Argentina’s Political and Economic History: 1922-1943
Presidency of Marcelo T. Alvear (1922-1928)
In the presidential elections of 1922, Yrigoyen allowed Alvear as a candidate as a political alternative, due to differences that arose within his party, and as a possibility for Yrigoyen himself to influence the new government. However, Alvear was supported by a group of conservatives and was chosen as head of the “Antipersonalists.”
From one of the richest and most traditional families in our country, Alvear (grandson of Carlos de Alvear, Supreme Director of the Río de la Plata, and son of Torcuato de Alvear, first mayor of the city of Buenos Aires) was not, logically, the image of middle-class radicalism, but rather represented the right wing of the UCR. The election was won by the radical formula of Marcelo T. Alvear and Elpidio González (true to Yrigoyen), who managed to bring the control of “Antipersonalists, although he allowed himself a warm influence “personalist” through the vice president. However, during Alvear’s government, there was exemplary administrative management and some general well-being.
The reforms introduced by Yrigoyen were delayed or rescinded; thus, the protection of the working class continued anyway.
In the economic order of the nation, and as a direct consequence of the new configuration of the world map, a product of the Great War, came the increase in U.S. investments in the country, to the detriment of the influence that Britain had always wielded.
Politically, the differences within the Radical Party sharpened, which led in 1924 to the open division and the formation of the Antipersonalist Radical Party.
In the elections for deputies of 1926, “Alvear” was presented independently but had no success.
Argentina in the Early 1920s
Between 1921 and late 1923, industrialized countries (Western Europe and the USA) experienced a crisis that economists call “conversion,” which affected Argentina’s economy under the lower prices paid for our meat and crops and the reduction in export volumes. However, after this period, starting in 1924, a time of significant development began for Argentina, which would last until 1929, and was caused by:
- The high prices of agricultural products.
- The great demand for them on the world market.
In general, the government’s economic plan was similar to the radicals’ and conservative governments’ plans: exports of primary goods and imports of manufactured goods, except that under President Yrigoyen, this rule was modified somewhat by the Great War.
In the 1920s, Argentina increased the number of hectares under cultivation and livestock. The total cultivated area, which was 17,519,635 ha in 1914, amounted to 26,161,652 ha in 1929-30, registering the largest increase in cereal crops. At the same time, highs were achieved in the export of meat.
It can be said that between 1924 and 1929, the production and export of agricultural products reached their maximum splendor, accompanied by prices that would never again be repeated. In those five years, Argentina supplied 66% of world corn exports, 72% of flax, 20% of wheat, and over 50% of the meat.
In this decade, there was a noticeable change in the international trade of our country, in regard to the source of imports: the U.S., which had emerged as a major world power after the war, became the main supplier of manufactured goods, displacing Britain. However, Britain remained the main buyer of commodities. In summary, Argentina’s economy had, in those years, a solidity and integration in the framework of the international division of labor never seen before or after that date.
Alvear and Military Power
President Alvear managed to bring about a policy of understanding and help with the military. Some officers who shared an old friendship with the president were responsible for strengthening the dialogue between the political and military power. Alvear led to an increased military budget, which allowed the armed forces to renew their power, both with the purchase of equipment abroad and domestic production. In Mar del Plata, a submarine colony was installed, and in Córdoba, Argentina completed the first factory for the manufacture of aircraft. In addition, with strict administrative adherence to the Constitution, which aired on a permanent internal social peace, the army was devoted exclusively to their duties and did not intervene in political matters, as would happen later.
Alvear’s Succession
Towards the end of his mandate, the Radical Party had definitely divided into opposing groups. Most of the mass party remained true to Hipólito Yrigoyen, in whom they recognized the born Chief of the UCR and the inspiration for political action. For this reason, the “Antipersonalist” minority of Alvear joined the conservative sector in the 1928 elections, and together they presented the formula of Leopoldo Melo and Vicente Gallo. In contrast, the “Personalists” again proposed the candidacy of Hipólito Yrigoyen, who finally triumphed over their opponents.
