MISCELLANEOUS

Manufacturing in South America

G. M. L. BROWN AND F. ADAMS IN AMERICAN REVIEW OF REVIEWS March 1 1907
MISCELLANEOUS

Manufacturing in South America

G. M. L. BROWN AND F. ADAMS IN AMERICAN REVIEW OF REVIEWS March 1 1907

Manufacturing in South America

MISCELLANEOUS

Great progress has recently been made in manufacturing throughout South America. A new era of manufacturing has come. Although this era has as yet been scarcely recognized abroad it is slowly Lut surely affecting an industrial transformation throughout the entire continent.

G. M. L. BROWN

F. ADAMS

IT is but a few years since the most deplorable apathy was manifest in this country toward South American trade, and, indeed, toward everything relating to our South American neighbors, even to the maintenance of regular means of communication with them. Intercourse with several of the republics, indeed, was carried on almost entirely through Europe, the London post office attending to the transmission of our mails, and London and Paris hanking houses looking after our scattered collections.

The changed situation today, as the reader is well aware, is due principally to the recent Pan-American conference at Rio Janeiro.

The imports of South America in

the past have corresponded, in a measure, to those of many Oriental countries. The preponderating lower classes demanded the crudest and cheapest articles that Europe could provide. Gaudy cotton textiles, machetes, knives and rude tools, cheap crockery and glassware, trinkets, etc. were the staple articles of trade. Then came luxuries for the increasing urban population, such as pianos, jewelry, sewing machines, and expensive fabrics, etc., and more recently, confectionery and fancy groceries, laces, scientific and surgical instruments, phonographs, bicycles, and automobiles.

Simultaneously, however, there has been a marked development of the natural resources : in agriculture,

creating a large demand for modern implements, fencing wire, coffee and sugar machinery, etc.; in the exportation of meat, necessitating the establishment of refrigerating plants ; and in mining, with the necessary introduction of modern machinery. Transportation facilities have also been extended, and since the railroads, street car lines and steamboats have been built and supplied almost exclusively by foreign contractors, this has led to a large and lucrative trade. Equally progressive have been many of the governments and municipalities, not only in the purchase of warships, artillery, arms, and ammunition, but in the extension of telegraph and telephone lines, the establishment of waterworks, sewerage systems, and electric light plants, which, almost without exception, have been furnished or equipped by European or American manufacturers. Lastly, moreover, there has been a class of imports, small at first, and in many republics still relatively unimportant, but destined in time to cause a complete industrial upheaval, and, incidentally, to reduce almost every other output from northern factories. This includes machinery, stationary engines, electric motors, water turbines, *;tc., and all the necessary supplies for the construction and equipment of manufacturing plants.

Let it not be supposed, however, that manufacturing, in a broad sense, is of such recent date, and that South America has alwTays been wholly dependent upon foreign nations. During the colonial epoch, or at least until the middle of the eighteenth century, it is true, manufacturing even of the simplest articles, such as shoes or candles, was prohibited by Spain throughout her colonies ; but from that period, and especially since

the revolution, crude arts and handicrafts have been practiced, much as in other countries, and few are the towns or villages in Argentina, Peru, or Venezuela, for that matter, which, though bearing no evidence of their inductries in towering chimneys, canboast of their petty" manufactories.

From these primitive village handicrafts to the larger industries of tlje towns and cities, the evolution, though slow, has been as certain as in our own country. Buenos Ayres, even a generation ago, had its flour mills, breweries, distilleries, steam printing establishments, carriage factories, foundries, sawmills, etc., and in 18-87 the Argentine capital showed the remarkable total of 1,244 factories, employing 42,321 hands. Five years later the Argentine Minister of the Interior, reporting upon the new factories that had sprung up in the environs of the capital, drew particular attention to “a shoe factory employing 970 hands and turning out 400,000 pairs of shoes yearly ; a cloth factory employing 200 hands and consuming 400 tons of wool per annum, a paper mill producing 30 tons of paper daily7, and no less than eight match factories.” By way of contrast, refer to our geographies of that time !

This marked development of manufacturing was a direct effect of protective tariffs, which in Argentina, were first imposed in 1S76. Nor were other governments slow to follow her example ; so that to-day few of these countries are without a high tariff, designed, perhaps, as much for revenue as for the encouragement of home manufactures, but constantly revised, as our exporters are already learning to their sorrow, so as to protect any new industries that may arise.

