction than that derived simply f r o m b u s i n e s s a n d t e c h n o l o g i c a l p r o g r e s s . I n his r e l a t i o n s w i t h f o r e i g n m a n a g e r s D i T e l i a e s t a b l i s h e d e x t e n s i o n s of t h e S . I . A . M . f a m i l y . H e f o u n d hombres de confianza in C h i l e a n d U r u g u a y c a p a b l e of r u n n i n g his c o m p a n i e s . T h r o u g h t h e p a t t e r n s of f r i e n d s h i p (personalismo), la dignidad de la persona a n d t h e i n t e g r i t y of t h e S . I . A . M . f a m i l y w e r e m a i n t a i n e d . I n this k i n d of social r e l a t i o n s h i p D i T e l i a f u l f i l l e d 44

John

Gillin,

"F.thos

Components

in

Latin

American

Culture,"

Amtrican Anthropologist, 57,1955 ρ 494. -15 Ibid.,

p . 491. T h i s p o i n t will b e f u r t h e r e x p l o r e d in C h a p t e r V .

S.I. Α . M . : DI T E L L A E X P A N D S IN SOL'TH A M E R I C A A N D A B R O A D

141

his aspirations of creating s o m e t h i n g of real v a l u e even t h o u g h , as in the case of U r u g u a y a n d Brazil, it d i d not yield e c o n o m i c returns. Professor Gillin has pointed out the i m p o r t a n c e of u n d e r s t a n d i n g such n o n m a t e r i a l considerations in L a t i n A m e r i c a n ethos: F o r I believe t h a t it is still g e n e r a l l y t r u e in M o d e r n L a t i n A m e r i c a n c u l t u r e t h a t t h e W o r d is m o r e v a l u e d t h a n t h e T h i n g in. t h e sense of e m p i r i c a l r e a l i t y ] . . . t h a t L a t i n A m e r i c a n s s e a r c h for s o m e t h i n g a b o v e t h e w o r l d of c r a s s , e v e r y d a y reality . . ,46

Finally, the record indicates t h a t Di T e l i a took q u i c k a d v a n t a g e of each new o p p o r t u n i t y for industrial g r o w t h . H e was a w a r e of the p r o b l e m s implicit in new v e n t u r e s , but these did not p r o d u c e restraint. H e struck o u t optimistically with the a s s u m p t i o n t h a t h a r d work a n d confidence would bring success in the long r u n : "querer es poder." H e r e lies one of Di T e l i a ' s u n i q u e assets. P r o b l e m s a n d crises p r o v i d e d a c h a l l e n g e a n d a stimulus for Di T e l i a ' s spurts of creativity. T h i s left a d e e p impression on those w h o w o r k e d with h i m in e x p a n s i o n a b r o a d . « Ibid., p. 499.

CHAPTER V T H E RISING

ENTREPRENEUR

DI T E L L A T H E MAN THE

GROWTH

OF T H E

entrepreneurial

career

DI

TELLA

by

LEGEND

creating

a

SUPPORTED

deep

HIS

feeling

l o y a l t y a n d respect in those w h o k n e w a n d w o r k e d

of

with

h i m . T h e i m a g e h e p r o j e c t e d is i m p o r t a n t f o r o u r s t u d y , a n d is p e r h a p s b e s t s e e n i n s t a t e m e n t s m a d e b y

members

of the Di Telia a n d S . I . A . M . families: H e was a clean-looking person, honest, straightforward, r e l i a b l e . . . w o n d e r f u l smile. ( C l u t t e r b u c k ) M y u n c l e w a s a v e r y perceptive, m a n . H e c o u l d d e t e c t a s i t u a t i o n in o u r h o u s e h o l d by t h e t o n e of v o i c e , e v e n o v e r the telephone. (Mrs. Caserta) M y h u s b a n d w a s v e r y conscious of t h e f a c t t h a t h e · d i d n o t h a v e t h e r i g h t to b e called ingeniero, t h o u g h h e l a c k e d o n l y t h r e e c o u r s e s for his d e g r e e . H i s s i n c e r i t y w a s s u c h t h a t l a t e r in his life h e c o m p l e t e d t h e r e q u i r e m e n t s a n d w e n t to t h e U n i v e r s i t y for e x a m i n a t i o n to o b t a i n t h e e n g i n e e r i n g degree. (Mrs. Di Telia) 142

THE RISING ENTREPRENEUR

143

I n 1941 s o m e of the d i r e c t o r s suggested t h a t c a p i t a l in the c o m p a n y should be raised to 100 million pesos f r o m 25 million pesos b u t he modestly replied that the p u b l i c m i g h t think he was boasting . . . Di T e l i a never let people feel t h a t h e was intellectually or economically superior. (Dr. M a r i o R o b i o l a ) Di T e l i a liked y o u n g people. H e was a good listener, gave t h e m plenty of o p p o r t u n i t i e s to discuss their ideas, a n d e n c o u r a g e d t h e m to develop t h e m . . . . [ H e ] was tolerant of mistakes m a d e by y o u n g workers. . . . H e was a w o n d e r f u l m a n a n d a d m i r e d by all of us. . . . H e was not perfect b u t he w o r k e d with intelligence, always seeking the best solution. . . . H e was sincere . . . no prejudices a n d all of these positive characteristics m a d e u p for his mistakes. Clutterbuck) Di I ella was a g r e a t salesman b u t he was a careful one. H e would never p r o m i s e w h a t he could not fulfill. • Lasgoity) Di I ella h a d a n e x t r a o r d i n a r y c a p a c i t y for work. . . . Λ s u p e r i o r m a n . . . h a n d l e d a d m i n i s t r a t i v e m a t t e r s well. . . . Λ f a n t a s t i c vision into the f u t u r e . H e knew every inch of his f a c t o r y . H e k n e w w h e r e he w a n t e d to go. (Fussatti) T h e affection of his factory workers toward Di T e l i a was d o c u m e n t e d in 1925. Λ book luxuriously b o u n d in leather w a s d e d i c a t e d to Di I e l l a ''in a p p r e c i a t i o n of the patron" a n d signed by 176 laborers, mostly Spanish a n d I t a l i a n . ' D o c u m e n t is in the c o m p a n y files.) It w a s a r a r e occasion to find Di I e l l a depressed in the face of p r o b l e m s or crises. H e always seemed to be at the top, with a smile a n d advice for everyone to keep on working a n d b u i l d i n g . (Colominas) W h e n h e w e n t a w a y on his long business trips, it was c u s t o m a r y for h i m to visit all t h e d e p a r t m e n t s before he

144

E N T R E P R E N E U R S H I P IN A R G E N T I N E C l ' I . T U R E

left, s h a k i n g h a n d s with every single person. If he could not d o this, a m e m o r a n d u m was sent apologizing for t h e failure d u e to lack of time. (Fussatti) T h e a b o v e r e p r e s e n t m e m o r i e s of t h e i d e a l m a n , a n d t h e i d e a l patrón, in t h e o l d S o u t h e r n E u r o p e a n sense of a b e n e v o l e n t a n d simpático a u t h o r i t y - f i g u r e . T o w a r d t h e e n d of his a d m i n i s t r a t i o n , t h e S . I . A . M . a n d Di T e l i a f a m i l i e s h a d b e c o m e so i n t e r t w i n e d t h a t D i T e l i a ' s p e r s o n a l p r e s t i g e b e c a m e a d o u b l y p o t e n t r e i n f o r c e m e n t for t h e u n i t y of " l a gran empressa." T h e m a t e r i a l c l e a r l y i l l u s t r a t e s t h e e f f e c t i v e n e s s of t h e m a n as a n i n t e g r a t i n g s y m b o l f o r the c o m p a n y . DI T E I . L A IN T H E I T A L I A L I B R E M O V E M E N T

I n c o n t r a s t to t h e g e n e r a l i n d i f f e r e n c e of t h e estancieros t o w a r d social r e s p o n s i b i l i t i e s , D i T e l i a is d e s c r i b e d b y t h o s e w h o k n e w h i m best as a m a n w i t h a sense of s t e w a r d s h i p . P e r s o n a l a g g r a n d i z e m e n t in itself w a s e m o t i o n a l l y u n s a t i s f y i n g . I n t h e l a t e t h i r t i e s h e t u r n e d to antifascist political action, p u t t i n g funds into a cause w h i c h , as h e s a w it, w o u l d b e n e f i t t h e g r e a t masses of p e o p l e w h o s h a r e d his E u r o p e a n o r i g i n . H e o n c e c o m m e n t e d s a r c a s t i c a l l y : " T h i s is to m e a r e w a r d i n g w a y to s p e n d m y m o n e y . I t is m o r e economic, t h a n m a i n t a i n i n g c o n c u b i n e s , w i t h all t h e l u x u r i e s t h a t t h e y d e m a n d . " 1 D i T e l i a ' s v i t a l i d e a l i s m m a y b e t r a c e d b a c k to his d e p a r t u r e for I t a l y to d e f e n d " f r e e d o m a n d d e m o c r a c y " in W o r l d W a r I . H e w a s m o v e d b y h i g h i d e a l s a n d w a s r e a d y to d e f e n d t h e m r e g a r d l e s s of t h e cost. H e p r o j e c t e d s o m e of his f e e l i n g w h e n h e w r o t e t o a f r i e n d in NewY o r k c o m m e n t i n g o n W i n s t o n C h u r c h i l l ' s view of a b o o k : It is quite easy to u n d e r s t a n d M r . Churchill's liking this book as it is essentially realistic. All the same, I have a very 1

I n t e r v i e w w i t h N i c o l a s C i l i a , M o n t e v i d e o , U r u g u a y , 1959.

T H E RISING E N T R E P R E N E l ' R

145

real fear that due to excess of realism, we often m a d e lamentable errors. For realism, the policy of pacification was undertaken after the war; realism decided nonintervention in Spain during the revolution; realism led us to M u n i c h ; a n d , I hope, realism will not take us where we decidedly do not want to go. It appears to be fashionable today to suppress idealism and all those who fight for ideas. I personally think that it is a rotten fashion which can bring us many headaches. 2 Di T e l i a ' s direct p a r t i c i p a t i o n in the defense of freed o m b e g a n w h e n m a n y I t a l i a n m e n a n d scholars w e n t into exile in F r a n c e d u r i n g Mussolini's regime. A n o n y mously, Di T e l i a s u p p o r t e d the political activity of t h e exiles with a m o n t h l y c o n t r i b u t i o n of 10,000 f r a n c s . T h e s e I t a l i a n s o r g a n i z e d the m o v e m e n t for a F r e e I t a l y a n d soon the m o v e m e n t s p r e a d to L a t i n A m e r i c a a n d N o r t h A m e r i c a . It has been e s t i m a t e d t h a t by 1942 Di T e l i a h a d spent a p p r o x i m a t e l y 200,000 dollars for t h e m o v e m e n t . Italia Libre s n e w s p a p e r , u n d e r the direction of the exiled j o u r n a l i s t , Nicolás Cilla', s p r e a d a n t i fascist news on I t a l y ' s i n t e r n a l politics a n d p r i n t e d editorials lor f r e e d o m . Di T e l i a a n d Cilia m e t f r e q u e n t l y to p l a n f u t u r e activities. The Italia Libre m o v e m e n t initiated in 1938 o f f e r e d Di T e l i a a n a r e a for free expression of his personal convictions that h e l p e d to c o m p e n s a t e for the fact t h a t as a b u s i n e s s m a n , e x p e d i e n c y in t e r m s of c o m p a n y interest h a d to govern m u c h of his d e c i s i o n - m a k i n g . Italia Libre's explicit creed f a v o r e d : (1) opposition to t o t a l i t a r i a n i s m based on racial or religious h a t r e d ; (2) full e q u a l i t y of m e n ; a n d (3) the s e p a r a t i o n of c h u r c h a n d state. T h e s e aims a p p e a l e d to the idealistic intellectuals, b u t a m o r e i m m e d i a t e a i m was to fight the i n f l u e n c e of Mussolini's 2

D i T e l i a ' s files, u n d a t e d .

146

E N T R E P R E N E L ' R S H I P IN A R G E N T I N E C U L T U R E

Fascism on the fifteen million Italians in the new hemisphere. Operation in the open was not always easy. Argentina's political orientation in 1941 was unfavorable for antiaxis political action. Vice President R a m ó n S. Castillo, who took full power in 1940 because of the failing health of President R o b e r t o M . Ortiz, refused to break off relations with the enemies of the United States a n d stood for neutrality. G e r m a n s as well as their allies, or allied friends, were permitted to organize their own movements a n d p r o p a g a n d a . 3 Italia Libre, however, had difficulty in securing permission to hold public meetings. O n the occasion of the arrival of Count Carlos Sforza in 1942 Di Telia sponsored one of the main gatherings of Italia Libre in the neighboring country of U r u g u a y , and paid the Count's expenses for attending. " T h e meeting was a success and it was the happiest moment of my father's life," stated Di Telia's eldest son. 4 Di T e l i a was not deterred in his public support of Italia Libre by fear of adverse political or business pressures. An active member of the movement stated: D i T e l i a w a s a bellísima

persona,

a n d he w a s a c o u r a g e o u s

m a n . T h i s b e c a m e evident d u r i n g World W a r I and again d u r i n g the F r e e I t a l i a n M o v e m e n t . A s a n i n d u s t r i a l i s t in A r g e n t i n a , he w a s f a c e d a t t h a t p e r i o d

with

individuals

o p p o s e d to his v i e w s w h o c e r t a i n l y c o u l d h i n d e r D i

Telia's

i n d u s t r i a l d e v e l o p m e n t , b u t he w a s r e a d y to f i g h t . 5

Di Telia's participation in the movement became well known in Italy and lie was unable to visit his country; furthermore, he lost two million liras invested in Italian property. When members of the movement returned to Italy, some to become government functionaries, Di T e l i a * P e n d l e , op. cit., p . 72. 4 Interview with T o r c u a t o D i T e l i a . 5 Interview with T i t o C h i a r a v i g l i o .

147

T H E RISING E N T R E P R E N E U R

r e m a i n e d b e h i n d looking f o r w a r d to his visit, w h i c h took p l a c e in 1945.®

di t e l l a ' s

varied

first

postwar

interests

W h e n t h e fall of Mussolini e n d e d Di T e l i a ' s l e a d e r s h i p in I t a l i a n political action in L a t i n A m e r i c a h e h a d a l r e a d y b e g u n to explore o t h e r m e a n s to fulfill his d r i v e for creative activity. N e v e r a seeker of publicity, Di T e l i a p r e f e r r e d q u i e t or a n o n y m o u s p r i v a t e p h i l a n t h r o p y to t h e role of a p u b l i c b e n e f a c t o r . H e d e l i g h t e d in d o i n g n u m e r ous small favors for his employees, p a y i n g for v a c a t i o n s a n d , in m a n y instances, s u p p o r t i n g trips to I t a l y for his workers a n d their families. P e r h a p s his most o u t s t a n d i n g c h a r i t a b l e work w a s in the field of m e d i c a l needs. I n 1944 Di T e l i a was e n g a g e d in w o r k i n g with the Embassies of G r e a t Britain a n d t h e U n i t e d States in a n effort to secure penicillin for A r g e n tina. H e a p p a r e n t l y received i n f o r m a t i o n on d e s p e r a t e l y ill p a t i e n t s in a r e a hospitals f r o m t h e i r m e d i c a l staffs, a n d passed o n the p a t i e n t s ' histories to E m b a s s y officials with his petitions. Di T e l i a also gave s u p p o r t to hospitals themselves, p a r t i c u l a r l y the hospital in the m u n i c i p a l i t y of A v e l l a n e d a . T h i s p a r t i c u l a r interest was c a r r i e d o n b y S . I . A . M . as a n o r g a n i z a t i o n a f t e r Di T e l i a ' s d e a t h . I n 1954 the c o m p a n y c h a r t e r e d a n a i r p l a n e to b r i n g P u l m o t o r s f r o m t h e U n i t e d States to aid in t h e fight against a w i d e s p r e a d e p i d e m i c of polio. I n 1942 Di T e l i a invested in a n estancia w i t h 6,600 acres of l a n d n e a r Buenos Aires. Business was c o m b i n e d with p l e a s u r e d u r i n g his w e e k e n d s at N a v a r r o . Di T e l i a took t h e o p p o r t u n i t y to s t u d y a n d d e v e l o p t h e scientific b r e e d i n g of d a i r y a n i m a l s . F o r this h e secured i n f o r m a tion f r o m specialists a n d b o u g h t prize a n i m a l s in C a n a d a • The Free Movement in Argentina has since continued as a locial agency for orienting new immigrants.

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and the United States, which were flown to Argentina by chartered plane. In his various trips after 1945 he visited dairy farms in the United States and transferred the know-how thus acquired to the pampas of Argentina. He summarized his interest in an undated newspaper interview: Although national industry may find a way to develop rapidly under a protective policy, it should not lose sight of the fact that agriculture and animal husbandry are the basic industries of this country and, therefore, the proper balance among the three would be advantageous to the national economy. 7 His son, Guido, b e c a m e interested in the N a v a r r o operation a n d has carried on the administration of the estancia since his father's death. In 1939, after viewing the collection from the P r a d o in M a d r i d on exhibition in Geneva, Di T e l i a b e c a m e interested in painting and sculpture. U n d e r the g u i d a n c e of Lionello V e n t u r i , an internationally known Italian art critic, Di T e l i a eventually invested a p p r o x i m a t e l y $2 00,000 in art. His first acquisitions in 1943 i n c l u d e d paintings by Renoir, Pisarro, a n d Sisley. C e z a n n e , V a n Dyke, Picasso, M a n e t , Rubens, R a f a e l , Fra Angelico, Tiziano, Tintoretto, Degas, and others were later a d d i tions. Di T e l i a also acquired a collection of Italian Renaissance furniture. 8 Di T e l i a ' s reputation as a progressive and intellectually oriented industrialist reached the professional circles of Buenos Aires University. In 1944 Engineer T o r c u a t o Di T e l i a was appointed Associate Professor of Economics a n d Industrial Organization in the School of Economic ' C o m p a n y file of newspaper clippings, w i t h o u t bibliographical references. • T h e residence of the Di T e l l a s is decorated w i t h these works of art Lionello V e n t u r i p r e p a r e d an illustrated book describing these items ( 1 9 6 0 ) .