Second Presidency of Hipólito Yrigoyen (1928-1930)
On October 12, 1928, Yrigoyen took the constitutional oath for a second time. He came back to the presidency of the nation, although the circumstances were not the same as in 1916, nor was the radical leader the same age and ability to adapt to them. His health was somewhat shaken by his old age; his party was divided, and above all, the global crisis was hinted at with evidence. Nevertheless, the president tried to maintain the basic principles outlined in his first government, in particular, the total nationalization of oil to the detriment of American and British companies. However, this quickly became unhappy when Argentina began to suffer the consequences of the global economic crisis. The opposition seized on the circumstances and developed a political campaign to discredit the president, accusing him of neglecting the public, creating and distributing new, well-paying jobs—most nonexistent—and delaying the solution of immediate problems.
His colleagues were accused of keeping the president away and deceiving him about the political and economic realities of the country, including the secretaries. It was reported that he delivered apocryphal newspapers to Yrigoyen, using the president’s age, where false reports made him believe that Argentina was undergoing a period of prosperity and tranquility.
The Global Crisis of 1929
In 1929, there was an international crisis that hit financial schemes, financial records, and businesses. The drop in world production increased unemployment and therefore decreased the consumption capacity of the population in general. Industrialized countries had to restrict their imports of raw materials and agricultural products. While the crisis was worldwide, not all countries shared the same causes. In the U.S., the crisis was due to the expiry of a period of capitalism that had concentrated money in fewer hands, resulting in a decrease in the purchasing power of the mass of the population. In countries like Argentina, with a dependent economy, the crisis had different causes. First, because many nations began to withdraw their capital they had invested in our country to devote to other economic and financial options. Second, they stopped buying our agricultural products, significantly reducing our exports.
Impact of the Global Crisis in Argentina
The crisis situation that developed at the international level coincided with the second presidency of Yrigoyen and therefore made it difficult to carry out the party platform. The impact of the crisis on society was manifested in continuous strikes and unrest that affected workers and continually raised the industry and agriculture. Argentina was still closely linked to Europe through agricultural exports. Our country felt the impact through a three-conductor system:
- Reduction in physical volumes of exports.
- Reduction in the prices obtained by them in the world market.
- Interruption of the flow of new investments from abroad.
In addition, there was a sharp decline in export value and the robes of filings of foreign capital. The existing socio-economic spectrum during Yrigoyen’s second presidency was disturbing:
- The economy was affected by a serious shortfall in resources because of declining exports and declines in gold reserves.
- A production crisis, leading to social unrest.
- Unemployment of rural workers, which led large groups of people to try their luck in the cities, adding further downward pressure on urban wages, derived from the same crisis.
- A financial crisis in the area of national government.
- A contraction in labor demand.
Thus, discontent grew, causing political unrest. Tensions rose, and the government did not hesitate to suppress workers. At this point, the government of Yrigoyen and his party were wearing thin and decreasing the margin to give solutions to the serious problems facing the country. Moreover, within the National Congress, anti-Yrigoyenist sectors were gaining strength and continually hindering government action.
There were acts of opposition politicians and a proliferation of meetings and conspiracies with impunity. Yrigoyen was accused of arbitrarily intervening in provincial matters and failing to manage the effects of the global crisis.
By then, the international policy framework called attention to two events: the increasing development of the dictatorship of the proletariat in the Soviet Union, with communism spreading in several countries, and Mussolini’s Italian fascist revolution, which profoundly moved democratic governments in Europe by opening a fluctuation between these two alternatives.
The Revolution of 1930
Everything seemed complicated for Yrigoyen; he had even taken some measures affecting the organization of the army with the withdrawal and removal of many of its members, causing a clash between groups. There were factions that agreed with their attitudes, and those who openly demonstrated anti-Yrigoyenist sentiment. This discomfort in the armed forces created a climate conducive to a coup.
Two positions then manifested: one led by Augustine P. Justo and one that responded to General José Félix Uriburu, which ultimately prevailed.
In such circumstances, a group of civilians and the military organized a movement to oust President Yrigoyen.
On September 6, 1930, an uprising broke out that would inaugurate a long history of coups and the suspension of constitutional order.
General José Félix Uriburu, who commanded the troops of the Military College, the 1st Cavalry Regiment, and other forces, advanced toward the Government House almost without resistance. Yrigoyen, who had been warned in advance, had left home and went to La Plata, delegating control to Vice President Martínez. Without more to do, he submitted his resignation, written in the Government Palace in the province, to the military commander of the 7th Infantry Regiment.
Uriburu, as revolutionary leader, was sworn in as President of the Interim Government two days later.