It is impossible to arrive at an ex-

act knowledge of the present trend of industrial development by a mere analysis of imports, since each republic presents many modifying conditions which must be carefully examined before the trade returns of any given year be too la$ge depended upon. Thus Peru shows an increase of 160 per cent, in her total imports in 1904, compared with 1897 ; but in the latter year, it must be remembered, Peru was still suffering from the depression caused by her disastrous war with Chile. Since then she has experienced a gradual tide of prosperity, which, while stimulating the production of native goods, has allowed a much greater indulgence in luxuries, and luxuries, as a rule, still come from abroad. At the same time, moreover, has come the investment of foreign capital in her mines —$25,000,000 from America alone, it is estimated—which, of course, has led to a phenomenal demand for the manufactures of iron and steel. Similar conditions are to be met with in other countries—viz., a sudden wave of prosperity, resulting in a greatly increased consumption of luxuries, or an unusual influx of foreign capital for the construction of railroads, the opening up of mines, and development of the varied natural resources.

But another factor must be taken into consideration, and one that may cause yet greater fluctuations in the trade and industries of the immediate future, and this is the spread of foreign ideas and customs among the peon class, who suddenly, and often en masse, discard some garment or utensil of their forefathers, and demand the latest, if not the best, product of modern loom or factory.

Notwithstanding extraordinary or abnormal conditions, however, a brief review of the trade statistics of cer-

tain of these republics is exceedingly instructive. In Argentina we find that while in 1891 the exports exceeded the imports by $35,000,00’0, approximately, in 1905 this amount had increased to $116,000,000. It is true that the imports increased nearly 200 per cent, during the same period, but the exports increased 212 per cent.; and it is safe to prophesy that the returns for 1906 will show a yet wider divergence.

But one is surprised that the disproportion is not greater. With more than 25,000 establishments, mpioying almost 200,000 workmen, and provided with adequate capital, Argentina even now seems well equipped to utilize her raw materials—that is, so far as home markets are concerned ; exported manufactures being for the moment ignored, Indeed, the importation of such commodities as flour, sugar, beer, butter, and, of course, all meat products, has practically ceased, and of the 20,000,000 liters of alcohol and spirits consumed in 1905, 15,000,000 were distilled m the country. The importation of tabacco products, also, is considerable, and local cigarette factories, with the remarkable annual output of 1.8-6,•■00,000 packages, certainly supply all domestic needs. The extent of that match industry is equally astonishing, the output of wax Hatches (practically the only kind in use in River Plate countries) being 2 6.000,000 boxes per annum. Textiles, on the other hand, form one of the bulwarks of European trade, although Argentina now produces more than one-fourth of the entire output of the world, and can boast of an excellent cotton which is susceptible of cultivation throughout a large northern area. Nevertheless, cloth mills, as we have seen, were long since es-

tablished, and the manufacturing of cotton, though of more recent date, has already assumed sufficient importance to warrant the government’s imposing a substantial duty. Wine and cheese are still imported in large quantities, notwithstanding an enormous domestic production, especially of the former, but this can be attributed in part to the taste of the large Italian population of Buenos Ayres, who prefer the vintages of their far-distant home-land. Foreign manufactures of wood are also increasing, though the local furniture factories and car works are flourishing, and the demand for native lumber extending to the remotest districts.

Brazil has not enjoyed so great a prosperity as Argentina of late, and her imports of luxuries are relatively smaller. Her trade statistics, therefore, are particularly interesting, showing, as they do, how quickly she is learning to depend upon domestic production. Nevertheless, it is necessary to bear in mind that skilled labor is here much scarcer than in Argentina ; so that industries which may yet assume great importance are now in their infancy. On the other hand, Brazil has a growing European population in the south, where the bulk of her manufacturing is centered.

Brazil in learning to manufacture for herself, and looks forward to the not far-distant date when, in times of depression or emergency, she will be a self-contained nation.

The most important industry in Brazil is the manufacture of cotton goods, mostly from her own raw products, and more than 100 mills are already in operation, employing nearly 40,000 hands. Most of these mills are to be found in Bio Janeiro, Sao Paulo and the cities of the south, as

are also the woolen cloth factories, and the jute mills, the product of which is used largely in the manufacture of coflee bags. Sugar refineries, second only to the cotton mills in importance ; cigarette factories, shoe and leather establishments, iron works, silk mills, breweries, furniture factories, and flour mills are distributed among the leading cities and give employment to an increasing army of artisans and laborers.

Chile, of course, on account of her enormous nitrate industry, has less incentive to foster manufacturing than her sister republics, and can boast of a larger free list, probably, than any other country in Latin-America. Not only is she increasing her imports from Europe, but has recently aided in the establishment of a line of steamships to Japan, and looks forward to large imports from that country of textiles and other Oriental manufactures in exchange for minerals, fruits, and raw products. Nevertheless, Chile’s list of domestic industries is considerable and likely to increase.