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Science of the University of Buenos Aires. A local newspaper editorialized: His appointment has pleased everyone . . . since he has been one of the first to introduce in our country the principles of mass production and scientific organization of work. . . . He has adapted to [Argentine] national characteristics the national system employed in the United States, a country where he has been studying industrial development throughout his numerous trips. . . . 9 Di T e l i a ' s friends gave an e l a b o r a t e b a n q u e t to celeb r a t e his a p p o i n t m e n t . It m a r k e d not only an i m p o r t a n t step in Di T e l i a ' s career but raising of the status of industrialists as a g r o u p . A c a d e m i c rank was a passport to intellectual circles. A successful industrialist a n d professor at a University, Di Telia was a u n i q u e figure in the leading circlcs of Buenos Aires. As his social s t a n d i n g c h a n g e d , h e also achieved a g r e a t e r degree of political influence. S u c h recognition re-enforccd his feeling that business \\ as a way of life r a t h e r t h a n a m e a n s of securing more and more wealth. I n 1947 Di Telia sought p r o m o t i o n to Professor Titular in the University. H e c o m p e t e d openly for the post, subm i t t i n g a p r o g r a m of courses on economic a n d industrial o r g a n i z a t i o n . Di T e l i a stated t h a t his aim was to train students in the f u n d a m e n t a l s of mass p r o d u c t i o n , with e m p h a s i s on engineering a n d economic principles. H e c o m p a r e d his p r o g r a m with achievements m a d e in the U n i t e d States, p a r t i c u l a r l y at H a r v a r d University, w h e r e courses in industrial organization b e c a m e i m p o r t a n t a f t e r the w a r . It is interesting to note here t h a t his w h o l e a p p r o a c h was related to an analytical review of the history of industrialization a n d structural analysis of i n d u s t r i a l i z a t i o n based on mass p r o d u c t i o n . 9

From an unidentified newspaper clipping, no date.

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His outline stressed the following topics: Scientfic Method in Relation to Efficiency Economic Elements in Factories Principles Involved in the Function of Production Relationship between Manufacturing and Marketing Manufacturing and R a w Materials Prices Salaries Control of Production Aspects of Power Structure Problems of Standardization Inspections Cost of Production Problems of Defining S a l a r y Relationship of Industrialist and Worker Unions Internal Discipline Monopoly Planning Production in Relation to Social Conditions

Ninety-seven per cent of the books listed in an attached b i b l i o g r a p h y w e r e by A m e r i c a n authors and the r e m a i n d e r w e r e F r e n c h a n d Spanish. In contrast to this learned discussion of United States methods was Di T e l i a ' s failure to a p p l y them rigorously in S . I . A . M . This possibly reflected his awareness of the profound differences between the United States a n d the L a t i n A m e r i c a n industrial and sociocultural situations. A keen student of national contexts, Di T e l i a saw that modifications of A m e r i c a n schemes a n d g r a d u a l introduction w e r e needed in industrializing A r g e n t i n a . It is difficult to j u d g e his success as a teacher, but there is no doubt that he influenced a number of individ u a l s who were i m p o r t a n t in national industrialization. A l t h o u g h his attention as a teacher was p r i m a r i l y on technical and o r g a n i z a t i o n a l matters, his concern for the

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human element from a social standpoint was shown by his work, Dos Temas de Legislación del Trabajo ( Two Themes for the Legislation of Work), a project for the legislation of social security and family compensations. He wrote another book, Problemas de Posguerra (Postwar Problems), in which he attempted an economic and social analysis of Argentina in relation to the postwar world situation. It is interesting that Di Telia's writings were not concerned with the problem of industrial psychology or the relationship between industrial development and the rural Argentine's adjustment to a machine age. Apparently he took for granted that people would accept the machine age readily, that the Argentine would love the factory process and the machine as Di Telia himself did. By the forties newspapermen followed Di Telia's movements and gave elaborate coverage to his numerous trips. Major emphasis was on the subject of industrialization—Di Telia viewing the advancements made by the giant industrial nations. Di Telia himself was extremely averse to the limelight. But, as representative of S.I.A.M. and often of Argentina abroad, his business trips were inevitably newsworthy items. Di Telia's trips abroad for over twenty years followed the same general itinerary: European nations, the United States, and neighboring South American countries. He took such trips in 1924, 1928, 1935, 1937, 1939 (including a visit to Russia), 1941, 1943, 1945, 1947, and 1948. These dates do not include the numerous trips he made to visit his branches in Brazil, Uruguay, and Chile. Before his trips, detailed plans were made and appointments with important industrialists were scheduled. Contacts were arranged through friends in various companies. For example, a Buenos Aires importer wrote an American businessman:

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I a m pleased to be able to inform you that M r . Di Telia hopes to be in Detroit in M a r c h and would like to get in touch with you with regard to the m a n u f a c t u r e of kerosene operated refrigerators in this country. M r . Di Telia is the President of S.I.A.M. Di Telia Ltd. in this city, a n d the largest m a n u f a c t u r e r and seller of the electric-type refrigerator in this country by a long way. In fact they sell 58 per cent of the total sales of the country. T h e firm has S2,000,000 capital and all the money they need. Also he has his own factory for cabinet making a n d all the m e c h a n i c a l parts, so much so that they m a d e over 3,500 electric jobs complete this year and plan on a m u c h bigger p r o g r a m next year. You will be talking to the biggest m a n in South A m e r i c a . 1 0 B u e n o s Aires n e w s p a p e r s c a r r i e d t h e cxciting news in 1943 t h a t D i T e l i a was received by V i c e - P r e s i d e n t W a l l a c e , S e c r e t a r y of S t a t e C o r d c l l H u l l , a n d several o t h e r A m e r i c a n h i g h officials. It was also r e p o r t e d t h a t a t o u r of w a r p l a n t s a n d A r m y c a m p s h a d been a r r a n g e d in o r d e r to give this A r g e n t i n e industrialist a c o m p l e t e p i c t u r e of t h e w a r efforts. Di T e l i a was received a n d e n t e r t a i n e d b y N e l s o n Rockefeller " a n d o t h e r bigwigs of t h e A m e r i c a n g o v e r n m e n t . " 1 1 A p p a r e n t l y Di T e l i a left a n e x c e l l e n t i m p r e s s i o n o n one occasion w h e n , at an intim a t e cocktail p a r t y , h e g a v e a t h o r o u g h a n d s o p h i s t i c a t e d t w o - h o u r d i s c o u r s e o n t h e p o l i t i c a l a n d b u s i n e s s situat i o n of A r g e n t i n a . I n his m e e t i n g w i t h t o p g o v e r n m e n t officials, D i T e l i a a l w a y s e x p r e s s e d his views v e r y f r a n k l y . A k e e n o b s e r v e r of political d e v e l o p m e n t s a b r o a d , h e w a s c a r e f u l to r e p o r t d i r e c t l y to s e n a t o r s a n d o t h e r i m p o r t a n t i n d i v i d u a l s in A r g e n t i n a . In 1939 he w r o t e f r o m E u r o p e to S e n a t o r M a r t i n e z : 10 Letter from H a r r y Reynolds, Sveiison Company, Importers, Buenos Aires, company files, 1943. 11 Buenos Aires Herald, newspaper, n.d., company files.

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H e r e we a r e living on top of a volcano. E v e r y b o d y talks a b o u t w a r a n d gives the precise d a t e on which it will be d e c l a r e d . S u c h a c c u r a t e predictions m a d e m e feel t h a t there will be no w a r — a t least for t h e time b e i n g — a n d for that reason I a m leaving for a trip to Russia w h e r e I will stay f r o m t h e 10th to the 22nd of J u l y . T a l k i n g seriously, the situation h e r e is really disastrous. I do not refer only to the d a n g e r of w a r , but r a t h e r to t h e state of p r e - w a r which costs as m u c h as a w a r a n d w h i c h has a l r e a d y strained the nerves of e v e r y b o d y to the p o i n t t h a t the m a j o r i t y of people wish w a r as a solution. A r g e n tina is a privileged country, but we a r e going to feel t h e blows of this situation. If there is w a r , it is better not to m a k e a n y predictions a n d if there is no w a r , this c o u n t r y will h a v e to face demobilization of this fantastic a p p a r a t u s of p r o d u c t i o n for w a r . T h e y will find themselves s u d d e n l y with t h e p r o b l e m s of an u n b a l a n c e d e c o n o m y ; they will need a special system in o r d e r to g a i n t h e foreign m a r k e t s since over h e r e (Europe) they will h a v e their a b s o r b i n g c a p a c i t y completely w o r n o u t . 1 2

During the war, Di Telia did not share the prevalent belief that the United States State D e p a r t m e n t would use political methods to ruin Argentina's economic interests. " I f such tendency exists in Washington," he wrote in an article, "it will not be found in the State D e p a r t m e n t but rather in some of the so-called government agencies, of recent creation, which have power to handle the war economy . . , " 1 3 While political leaders expected him to devote more and more time to such international matters, Di Telia's main preoccupation in his travels was the study of industrial production. This is evidenced by the hundreds of letters written during those trips to individuals responsible for S.I. A.M.'s development (Sudiero, Caserta, Clutterbuck, 12

Letter from Di Telia to Senator Martinez, J u n e 1939. Argentina Fabril, official publication of the Industrial Union, No. 891, March 19, 1943, p. 13. 13

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Schibli, and relatives). The letters were numbered and the contents, covering several pages, had thorough descriptions of his observations of factories from technical and organizational points of view. Throughout his trips he was informed of important and unimportant matters at home and the letters show that even in 1945 most decijions were made with his consent. Advice was sought on personnel problems, subjects related to government, export and import, finances, and technical matters. Di Telia gave his personal attention to each one. He never lost touch with the rhythm of his factories and administrative offices even though his absences may have lasted as long as three or four months. 14 DI TELLA T H E NATIONAL ENTREPRENEUR

Di Telia's transition from a small entrepreneur to a powerful industrialist dealing with big business and big finance was accompanied by extension in his sphere of social connections from those of a local businessman to the national and international society. An increasing number of congratulatory letters, greetings, and invitations to public and official events from 1942 on indicate his rise to national prominence. In the year 1942 he received, for example, invitations to dinner at the Plaza Hotel in the company of the Ambassador of Argentina in Brazil; letters from the Minister of the Interior introducing friends to Di Telia; notes from senators congratulating and thanking Di Telia for copies of his projects for family assistance and social security; notes from persons appointed to positions in various ministries assuring Di Telia that they would do their best for the 14 In the last few years of his administration, the documentation is not as abundant, possibly indicating some relinquishing of power to other*. It was learned, however, that he made daily telephone calls to his offices rather than give instructions in writing. Hundreds of telegrams carried short messages of instruction.

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industrial development of Argentina; and copies of Di Telia's many telegrams and letters to officers of the Argentine Army for their promotion. Since his industrial progress often depended on the officials who held important national positions Di Telia kept well informed on national political maneuvers. Consequently, some of his correspondence was directed to individuals who had been appointed to positions important for industrial development. This became even more necessary with the rapid change in the government after the military revolution of 1943. The accumulation of invitations to social and official affairs by 1947 was so great that with only careful discrimination could he salvage sufficient time for his personal and business activities. As president of the company that was Westinghouse's major link to Argentina, Di Telia was obliged to relay to Perón in 1947 the following offer from the United States: W e are w r i t i n g to Y o u r E x c e l l e n c y in o r d e r to t r a n s m i t the

proposition

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find

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g e n e r a l p l a n s u g g e s t i n g a w a y to b r i n g a b o u t this c o l l a boration w h i c h does not exclude a n y other w a y that Y o u r E x c e l l e n c y m a y find c o n v e n i e n t .

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T h e essential benefits of this proposition by Westinghouse lies in the saving of time and money by means of quick technical assistance as well as in securing for the country the most modern means for the execution of your plan. Westinghouse, one of the greatest progressive organizations in the world, can guarantee to the Argentine government the most efficient service. This service offered does not obligate the Argentine government in any kind of purchasing, and does not represent earnings for Westinghouse since the financial assessment will be m a d e on the basis of the time invested by the technical consultants plus the expenses of the trip and residence in the country. For the initial development of this proposed plan, Westinghouse is prepared to send immediately several of their best technicians, making available to the Argentine government all their resources, their technical knowledge and their practical experience. God guard Your Excellency. 15 T h e offer was refused b u t Di T e l i a ' s close c o n n e c t i o n s with W e s t i n g h o u s e laid h i m o p e n to criticism in a c o u n t r y w h e r e p u b l i c o p i n i o n was generally a n t i Y a n k e e . H e wrote to his very close friend, G e n e r a l M a n u e l Nicolás Savio, Buenos Aires, in 1947, in defense of his industrial policies : I know that on several occasions you have been concerned with the fact that S.I.A.M. has been sold to the Americans . . . and that a rumor was started, but I had an opportunity to advise you of the nature of the relationship between S.I.A.M. and Westinghouse. This is essentially a relationship instrumented by a contract which gives us the right to use Westinghouse's patented technical developments. Westinghouse's financial participation in our corporation was never more than 5 per cent and I am happy to communicate to you, my friend, that I have purchased 15

Letter from Di Telia, representing Westinghouse, to J u a n Perón, 1947.

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from Westinghouse a portion of their shares. Currently the American company has only 2.07 per cent of the total capital of our corporation and no more. May I say that in accordance with some of our customs, I have conducted a patriotic action in the recovery of some of our capital—but I do not want credit for this . . . it was simply a good business operation. 16 DI T E L L A AND T H E UNION I N D U S T R I A L 1 7

A m a n u f a c t u r i n g c o r p o r a t i o n is n o t o n l y p a r t of the c o m m u n i t y w h e r e it o p e r a t e s b u t o n e as l a r g e as S . I . A . M . inevitably comes to h a v e a b e a r i n g o n n a t i o n a l p r o b l e m s a n d policies. A r g e n t i n e c o r p o r a t i o n s f a c e d the p r o b l e m s c o m m o n to industrialization such as w a g e s , w o r k i n g hours, a n d s t a n d a r d s of living. T h e s e issues w e r e c o m p l e x in A r g e n t i n a as a h a n d i c r a f t t r a d i t i o n was b e i n g r a p i d l y s u p e r s e d e d b y r o u t i n e factory o p e r a t i o n s . W i t h t h e d e v e l o p m e n t of large a n d p o w e r f u l c o r p o r a t i o n s , a n tagonism between labor and m a n a g e m e n t grew rapidly. M a n a g e m e n t was a i m i n g at the d e v e l o p m e n t of efficiency a n d r e o r g a n i z a t i o n for mass p r o d u c t i o n while l a b o r was b e c o m i n g unionized in o r d e r to p r o t e c t existing j o b s a n d gain b e t t e r living s t a n d a r d s . As in o t h e r capitalist countries, the w o r k e r was accused of " c l o g g i n g the c h a n nels of the free m a r k e t a n d i m p o s i n g his t h e o r e t i c a l p o w e r s u p o n t h e rest of the e c o n o m y , " a n d was also " s e e n as a r e v o l u t i o n a r y w h o b y the n a t u r e of his d e m a n d s o p e r a t e s to destroy the price s y s t e m . " 1 8 Di T e l i a could n o t escape these issues a n d S . I . A . M . was c h a l l e n g e d m a n y times by t h e Unión Obrera Metalúrgica, o n e of the strongest o r g a n i z a t i o n s of its k i n d . 14 Letter f r o m Di Telia to G e n e r a l M a n u e l Nicolás Savio, 1947, comp a n y files. 17 T h e material on Unión Industrial was obtained through the assistance of Cesar Grassi of Buenos Aires. 18 M a x L e m e r , America as a Civilization, N e w York, Simon a n d Schulter, 1957, p. 329.

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O n J u l y 7, 1933 Di Telia was elected a m e m b e r of the Board of Directors for the Cámara Metalúrgica of the Unión Industrial, the old and well-established manufacturers' association. Before this Di Telia had refused direct participation in the Unión because of its internal politics. After coming to know some of the members and being encouraged by Clutterbuck and others, Di Telia became convinced that the Unión was a valuable organization through which m a n y of the problems caused by industrialization a n d industrialists' interests might find solutions. T w o specific problems appeared immediately. T h r o u g h the organization, governmental policies in relation to the needs of Argentine industries could be studied a n d properly formulated for specific action. Second, it presented an opportunity to bridge the g a p between industrialization and agrarian interests. 19 His personal c h a r m a n d displays of initiative m a d e Di Telia a popular m a n in the organization. He was soon designated as the Secretary of the Cámara Metalúrgica, a position he held until 1945. Simultaneously he was nominated as the representative of the Cámara Metalúrgica to the Board of Directors of the Unión Industrial. He held this position until the Unión Industrial was interdicted a n d dissolved by Perón. 2 0 Di Telia argued strongly for his views of a proper industrial order. H e summed up his philosophy in the phrase "business as a way of life." Di Telia did not reject the unions, he held that they were a functional p a r t of the capitalist system. W h e n dealing with labor his attitude toward the problem vías sympathetic, friendly, a n d 11 Unión Industrial and Sociedad Rural had been trying to outdo each other. Di Telia was convinced, and expressed publicly his views, that one could not carry out its program at the expense of the other. t0 T h e files of the Unión were destroyed by the Perón government and mort of the information has been collected through informants and an incomplete collection of documents in company files.

