June T, 1916 LAND & WATER 
South America and the War. 
15 
By Lewis R. Freeman 
[The very remarkable figures showing Great Britain's 
share of South American trade on which Mr. Freeman 
bases his article have only recently been issued and 
are noiv for the first time published in this country.] 
ONE of the most remarkable, as well as one of the 
most encouraging developments of the war — - 
from England's standpoint — has been the manner 
in which British foreign trade has been main- 
tained. That this has been done in spite of an unpre- 
cedented demand on home industries and unparalleled 
ocean freights, and in the face of the decreased buying 
powers of practically all of the overseas markets, only 
accentuates its importance on both scores. That imports 
would be greatly increased by the war, and that exports 
would be greatly restricted, was, of course, a foregone 
conclusion. But, staggering as the figures of the aug- 
mented imports — principally represented by foodstuffs 
and munitions — have been, the fact that Great Britain, 
notwithstanding the handicaps mentioned, has been 
able to bring back her exports almost to pre-war figures 
is even more remarkable. 
British exporters, it now appears, have been able to 
maintain their hold upon practically all of the markets 
of the world that are open to them from the seas, but that 
they have been notably successful in this respect in one 
quarter of the globe, where it is especially desirable 
that such a hold should be maintained, was brought clearly 
to the writer's attention during a study he recently made 
in Washington of some late facts and figures relating 
to Latin American trade placed at his disposal through 
the courtesy of the Pan-American Union.* ' 
The Ideal Market 
The South American continent, as has long been under- 
stood in England and Germany, and, more recently, the 
United States, offers a nearer approach to the theoretical 
ideal of a market for an industrial nation than any other 
of_ the great geographical regions of the world. The 
" ideal market," it is generally agreed, is a country which 
is very rich in natural products, but which, through 
scantiness or inadaptability of its population, is not 
capable of doing much in manufacturing itself. This 
allows an exporting nation to market its manufactures in 
such a country with negligible home competition, and 
to take its pay in the raw products which it must get 
from somewhere in any case. China is not such a market 
because, with unlimited coal and iron and an enormous 
and energetic population, it will become— is rapidly 
becoming, indeed— a great manufacturing nation itself. 
Africa is not an ideal market because the producing, 
and therefore the pxnxhasing, power of its great savage 
or semi-savage populations is too small. Similar, or 
equally potent, objections will be found to apply to all 
of the other great non-industrial regions of the world. 
Only the various countries of South and Central America 
—rich in raw products, but lacking in iron and coal and 
with scant inclination in their peoples toward modern 
industry — hold out the promise of being able to buy as 
much as they sell, of realising the " commercial ideal " of 
" fair exchange " on a broad international basis. 
The South American Republics have probably been 
harder hit by the war than any other group of countries 
outside of Europe. This is due to the fact that the 
commerce and finances of South America were so largely 
dependent upon Europe that any disturbance of con- 
ditions in the latter could not but quickly be reflected 
in the forn)er. South America— being a "non-manufac- 
turing region— a producer of raw materials rather than 
elaborated commodities — has been able to buy only 
about so much as it could sell. This is shown by the 
fact that, at the beginning of the war, that continent's 
• This organisation, it may be in order to explain, is maintained 
by the twenty-one American Republics for the development of good 
understanding, friendly intercourse, commerce and peace among 
tliem. It is pro-North and South American rather than anti-European, 
and its headquarters in Washington is the only place in the world 
\\hcre one may studj- Latin .American problems free from bias,, 
exports and imports very nearly balanced each other 
at something like two hundred million pounds each. 
It followed naturally, therefore, that as soon as Europe 
became unable or unwilling to buy South American 
products, this acted automatically to restrict that con- 
tinent's ability to buy those of Europe. It was this 
sudden contraction of South America's principal markets 
as well as the drying up of what had been its principal 
financial sotirces, that operated to cut down the trade of 
the various republics from ten to thirty per cent, during 
1914-15, and to make some form or other of moratorium 
necessary in every one of them. 
In the trade of South America up to the time of the 
war, as in that of the rest of the world, Great Britain had 
a very considerable lead, with Germany second, and the 
United States a very close third. Eor several years 
the relative shares of the two latter countries were in- 
creasing more rapidly than that of the former, though 
Britain's actual lead was fairly well maintained. With 
the closing of the seas to Germany, the trade of that 
country quickly became an almost negligible quantity, 
and, especially in the first months of the war, that of 
Great Britain was greatly cut down. 
Unfulfilled Anticipations 
Immediately after tlie outbreak of the war the general 
feeling in commercial circles on both sides of the Atlantic, 
was that the United States would at once succeed to the 
South American trade of Germany, and to such of that of 
England, France and the other European nations as these 
would be compelled to relinquish. That this very 
natural expectation has been fulfilled only to a small 
degree is due to a number of causes, the most important 
one of which is doubtless the fact that the huge war 
demands of the belligerents have left the American 
factories little opportunity to turn their attention to 
more remote and — for the time being — less profitable 
markets. Shortage of ships and Sovith America's decreased 
buying power hav.e operated to the same end. 
Nor was the United States, as it transpired, to have 
anything like the anticipated monopoly in foreign markets. 
Englancl's industrial vitality had not been sufficiently 
reckoned with. Once the sea lanes were cleared of Ger- 
man raiders and industry at home got its second wind, 
Britain began to make good in commerce the " bull- 
dog's " dictum she has so often made good territorially, 
and " What we have we'll hold " may well have been the 
war motto of British exporters in their plucky up-hill 
fight to keep their hard-won foreign markets. How well 
they have succeeded nothing could show better than the 
mounting figures of British exports during the last 
eighteen months. 
How remarkable is Britain's achievement in so nearly 
keeping its export trade up to pre-war figures may be 
best appreciated from the fact that, in spite of the great 
industrial mobilisation in the United States, the trade of 
that country with all of the world outside of Europe does 
not show a dollar of increase for the year 1915 as com- 
pared with 1914. Roughly speaking, the total value oi 
the exports of the United States for 1915 were, two 
hundred milhon pounds greater than for 1914. Since 
this figure is almost exactly equal to the value of the 
increase of exports to Europe for the same period, it will 
be seen that America's trade with the rest of the world 
has no more than held stationary in spite of the elimina- 
tion of the competition of Germany, Austria and Belgium, 
and the unprecedented war demands upon the industries 
of Great Britain, France and Italy. 
The trade and finances of the Latin American countries 
have been adversely affected by the war in direct pro- 
portion to their previous dependence upon Europe. 
Those least affected have been the ones having the closest 
trade relations with the United States. 
Argentina, Brazil and Chile are the most advanced 
commercially, as well as politically, of the South American 
repubhcs, and by far the greater part of the foreign trade 
of that continent is in their hands. Argentina was 
