Industrial Development in a Frontier Economy: The Industrialization of Argentina, 1890–1930 9781503627239

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INDUSTRIAL DEVELOPMENT IN A FRONTIER ECONOMY

SOCIAL SCIENCE HISTORY

Edited by Stephen Haber and David W. Brady John P. Enyeart, By Laws ofTheir Own Making: Rocky Mountain Workers and American Social Democracy, 1870-1924 Paul W. Drake, Between Tyranny and Anarchy:A History of Democracy in Latin America, 1800-2006 Armando Razo, Social Foundations of Limited Dictatorship: Networks and Private Protection during Mexico's Early Industrialization Stephen Haber, Douglass C. North, and Barry R.Weingast, editors, Political Institutions and Financial Development David W. Brady and Mathew D. McCubbins, Process, Party, and Policy Making: New Advances in the Study of the History of Congress Anne G. Hanley, Native Capital: Financial Institutions and Economic Development in Siio Paulo, Brazil, 1850-1920 Fernando Rocchi, Chimneys in the Desert: Argentina During the Export Boom Years, 1870-1930 ]. G. Manning and Ian Morris, The Ancient Economy: Evidence and Models Daniel Lederman, The Political Economy of Protection William Summerhill, Order Against Progress Samuel Kernell,]ames Madison: The Theory and Practice of Republican Government Francisco Vidal Luna and Herbert S. Klein, Slavery and the Economy of Sao Paulo, 1750-1850 Noel Maurer, The Power and the Money David W. Brady and Mathew D. McCubbins, Party, Process, and Political Change in Congress Jeffrey Bortz and Stephen Haber, The Mexican Economy, 1870-1930 Edward Beatty, Institutions and Investment Jeremy Baskes, Indians, Merchants, and Markets

INDUSTRIAL DEVELOPMENT IN A FRONTIER ECONOMY

The Industrialization ofArgentina,

1890-1930

YOVANNA PINEDA

STANFORD UNIVERSITY PRESS

Stanford, California 2009

Published with the assistance of Saint Michael's College ©2009 by Board ofTrustees of the Leland Stanford Junior University. All rights reserved. Parts of Chapter 5 were originally published in "Manufacturing Profits and Strategies in Argentine Industrial Development, 1904-1930," Business History, Taylor & Francis ©2007. Reprinted with permission. Parts of Chapter 4 were first published as "Sources of Finance and Reputation: Merchant Finance Groups in Argentine Industrialization, 1890-1930," by Yovanna Pineda, from the Latin American Research Review, 41:2, pp. 3-30. Copyright ©2006 by the University ofTexas Press. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press.

Library of Congress Cataloging-in-Publication Data Pineda,Yovanna. Industrial development in a frontier economy : the industrialization of Argentina, 1890-1930 /Yovanna Pineda. p. em.- (Social science history) Includes bibliographical references and index. ISBN 978-0-8047-5983-0 (cloth : alk. paper) 1. Industrialization-Argentina-History. 2. IndustriesArgentina-History. 3. Argentina-Economic conditions19th century. 4. Argentina-Economic conditions-20th century. I. Title. II. Series: Social science history. HC175.P567 2009 338.098209'041-dc22 2008042354 Typeset at Stanford University Press in 10/14.5 Minion

For my parents, Alba & Marco Para mi abuelita, Marfa Mercedes Rivas Sarti (1916-2004)

I I I I I I I I I I I I I I I I I I I I I I I I I I I

CONTENTS

Acknowledgments, xi Abbreviations Used in the Text, xiii 1. Argentine Industrialization: An Introduction

1

Evolution of Argentine Industrial Development, 7. Organization of the Book, 14. The Promise oflndustrialization, 16 2. Manufacturing Productivity and Concentration, 1895-1935

18

Census Data Description, 19. Estimates and Analyses of Labor Productivity, 19. Estimates from the Manuscript Census, 1895,28. A Noncompetitive Industrial Sector, 36

3. Argentina's Investment in Imported Machinery, 1890-1930

40

Data and Methods, 41. Investment Cycles of Machinery, 42. Entrepreneurship, Technology, and Industrial Development, 54 4. Merchant Finance Groups in Argentine Industrialization

60

Data and Methods, 63. Formation of Merchant Finance Groups, 66. Five Leading Finance Groups, 69. Nondominant Groups and Their Sources ofFinance, 77

5. Manufacturing Profits and Strategies, 1904-1930

81

Profits, Business Cycles, and Tariffs, 82. Manufacturing Strategies, 95. Shortcomings of the Manufacturers' Strategies, 105 6. Political Economy oflndustrial Legislation

108

Data, 109. TariffHistory, 1875-1914,110. The Political Economy of theTariffDebate, 112. Rationale and New Support forTariffProtection, 1914-1930,115. Critics ofProtectionism, 123. Shortcomings of Industrial Legislation, 125

127

7. Conclusions

Appendixes A. Potential Bias in the Census Data, 135. B. Census Survey Forms, 137. C. Data and Methods of Argentine Machine Investment, 1890-1930, 140. D. Data and Methods for Profit Calculations, 143

Notes, 147

Bibliography, 189

Index, 205

TABLES AND FIGURES

Tables 1.1 Names of Fifty-Nine Companies and Their Industrial Activities, 1890-1930 2.1 Estimates of Labor Productivity, 1895-1935 (Twelve Activities, Real Pesos) 2.2 Female and Child Workers, 1895-1935 (Twelve Activities)

8 20 '26

2.3 Total Factor Productivity of Manufacturing Firms, 1894

29

2.4 Economies of Scale of Manufacturing Firms, 1894

32

2.5 Indices oflndustrial Concentration, 1894

33

3.1 Argentine Investment in Machinery, 1890-1930 (Real British Pounds, 1913)

44

3.2 Percentage Changes Within Census Years, Estimates of Capital, Labor, and Value Added, 1895, 1914, 1935

49

4.1 Finance Groups and Their Investments and Cmnpanies

64

5.1 Average Annual Rates of Return by Industrial Sector, 1904-1930 (Ten Activities, Fifty-Nine Firms, Nominal Values, Percentages)

83

5.2 Average Annual Returns and Standard Deviation of Profit Rates, Fifty-Nine Firms, 1904-1930 (Organized by Industry and Company)

84

5.3 Company Average Profit Rates and Standard Deviation, 19041930 (Organized by Ownership Group Category):Yield on Capital Stock

86

5.4 Company Average Profit Rate and Standard Deviation, 19041930 (Organized by Ownership Group Category):Yield on Stockholders' Equity

88

5.5 Acquisitions and Mergers, 1888-1927

102

Tables and F(