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showed o b v i o u s interest in m a i n t a i n i n g their d i g n i t y a n d c r a f t s m a n s h i p . H e w a n t e d to see l a b o r e r s as " i n d u s t r i a l m e n w h o w e r e p a r t of his society." His position was n o t always well i n t e r p r e t e d by his colleagues of the Unión Industrial : Frequently after discussions held in the Unión he returned to his home with a degree of uneasiness. . . . He had an opportunity to compare himself with others and he felt that he was stepping farther and farther away as he planned for future industrial development, leaving large groups of conservative industrialists . . . behind. He used to say that in discussing industrial problems, labor problems and formulating plans, he found himself dealing with industrialists whose methods of operations resembled those of small shop owners. 2 1 E c o n o m i c a n d political crises m a r k e d the p e r i o d in w h i c h Di T e l i a was a n active p a r t i c i p a n t in the U n i o n . But eschewing politics, Di T e l i a interested himself chiefly in p r o b l e m s affecting S . I . A . M . O n e of his m a i n c o n c e r n s was the d e v e l o p m e n t of n a t i o n a l policies for the p r o t e c tion of A r g e n t i n e i n d u s t r y . C u s t o m s duties, h e a r g u e d in o n e of the sessions, should b e p u t into effect based o n e q u i t a b l e principles even if they w o u l d d a m a g e some interests. P r o d u c t s a l r e a d y m a n u f a c t u r e d should surely p a y m o r e d u t y t h a n the r a w m a t e r i a l s f r o m w h i c h they were manufactured. O n m o r e t h a n one occasion, Di T e l i a r e q u e s t e d f r o m the g o v e r n m e n t , t h r o u g h the i n t e r v e n t i o n of the Unión Industrial, the j u s t classification of i m p o r t e d e q u i p m e n t for fair tariff t r e a t m e n t . O n e such case was t h a t of electric e q u i p m e n t for refrigerators (compressors), in 1935. H e felt t h a t since the compressors w e r e n o t locally m a n u f a c t u r e d t h e y should c o m e in p r a c t i c a l l y free of d u t y and îl

Interview with Mrs. Maria de Di Telia.

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E N T R E P R E N E U R S H I P IN A R G E N T I N E

CULTURE

t h a t t h e y c o u l d o n l y receive h i g h t a r i f f w h e n t h e y w e r e locally p r o c e s s e d . S . I . A . M . w o n t h e a r g u m e n t a n d e s t a b lished a p o l i c y in t h e e c o n o m y of t h e n a t i o n t h a t is still in e f f e c t t o d a y . D i T e l i a w a s a m o n g t h e g r o u p of A r g e n t i n e i n d u s t r i a l d e l e g a t e s to t h e I n t e r n a t i o n a l L a b o r C o n f e r e n c e h e l d in G e n e v a in 1939. T h e t h e m e in his p u b l i c s p e e c h w a s t h e " a b s u r d a n d t e r r i b l e c o n s e q u e n c e s " of w o r l d r e a r m a m e n t f o r t h e a g r i c u l t u r a l a n d i n d u s t r i a l d e v e l o p m e n t of A r g e n t i n a a n d t h e d a n g e r of flooding m a r k e t s in u n d e r developed areas with imported manufactures, which were c h e a p e r t h a n the national products. Di Telia recomm e n d e d to t h e I n t e r n a t i o n a l L a b o r C o n f e r e n c e t h a t a study should be u n d e r t a k e n on the economic transition f r o m a p r e w a r a n d w a r p e r i o d to a p e a c e e c o n o m y . T h i s , h e felt, w a s n e c e s s a r y in o r d e r to p r e v e n t serious c r i m e s c a u s e d , p a r a d o x i c a l l y , b y t h e c o m i n g of p e a c e . A f i n a l p o i n t w a s m a d e in r e l a t i o n to l a b o r . If t h e r e was a g r e e m e n t t h a t a r e d u c t i o n of w o r k i n g h o u r s (forty) s h o u l d b e a d o p t e d , it s h o u l d c o m e a b o u t s i m u l t a n e o u s l y in all t h e c o u n t r i e s i n t e r e s t e d in s u c h a c h a n g e . O n e s h o u l d r e m e m b e r , r e m a r k e d D i T e l i a , t h a t t h e " i n t e r n a t i o n a l social s e t t i n g for e a c h c o u n t r y d i f f e r s . " A l t h o u g h t h e A r g e n t i n e s i t u a t i o n w a s d i f f e r e n t f r o m t h a t in t h e U n i t e d States a n d E u r o p e , A r g e n t i n e industrialists, h e h e l d , w e r e r e a d y to a b i d e b y t h e decisions of t h e I n t e r n a t i o n a l O r g a n i z a tion. D i T e l i a ' s p u b l i c a p p e a r a n c e as a n i n d u s t r i a l i s t r e p r e s e n t i n g t h e views of t h e Unión Industrial w e r e n u m e r o u s in t h e y e a r s 1941 a n d 1942 as i n f l a t i o n f r o m w a r t i m e c a u s e d u n r e s t a n d dissatisfaction a m o n g w o r k e r s . H e m a d e a r a d i o b r o a d c a s t s p o n s o r e d b y t h e Unión Industrial in w h i c h h e discussed t h e views of t h e o r g a n i z a t i o n r e g a r d i n g basic f a m i l y w a g e s . I n d u s t r i a l i s t s , h e s a i d , w e r e seeking a "just wage."

T H E RISING E N T R E P R E N E U R

161

O n c e a basic wage has been determined for a category of labor, this should represent the value of his service in relation to a normal life for a single m a n . It is inevitable that his obligations increase considerably when a family is formed. There will be a deficit which can be balanced through a family subsidy related to each child born from that marriage and for whom the laborer is responsible for support and education. This should not be the only subsidy but it must be accompanied by maternity insurance, school cafeterias, increase in the retirement compensation for each child educated, and maintenance for orphans. T h e whole plan should be toward a harmonious benefit for the entire family. 2 2 T h e s e t h o u g h t s led to Di T e l i a ' s book, Dos Temas de Legislación del Trabajo, Proyectos de Ley de Seguro Social Obrero y Asignaciones Familiares, p u b l i s h e d in 1942. His thesis was a t t a c k e d by u n i o n leaders in the c o m m u n i s t n e w s p a p e r , La Hora. Di T e l i a was p r e s e n t e d as the e n e m y of l a b o r in S . I . A . M . in spite of all his speeches. T h e n e w s p a p e r carried pictures of S . I . A . M . laborers w i t h their families at d i n n e r - t i m e , sitting a r o u n d a t a b l e o n which n o t even b r e a d was available. D u r i n g the notorious strike of 1942 l e a d i n g e l e m e n t s in the G e n e r a l C o n f e d e r a t i o n of L a b o r , the M e t a l u r g i c a l L a b o r U n i o n , sent the following c a b l e to C . I . O . in t h e United States: Regardless of government orders, S.I.A.M. Di Telia refuses to re-employ 200 workers who participated in the recent strikes requesting better working conditions and better living standards. We request their reinstatement. We request the firing of known Fascist enemy elements. We request your intervention through Westinghouse in favor of our Union which is fighting for the unity of the Americas and for the triumph of the Allies over Germany. 2 3 21 23

Company files, August 28, 1942. Company files.

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W h e n P e r ó n b e c a m e S e c r e t a r y of L a b o r a n d Social Security, o n O c t o b e r 27, 1943, h e realized the n e e d for m o r e effective l a b o r o r g a n i z a t i o n in o r d e r to c o n s o l i d a t e his political s u p p o r t . P l a c i n g the Confederación General del Trabajo ( G e n e r a l C o n f e d e r a t i o n of L a b o r ) u n d e r c e n t r a lized g o v e r n m e n t control, h e soon stripped m a n a g e m e n t of a voice in d e c i d i n g m i n i m u m w o r k i n g c o n d i t i o n s , wages, a n d bonuses. 2 4 T h e effect of t h e g o v e r n m e n t policies was described b y o n e of the S . I . A . M . engineers as follows: Before Perón, salaries were low but the workers were good—respectful and disciplined. With Perón's policy a new era of euphoria for both industrialists and workers unfolded. . . . T h e laborer received more for his work but at the same time cost of living increased. T h e r e was another effect. After two years of Perón's protection the worker wanted more but wanted to work less. T h e means and techniques used by labor created many moments of anxiety. Workers accused many foremen of being against Perón's regime and it was not too long before the role of the foreman was affected to the extent that very few people wanted to continue as such. T h e power extended to the foremen in the structure of the factory was in conflict with the union delegates. T h e r e was a vicious cycle of complaints, a struggle, individual uncertainty, and the consequence for industry was less efficiency and less production. Management could not keep out of the situation and spent most of their time arguing, clearing themselves, defending the rights of the organization and faithful employees. Less and less time was available for planning and for problems of production. Equality in salary for the labor force was psychologically very damaging inasmuch as skilled labor lost the incentive to work well. 25 Di T e l i a h a d earlier spoken in favor of social security M

Interview with Sozio. *· Name withheld at request of the interviewe.

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b y l a w , h a v i n g s a i d at t h e First C o n g r e s s o f I n d u s t r i a l M e d i c i n e in

1939:

Argentine industry has m a d e tremendous progress but w e m u s t r e c o g n i z e t h a t legislation a n d p r o t e c t i o n for t h e w o r k e r u n f o r t u n a t e l y h a v e not a d v a n c e d in r e l a t i o n to i n d u s trial d e v e l o p m e n t a n d i n d u s t r i a l p r o s p e r i t y . . . w e m u s t give t h o r o u g h a t t e n t i o n to t h e h e a l t h of t h e w o r k e r , w o r k i n g c o n d i t i o n s , t h e j u s t r e m u n e r a t i o n of his w o r k , a n d a relative security for his f u t u r e . 2 6 In the settlement of

1942 h e w o u l d

have

preferred

social s e c u r i t y to a g e n e r a l w a g e i n c r e a s e , b u t w i t h P e r ó n as S e c r e t a r y o f L a b o r a n d S o c i a l S e c u r i t y f r o m t h e e n d o f 1 9 4 3 o n , D i T e l i a b e c a m e o p p o s e d to a n y interference in e m p l o y When

Perón

Christmas

of

sent 1943

government

e m p l o y e e relations. a

telegram

asking

that

to

employers

they

pay

before

Christmas

bonuses, Di Telia replied: I r e c e i v e d t h e t e l e g r a m in w h i c h y o u r e q u e s t e d t h e coo p e r a t i o n of this firm in giving e m p l o y e e s p r e s e n t s a t t h e e n d of t h e y e a r . W e a g r e e w i t h the i d e a of M r . S e c r e t a r y to give a c o n t r i b u t i o n for t h e h o l i d a y ; this firm n o w h a s in effect a system for a N e w Y e a r ' s b o n u s , aguinaldos. E a c h e m p l o y e e a n d l a b o r e r receives e x t r a s a l a r y a c c o r d i n g to l e n g t h of service, a n d this is s u p p l e m e n t e d w i t h a b o x of c a n d y . T h i s firm also h a s , as you m a y k n o w a l r e a d y , t h e following social services a b o v e a n d b e y o n d those r e q u i r e d by legislation, w h i c h in this y e a r h a s cost t h e c o m p a n y a p p r o x i m a t e l y 4 3 0 , 0 0 0 pesos: 1. F a m i l y salary i n i t i a t e d in J u n e 1941. ( T h i s w a s t h e first e s t a b l i s h m e n t of i m p o r t a n c e to p u t this p r o g r a m i n t o operation.) *· Company's file. Di Telia had attended the First Congress . . . Mtduina del Trabajo, 1939.

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2. Financial increases for marriage, and birth of each child. 3. Medical service for children of employees. 4. M a t e r n i t y benefits. 5. Bonus for outstanding employees. 27 G o v e r n m e n t intervention continued throughout the P e r ó n r e g i m e . T h e B o a r d m i n u t e s of la Cámara Argentina de Industria Metalúrgica for t h e y e a r 1948 n o t e t h a t : T h e increasing intervention of the State in private enterprise has been of concern this year. T h e Unión Industrial recognizes that whenever the situation is difficult government intervention might be necessary, but it should be of a limited length of time, for a specific purpose, and should not substitute for or annul the fundamental functions of an industrial system under private industry. . . . 2 8 D i T e l i a ' s e f f o r t s to find a m e e t i n g g r o u n d b e t w e e n t h e d e m a n d s of l a b o r a n d i n d u s t r y w e r e unsuccessful. T h e conflict b e t w e e n D i T e l i a ' s ideal of b e n e v o l e n t p a t e r n a l ism t o w a r d l a b o r , u n d e r a d e m o c r a t i c g o v e r n m e n t f a v o r i n g f r e e e n t e r p r i s e , i n e v i t a b l y i n v o l v e d h i m in p e r s o n a l difficulties w i t h t h e P e r ó n r e g i m e . D u r i n g the years w h e n Di Telia was a medium-sized i n d u s t r i a l i s t w i t h little n a t i o n a l r e p u t a t i o n , h e c o u l d a f f o r d to s t a n d u p for his basic ideas a n d ideals. T h r o u g h t h e Italia Libre m o v e m e n t , for e x a m p l e , h e stood for d e m o c r a c y as a g a i n s t f a s c i s m ; in W o r l d W a r I I h e o p e n l y f a v o r e d t h e Allies w h i l e t h e g o v e r n m e n t was officially neutral, b u t actually p r o - G e r m a n . Di Telia o p e r a t e d Italia Libre at a d i s t a n c e f r o m I t a l y ; M u s s o l i n i c o u l d i n t e r f e r e v e r y little w i t h his a n t a g o n i s t ' s A r g e n t i n e a f f a i r s . A f t e r 1945, h o w e v e r , this m a r g i n of safety in o p p o s i t i o n to totalitarianism was no longer present. 27 28

Letter in company files, December 3, 1943. Company files.

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165

Initially Di Telia openly opposed Peronismo and its followers. He resigned as Secretary and as a member of the Board of Directors of the Unión Industrial in 1945, and escaped the immediate problem by an extended business trip abroad. In October of 1945, Perón was ousted for a brief period of several days. Di Telia, in London during the interim, made the following statements in defense of 'democratic sentiments" in Argentina: I have been surprised and saddened to encounter an unfounded opinion in this country: that we Argentines are a group of fascists. This feeling, which I have found in persons of all walks of life, is damaging to the future relations between the two countries. The Argentine people are, among the South American countries, those whose organization most closely resembles that of the most advanced democracies of Europe. . . . An irrefutable proof that the Argentine people have fundamentally democratic sentiments is that in spite of four years of a state of siege— four years without freedom of the press, without public meetings, without any means of expressing public opinion —in the space of a few days has swept out the antidemocratic regime. T h e democratic struggle of our people has begun and will continue until the last vestige of fascism has been eliminated. 29 These statements were published in Buenos Aires, in La Nación, but Perón returned to power. This placed Di Telia and his company in a precarious position and he was eventually forced to adopt a policy of token coexistence with the Perón regime as explained by his son Torcuato : My father felt that it was logical to adapt, at least outwardly, to the political situation in order to protect what he had built over the course of many years of hard work. . . . He felt that he had sacrificed his own vocation (political «· La Nación, October 17, 1945.

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a n d p e d a g o g i c a l activities) for r e a l w o r k . H i s love for the m a c h i n e a n d his sense of d e s t i n y to build a n e n t e r p r i s e for t h e g o o d of t h e c o u n t r y , for t h e good of t h e p e o p l e , h a d b e e n a v e r y i m p o r t a n t goal. C o n s e q u e n d y , h e w a s h e s i t a n t t o t a k e a n a c t i v e political role, as h e h a d previously a g a i n s t u n d e m o c r a t i c p r o c e d u r e . If h e h a d d o n e it, t h e whole S.I.A.M. organization would have crumbled.30 F o r D i T e l i a t h e r e w e r e t w o types of difficulties : h o w to c o n d u c t a business u n d e r insecure a n d

first,

uncertain

c o n d i t i o n s in w h i c h a false m o v e m i g h t lead either curtailment

of s u p p l i e s o r n a t i o n a l i z a t i o n of t h e

to

enter-

p r i s e ; a n d , s e c o n d , h o w t o r e c o n c i l e his d e e p a n t i f a s c i s t convictions with the friendly relations toward the Perón g o v e r n m e n t t h a t w e r e e s s e n t i a l to t h e s u r v i v a l o f his life work, S.I.A.M. T o t a k e a s t a n d a g a i n s t P e r ó n a n d E v i t a was to destroy e v e r y t h i n g h e h a d b u i l t d u r i n g m a n y years. T h e r e f o r e , h e a l w a y s felt g r e a t uneasiness a n d grief a b o u t t h e s i t u a t i o n . H o w e v e r , h e d i d t h e least t h a t h e could d u r i n g t h e P e r ó n r e g i m e . H e a l w a y s said t h a t P e r ó n w a s d o i n g s o m e t h i n g . v e r y w r o n g a n d t h a t h e d i d n ' t a p p r o v e of t h e w a y in w h i c h h e w a s b u i l d i n g u p h a t e in t h e l a b o r e r s in A r g e n t i n a . H e w a s n o t a g a i n s t t h e fact t h a t P e r ó n w a s giving b e t t e r t h i n g s to t h e laborers, b e c a u s e M r . D i T e l i a himself h a d been in favor of t h e i m p r o v e m e n t of t h e w o r k e r a n d of the O l d A g e P l a n s a n d F a m i l y Plans. H e was a p i o n e e r in b o t h of t h e m . H e said s o m e t h i n g h a d to be d o n e for t h e w o r k e r s ; o t h e r w i s e , they w o u l d t u r n c o m m u n i s t a n d he was a f r a i d of this. . . . W h a t P e r ó n d i d . . . w a s g o o d , b u t n o t in t h e w a y h e d i d it, n o r in t h e t e c h n i q u e he u s e d , n o r in t h e w a y h e spoke to t h e l a b o r e r s . M r . D i T e l i a a l w a y s said t h a t they speak a g r e a t d e a l a b o u t t h e rights of t h e l a b o r e r s b u t n e v e r a b o u t t h e duties {deberes) of the workers. T h i s was a b a d t e c h n i q u e of i n c u l c a t i n g a g r e a t d e a l of h a t r e d t o w a r d c a p i t a l a n d t o w a r d i n d u s t r i a l l e a d e r s in t h e c o u n t r y . 3 1 41

Interview with Di Telia's eldest son, Torcuato Salvador Di Telia. Interview with Mrs. Maria R . Di Telia.

