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Argentina stayed neutral throughout the war. Didnt see the war as directly affecting its interests. Lots of pro-British sympathy in Argentina. Lots of money could be earned from the war sale of meat and grains as well as other needed items. Staying neutral facilitated that. In fact, Argentina, tilted towards the British and the Allies. Since the United States was also a neutral, there was no conflict between the two countries. Even after the United States entered the war, Argentina tended to be pro-Allies.
United States-Argentine trade expanded during the war. By 1918, Argentina foreign trade had reached $1.263 billion, almost double that of 1914. Argentina loaned some 250 million dollars to the Allies during war. By 1918, the United States was the best market for Argentine goods as well as the leading supplier.
Argentine economy, 1914-1939
Between 1913 and 1929, the value of foreign trade tripled. Argentines were able to buy more foreign-made articles per person than even the United States. Because of shortages of imported goods and petroleum during World War I, domestic and foreign capital developed new industries and petroleum sources. The war brought higher wages for labor and expansion of the school system. Cities grew as people flocked to them for jobs and prosperity encouraged higher survival rates for children.
US-Argentine trade
Total US-Argentine trade peaked at $421 million in 1920. From 1914-1919, Argentina enjoyed a favorable balance of trade. In the 1921-1929 period, total trade volume ran better than two billion dollars but Argentina suffered a trade deficit with the US. The share od US trade with Argentina was increasing while Britains share was decreasing. Reasons included:
The US had begun to understand the Argentine market better. Trade barriers had been reduced.
US citizens had been investing more in the country.
Argentina leaders had repeatedly advocated that US investment. At end of 1920, total US investment was a little more than $40 million which represented an expansion. Some occurred during the war. The1920s saw the first substantial flow of venture capital from the US. Ford Motor Company established assembly plants; RCA bought part of a radio station. Standard Oil. of New Jersey and California came for oil. Others came. By 1924, total industrial investment neared $100 million. During the mid-1920s, US capital went mainly to government securities rather than direct investments. In 1928, however, more went into public utilities. International Telephone and Telegraph Company and American and Foreign Power Company invested nearly $160 million. Direct investments reached $355 million. Only in the case of oil did the US State Department play a hand, encouraging the oil companies to ascertain if the British were interested in expanding in Patagonia. Argentina created the Yacimientos Petroleo Fiscales (YPF) to protect Argentine interests.
Argentine borrowed money from US citizens.
Argentina found it difficult to get loans in London in the first years of the war but needed money for public improvements already under way, so it went to New York for money. Did not want to pay 7% interest, so went to short-term funding. By 1917, J.P. Morgan group and First National City Bank held $80 million in Argentine notes.
Between 1917 and 1920, because of WWI, Argentina became a creditor and paid off its American loans. In 1922 and afterwards, the Argentine national government and some state governments tarted floating bonds, bought in New York, to pay for improvements. The interest was often 7%. By 1929, British creditors held $2.140 billion in Argentine notes whereas the United States held $611,428,570. The Yrigoyen administration (1928-1930) stopped the flow of loans.
Obstacles to the growth of trade included:
(1) Tariffs had been a problem since 1867 as Republicans in the United States had thrown up high tariffs. The1921 and 1922 tariffs hit Argentina hard because they put prohibitive rates on wheat, corn, meat, wool, hides, flax and sugar. Many Argentine exports had been on the free list but now only two were. Argentina protested, of course, but got little relief.
(2) Sanitary embargoes hurt trade as the US put restrictions on imports from areas infected by hoof and mouth disease. Argentina had some infections.
(3) The British had the advantage of being well integrated into the Argentine