Thus, almost without firing a single shot, the civil-military revolution overthrew the most popular president until then and undermined the democratic system in Argentina.
The Conservative Restoration, 1930-1943
Uriburu (1930-1932), Justo (1932-1938), Ortiz (1938-1940), Castillo (1940-1943)
On September 6, 1930, General José Félix Uriburu took over as interim president, and on February 20, 1932, he transferred the command to General P. Justo, who had been elected, along with Dr. Julio A. Roca, in November of the previous year.
Intervention and Economic Closure
The depression that started in 1928 and continued until 1932 hit hard the economies of the open world.
Great Britain took refuge in protectionism and formed an “area” of the pound, defended by the first exchange controls and inconvertible currency later. Only timidly did it venture in new directions in mid-1933 with the appointment of Pinedo as Minister of Finance, who, collaborating with Raúl Prebisch, advanced a more innovative path, delineating two trends that would last long: the increasing intervention of the state and the gradual closure of the economy. Also, another, less durable but more important in the immediate term: the strengthening of the relationship with Britain.
Also, in 1931, the establishment of exchange controls by the government centralized the buying and selling of currencies. Progress on financial control in 1935 created the Central Bank, whose main function was to regulate the cyclical fluctuations of the money while avoiding both excessive slack and shortages, as well as to control private banks, especially in handling claims. To mitigate the effects of cyclical downturns and defend local products, they began to regulate the marketing of agricultural production.
The state was assuming major roles in economic activity, rising from the ordinary rules of the crisis to the definition of an ever-larger playing field. The most important had to do with the industry, whose production began to grow in the context of the crisis and continued to do so after the recovery of the second half of the decade. With the prosperity of the previous decade, the country had become an important consumer market. The increasingly closed economy, tariffs, and foreign exchange shortages created conditions for replacing imported goods produced locally, especially if the production did not require a complex febrile installation or if there was an industrial base that could be used more intensely.
The old dynamic of the owner sectors, diversification into other activities without being tied to a final substitution industrialization, found a new field, which was later completed by real estate investment. Moreover, with the combination of a closed market and a few large companies for each branch or activity, the pressure for greater efficiency and lower costs became less relevant. Livestock continued to fall on agriculture as in the previous decade. Agricultural production did not decline, despite the collapse of fixed prices, although the situation of producers significantly deteriorated, especially the smaller ones, and the conditions of the rural exodus were outlined, visible after the start of the Second World War. Across the Northeast, the occupation of new lands extended, begun a decade earlier, and constituted a large segment of small independent producers of a commercial sector and a very concentrated manufacturing sector. Here, too, the state intervened to regulate marketing.
The British Presence
Pressured by the advancing U.S. and in the context of the crisis unleashed in 1930, Britain decided to refocus on its empire to strengthen its links with the colonies and dominions and limit the U.S. presence. At the same time, in a global context of financial constraints, it intended to defend its old markets and save its income from loans or older ones. In 1932, the imperial conference in Ottawa tipped the scales towards members of the Commonwealth, who had a preference for British imports. Among other measures, it was decided to reduce one-third of purchases of frozen meat from Argentina that could be replaced with that from Australia and 10% of chilled meat, taking this as a basis for procurement of 1932, already very low. It was extremely sensitive for Argentina, perhaps not for its intrinsic importance, but for the magnitude of the interests formed around the export of meat. Producers, refrigerators, and shipping companies were able to put strong pressure on the government.
While the Argentine government also had a decisive weapon: tariff policy and exchange controls, allowing it to discriminate against imports and regulate the amount of currency that would be used to pay British debt service, buy British goods, or forward the profits of British companies established in Argentina. In the context of foreign exchange shortages and strong demand for American business interests, this point became very important for Britain. In 1933, a mission led by Julio A. Roca in London negotiated the conditions for the maintenance of Argentina’s share of the meat. The government’s credibility was vital among various sectors linked to livestock, but it had limited success: the continuance of the conditions of 1932, and any further reductions would be consulted as necessary.
It did not do much in its second objective: to increase the participation of local producers in export control in order to negotiate better terms with the cold. Britain said that all of the pounds generated by this trade would be used in Britain itself: in debt, imports of coal, rail or textile material, for which preferential tariff treatment was provided, and remittance of profits of British companies. Benevolent treatment aimed to revive struggling British companies: the railway and urban transport. The railways were constrained by high fixed costs in a general decline in activity and increasing competition from road transport.