T H E RISING

ENTREPRENEUR

167

Thus during the Perón regime Di Telia experienced one of the most intense conflicts of his life, a conflict which may have precipitated his death in 1948. 32

DI T E L L A ' S

DEATH

In the spring of 1947, Di Telia left Argentina with his family for a prolonged trip to Europe and the United States. One of his major business objectives was contact with the firm of Innocenti of Milan, Italy. The creation of S.I.A.M.'s first subsidiary, S.I.A.T., was on its way and Di Telia was again involved in buying know-how abroad. There are indications, however, that he was aware of failing health at this time. While in Switzerland, he was examined by medical specialists. In R o m e Di Telia, never more than a nominal Catholic, obtained an audience with Pope Pius X I I , from which he emerged deeply moved. 3 3 Shortly after his return from a trip to the United States in J a n u a r y 1948, Di Telia was stricken by a cerebral hemorrhage. After a few months of treatment he died on J u l y 22, 1948. Newspapers featured the loss of a man who had been one of national industry's strongest promoters. Thousands of letters and telegrams were received by the company and the family and many hundreds of people attended the funeral. Following the local pattern, public officials and representatives from many organizations delivered speeches at the cemetery, remarking on Di Telia's contribution to Argentina and reviewing his life. A year later, his long-time friend General Manuel N . 3 2 In this year he also learned that his eldest son did not want to inherit the leadership of the family and the business. Young Torcuato preferred the career of an academician rather than that of an industrialist. In addition to the struggle between ideal and expediency with regard to the national scene, Di Telia now felt remiss in his obligations to his children. Belatedly he recognized his son's true bent. ** Interview with Guido Di Telia.

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Savio delivered the following homage at a meeting of the directors of the Sociedad Mixta Siderurgia Argentina: I consider it a duty to remember the m a n who was our great friend, Ing. Torcuato Di Telia. H e had the brilliant quality of looking at our land with an extraordinary optimism and with a great faith in its future, as did many foreign-born persons. H e supported decisively, from the first, the idea of beginning a steel industry in Argentina and was thus, as he was always with us, animated with confidence that such a plan would become reality in the country. When the issue of shares of this company was initiated, he demonstrated once more his firm disposition to aid us in undertaking the task to the extent that was necessary. With the death of Ing. Di Telia, the country has lost a man of inestimable worth, and in his memory I invite the Directors to a brief moment of silence. 34

Each year, on the date of his death, memorial rites are held in S.I.A.M. At the time of the first such observance, a life-size statue of Di Telia was unveiled in front of the factory in Avellaneda. T h e material for the statue was prepared by S . I . A . M . laborers in their own foundry; the sculptor was J o s é Alonso. T h e finished work was cast in bronze. A mass is held annually in one of the Buenos Aires churches and all laborers and employees are invited to attend. Flowers, speeches, and plaques are offered at the tomb. A large picture of Di Telia is found in each of the offices and workshops. In consonance again with Latin American ethos we found a persistent attitude that the loss of Di Telia the m a n to S.I.A.M. and his family has been in the physical sense only. Something of Di Telia's spirit, the inner, vitalizing essence remains. H e is the m a n around which the whole configuration of S.I.A.M. ideals cluster; Di M Acts of the Board of Directors, Sociedad Mixta Siderurgia Argentina, Number 47, July 28, 1948.

Torcuato Di Telia

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169

T e l i a lives through his c o m p a n y and through the personal identification o f his associates with his cause. SUMMARY

Di T e l i a , though Italian by birth, succeeded because o f sensitivity to Argentine conditions and values. As a " g r e a t m a n , " equally at home in the office and the classr o o m , in government chambers and in factory Workrooms, he adjusted to sharp differences in class, ethnic background and personal interest. An Argentine socialist l e a d e r said that Di T e l i a " h a d a humanistic, almost philosophical view of life because he didn't reduce behavior to a mathematical or mechanistic f o r m u l a . " 3 5 H e was quick to appraise new situations and to a d j u s t accordingly in terms of immediate ends, although he tried as far as possible to hold to his basic convictions and ultim a t e goals. Sensitivity to changing moods and attitudes in those closest to him prevented his authority over the family from arousing resentment. W h i l e Di T e l i a engaged in activities «uch as estancia ownership, that were commonly associated with wealthy, absentee landlords, he was far removed from the autocratic porteños or earthy, heroic caudillos. Y e t his personal attention to operations and personnel problems, and his symbolic role as the benevolent patrón o f the S . I . A . M . family elicited fervent loyalty among many of his employees. This was an asset in dealing with the emergent, restive proletarians who, as history demonstrated, were ripe for the near-caudillistic appeal of Perón. Unión Industrial made a wise choice in selecting Di T e l i a to represent them in international congresses and during the labor crisis of 1942. His fellow industrialists recognized in him a scholar, a gentleman and a sort of radical entrepreneurial genius. During Perón's regime, D i T e l l a skillfully u

Interview with J u a n A . Solari, a noted Argentine socialist.

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b a l a n c e d i n d u s t r i a l i n t e r e s t s a n d t h e l a b o r - o r i e n t e d interests of t h e g o v e r n m e n t . H e n c e , h e w a s a b l e to preserve S . I . A . M . ' s s t a n d i n g t h r o u g h A r g e n t i n a ' s m o s t anxious y e a r s . T h i s t r a i l of e v e n t s d e m o n s t r a t e d t h a t his s e l e c t i o n of e m p l o y e e s b y feeling a n d simpatía r a t h e r t h a n m e r e l y i n t e l l i g e n c e a n d a b i l i t y a l o n e w a s a successful p o l i c y in the Argentine context. T h e n a t u r e of this b o n d m a y b e b a f f l i n g to N o r t h A m e r i c a n s . T h e S o u t h e r n E u r o p e a n c o n c e p t of t h e patrón as b r o u g h t to A r g e n t i n a , is o n e key to u n d e r s t a n d i n g t h e p a r t i c u l a r n a t u r e a n d i n t e n s i t y of loyalties to D i T e l i a . T h e L a t i n patrón-client r e l a t i o n s h i p is b a s e d o n a c o m p l e x b o n d of m u t u a l responsibilities a n d s a t i s f a c t i o n s i n t e g r a t e d a r o u n d a v e r y real feeling of simpatía'. . . . the />a/ro7i-client relationship is not a one-way affair only with the client being a passive recipient of the patron's favors. It is the client's b o u n d e n duty not only to promise loyalty a n d support to his patrón but actively to fulfill that promise and voice it a b r o a d . By doing so he not only obeys a f u n d a m e n t a l rule of the p a t r o n a g e system i.e., that of constantly stimulating loyalty channels, but he also creates good will, a d d s to the n a m e a n d fame ot his patrón a n d this ensures him a species of immortality.·' 6 Di T e l i a b e g a n as a n hombre de confianza for t h e D i T e l i a a n d S . I . A . M . families. His e s t a b l i s h m e n t of personalismo w i t h o t h e r i n d u s t r i a l i s t s a n d p u b l i c figures, a n d his rise to n a t i o n a l p r o m i n e n c e as a n hombre de confianza for t h e g r e a t e r A r g e n t i n e society m a y b e seen in p a r t as a rise t h r o u g h successive levels in t h e p y r a m i d a l s t r u c t u r e of patronship. I t m u s t b e r e a l i z e d , how ever, t h a t Di T e l i a himself w a s n o t a conscious s t a t u s - s e e k e r in t h e N o r t h A m e r i c a n sense. W h i l e his e x p a n d i n g business in f o r e i g n i n t e r e s t s a n d 38 M i c h a e l K e n n y , " P a t t e r n s of P a t r o n a g e in S p a i n , " Quarterly, V o l . 33. J a n u a r y I 9 6 0 , N o . 1, p . 21.

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outside activities h a d c o n s e q u e n c e s for his social r e p u t a t i o n , he r e m a i n e d " v e r y h u m b l e , " in the w o r d s of his close associates. Di T e l i a ' s o r i e n t a t i o n was t o w a r d his circle of intimates, m e m b e r s of the S . I . A . M . a n d Di T e l i a families a n d p e o p l e w i t h w h o m h e h a d a b o n d of personalismo. T h e n e t w o r k of real a n d fictive kinship was f o u n d e d o n c o n f i d e n c e a n d responsibility. T h i s is the i m a g e t h a t D i T e l i a w a s most c o n c e r n e d w i t h b u i l d i n g a n d m a i n t a i n i n g .

CHAPTER VI S.I.A.M.: DI TELLA'S FINAL

IN

1939

AN EXECUTIVE OF THE

WAYNE

DECADE

PUMP

COMPANY

wrote: " M r . Di Telia is an outstanding manufacturer of the Argentine—not one of the outstanding but THE O U T S T A N D I N G . " 1 With sales of over twelve million pesos, or about three million American dollars, S.I.A.M. was scarcely big by United States standards but was now one of South America's largest manufacturers of machinery. Furthermore, early in 1939, everything seemed propitious for rapid expansion. T h e contracts with Wayne and Kelvinator enabled Di Telia to call upon experts for help in installing new processes and thus to move toward a broader range of manufacturing. RESTRICTION OF IMPORTS

T h e Conservative government of President Ortiz, elected in 1938, favored land and army interests more t h a n industry. However, its policy of restricting imports, while 1 Letter from Wavne P u m p Co. to W'm. Kelepper, K r a f t Phoenix Co., 1939.

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i m m e d i a t e l y troublesome, promised l o n g - r a n g e benefits for S . I . A . M . a n d other local m a n u f a c t u r e r s . President Ortiz issued an order on November 7, 1938, to be effective J a n u a r y 1, 1939, which p l a c e d severe restrictions on imports from the U n i t e d States. O n e h u n d r e d a n d three categories of A m e r i c a n goods were e m b a r g o e d . - T o J o s é T e r r i l e in the import d e p a r t m e n t , the President's order seemed a i m e d p a r t i c u l a r l y at the m a t e r i a l S . I . A . M . needed for production. A committee of the C e n t r a l Bank passed on petitions for import permits. For items not on the permissible list: . . . there was a lot of red tape in the transaction and, of course, personal influence was needed. . . . Mr. Di Telia acted personally. He made the contacts and if anything required expedition, he took care of it. We followed up all the applications and all formalities which were required in each case, but we never did anything outside of regular channels. 3 W h e n w a r cut off E u r o p e a n supplies, the A r g e n t i n e g o v e r n m e n t relaxed restrictions only on indispensable categories of U n i t e d States goods. By M a r c h of 1940 these categories h a d h a d to be m a r k e d l y e x t e n d e d ; import restrictions h a d been cut back to the 1937 level. 4 T e r r i l e says, " t h e Central Bank opened the doors and we could h a v e permits for as m u c h as we w a n t e d from the U n i t e d States." EXPANSION OF THE LICENSING SYSTEM

Some importation continued to be essential for S . I . A . M . a n d other Argentine m a n u f a c t u r e r s of c o m p l e x mecha n i c a l a n d electrical products. T o one u n f a m i l i a r with m a n u f a c t u r i n g it is h a r d to realize how m a n y complic a t e d processes go into even relatively simple machines * S a l e r a , op. cit., pp. 202 ff. * Interview with José Terrile. 4 S a l e r a , op. cit., p. 2 6 6 .

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such as p u m p s . I n 1939, for e x a m p l e , a licensing agreem e n t for " S t r e a m l i n e F i t t i n g s ' ' was e n t e r e d into with the M u e l l e r Brass C o m p a n y of P o r t H u r o n , M i c h i g a n . T h e clauses w e r e similar to those described in the W a y n e a n d K e l v i n a t o r c o n t r a c t s . T h e U n i t e d States firm was to p r o v i d e e n g i n e e r i n g d a t a , the results of tests, d r a w i n g s , a n d b l u e p r i n t s . T h e y also a g r e e d to such conferences as S . I . A . M . m i g h t r e q u i r e . S . I . A . M . could m a n u f a c t u r e fittings b y p a y i n g a royalty of 5 per cent on their list price, or b u y the article f r o m M u e l l e r at t h e " b e s t j o b b e r ' s p r i c e . " If royalties a m o u n t e d to less t h a n S500 a y e a r , S . I . A . M . w o u l d forfeit its exclusive privilege to m a n u f a c t u r e in A r g e n t i n a . Di T e l i a ' s c o m p l e t e conversion to the principle of m a n u f a c t u r i n g u n d e r licenses f r o m leading c o m p a n i e s is also s h o w n by the P o m o n a P u m p c o n t r a c t . A l t h o u g h S . I . A . M . h a d been m a n u f a c t u r i n g t u r b i n e p u m p s perfected by S u d i e r o a n d others for half a dozen years, Di T e l i a t h o u g h t it b e t t e r to pay royalties for the i m p r o v e m e n t s a v a i l a b l e f r o m P o m o n a . T h e c o n t r a c t e n t e r e d into in M a r c h 1941 covered the m a n u f a c t u r e a n d sale ot S . I . A . M . - P o m o n a t u r b i n e p u m p s in A r g e n t i n a . P a r t s c o u l d b e p u r c h a s e d in C a l i f o r n i a by S . I . A . M . at m a n u f a c t u r i n g cost, e x c l u d i n g a d m i n i s t r a t i o n a n d sales expense, plus 25 per cent. O n c o m p o n e n t s m a n u f a c t u r e d in A r g e n t i n a , S . I . A . M . w o u l d p a y 5 per cent royalty to P o m o n a on the selling price of cither c o m p l e t e p u m p s or p a r t s . A n exception was m a d e for p u m p s sold to t h e A r g e n t i n e D e p a r t m e n t of S a n i t a t i o n ; on these, 3 p e r cent was c h a r g e d . A five-year d i s t r i b u t i n g a g r e e m e n t w a s also e n t e r e d into for P o m o n a a n d N i a g a r a p u m p s in U r u g u a y a n d Chile. 5 5 In September of 1944 Pomona was bought by Fairbanks Morse & Company and the contracts were terminated, the distributorship after thirty days' notice in August 1945, and the manufacturing license upon its expiration in March 194G.

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None of the enforced transition to more domestic m a n u f a c t u r e was easy. According to Sudiero, even the first attempts to make the body of the Kelvinator refrigerator produced : . . . a p e r i o d of terrible a n x i e t y , as t h e d o o r of t h e r e f r i g e r a t o r w o u l d not o p e n . T r u c o (in c h a r g e of the o p e r a t i o n ) n e a r l y w e p t with f r u s t r a t i o n b e c a u s e t h e y j u s t c o u l d n ' t m a k e t h e d o o r w o r k a n d t h e y h a d a l o n g list of c u s t o m e r s w a i t i n g for r e f r i g e r a t o r s . I t w a s a t r a g i c e x p e r i e n c e . N o t h i n g could be d o n e to p u t the d o o r s in o r d e r , t h e d a y s w e r e p a s s i n g , a n d the c u s t o m e r s w e r e w a i t i n g . . , 6

T h e trouble stemmed from a makeshift a r r a n g e m e n t . A proper hydraulic press would have involved a large investment, and scarce import privileges would have been used up. Hence, they tried to get along with an old press that had been used for crushing tallow. T r u c o eventually found a way of fixing the improperly pressed doors so that they would open. Visits to the United States for observations were becoming increasingly frequent. In 1938 Michi a n d Sudiero went to the Kelvinator plant to study the m a n u facture of evaporators, condensers, and compressors. While in the United States, Sudiero wrote Di Telia long, detailed letters describing the companies visited and operations observed. Special machinery was bought through Kelvinator for the m a n u f a c t u r e of the sealed [bocha) compressor and condenser and installed in what was later called the "J'" building at Avellaneda. American engineers did not supervise the installation of these machines. Sudiero and his staff were on their own. T h e mixed operation of making some parts a n d assembling others for household refrigerators was successful. More than 8,000 were produced in the year ending in April 1940. At this point, however, a m a n a g e m e n t shift β

Interview with Sudiero.

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in Kelvinator initiated a new policy. The company moved to standardize its line and thus cut production expenses, which would enable it to underprice its competitors in the American market. This policy change had repercussions in Argentine. S.I.A.M.'s production was based on variety and flexibility to meet particular consumer needs. A standardized, one-model line would be difficult to sell in Argentina. Meanwhile, Westinghouse International had decided to close its Argentine branch and find a local company to license for assembling and distribution. J . \V. White, then local manager for Westinghouse, contacted S.I.A.M., the largest manufacturer of refrigerators in Argentina, as a logical prospect. The terms offered were generous, and Di Telia opened negotiations. S.I.A.M. regretfully severed relations with Kelvinator on a friendly basis, with both parties realizing that the demands of their respective markets were too different to be reconciled in a single production policy. 7 WESTINGHOUSE

The licensing agreement concluded with Westinghouse on August 28, 1940 was one of the major turning points in the history of S.I. A.M. Not only did it open almost the whole range of electrical products to manufacture in Argentina, but it also provided for technical advice and assistance. Cooperation was made still easier when J . W. White became President of Westinghouse International. Under the continuing influence of Westinghouse, S.I.A.M. moved from a series of shops built up by the practical needs of the situation, toward a planned and coordinated system of mass-production. The contract, effective for general lines on November 1 of 1940 and for refrigerators on April 1 of 1941, was to 7

Interview with Clutterbuck.