Of the remaining republics, Peru, as we have seen, is well launched upon a manufacturing career, though the recent internal developments have stimulated imports of building and construction materials. Uruguay and Venezuela are also encouraging home industries, and Ecuador, in September last, passed a law granting so many privileges to native manufacturers that foreign goods in certain lines, with the additional obstacle of a high tariff, will practically be excluded. Venezuela, as the reader is no doubt aware, has gone into manufacturing as a national enterprise, to the dismay of Venezuelans and foreigners alike ; yet much as one may criticize the President for the ruth-

lessness of his policy, it cannot be denied that the new factories, such as the recently established match factory in Caracas, are well equipped to supply the needs of the entire country.

South America has invaluable assets in her natural resources, and in the unlimited latent energy in mountain streams and waterfalls.

Coal, of course, has hitherto been regarded as the chief source of power, and since few accessible deposits have as yet been found, it has commonly been supposed that manufacturing in the southern continent could never be established upon a true economic basis. But the search for coal has not been fruitless, and at least half of the South American countries are operating mines. Chile, with her excellent deposits at Lora, south of Valparaiso, can boast of an annual output of 400,000 tons, part of which finds its way to the factories of the cities and part to the bunkers of passing steamships. Peru shows indications of possessing large deposits, not only of bituminous coal, but of anthracite, as well as of lignite, the commonest coal heretofore discovered in South America. Peru, in fact, is very optimistic regarding the development of her coal regions, which already supply the famous Cerro de Pasco copper mines.

The future of manufacturing in South America, however, is undoubtedly dependent upon the tremendous water power so lavishly distributed by nature. Upon the Andean slopes, in the virgin wilds of the Guianas, and throughout the extensive mountain system of central Brazil exist countless streams whose potentiality will yet minister to the needs of a vast and ever-increasing population. No estimate could be given of the

energies now going to waste upon the eastern escarpments of the Andes. In regions peculiarly adapted to settlers from the manufacturing nations of Europe, and soon to be made accessible by the various waterways connecting either with the Parana to the south, or with the gigantic Amazon to the north, regions incalculably rich in forest and mineral resources, exist ideal sites for the industrial towns and cities that may yet arise.

Among the better known waterfalls of the interior are the cataracts of the upper Orinoco, the falls of the Sao Francisco, the remarkable series of rapids on the Madeira river, and the stupendous cataract of Guayra, between Brazil and Paraguay. But greater than these, and rivaling even Niagara and the Victoria of. Africa, are the Falls of Iguazu, upon the river of the same name, a few miles above its junction with the Paraguay. This magnificent fall, as yet scarcely accessible to the tourist, and almost unknown outside of the La Plata country, is undoubtedly the greatest source of power upon the entire continent, a power that if converted into electrical energy could supply the industries, light and traction of a vast city. The city, of course, has yet to appear, but its advent is assured even though the promising ores of Paraguay should never be developed. But bearing in mind the new electrical process of smelting now successfully introduced into Germany, one can easily imagine the establishment of a great industry in this southern wilderness in iron smelting alone, a tropical Pittsburg, lacking only the smoke and cloudy skies of our northern city.

Such, in brief, are South America’s possible resources in fuel and pover, upon each nation’s use of which, even

as much as upon a protective tariff or the privileges granted by a paternal government, or even upon abundant labor, will depend her economic advancement, her ultimate prosperity and enlightenment.

But will South America be ontent simply to provide for her own w'iiiits; has she no chance of winning % foreign market as well ? In other words, is this industrial evolution to come to an abrupt end ? To this there can be but one answer. Already, indeed, we find an important export trade established in certain manufactured products, especially from River Plate ports.

It must be borne in mind that the initiative in most of the industries enumerated in this article has been taken by the foreigner, who brings with him not only his money and his brain, but his northern energy as well, and is often stimulated to greater activity by the very abundance of the opportunities with which he is surrounded. Nor need he lack

capital if he has ability, experience, and enterprise, for the native, if slow, is by no means lacking in shrewdness ; and even now in the city of Buenos Ayres, and to a lesser degree in other cities, one can find an astonishing amount of capital available if the project be a safe one and the inducements sufficiently liberal.

Of one thing we are assured : With the exception of the precious metals and certain sections of forest, South America holds her vast natural heritage almost intact, whereas the United States, as Mr. James J. Hill so recently warned us, has been as prodigal in her methods as a spendthrift heir, and equally blind to the future. May it not be, therefore, that these southern neighbors are fortunate in their very backwardness, and that a generation hence they may find themselves with unimpaired resources, and a world-market clamorous for the products of their forests and mines and mills ?

Three things of great utility are reading, conversation, and reflection.

By reading, we treat with the dead; by conversation, with the living; by reflection with ourselves.

Reading enriches the memory; conversation polishes the mind, and reflection forms the judgment.

But of these noble employments of the soul, were we to say which we think of the most important, we must confess that reading seems to be the groundwork for the other two; since, without reading, contemplation is fruitless, and conversation dull and insipid.