Frustrated Popular Front
In 1935, construction workers in Buenos Aires, led by Communist leaders, began a strike that lasted more than 90 days. In the neighborhoods of the city, wide solidarity was expressed, and in January, the CGT held a general strike in two days—the only one of the decade—after which the strikers were satisfied with a substantial portion of their claims. The balance was perhaps the most important constitution of the National Workers Federation building, one of the largest and most militant unions in the country. In 1936, there were as many strikes as in 1935 and 1937, probably coinciding with the economic recovery. The government’s reaction was also directed to the new militant trade unionism: private law was applied in 1937 against the main leaders of the construction, Italian Communists deported to Fascist Italy. A statement of the right was the one who alerted the resurgence of the blind and the dark mass democracy moves in 1930 and justified the patriotic fraud since the government used it systematically for governing parties.
In the field of opponents of the government, a very important change was the position of the Communist Party. With the slogan of “struggle of class against class,” the Communists were fighting fascists and Nazis alike, and they stigmatized social democratic parties as the most dangerous enemies of the proletariat. However, since 1935, they launched a drive to promote “democratic sectors” to confront fascism, sacrificing the slogans and practices that might irritate or frighten the progressive and democratic groups of the bourgeoisie. Recognizing the importance of the rule and making it its main interlocutor was also a very strong tendency among union leaders. This trend was criticized from the opposition political parties, which began to give priority to the claims of democracy and political confrontation with the government and pressured to align it with the unions.
The War and the Home Front
The progressive development of European markets, led by the Germans, drastically reduced agricultural exports but instead greatly increased meat sales to Britain, both chilled and frozen. Imports decreased, as did British imports. Moreover, taking advantage of the difficulties in all international trade and a sort of “power vacuum,” they began to export to neighboring countries industrial products such as textiles, clothing, food and beverages, footwear, and chemicals. This emphasized industrial growth started with the substitution of imports, and the country began to have favorable trade balances, including with the United States. The proposed Economic Recovery Plan for output to the difficulties created by the war, insisting on crops by the state to sustain its price, and building public and private, can mobilize many activities. Above all, it stressed the importance of encouraging foreign trade, which was still the “master wheel” of the economy. These other activities, “smaller wheels,” would contribute to the overall balance. It warned of the problem of an economy excessively closed in on itself and intended to stimulate the “natural” industries, which developed local raw materials and could export to neighboring countries and the United States. In the long run, Argentina would have to solve a trade deficit with the North American country, which would no doubt become more burdensome as the industrial sector grew and the demand for machine parts or fuel increased.
The bill passed the Senate with a majority ruling, but the House of Representatives did not treat it. Their failure was political rather than economic. Since 1932, Roosevelt’s United States shifted its foreign policy relationship with the rest of the American countries, trying to reach a common agreement but elevated to the dominance of the continent. Bilateral trade between the U.S. and Argentina was fruitless due to agricultural protectionism in both countries.
In June 1940, Argentina dedicated action to denounce the Nazi activities in the country and the interference of the German Embassy. It was attended by radicals, socialists, many independent scholars, and many conspicuous members of the conservative oligarchy. It created the General Directorate of Military and Geographic Institute, thus promoting the advancement of the armed forces on grounds broader than the specifics. The presence of the military was increasingly visible. The Armed Forces were quickly becoming a new political actor. A central element of the new military profile was the development of a nationalist consciousness. The ground had been prepared by Uriburu’s nationalism, spread by a small but active group within and outside the institution. This was a traditional nationalism: anti-liberal, xenophobic, and hierarchical.
It was also important the role of government in a society that would surely be harassed in the acute postwar conflicts: the reconstitution of the popular front, the red flags in rallies of workers, and the presence on the streets of the Communist Party seemed ominous signs of that future and was required to confront social order and peace. Nationalism finally manifested in the intellectual, who pointed out that the dismal future that awaited the nation was in part because of certain facilities and spiritual renunciation of the upper class or bourgeois contempt for the “mestizo” society by all, resulting in turn from the culture of European immigrants unable to understand the true value of the nation.
On June 4, 1943, the army overthrew the president and interrupted a second time the constitutional order, even before the agenda of the coup and even the very figure who would lead had been defined.