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r u n for seven y e a r s f r o m t h e e a r l i e r d a t e . E x c l u s i v e rights w e r e g i v e n for m a n u f a c t u r e a n d sale in A r g e n t i n a of m o t o r s , g e n e r a t o r s , a n d t r a n s f o r m e r s ( e x c e p t those of the largest size), a n d for all types of h o u s e h o l d e q u i p m e n t . 8 Westinghouse would supply: . . . drawings, calculation and design sheets, m a t e r i a l , process a n d performance specifications, test d a t a , material cards, photographs and photostats a n d similar d a t a known as engineering, m a n u f a c t u r i n g and operating information, relative to licensed material as above defined. C e r t a i n W e s t i n g h o u s e p r o d u c t s s u c h as i n c a n d e s c e n t l a m p s , e l e c t r o n i c tubes, w a s h i n g m a c h i n e s , a n d v a r i o u s devices c o n n e c t e d w i t h r a d i o a n d wireless w e r e s u b j e c t to special licenses involving e x t r a p a y m e n t s . If S . I . A . M . d i d n o t p l a n for m a n u f a c t u r e of a n y p a r t i c u l a r W e s t i n g house products within two years, the latter could on n i n e t y d a y s ' n o t i c e w i t h d r a w t h e license for t h a t p r o d u c t . Technical experts would be provided by Westinghouse on r e q u e s t . T h e royalties to b e p a i d w e r e r e l a t i v e l y l o w , since S . I . A . M . was a l r e a d y successfully m a n u f a c t u r i n g refrigerators a n d motors. Westinghouse, therefore, did not h a v e to i n s t r u c t t h e m in basic m a n u f a c t u r i n g t e c h n i q u e s . Instead, S.I.A.M. would benefit through continuing access to n e w t e c h n o l o g i c a l findings.9 T h e r e f r i g e r a t o r clause of t h e c o n t r a c t w a s d a t e d A p r i l 1941 in o r d e r to give S . I . A . M . t i m e to t e r m i n a t e t h e K c l v i n a t o r a g r e e m e n t . But t h e i n t e r n a t i o n a l s i t u a t i o n f u r t h e r d e l a y e d the c h a n g e o v e r to W e s t i n g h o u s e e q u i p m e n t . S . I . A . M . was well-stocked w i t h K e l v i n a t o r p a r t s , a n d a rush of o r d e r s in e x p e c t a t i o n of w a r s l o w e d W e s t i n g h o u s e deliveries. As a result, w h e n t h e U n i t e d S t a t e s 8 Motors of over 200 mechanical horsepower or more than 200 ΚΛΥ, DC, or transformers of more than 500 kilowatt amperes capacity were optional and would involve a special agreement. • For reasons of competitive policy· both S.I.A.M. and YVestinghouie delire to keep the exact royalty rates confidential.

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entered the war on December 7, 1941, S.I.A.M. was still producing the Kelvinator type of domestic refrigerator from a diminishing supply of imported parts. In July of 1940 the United States adopted a licensing act that allowed the President to prohibit the export of materials used in manufacturing munitions. Within a year most metals and types of machinery were on the restricted list. Because of such complications a S.I.A.M. agent was needed to look after company affairs in New York. Export permits had to be secured, and the agent also accepted delivery of goods and made provisions for storing. The manager of the office of ".Associated Companies" of Westinghouse International gave leave of absence to a young engineer, who became a S.I.A.M. employee. An office was found at 40 Wall Street, the New York headquarters of Westinghouse International, and the engineer joined S.I.A.M. To facilitate transactions he was authorized in February 1942 to set up the Di Telia Corporation of New York. Its nominal stock was held by the Schroder Trust Company as trustee for Di TeUa. The agent dealt with the Board of Economic Warfare in Washington. Early in 1942 he informed Di Telia that the government had issued directives to American industrialists, which specified the order of priority for manufactures. American needs were to be supplied first, then belligerents who were cooperating with the United States. Friendly countries that had agreed to break off relations with the Axis were third on the list, and neutrals came last. The agent warned on March 26: . . . Argentina, by her own choice, comes under the fourth category and if there are any materials remaining from the first three classifications, then Argentina, Chile and any other neutral countries may have the materials . . . the definite conclusion being that Argentina will obtain very

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little m a t e r i a l , unless this policy is corrected, either by a change of a t t i t u d e on the p a r t of A r g e n t i n a or by a c h a n g e of attitude on the part of the U n i t e d States g o v e r n m e n t . 1 0 A week later he wrote: I had things r u n n i n g fairly smoothly in W a s h i n g t o n when "something h a p p e n e d . " . . . T h e U n i t e d States a n nounced that they would not allow Argentina war materials but would allow other articles. In practice, this would m e a n that as long as Argentina m a i n t a i n s her present resistance to cooperation in hemispherical defense, she will be given nothing a n d gradually you will find that by M a y 1st a complete e m b a r g o will exist, unless one g o v e r n m e n t or the other definitely changes its a t t i t u d e toward the other. I do not think it would do any good to a p p e a l to the American Ambassador. I d o u b t w h e t h e r he would have received any instructions whatsoever. I also d o u b t w h e t h e r an appeal to the Ambassador of Argentina would have any results. As a m a t t e r of fact, this has already been done. Business in Argentina is a w a r e of the fact that they are placed in a position of a gigantic p a w n on the chessboard of international politics. The sooner they begin to do something about it, the better off all sides will be. . . . I n d u s t r y is being used as a political weapon and a solution must be found . . . C o m p a n i e s in the U n i t e d States s t o p p e d a c c e p t i n g orders unless there was assurance of favorable a c t i o n from the Export License Board or before r e c e i v i n g priority rating permits. In a letter, J u n e 1, 1942, W e s t i n g house notified S . I . A . M . : It is now a p p a r e n t that we will not be able to ship a n y of the machines on the order which was transmitted to us by your Buenos Aires office. W e h a d hoped t h a t we 10 Company files. YVestinghouse International prefers not to have employees' names given, so that "YVestinghouse" will be used instead of the name of the sender cr recipient.

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would be able to at least ship some of them but we will have to reserve our production for our established customers. 1 1 I n Di T e l i a ' s a n s w e r to his a g e n t in New Y o r k he e x p r e s s e d s o m e of his c o n c e r n : . . . I have m a d e a n d a m continuing to make every possible effort so that the Argentine authorities will take an interest a n d find a solution to our problems, but unfortunately the situation has not c h a n g e d , principally d u e to the fact that the Argentine authorities failed to realize the seriousness of our difficulty a n d believe that our petitions are based on exaggeration. . . . Your optimism really pleases me a n d I sincerely congratulate you on keeping it up. As at the present moment, optimism is what we must not lose. 1 2 Di T e l i a a p p a r e n t l y started q u e s t i o n i n g the f a c t t h a t s o m e s m a l l firms, at the e n d of 1942, p a r t i c u l a r l y in U r u g u a y , h a d r e c e i v e d s h i p m e n t of U . S . m e r c h a n d i s e a n d he c o m p l a i n e d to W e s t i n g h o u s e : W e suppose that if firms that are less important than ours can obtain a n d import merchandise from the U . S . A . , we, with a branch in that country, should be able to receive at least as much as our less important competitors. 1 3 D u r i n g this first y e a r of the c o n t r a c t , S . I . A . M . s e c u r e d no e x p o r t p e r m i t s for r e f r i g e r a t o r parts. By the fall of 1942, V i c e P r e s i d e n t W h i t e w a s u r g i n g Di T e l i a to c o m e to W a s h i n g t o n . Di T e l i a , a p p a r e n t l y d i s c o u r a g e d , d o u b t e d t h a t h e c o u l d a c c o m p l i s h a n y t h i n g b y a short visit. I n s t e a d , he a s k e d W h i t e to l e n d h i m " a person of y o u r a b s o l u t e c o n f i d e n c e " to look a f t e r o u r i n t e r e s t s . " H e also a s k e d the h e l p of W e s t i n g h o u s e I n t e r n a t i o n a l ' s W a s h i n g ton office. I n J a n u a r y of 1943 Di T e l i a f i n a l l y d e c i d e d to look into m a t t e r s p e r s o n a l l y . H e f o u n d t h a t r e q u e s t s for p e r m i t s h a d b e e n for e x t r e m e l y l a r g e q u a n t i t i e s a n d h a d " W e s t i n g h o u s e " to Di T e l i a . " Di T e l i a to Agent, J u n e 8, 1942. « Di T e l i a to " W e s t i n g h o u s e , " November 10, 1942. 11

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been presented too aggressively. Di Telia h a d to establish better relations in Washington and reorganize the operations of the Di Telia Corporation. He brought with him José Terrile, of S.I.A.M.'s Import D e p a r t m e n t in Buenos Aires. Di Telia h a d some measure of success in smoothing over relations in the United States, and Terrile was asked to stay on in New York as an advisor. This temporary a r r a n g e m e n t ended in Terrile's a p p o i n t m e n t as the new director of the Di Telia Corporation, in charge of S.I.A.M.'s American interests. With this change of personnel, S . I . A . M . began to acquire the necessary materials. Frequently only small quantities were shipped to maintain minimal production. This helped the c o m p a n y take advantage of a provision in the restrictions which allowed a general license for exports of less than twenty-five dollars in value. O f t e n the immediate needs of Buenos Aires for some essential p a r t or material did not excced this a m o u n t . But no strategies could produce a d e q u a t e supplies for household refrigerator manufacture. T h e n u m b e r of these refrigerators m a d e by S . I . A . M . declined steadily from nearly 6,000 in 1941 to 1,232 by 1945. Except for condensers, the units produced had few Westinghouse parts. 1 4 When the Kelvinator parts ran out and Sudiero was faced with m a n u f a c t u r e of practically the complete refrigerator from parts m a d e at Avellaneda, Di Telia was greatly concerned. Sudiero says that Di Telia relaxed only after ten refrigerators h a d proved successful. T h e operation was expensive, but with wartime shortages it paid handsome returns. Di Telia proposed a compromise with Westinghouse on royalty payments for these " h o m e m a d e " refrigerators. 14

Di Telia to "Westinghouse," May 21, 1943.

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A further difficulty caused by lack of Westinghouse supplies came from S.I.A.M.'s relations with the Westinghouse dealers in Argentina. As exclusive distributor Di Telia had reluctantly agreed to continue two lines of dealers, those that handled S.I.A.M. products and those handling Westinghouse. 15 But when it was impossible to supply most of the latter's products, the only way to keep these dealers in business was to send refrigerators and other equipment made by S.I.A.M. Di Telia wanted to use the Westinghouse label so that S.I.A.M. would not compete with its own dealers, but Westinghouse was hesitant at first. Finally a compromise was worked out whereby the labels read either "Made by S.I.A.M. under license from Westinghouse" or "Made by S.I.A.M. under Westinghouse design." 10 Di Telia assured Westinghouse : W e have, of course, taken all the possible steps to counteract " p r o p a g a n d a " by competitors regarding the disappearance of the n a m e "Westinghouse." O n e of these steps is a v e r y large illuminated sign on the A v e n i d a de M a y o (the p r i n c i p a l thoroughfare), with the n a m e Westinghouse in large letters and also two showrooms in the same street dedicated to Westinghouse lines. 1 7

When the Westinghouse distributorship was negotiated, Di Telia had looked forward to a considerable business in fluorescent lamps. Sylvania had offered S.I.A.M. a license and a plant for lamp manufacture, but Di Telia waited for Westinghouse. Avellaneda was prepared to manufacture the fixtures, and if necessary the ballasts, but the starters and bulbi had to be imported. Preparations for this new line were completed in the spring of 1941, but Westinghouse was unable to deliver the lamps before the export licensing system went into effect. On Di Telia to "Westinghouse," May 5, 1941. "Westinghouse" to Di Telia, May 28, 1942. « Di Telia to "Westinghouse," May 12, 1942. 15

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April 1, 1942, the Manager of the Associated Companies Division of Westinghouse wrote Clutterbuck that he doubted that they could secure export clearances for fluorescent lighting. Di Telia replied on April 13: What troubles us most in your letter is the bad new» about fluorescent lamps and ballasts, etc. If you glance over your files, you will see that we have been trying to obtain deliveries for nearly a year, long before conditions had become as acute as they are now and while we have not received any merchandise, General Electric has been receiving shipment after shipment and have their warehouses stocked to the limit. Furthermore, Hi-Grade has been supplying innumerable importers, and they have been receiving fluorescent equipment on steamer after steamer during the last few months while we have nothing. We are quite prepared to suffer the same consequences as everybody else in the future, but we think that in the past we have been somewhat more than unlucky as compared to our competitors. The prevailing confusion in the United States is illustrated in a cable of August 19, 1942 from Westinghouse: At present fluorescent ballasts, starters and sockets cannot be obtained without an A-l-K priority. Fluorescent lamps are under quota but no allocation for the third quarter. However, no one knows or will say what will happen in the fourth quarter. Present Government controls on fluorescent lighting equipment are designed to restrict the use of this equipment to essential war industries and the only exceptions to this are for starters and fluorescent lamps required for replacements in existing installations and not for stock. It is our belief that General Electric may have imported large quantities of fluorescent lamps, starters and sockets but probably they secured ballasts locally from small suppliers such as Chicago Transformer and others who

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were in a position to make shipments before the restrictions became so severe. If competitors have shipped ballasts, starters and sockets during 1942 it was imperative that they obtained a priority to enable them to do so and in that case they had to have an acceptable end use story. Suggest in the future make separate applications for fluorescent lamps, sockets, starters because apparendy competitors were successful in getting certain items but not balanced stocks. Di Telia was h a p p y to follow this advice and place separate requests for permits, as he thought that no other firm in Argentina could manufacture ballasts. Eventually S.I.A.M. was able to market a small quantity of fluorescent fixtures. But to Di Telia's regret the l a m p factory never seemed feasible. T h e same difficulties on a small scale h a d interfered with S.I.A.M.'s marketing Sears, Roebuck and Company's Coldspot kerosene refrigerators in cabinets made in Buenos Aires. Having sold 100 units in 1940, S.I.A.M. ordered 500 for 1941, but the United States export restrictions prevented Sears, Roebuck and C o m p a n y from filling the order, and the kerosene refrigerator market continued to be dominated by Servel and Electrolux. 1 8 FACTORY ORGANIZATION: THE REYNDERS P L A N

T h e wartime restrictions gradually built up selfsufficiency for S.I.A.M. and for Argentina as a nation. Refrigerators could now be manufactured at Avellaneda without importation of compressors. Electric motors, transformers, and generators up to large sizes could be supplied to Argentine homes and industries. I n the process of gaining greater self-sufficiency, Westinghouse knowledge could be drawn upon for better organization of production. M

D i Telia to A r t a m a n o f f , Scars R o e b u c k I n t e r n a t i o n a l , J u l y 25, 1941.

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T h e S . I . A . M . organization of 1 9 4 0 was held together by Di T e l i a in person. He would walk through the factory at least two or three times a week, talking with the chiefs and foremen and settling problems on the spot. T h e "Personnel D e p a r t m e n t " was thought of as only a paymaster's office. Di T e l i a personally advised each capataz (foreman) on important hiring and labor relations. T h e capataz received special orders directly from Di T e l i a . Since foremen were also responsible to supervisors such as T r u c o , Treutz, or Michi, Vice-Technical Director Caserta, and Technical Director Sudiero, the result could have been utter confusion. Di T e l i a avoided serious conflicts in policy only by almost daily contact with all these men. T h e same situation existed in Clutterbuck's sales divisions. When Di T e l i a left Buenos Aires for any length of time, he complained that thousands of matters accumulated on his desk. This highly personalized control was more suited to a small taller than a big factory, but there are indications that it afforded Di Telia real satisfaction. He was persuaded, however, by YVestinghouse executives to hire an industrial engineer to design a more efficient organization for S . I . A . M . Westinghouse sent A. B. Reynders, one o f their newly retired executives, to Buenos Aires in M a y o f 1941. Over the ensuing year Reynders attempted to introduce the " S . I . A . M . family" to American ideas of organization and shop management. Reynders saw his problem as involving (1) form or organization, (2) rearrangement of buildings and equipment and (3) systems and instructions. 1 9 Shortly after Reynders' arrival Sudiero gave him an organization chart. Reynders then worked it into what he thought would be a proper hierarchical arrangement. Formerly, groups o f men had been supervisors or foremen " Progress Report No. 1, June 15, 1941.

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working semi-indepcndcntly with undefined levels of authority intervening between themselves and top management. Reynders' plan called for one man in each group to be designated as chief. Between these shop superintendents and the managers like Clutterbuck and Sudiero, divisional heads were also needed. Sudiero may have agreed in principle with Reynders' chart, but felt that he was "unable, on account of the lack of capable men, to make appointments for the key positions." 20 Although the positions called for in Reynders' reports were filled, the men appointed did not in fact have the requisite authority. After the new type of organization had been functioning for eight months, Reynders had to admit that "results have only in part been obtained." He complained that: T h e r e a r e too m a n y cases where organization functions a r e ignored. As e x a m p l e s , engineers a r e doing shop work, shop officials a r e doing engineering work, building constructions u n d e r t a k e n without informing M a i n t e n a n c e D e p a r t m e n t , salesmen giving instructions direct to the shop. T h i s so-called " d i r e c t a c t i o n " is being taken in certain cases " t o o b t a i n quick a c t i o n , " in other cases b e c a u s e that has been the practice in the past a n d the p r o c e d u r e u n d e r the new f o r m of o r g a n i z a t i o n is not fully k n o w n . 2 1

According to Dr. Reina, Reynders had run up against an ideal motif in Argentine culture, expressed by the phrase " a mi no me manda nadie'' (no one pushes me around). In the physical rearrangement of buildings and production Reynders was more successful, although here one suspects the reports were too optimistic. Buildings were given alphabetical letters and their various rooms numbered. Plans were drawn up for an order of processes »0 Ibid. Progress Report No. 9, March 15, 1942.

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t h a t would feed into each o t h e r . A three-story warehouse, twenty-four meters wide a n d 124 long, was to b e constructed to house finished products, t h a t c u r r e n t l y a c c u m u l a t e d in the work areas until needed for s h i p m e n t . Most of the building plans were ultimately carried out. R a t i o n a l i z a t i o n of work a n d specific instructions as to s t a n d a r d s of time a n d quality r a n into the s a m e difficulties as o t h e r definitions of responsibility. I n his n i n t h report, Reynders wrote: T h e Centralized Production Control System is not receiving that constant supervision . . . necessary until it is firmly established. . . . In general the system is operating without much guidance. . . . Pressure is now being placed on the Engineering Department to furnish . . . specifications, etc., to the shop. Heretofore, these—with a few exceptions—have been lacking and the shop has had to use its own judgment or oral instructions to proceed. T h e difficulties involved in p u t t i n g R e y n d e r ' s system into effect are described by two S . I . A . M . executives, T e r r i l e w h o could see it as o n e not directly involved, a n d Sudiero w h o was responsible for operations. Terrile was told t h a t R e y n d e r s : . . . felt that organization was needed in S.I.A.M.; that rules had to be set up and followed. He always insisted on being strict. . . . You had to follow the system. You couldn't make exceptions because if you did the whole production would be held back. . . . The old standard procedure was that when someone like Mr. Venturini needed something urgently done, he went to his boss, Engineer Caserta, and they decided to do it. From their point of view this was urgent, but it paralyzed the whole mass production. M r . Reynders . . . noticed that the whole line of production was paralyzed due to individual decisions of foremen or engineers. This . . . was typical of S.I.A.M. Di Telia in 1940. . . . Mr. Reynders decided that production could not be stopped. . . . Mr. Di Telia agreed. . . . All the top

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engineers were very pleased with this new aspect of production, but the ones who got hurt were the little men (the foremen). T h e y had been accustomed to decide just as in a small shop situation, and now they felt that their wings had been clipped. 2 2

The system's effectiveness at the beginning was questioned by Sudiero. He thought that: . . . from the moment Reynders started to organize matters in S.I.A.M., everything went up. Before, without any specialists in the Company, the products were sold at very low prices. However, after Reynders started his system, there were many more employees. Before this, there was an informal system of working. However since 1941, when the Westinghouse system was adopted by the Company, the organization had an American system of working. Prior to that time each department had a chief and he would do what he thought right. For instance, he would effect the purchases he needed, give orders here and there. With this new system, there was an office in charge of purchases, and the purchases of each chief had to go through there, so it was quite different. When Reynders started his system, there was much opposition to it, especially from the overseers. With the new system, they felt diminished before the laborers, and they did not like it. U p to then, the company was relatively small and S.I.A.M. did not bother to carry out this type of organization. With the increasing rise of production, they could not go on in the old way, but it was hard for chiefs who had many persons under their charge to yield to the new system. M a n y overseers came to me to request that they stop the new system and go on as they had until then, so I said: "All right, we will go back to the old system, but we will dismiss all the personnel who came due to the new system." So, of course, the overseers would not accept on such terms. 2 3 al

Interview with José Terrile. Interview with Sudiero.

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"During the war," concludes Sudiero, "they did not do much about the new system. After the war they started again." 2 4 Reynders' system was gradually adopted in a modified form by the Company. Di Telia gave him full support, as shown in a letter to Alberto Di Telia in 1947: It is, of course, true that the increase in the size of S.I.A.M.'s organization makes each part of it look smaller in relation to the whole. T o d a y I have a minor function within the whole organization. Before, when the organization was small, I did everything and today I am only functioning as a general controller. I have to fight constantly against the tendency of individuals who want to do everything . . . Quite often when a function is taken away from someone their power appears to have diminished. But whatever is lost in distinction is won in propulsion. Each one will have to do less and less but do the things better and better—in other words, specialization. 2 5

Production efficiency was increased, and some organizational changes began to appear. Di Telia, however, retained a considerable amount of personal control and leeway in job specifications continued. Reynders had seen many disadvantages in S.I.A.M.'s organization of production, and in his capacity as consultant, he corrected as many of these as he could. Apparently he was not willing to compromise with the old system, although this is in effect what finally happened after he left in 1942. The industrial rhythm based on Argentine tradition called for flexibility, adaptability, and personalized relations. These features were combined with steps made by engineers and management toward increased efficiency in plant layout and production schedules. T h e accommodation resulted in an effective postwar management, ** Ibid. 25

Company files.

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which greatly impressed the Assistant General fylanager of Westinghouse International, who visited the Avellaneda plant in January of 1948. He wrote: First, it would be no exaggeration to say that you have an extremely prolific, energetic and versatile manufacturing organization which is well supported by the equipment placed at its command. The organization and the equipment in themselves were most impressive, but there was an even more unusual thing existing in your plant. It seems that the necessity you have found, since the organization of S.I.A.M. Di Telia, to improvise and extemporize as your various sources of supply were either reduced or failed entirely, has resulted in an extraordinary attitude on the part of your production people. There is a display of ingenuity and resourcefulness made by your people which, in my very broad experience in viewing manufacturing organizations throughout the world, I have never seen surpassed.

In February of 1947, the gradual modification of the formal structure of S.I.A.M. received further impetus from the introduction of the Consejo, an informal weekly meeting between Clutterbuck, Sozio, and Sudiero. Company policies and problems were discussed and decisions made. Di Telia occasionally attended these meetings, and was kept informed about important matters. Generally speaking, however, Di Telia functioned in a semiadvisory capacity, and his position in company management began to approximate that of a Chairman of the Board. Di Telia found it necessary to delegate more final responsibility to these trusted members of the S.I.A.M. family as company expansion increased the complexity of operations and administration. The period of intense concern with more efficient operation matured Di Telia's plans for a factory training school. The school, opened in 1942 under the direction of Pedro

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Echarte, a g r a d u a t e engineer, offered, in addition to the necessary practical training, a course on Argentine history. T h e school was valuable not only for the training of skilled workers and minor technicians, b u t also for educating service men from the agencies. Di Telia was also active in promoting the public vocational schools which shortly appeared. R E L A T I O N S W I T H Y A C I M I E N T O S P E T R O L I F E R O S FISCALES

In the middle 1930's the U r i b u r u government acted to cut down on Argentina's large petroleum imports by stepping u p the activity of Yacimientos Petrolíferos Fiscales. Di Telia informed Y.P.F. that S . I . A . M . could supply electric motors and p u m p s for the development of the nationally owned Comodoro Rivadavia oil fields. H e claimed that S.I.A.M. was " n o t guided in this matter by any profit-making interest." T h e development of the necessary machinery to sell in competition with imports would show a loss at the time, but " w e trust that in the future the volume which will ensue will recompense us for the immediate sacrifices." 2 6 T h e correspondence between Di Telia and Y.P.F. illustrates a phase of his business tactics. A skillfully d r a w n image of S.I.A.M. is projected. S . I . A . M . forges on alone, in the face of adverse conditions and foreign competition, to satisfy the needs of the nation. H e argues that its efforts should be r e w a r d e d : The prices quoted were always lower than those of similar foreign machines, although in no case were customs duties calculated in our favor. We have had to struggle against internationally known factories that have their initial costs amortized, that sell their products in huge quantities in all parts of the world and that, here referring to Italian and German industries, receive export subsidies. Competing " Letter, March 13, 1936.

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against these conditions can never be lucrative business, and we can assure you that up to now our only satisfaction is that we have demonstrated o u r technical capacity. . . . W e have not asked for subsidies or help or protection, but we do ask that in the adjudication of f u t u r e orders there is taken into consideration the situation of a n industry which has no export possibilities, which does not have any subsidies, which must be limited to the necessities of the country. . . . It is enough to cite these facts to stress the importance of having a national fabrication of these basic products. . . . It cannot be pretended that so great a capital and such intense work does not deserve a d e q u a t e r e m u n e r a tion. . . . But even more important is a security of work, a continuity of work. 2 7 S . I . A . M . c o n t i n u a l l y p o i n t e d o u t to Y . P . F . t h a t t h e c o m p a n y h a d m a d e i m p o r t a n t i n v e s t m e n t s in facilities, l a b o r , a n d t e c h n o l o g y to fill o r d e r s for p a r t i c u l a r a p p a r a tus, such as f o u r - , seven-, a n d e l e v e n - t o n oil p u m p s , for w h i c h Y . P . F . was t h e o n l y c u s t o m e r . S h o u l d a r e g u l a r v o l u m e of o r d e r s not be f o r t h c o m i n g , S . I . A . M . w o u l d b e "paralyzed." T h e c u t t i n g off of i m p o r t s f r o m E u r o p e a n d restriction o n those f r o m t h e U n i t e d States m a d e Y . P . F . m o r e d e p e n d e n t o n S . I . A . M . O n l y the l a t t e r c o u l d m a n u f a c t u r e locally t h e t y p e of electric m o t o r s a n d p u m p s n e e d e d . T h e r e l a t i o n s h i p s s u f f e r e d the usual w a r t i m e s t r a i n . S . I . A . M . c o u l d n ' t get t h e necessary r a w m a t e r i a l s a n d deliveries to Y . P . F . w e r e d e l a y e d . F u e l oil was r a t i o n e d b y t h e C o m m i s s i o n of D i s t r i b u t i o n of C o m b u s t i b l e s , a n d D i T e l i a c o m p l a i n e d t h a t t h e y received too s m a l l a q u o t a a n d too few deliveries of t h e i r a l l o t t e d a m o u n t to fill Y . P . F . o r d e r s . S . I . A . M . b e g a n c o n v e r s i o n to c o k e , p r o d u c e d f r o m p e t r o l e u m coal b r o u g h t f r o m R i o T u r b i o 27

l e t t e r , November 13, 1939.

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and M e n d o z a . Six ovens were installed at Avellaneda and by 1945 the company became not only self-sufficient, but was also occasionally selling coke on the market. Nieves called Di Telia " t h e pioneer of coke production in Argentina."28 Despite solution of the fuel problem, however, the shortage of materials continued. Delays in production forced Y.P.F. to suspend nine of its orders with S.I.A.M. Supergas cylinders may serve as an example of these troubles. Y.P.F. used large numbers of these cylinders. T h e problems of making them during the war were similar to those discussed in relation to refrigerators. When deliveries were delayed, Di Telia explained: Fortunately the license for exportation of a special press which we had specially made in North America for the construction of the supergas cylinders was granted to us; unfortunately, when it was completed and a few days before shipping, the American government confiscated it. In spite of. all the protestations which we made to the effect that the press was completely paid for, our claim was not attended to. As if that was not enough, the price which was reimbursed to us was less than the price which we had originally paid. 2 9

T o provide material for Y.P.F. orders and refrigerator cabinets, Di Telia experimented with steel-making during the war. He purchased the necessary alloys in the United States and obtained scrap iron wherever it could be found. Nieves reported that six or seven wagon-loads of iron, some of it from the railroads, would arrive at the foundry daily. T h e neighboring Fábrica Militar de Aceros (Army Steel Mill) was able to supply drawings for a Siemen's steelmaking oven. Between October 1943 and the end of the 18 29

I n t e r v i e w w i t h E l a d i o Nieves. L e t t e r A u g u s t 21, 1945.

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war three Siemen's ovens were built, and operated on continuous shifts including Sundays. Nieves moved from his former home to live six blocks from Avellaneda so that he could personally supervise each discharge of the ovens. The steel ingots were then taken to the Fábrica Militar and rolled into thin plates. In spite of inevitable mutual annoyances, S.I.A.M. continued to supply Y.P.F. with most of its locally made equipment throughout the war. This was a major factor in maintaining Argentina's oil production during these years. After 1945, however, exchange problems led Y.P.F. to buy its machines on the European market until the late fifties. S.I.A.M. considered this both ingratitude and failure of a government agency to support national industry. P E R O N A N D BUSINESS

With the Peronista triumph in 1946, businessmen had to face a regime that rejected free enterprise. By a decree of March 25, 1946 control over all banking operations was lodged in the Central Bank. While the commercial banks could still deal with their customers they received deposits as agents of the Central Bank, and loans and interest rates could be controlled to suit the purposes of the state. Exports were largely in the hands of a government agency and imports were controlled by licenses. Much of the favorable exchange balance was used to nationalize foreign-owned railroads and other public utilities and to repatriate the public debt. Wages had been controlled by government decree since 1943, strikes were under political manipulation, and unions came to be agencies of the Perón party. Beside controls on credit and labor, industrial entrepreneurs faced an additional problem. While up to Di Telia's death Argentina still had a favorable balance of

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foreign exchange, the credit was not transferable from Europe to the United States. With the latter Argentina ran a continuous deficit. Yet, S . I . A . M . and many other companies were geared to operate largely on American components and semifinished materials. This made the company dependent on the good will of the government for import licenses. The last two years of Di Telia's life coincided with the boom period of the Perón regime. From 1945 to 1948 the volume of manufacture in constant value pesos increased 55 per cent; real income from all activities rose 50 per cent. Employment in industry rose by a third, and real wages for both skilled and unskilled labor, continuing the trend present from 1938 on, rose faster than the cost of living; 3 0 1 947 was the greatest boom year. The terms of trade remained favorable and imports in 1948 were four times those of 1945 and double those of 1946. H a d agricultural and other exports been stimulated to an equal degree the prosperity might have continued, but from 1946 to 1948 exports declined 20 per cent, and fell still more in subsequent years. Part of the initial fall resulted from increased domestic consumption of meat as real wages increased. Thus the Argentine boom was essentially broken in 1949 by the using up of reserves of foreign exchange and the necessity of returning to a " p a y as you g o " policy. Since the government did not curtail expenditures, the result was more inflation. P E R O N AND L A B O R

The general impression among Argentines is that the most lasting effect of the Perón regime was on the attitude of industrial labor. In his manipulation of the labor 3 0 Di Telia and Zymelman, op. cit., p. 299. O n the basii of 1943 = 100, skilled wages were 288.1; unskilled, 246.8; cost of living 180.4 in 1946. With 1 9 3 7 = 100, real wages rose as follows: 1938, 111; 1940, 115; 1941, 125; 1942, 121; 1943, 141; 1945, 148; 1949, 2 3fi (p. 298, T a b l e 99).

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p r o b l e m P e r ó n was m a k i n g political c a p i t a l f r o m o n e of t h e m o s t t r o u b l e s o m e issues in t h e A r g e n t i n e s i t u a t i o n . As in t h e e a r l y stages of i n d u s t r i a l i s m elsewhere, A r g e n tine labor received low wages supplemented by employer b e n e v o l e n c e , as in t h e S . I . A . M . system of 1934 ( p p . 101 — 102). T o r c u a t o Sozio said of t h e p r o b l e m : Perón seized on a very pressing national situation which no one else had capitalized on . . . before; namely, the growing dissatisfaction of the labor class and the need to legislate for the economic status of the labor class. Unfortunately, the purposes and the means were objectionable. 31 F r o m 1930 o n t h e Confederación General de Trabajo of A r g e n t i n a h a d r e p r e s e n t e d t h e skilled crafts. W h i l e figures for t h e l a b o r f o r c e in 1942 a r e u n a v a i l a b l e , a fair e s t i m a t e w o u l d b e t h a t less t h a n 7 p e r c e n t of t h e total w a s organized.32 W h e n t h e s h o r t a g e s c a u s e d by W o r l d W a r I I p r o d u c e d d o m e s t i c i n f l a t i o n , n o t m i r r o r e d in t h e e x c h a n g e r a t e , t h e s q u e e z e o n t h e a l r e a d y l o w living s t a n d a r d s of w o r k e r s a n d s t r o n g e r l e f t - w i n g l e a d e r s h i p in the l a b o r m o v e m e n t led to strikes n o t f a v o r e d b y t h e m o d e r a t e e l e m e n t in t h e C . G . T . A w i d e - s p r e a d strike of m i d - 1 9 4 2 i n v o l v i n g S . I . A . M . led to g o v e r n m e n t i n t e r v e n t i o n by t h e Castillo r e g i m e , w h i l e C o l o n e l P e r ó n was still a t a n a r m y post in t h e A n d e s . T h e M i n i s t e r of L a b o r a n d t h e Unión Industrial, o v e r D i T e l i a ' s p r o t e s t , a g r e e d to a g e n e r a l w a g e i n c r e a s e , a n d t h e M i n i s t e r m a d e it effective b y official d e c r e e . F r o m t h e b e g i n n i n g of P e r ó n ' s S e c r e t a r y s h i p to t h e e n d of his r e g i m e as d i c t a t o r in 1955 a n i n d i v i d u a l c o m p a n y c o u l d n o t b e said to h a v e a l a b o r policy. M a n a g e m e n t m e r e l y c o n f o r m e d to laws, decrees, a n d u n i o n o r d e r s . " Interview with Torcuato Sozio. 31 YVhitaker, Argentina, op. cit., p. 40.

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Eva Perón was even more influential t h a n her h u s b a n d with the u r b a n workers. As S u d i e r o p u t it: During Perón's time, the only person who commanded was Eva Perón, his wife. The laborers changed so much that in the factories one could not tell them anything. 3 3 T h e coup d ' e t a t by which J u a n a n d Eva, s u p p o r t e d by militant labor, took power a w a y f r o m Farrell a n d the conservatives who had p l a n n e d Perón's exile stopped production for three days. C a s e r t a recorded in his d i a r y on O c t o b e r 16, 1945: " T h e r e v o l u t i o n a r y m o v e m e n t has started. T h e aim is to free P e r ó n . . . . A r o u n d three in the afternoon workers began to leave the factory a n d in one h o u r everyone h a d l e f t . " O c t o b e r 17: " T o d a y n o one c a m e to work a n d we c o u l d n ' t get in. W e r e t u r n e d home. . . . " T w o days later the factory resumed n o r m a l operations. December 19: C a s e r t a noted t h a t the laborers left work at noon to hear P e r ó n speak. T h e r e are o t h e r similar notations, one recording a visit of Eva Perón to Avellaneda. Perón gave the workers higher real wages, p a i d v a c a tions, social security, and politically controlled union organization. Hence, labor, m u c h of it newly recruited from the back-country, lacked the self-discipline a n d experience that would have developed h a d they built their own unions a n d slowly won recognition of collective bargaining through their o w n efforts. S . I . A . M . ' s status as an employer suffered f r o m the legislation. As we h a v e seen, Di Telia h a d initiated his own welfare p r o g r a m with fringe benefits in 1934, a n d a social a n d r e c r e a t i o n a l association for the workers, C l u b S . I . A . M . , h a d b e e n formed in 1941. 34 Perón's industry-wide program >s Interview with Sudiero. M Club S.I.A.M. was apparently never really successful. This type of formalized organization is less suited for Latin American industries than for the United States. By 1944 S . I . A . M . estimated the cost of welfare, including paid vacations, at 700,000 pesos.

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eliminated most of the special advantages of working for S.I.A.M. By November 30, 1944 S.I.A.M. had 500 administrative and clerical employees and 3,134 m a n u a l workers, but during that one year 3,906 workers h a d been hired and 3,382 had left. 35 Considering the necessity for training most new factory workers, this rate of turnover must have been a major factor in high production costs. Venturini said that only about one w o r k m a n in ten in the factory really knew his j o b . By 1948 the majority of workers were native-born Argentines, m a n y of whom had little experience in industry. T h e personnel office complained of the "continued exodus" of S.I.A.M. workers, which was ascribed to the extraordinary demand for skilled labor, owing to general industrial expansions; hopes for easier jobs; workers seeking jobs nearer their homes; and the appeal of entering into new lines of activity. 3 6 In addition, absenteeism was running 12 to 14 per cent. Attempts at discipline were met by slow-downs, a new and effective device of the C.G.T. This was a general situation faced by all industrialists. As company loyalty and industrial discipline declined Caserta in 1945 started holding bi-weekly meetings of the supervisors to discuss labor problems, wages and costs. But as long as the government controlled these matters there appeared to be no solution. POSTWAR EXPANSION

I n 1946 S.I.A.M. started its greatest period of expansion, one that was only slightly affected by the depression from 1949 to 1952. T h e basis for the expansion was partly in the lowered real prices of durable goods. Consumer durables, the old lines of producer's goods, a n d the newer developments have been grouped in T a b l e 18 35

M e m o r a n d u m from Personnel Office, December 13, 1944. " C o m p a n y files, October 27, 1948.

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to show the trends in these different types of products. Some, such as pumps and motors, fall into both consumer and producer categories. Productive efficiency had increased, and Argentine industrialists were enjoying an extremely favorable official exchange rate. Di Telia expanded production in 1947 and 1948 to take advantage of this special opportunity given to Argentine industry. Although rising employment and increasing real wages meant more income per family and hence some increase in mass purchasing power, it was not until after 1952 that the market for consumer durables began to expand rapidly. Much of the increase TABLE

18.

ANNUAL PRODUCTION IN UNITS*

Description Household refrigerators Washing machines Centrifugal pumps Fans Electric motors Commercial refrigerators Bakery machines Gasoline pumps Supergas cylinders Air compressors Compressors (refrig.) Condensers (units) Condensers (KVA) Condensers 1, 2, & 4 MFD Oil pumps 4-7-11 tons Circuit breakers Transformers Transformers (KVA) J Pipes 10 meters χ J inch

1943

1944

1945

1946

1947

1948

2,803 119 1,650 1,310 12,437 t 207 65

2,343 705 1,593 3,692 10,320 t 232 110

2,587 207 2,385 5,899 9,689 t 120 24 8,619 243

7,335 580 3,954 6,813 15,018 3,039 366 150 13,734 310

11,693 2,071 4,267 15,656 15,586

89 842 11,500 65 1,721 110 12,100 1,013

237

283

1,214 239 1,910 6,030 9,831 Í 87 65 2,838 270

116 902 8,750 160 640 152 16,200

250 2,040 9,574 135 430 110 17,767

227 3,612 13,144 132 804 120 9,508

294 2,840 12,000 120 400 126 15,200

—

—

—

—

—

—

* Source: Company files, t Supplies on hand. About 1600 a year sold. J Figures represent capacity.

4,352 399 331 7,577 493 42 28

192 14,200 4

915 86

8,700 193,634

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in income in the late forties was invested in houses or in setting up small businesses. Di Telia and his associates foresaw, however, the future boom in consumption of domestic appliances and acted accordingly. After the war, the major problem of the company was still the shortage of imported supplies for producing household refrigerators. Production did not reach prewar levels until 1948. Di Telia had foreseen the postwar problems. In April of 1946 he wrote Vice President Knox of Westinghouse International: I trust that you will be able to spare me some time . . . so that we can do some real thinking together and plan our campaign for the immediate postwar period . . . We are thinking also as to the advisability of increasing our import business in other lines in which your advice will be of great value. There is also the matter of obtaining a certain amount of expert personnel for the new activities as well as for our present manufacturing operation.

Westinghouse would no doubt have had difficulty under the most favorable circumstances in filling all S.I.A.M.'s orders during the period of postwar shortages. But a strike at Westinghouse starting in J a n u a r y 1946 and lasting until May ended all possibility of meeting demand. On December 21, 1945 Di Telia had asked for steel for refrigerator cabinets, and 12,000 sealed 220 volt compressor units. In a conference with Terrile early in March 1946 Westinghouse officials said they hoped to deliver 6,000 compressors of 110 volts with transformers, as well as some evaporators and condensers. At the same time S.I.A.M. was seeking open type compressors from Universal Cooler. October, November, and December, the Argentine spring, were the most important months of refrigerator demand. By August of 1946, Di Telia was afraid that they would not have enough imported compressors to

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keep production going. H e wrote to Westinghouse that Universal Cooler had supplied only a few of the thousands of compressors ordered. I n September Westinghouse pointed out to Di Telia that 2,600 compressors had been supplied so far in 1946, a n d 1,400 more were planned for by the end of the year. I n order to do this, Westinghouse was having to cut down on the more profitable business of m a n u f a c t u r i n g complete refrigerators. C . A . R . M . A . (Compañía Argentina de Representaciones y Manufacturas, S.R.L.) h a d been incorporated in 1938 to distribute refrigerators and other appliance lines. I n 1945, Di Telia set up a small shop also called C a r m a with the intention of eventual large-scale refrigerator production. This h a d never materialized, although in 1947 Di Telia had bought land for a new factory at Monte Chingolo, C a r m a was still a small shop experimenting principally with washing machine and kerosene absorption refrigerator production. T h e failure to give C a r m a a greater development points up an aspect of S.I.A.M. manufacturing essential to an understanding of c o m p a n y operations. While S.I.A.M. could, if necessary, m a n u f a c t u r e almost all the component parts that they sought to import, the cost according to Sudiero was " t r e m e n d o u s . " P a r t of the trouble was due to low volume, a few thousand units as against a million in United States plants, but part was also d u e to continuing plant difficulties with production. As wc have seen, after World W a r I I competent employees of all types were extremely scarce, a n d turnover was rapid. Engineers and technicians in particular were h a r d to secure and the shortage was increased by government restrictions on immigration of skilled workers. While the government tried to develop local technological knowledge through vocational education, improvement was necessarily slow. Sudiero felt that Argentine education stressed theory more t h a n applied engineering.

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Consequently, it took a long time to train young university graduates in practical problems, and they were likely to leave as soon as they found more prestigious or pleasant jobs with the government. 3 7 I n spite of the difficulties, Di Telia with the help of Westinghouse a n d his friends in Italy succeeded in securing a considerable n u m b e r of engineers. Late in 1946, for example, Westinghouse sent three well-qualified Americans to S . I . A . M . T h e c o m p a n y did not have a separate engineering d e p a r t m e n t , and all new engineers were p u t to work with various capataces. Sudiero reported t h a t : There was a lot of trouble and the system didn't yield good results. Generally the engineers didn't like the job. Perhaps the capataces showed some opposition because they were afraid these young engineers would take their place . . . Many of the engineers left and the campaign was not at all satisfactory. 38 N E W PRODUCTS

T h e need for flexibility and improvising, for being able to shift from one product to another had been a necessary factor in Di Telia's plans since 1929. Experimentation with a n d introduction of new products was continuous. Kerosene-absorption refrigerators for the m a n y homes without electricity and washing machines for those with electricity were two major products that would eventually fit into the existing refrigerator marketing system. Again, Di Telia was thinking in terms of a future market. Most rural families in the early postwar period could not afford refrigeration at all. Nevertheless, Di Telia's men began experimenting with kerosene-absorption refrigerators at C a r m a . No commercial success was achieved until the c o m p a n y was invited to negotiate a " Interview with Sudiero. " Ibxd.

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contract with Electrolux of Sweden in 1949, which had heretofore licensed only Servel, in the United States. Washing machine experimentation was also conducted prior to the contract with Hoover, Limited, in 1951. The washing machine line, like refrigerator production, ran into difficulties in the import of essential parts. Mechanized wringer attachments also were continually troublesome. Table 18 shows that only in 1944 did production get much beyond the pilot level and the line was not firmly established until 1948, when a volume of 1,500 machines was reached. As always, Di Telia was looking for new patented products or processes that S.I.A.M. could first distribute and eventually manufacture. His attempts were too numerous to describe in full. Here we can only cite as examples some that reached at least the preliminary negotiation stage. In November 1945 a distributorship for Ray-O-Vac products, chiefly flashlight batteries, was secured for Argentina and Chile. There was the usual additional clause covering the possibility of S.I.A.M. manufacturing the products: R a y - O - V a c C o m p a n y is p r e p a r e d to enter into i m m e diate negotiations with S . I . A . M . Di Telia L t d a . in o r d e r to work out the details of an a r r a n g e m e n t w h e r e b y the latter will m a n u f a c t u r e R a y - O - V a c products in A r g e n t i n a either on a royalty basis or by setting up a separate c o m p a n y in the ownership of w h i c h R a y - O - V a c C o m p a n y will participate through its contribution of " k n o w - h o w , " formulas, processes, etc., and possibly m a c h i n e r y or the like. 3 »

This did not materialize. The Perón government, evidently favoring Eveready, which had a virtual monopoly, refused the necessary import licenses and Di Telia did not think it wise to press the point. *» Terms contained in a letter from Ray-O-Vac Export Manager to Clutterbuck, November 16, 1945.

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A distributing agreement for A. O . Smith meters and liquid level gauges in Argentina and U r u g u a y was entered into in August of 1947 to run initially to December 31, 1948. No mention was m a d e of the possibility of Argentine m a n u f a c t u r e . Nineteen-forty-seven negotiations with VVestinghouse regarding possible licenses for A. B. Breakers, CA watthour-meters, and lamps had no result, but are further indications of this drive for diversification. In 1947 the Argentine Air Force awarded a bid to S.I.A.M. for the m a n u f a c t u r e of 500 hydraulic landing gears for their D L D L plane. T h e production, it was held, " r a n k s a m o n g the best jobs done by S . I . A . M . " 4 0 T h e Air Force c o m m a n d e r m a d e a personal visit to the S . I . A . M . plant to express his appreciation. This entry into a new field was followed u p by large-scale m a n u f a c t u r e of hydraulic cylinders. In the case of supplies for Y.P.F. the difficulty of acquiring licenses for importation did not exist. Since it seemed probable that under the Perón regime Y.P.F. would rapidly exploit Argentina's oil, Di Telia started negotiations for licenses from various United States equipment firms. O n September 8, 1947 he entered into a three-year contract with National Supply Export Company to sell and perhaps m a n u f a c t u r e their tubular products, including casings, for oil wells. S . I . A . M . was to survey oil field requirements and " m a k e recommendations to National as to the advisability of undertaking m a n u f a c t u r e of National products in A r g e n t i n a . " 4 1 Royalties would be fixed by mutual agreement. All payments were to be m a d e by S.I.A.M. in United States dollars. T h e political uncertainty attending such sales is indicated in clause B-6, which gave National " t h e right 40 41

Interview with Ermette Venturini. Contract.

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to withdraw permission of S . I . A . M . to m a n u f a c t u r e National products in the event of Argentine conditions making continued collaboration u n d e r this agreement unattractive to N a t i o n a l . " 4 2 Such action, however, would not automatically cancel the agreement for distribution. A separate contract was entered into with National's Superior Engine Division for the sale of diesel motors for oil pumps. As S.I.A.M. already m a n u f a c t u r e d three sizes of oil pumps, and electric motors, they were now prepared to supply most of the needs of Y.P.F. except for pipelines. But as noted earlier Y.P.F. orders did not come immediately. S.I.A.T.

Di Telia had been thinking about pipe m a n u f a c t u r e before the war, but since large-scale production required expensive imported machinery nothing could be done until normal trade was resumed. After the war he planned to make the necessary investment. Except for building Avellaneda this was Di Telia's largest* single venture. In 1945 he sought advice from Bechtell, McCone, and Parsons, engineering consultants in the United States. Not entirely satisfied, he consulted another United States firm, H. A. Brassert & C o m p a n y who controlled the Yoder process for welded pipe. Early in 1946, Di Telia brought to Argentina an outstanding Italian engineer, Agustín Rocca. Rocca persuaded Di Telia that it would be better under Argentine conditions to m a n u f a c t u r e seamless pipe using the M a n n e s m a n - C a l m e s process of the Innocenti firm in Milan, Italy. Sudiero was sent to the United States to check this by observing the Yoder and other pipe-making processes in use there. H e discovered that no American firms were making seamless pipe with «

Ibid.

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t h e M a n n e s m a n - C a l m e s process. I n early M a y of 1946, D i T e l i a received s t r o n g advice f r o m a n A m e r i c a n r e p r e sentative of t h e Y o d e r process a g a i n s t t h e use of M a n n e s man-Calmes.43 Y . P . F . , h o w e v e r , expressed p r e f e r e n c e for seamless pipe. F u r t h e r , Di T e l i a was impressed b y the t o n n a g e of pipe p e r dollar of c a p i t a l i n v e s t m e n t a p p a r e n t l y yielded b y the I t a l i a n process. Di T e l i a tactfully e m p h a s i z e d g o v e r n m e n t o p i n i o n as the d e c i d i n g f a c t o r in his letter to U . S . Steel of M a y 31, 1946, b u t e c o n o m i c reasons were p r o b a b l y m o r e i m p o r t a n t in his choice of the M a n n e s m a n C a l m e s process. O n A u g u s t 24, 1946 a p r e l i m i n a r y a g r e e m e n t was d r a w n u p in Buenos Aires b e t w e e n Di T e l i a a n d R o c c a , representing Innocenti. Innocenti would supply S.I.A.M. w i t h the m a c h i n e r y a n d b l u e p r i n t s n e e d e d for t h e process. M a n y details h a d to b e c l e a r e d u p , h o w e v e r . I n N o v e m b e r of 1946, Di T e l i a was still w a i t i n g for final i n f o r m a t i o n f r o m I n n o c e n t i , a n d S u d i e r o left for M i l a n to see a b o u t the m a t t e r . 4 4 T h e P e r ó n g o v e r n m e n t ' s Plan (Quinquenal ( F i v e - Y e a r P l a n ) called for d e v e l o p m e n t by Y . P . F . of oil fields a n d pipelines, a n d also a n i n d u s t r i a l credit b a n k to assist in c r e a t i n g the p r o d u c t i o n called for in the p l a n . A c c o r d i n g l y in late N o v e m b e r of 1946 Di T e l i a notified b o t h the Presid e n t of the I n d u s t r i a l Bank a n d the T e c h n i c a l M a n a g e r of Y . P . F . t h a t a n e w f a c t o r y was a b o u t to b e s t a r t e d to supply seamless p i p e u p to f o u r t e e n inches in d i a m e t e r . U p the R i a c h u e l o R i v e r f r o m t h e A v e l l a n e d a p l a n t 77,000 s q u a r e meters of l a n d w e r e p u r c h a s e d a n d p r e p a r e d for b u i l d i n g . Di T e l i a p l a n n e d a f a c t o r y of 15,000 s q u a r e meters w h i c h , t o g e t h e r w i t h e q u i p m e n t , w o u l d cost t w e n t y million pesos. I t was h o p e d t h a t five million of this 44

M. Castellvi (New York) to Di Telia, May 6, 1946. Di Telia to Rocca, November 29, 1946.

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would be a d v a n c e d by the government's Industrial Bank and seven million by public issue. In 1947 after Di T e l i a ' s medical examination in Switzerland he went on to M i l a n . Sudiero suspected that Di T e l l a ' j health was already failing, because in contrast to the decision and optimism with which he usually started a new project he was " h e s i t a n t " a n d in d o u b t . Finally he entered into an agreement in M a r c h of that year through an exchange of letters with F e r d i n a n d o Innocenti for the necessary machinery. Fifty thousand United States dollars were paid as a deposit, a n d $798,680 was due in addition when the machinery was shipped. 4 5 Di Telia cabled Sudiero, " I have signed the agreement. M a y G o d keep us and good l u c k . " 4 8 Meanwhile in 1947, engineer R o c c a had estimated the costs of the whole pipe mill with materials ready for operation at 28,769,600 pesos, many times the initial cost, even in constant pesos, of the Avellaneda factory. 4 7 Worried by the commitment of nearly four million pesos for imported machinery whose efficiency was in dispute, D i T e l i a went from Italy to E n g l a n d where he talked with officers of Stewart and Lloyd's. T h e y persuaded him that he had m a d e a mistake in ordering machinery for seamless pipe, that even with relatively low Argentine labor costs, it would prove more expensive to produce. T h e y also told him of many difficulties he would face in using the Italian equipment. At this point Sudiero became still more convinced that Di T e l i a was not well. H e " w r o t e in a depressed way which was not like h i m . " Sudiero tried to reassure him by pointing out that Stewart and Lloyd's were competing exporters of pipe to Argentina. Ferdinando Innocenti to Di Telia, March 17; Di Telia to Innocenti, March 19, 1947, Company archives. * * Interview with Sudiero. 4 7 Estimâtes in Company archives.

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D i T e l i a w e n t o n to N e w Y o r k f r o m L o n d o n a n d c o n s u l t e d w i t h m e m b e r s of s e v e r a l firms w h o all a g r e e d w i t h S t e w a r t a n d L l o y d ' s . T h e y said t h e I n n o c e n t i process w a s o l d - f a s h i o n e d , to w h i c h S u d i e r o o b s e r v e d t h a t t h e r e w a s a d i f f e r e n c e b e t w e e n mass p r o d u c t i o n in t h e U n i t e d S t a t e s a n d s m a l l scale p r o d u c t i o n in A r g e n t i n a . D i T e l i a also l e a r n e d f r o m B u e n o s Aires t h a t t r o u b l e o v e r c o m m i s sions h a d risen w i t h R o c c a . D i T e l i a finally m a d e his decision. H e severed connections with Rocca, canceling t h e c o n t r a c t a n d f o r f e i t i n g t h e S50,000. R o c c a w e n t o n to f o u n d t h e h i g h l y successful firm of T e c h i n t . I n l a t e 1947 S u d i e r o w a s sent to N e w Y o r k to b u y m a c h i n e r y for t h e Y o d e r process w i t h t h e a d v i c e of A . H . Brassert & C o m p a n y . T h e y w e r e also a s k e d to r e c o m m e n d a m a n a g e r , a n d in J a n u a r y 1948 Di T e l i a o f f e r e d t h e j o b to H a r r y E . C o l w e l l of T o l e d o , O h i o . T h e l e t t e r d e s c r i b e d t h e p r o p o s e d w o r k s c h e d u l e for t h e m i l l : You will take the responsibility of producing approximately 28,000 tons per year of 1/2" to 3 ' M e r c h a n t pipes with the Yoder M-2-1/2 a n d W-3-1/2 mills, working 4,000 hours per y e a r ; and approximately 60,000 tons per year of 4" to 12-3/4" pipes with the Yoder W-7-1/2 mill (Merc h a n t pipes, conduction pipes, casings, a n d pipe line), also working 4,000 hours per year. T h e a r r a n g e m e n t , h o w e v e r , was n e v e r fully c o m p l e t e d . A s e p a r a t e c o m p a n y , Sociedad Industrial Argentina Tubos de Acero, S . I . A . T . for s h o r t , was c h a r t e r e d . O r i g i n a l l y t h e c a p i t a l h a d b e e n p u t at e i g h t million pesos, b u t by t h e t i m e o p e r a t i o n s b e g a n in 1948 this h a d b e e n e x p a n d e d to t w e n t y - s i x m i l l i o n . T h e a d d i t i o n a l e i g h t e e n million w a s to b e d i v i d e d i n t o six m i l l i o n in c o m m o n s h a r e s of 100 p a r , c a l l e d Class A a n d c a r r y i n g o n e v o t e , a n d t w e l v e m i l l i o n in p e r c e n t c u m u l a t i v e p r e f e r r e d of 100 p a r . S u b s c r i p t i o n to t h e p r e f e r r e d w a s to b e h a n d l e d t h r o u g h t h e Instituto Mixto de Inversiones Mobiliarios, which was

s . Ι . A . M . : DI TELLA'S FINAL DECADE

209

controlled b y the C e n t r a l B a n k . I t w a s a n t i c i p a t e d t h a t the I . M . I . M . w o u l d loan 80 p e r cent of the p a r v a l u e of the p r e f e r r e d until it was issued. T h e Di T e l i a f a m i l y subscribed to o n e t h i r d of the total c o m m o n , S . I . A . M . to a n o t h e r t h i r d , a n d I . M . I . M . took most of t h e r e m a i n d e r as a n i n v e s t m e n t , w h i c h t u r n e d o u t to b e p r o b a b l y the best they ever m a d e . In the late w i n t e r of 1947 Di T e l i a h a d solicited orders for p i p e f r o m b o t h Y . P . F . a n d the S t a t e G a s C o m p a n y (Gas del Estado).48 H e h o p e d t h a t business f r o m these two o r g a n i z a t i o n s a l o n e w o u l d k e e p the m a c h i n e for large p i p e busy. But the state works failed to e x p a n d , a n d n o orders c a m e . S u d i e r o r e p o r t e d t h a t the big m a c h i n e did not o p e r a t e d u r i n g the first y e a r . O r d e r s w e r e received for small pipes for h o u s e h o l d or local use only. But the Y o d e r m a c h i n e s failed to p r o d u c e at t h e expected rates. S . I . A . M . filed suit a g a i n s t the Y o d e r process o w n e r s , a n d a settlement was o b t a i n e d . O b v i o u s l y , t h e early financial r e t u r n s f r o m the f a c t o r y w e r e d i s a p pointing. T h e s e troubles h a v e been d e s c r i b e d in s o m e d e t a i l because they o c c u r r e d shortly b e f o r e Di T e l i a ' s d e a t h . S p e c u l a t i o n has b e e n raised as to w h e t h e r Di T e l i a ' s p r o b l e m s a f f e c t e d his physical c o n d i t i o n , a n d w h e t h e r his actions at this time w e r e i n f l u e n c e d b y ill h e a l t h . Di T e l i a h a d been u n d e r g r e a t stress t h r o u g h o u t 1947. I n a d d i tion to the d i s c o u r a g i n g situation in S . I . A . T . , t h e policies of the P e r ó n g o v e r n m e n t w e r e m a k i n g it difficult for S . I . A . M . to o b t a i n a n a d e q u a t e s u p p l y of p a r t s . Di T e l i a was not in financial trouble. O n the c o n t r a r y , S . I . A . M . was r e c o r d i n g the highest sales a n d m a k i n g t h e largest profits in its history; S . I . A . T . losses could b e c o v e r e d . 48 Di Telia to Director General de Gas del Estado, I n g . J u l i o V . Canema August 23, a n d Di Telia to O r l a n d o Maroglio, Instituto Mixto dt Invtrsionts Mobiliarios, S e p t e m b e r 11, 1947.

210

E N T R E P R E N E U R S H I P IN A R G E N T I N E C U L T U R E

But since Di Telia defined success in personal terms more than company profit, he reacted sensitively when his plans did not run smoothly, feeling that company fortunes rested on his own good or bad decisions. MARKETING

While S.I.A.M. was beginning to manufacture electric washing machines, irons, and fans in large quantity by 1948, the company's great prosperity, as shown in Table 18, was based on the same products that had supported the boom of the late thirties—refrigerators, pumps, and electric motors. Since demand for household refrigerators and washing machines steadily exceeded supply there was no strong economic incentive to reorganize marketing arrangements. Furthermore, many of these arrangements that had developed as the company grew were geared to Di Telia's personal style of management and to Argentine patterns of consumer relations. The advertising department in the forties was kept separate in function from the Exitus agency. Exitus worked directly with top management, which retained control over advertising policy and made all final decisions on the details that Exitus drew up. The advertising department coordinated releases through the mass media and distributed publicity to the agents. Postwar advertising expenditures remained lower in real value than those of the late thirties when the company had been opening the mass market for refrigerators and minor lines such as electric washing machines, fans, and irons were only occasionally advertised. To celebrate the fifty-thousandth refrigerator in 1941, a special campaign was put on by radio, newspapers, and a film for display in "more than a thousand showrooms, to be seen by a million people!" 4 9 Expenditures were " Advertising

files.

S . I . A . M . : DI T E T L A ' S F I N A L D E C A D E

211

s t e p p e d u p in 1946 to r e s t i m u l a t e mass p u r c h a s i n g , o n t h e a s s u m p t i o n t h a t supplies w o u l d b e a v a i l a b l e . N e w s p a p e r a d v e r t i s e m e n t s for r e f r i g e r a t o r s s a i d : " S t a t e y o u r o w n t e r m s ! H o w m u c h c a n you p a y d o w n , a n d w h a t m o n t h l y terms w o u l d you l i k e ? " R e p l y c o u p o n s w e r e a t t a c h e d . T h e m e s of nationalistic a p p e a l a n d t h e " c o m m o n m a n " c o n t i n u e d to r u n t h r o u g h S . I . A . M . ' s a d v e r t i s i n g . I n c r e a s ingly d o m i n a n t , h o w e v e r , was the i m a g e of a g i g a n t i c o r g a n i z a t i o n w h i c h , sincc it was the biggest, m u s t also b e the best a n d the most reliable. R o s a r i o a n d L a P l a t a r e m a i n e d the o n l y d i r e c t b r a n c h e s , a n d sales elsewhere w e r e m a d e by a n increasing n u m b e r of a g e n t s (concesionarios). T h e i r r e p r e s e n t a tives did n o t necessarily h a n d l e the c o m p l e t e S . I . A . M . line. T h e r e was a t e n d e n c y to p l a c e b a k e r y m a c h i n e r y a n d o t h e r devices such as c o m m e r c i a l r e f r i g e r a t o r s t h a t sold to businessmen in the h a n d s of d i f f e r e n t agents t h a n those selling t h e c o n s u m e r goods lines. T h e W e s t i n g h o u s e p r o d u c t s d i s t r i b u t e d directly w e r e , as has b e e n seen, h a n d l e d by s e p a r a t e agents. T o c o o r d i n a t e t h e efforts of this g r o w i n g sales force S . I . A . M . c o n t i n u e d to h a v e inspectors. T h e s e s u p e r visors, specialized in c e r t a i n lines of p r o d u c t s , w o u l d visit the a g e n t s h a n d l i n g t h e m , a n d see to the p r o p e r t r a i n i n g of t h e a g e n t s ' salesmen. As in the thirties, m e c h a n i c a l k n o w l e d g e was essential in a n a g e n c y a n d in the back c o u n t r y s u i t a b l e m e n w e r e h a r d to find. T h e agents w e r e e n c o u r a g e d to send m e c h a n i c s to the Escuela de Capacitación a t A v e l l a n e d a . If necessary, inspectors f r o m the h o m e office sent a g e n c y salesmen to Buenoes Aires for further instruction.50 I n the e a r l y forties, a g e n t s h a d a r a t h e r f r e e h a n d in m a p p i n g local p r o m o t i o n c a m p a i g n s . A r t u r o S a n t o n i , a g e n t for M e n d o z a , led t h e w a y in s u c h efforts w i t h a b l e 50

Interview with Modesto José Bertoli.

212

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245

FINANCE

I* had always been Di Telia's policy to finance the steady growth of S.I.A.M. and the spread of foreign branches by reinvestment of profits. From 1943 on, this policy was represented by stock dividends, that as we have seen amounted to 150 per cent by 1948. Appendix A shows the continuation of the policy after Di Telia's death. 15 By 1953 a uniform policy of an annual dividend of 10 pesos in cash and 25 per cent in stock on common shares was adopted. In Argentina the 30 per cent income tax was collected on corporate dividends before payment, so that the ten peso cash dividend, while increasingly small in real value, was practically net income for the receiver. Considering the inflation that reduced the peso from about five to the United States dollar in 1948 to over 80 to the dollar in 1960, S.I.A.M.'s dividend policy in both stock and cash was conservative. Furthermore, the fixed dividends due on the preferred became less and less of a burden. As a result, after increasing the nominal capital 25 per cent a year a very large part of the annual profit was credited to reserves, until by 1960 the reserves almost equaled the capital. The near runaway inflation made local financing by preferred stock or bonds impossible, and foreign capital very difficult to secure. The remaining alternative, substantial issues of new common, would ultimately have threatened family control, although in 1960 the family still owned about 50 per cent of the common, plus all the five vote per share deferred. Thus massive reinvestment of earnings was used to provide the capital necessary for expansion. While the conservative dividend policy coupled with the spectacular growth of the company made S.I.A.M. 15

Appendix A, Part I I I .

246

E N T R E P R E N E U R S H I P IN A R G E N T I N E TABLE OPERATING

RESULTS

Net sales Manufacturing cost of sales Salaries and wages paid Opening inventories, material purchases and general expenses, less closing inventories Total General expenses and taxes Salaries and bonuses Salesmen's commissions Social security contributions Traveling expenses Advertising Amortization Taxes Miscellaneous Total Net profit before deducting items below Other income (deductions) Commissions and interest earned, less paid Interest and dividends on investments Surpluses on sales of fixed assets and miscellaneous Total other income (deductions) Transfers to deferred income Net profit for the year

CULTURE

31

IN T H O U S A N D S

OF

PESOS*

1949

1950

1951

1952

108,605

159,464

217,353

374,610

22,539

33,765

40,457

67,628

4θ,622

55,209

84,693

175,086

71,161

88,974

125,150

242,714

4,562 5,721 772 324 1,040 1,646 5,214 3,238

5,869 7,817 1,298 640 1,277 2,266 13,384 2,145

8,345 10,356 1,339 917 1,334 4,027 23,160 2,935

11,291 11,846 1,950 1,160 2,581 10,883 37,399 5,789

22,519

34,696

52,413

82,901

14,925

35,794

39,790

48,995

(4,590)

(4,699)

(1,388) (10,186) 37

38

1,190

55

5

17

55

1

(1,346)

(10,131)

(3,345)

(4,643)

25,663

36,445

44,352

13,579 —

13,579t

—

25,663

—

36,445

—

44,352

W H A T DI T E L L A DID N O T L I V E T O SEE

247

1953

1954

1955

1956

1957

1958

1959

636,360

704,833

833,183

922,056

1,112,809

1,739,062

1,871,250

86,036

107,938

133,614

161,109

170,657

253,219

356,480

377,994

353,914

378,346

427,195

559,740

1,006,932

898,388

464,030

461,852

511,960

588,304

730,397

1,260,151

1,254,868

15,046 13,017 3,555 1,628 5,540 11,627 56,786 12,242

19,923 22,224 5,879 1,945 7,504 25,741 59,050 21,663

27,420 23,478 6,390 4,212 13,335 26,246 93,909 28,821

42,830 28,042 9,527 4,870 7,515 25,922 108,850 24,173

58,530 42,538 14,919 5,781 16,490 45,450 77,577 38,871

78,708 79,790 28,003 9,256 20,044 60,017 31,015 50,448

129,307 118,791 46,155 18,698 19,163 96,068 46,423 71,250

119,441

163,929

223,811

251,729

300,156

357,281

545,855

52,889

79,052

97,412

82,023

82,256

121,630

70,527

(7,276)

(15,026)

11,133

14,155

23,636

34,971

60,229

707

22

2,161

3,900

5,381

1,189

23,785

8,258

2,831

7,602

546

3,880

182

7,379

1,689

(12,173)

20,896

18,601

32,897

36,342

91,393

66,879

118,308 30,315

100,624 1,867

115,153 9,523

157,972 17,643

161,920 9,611

87,993

98,757

105,630

140,329

152,309

54,578 —

54,578

—

66,879

* Source: Annual Reports for 1949-1959, company files, t Note : The final net profit figures shown above reflect adjustments made to the published profit and loss accounts to eliminate amounts charged which represent transfers of profits to general reserves, including reserve» for contingencies and amounts set aside to meet increased replacement values of fixed assets.

248

ENTREPRENEURSHIP IN ARGENTINE CULTURE

a blue chip on the Argentine exchange, it naturally held down the price of the stock. Company officials estimated in 1960 that the common at about 500 was selling for less than half its real value in company assets. In United States language S.I.A.M. was a growth stock. Table 31 shows in condensed form the operating results and Table 32 corporate assets for the years 1949 to 1959. But any translation of these figures into "real" or constant value pesos either in terms of exchange or cost of living would be extremely difficult. Prices rose so fast during some years that monthly accounting would be necessary for an accurate picture. LATER EXPANSION ABROAD

S.I.A.M. continued to export technological know-how to other South American countries. After Di Telia's death Torcuato Sozio took charge of foreign companies. Expansion in the period after 1945 continued to be financed by large investments from Di Telia and later by his widow, substantial sums from S.I.A.M., and lesser amounts from the family, S.I.A.M. executives, and local friends. In this way the Di Telia family retained personal control of these operations. Seeing the possibilities of expansion in Brazil following World War II, Nestor Sozio urged Di Telia either to invest more or to close the plant. But Di Telia himself never reached a final decision. In 1958 Torcuato Sozio organized a new company, Westingbraz, in partnership with Westinghouse and a Brazilian firm. Assets were increased by 2,000,000 in United States dollars, largely supplied by Westinghouse; land was purchased for expansion; modern machinery was added to the facilities, and contracts with foreign companies were signed. In the new plant Westingbraz made laundromats, dryers, domestic refrigerators, and air conditioners, while the old factory

249

W H A T DI TELLA DID NOT LIVE TO SEE

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