What was the most important export from the united states by the mid-nineteenth century?

Until recently there was little literature on Latin American terms of trade for individual countries during the first decades after independence, and even less on the impact of early globalization on them. However, as is highlighted by Bértola and Williamson,11 Prebisch's and Singer's works published during the early 1950s had long led scholars to believe that the collapse of primary product prices (in particular in relation to manufactures) witnessed during the 1929 Great Depression was a downward secular trend which originated after independence. In turn, this continuous and persistent deterioration of the terms of trade (what has come to be known as the Prebisch–Singer hypothesis) was seen by many as a key element limiting the development of the region, given that most countries specialized in the production and export of a handful of primary products, although this debate remains open.12 Yet, the idea of a deterioration of the region's terms of trade during the 1810–1850s has been recently refuted by many authors. For example, for Bulmer-Thomas, export growth after independence ‘appears to have been accompanied by a secular improvement in the net barter terms of trade’ (Bulmer Thomas, 2003, pp. 37-38 and 78-79), although he provides evidence for Brazil only. Williamson also claimed that ‘the secular price boom was huge in the poor periphery: between the half-decades 1796–1800 and 1856–1860, the terms of trade increased by almost two and a half times’, although for Latin America in particular the ‘boom up to 1860 was much more modest … [and] there was very little change at all in the Latin American terms of trade between about 1830 and 1870’.13 In the cases of Chile and Argentina, Prados de la Escosura reached two similar conclusions. First, that in relation to the net barter terms of trade between the new republics and the rest of the world from independence and until the mid-nineteenth century, for Chile ‘stability was the rule’, and that ‘Argentina's terms of trade showed an improvement that peaked in the late 1850s’ (Prados de la Escosura, 2009, p. 289). Second, that the purchasing power of per capita exports increased significantly for Chile and Argentina c. 1830–1850.14

These conclusions are further supported by my new data on Anglo-Southern Cone trade, which even provide a more positive account of the Southern Cone's terms of trade with Britain. The prices of the main Southern Cone products imported by Britain during the first half of the nineteenth century (i.e. Chilean copper and hides from the River Plate)15 remained relatively stable during c. 1815–1840 and subsequently fell at a much slower rate than Britain's export prices for textiles (when textiles were the main British export to the Southern Cone), as can be seen in Fig. 2. That is, there was no major volatility in the prices of the main export products of the new republics. At the same time, British textile export prices declined sharply during this period. Export prices for cottons fell to such an extent that in the 1850s cottons fetched a quarter of the value at which they had been sold in the late 1810s. Prices for plain linens fell by nearly 50% over a comparable period. Likewise, prices for wool manufactures mixed with cotton (the most important wool manufacture exported to the Southern Cone) also fell dramatically, as seen in Fig. 3.As a consequence of the developments portrayed in Figs. 2 and 3, relatively speaking, the prices of the principal Southern Cone commodities increased substantially compared to British textiles during most of the period between 1815 and 1856. This suggests that the terms of trade improved significantly for Chilean and River Plate native merchants, as well as for most of Latin America, as was previously found by Newland, Williamson and other scholars in relation to Argentina (Newland, 1998, Table 2; Newland & Poulson, 1998, p. 327; Salvatore & Newland, 2003, p. 20; Bértola & Williamson, 2006, p. 34), Latin America,16 and more generally with regard to most of the primary-product-producing periphery (Williamson, 2008, p. 356). This was already a known development,17 although no precise numbers existed for bilateral trades between Britain and the Southern Cone during this period.

Fig. 4 illustrates accurately the point being made for our specific case study in a very simple way.18 In 1836, the relative prices of both Chilean copper and River Plate hides to British printed cottons (the main British staple) had improved around 200% if compared to the prices of 1815 and, by the mid-1850s, by over 400% if compared to the prices at the end of the Napoleonic Wars, although it is true that the latest growth was a short-term phenomenon. In any case, between the mid-1830s and the mid-1850s, native merchants in the Southern Cone offering copper and hides in the market exchanged their local produce for two to four times more yards of British printed cottons than they would have received at the comparable prices of the late 1810s. Yet, as was previously highlighted by Salvatore and Newland, during the 1840s, because of a drastic decline in the export prices of hides, there was a temporary deterioration of the terms of trade for Argentina.19

Although not related to the main focus of this article, it would be pertinent to mention that there is an interesting debate led by Williamson on whether or not the improvement of the terms of trade observed for underdeveloped countries could have impaired their chances of industrialisation during the period dealt with in this essay. According to Williamson, the improvement of the terms of trade experienced by the periphery before 1850 fostered de-industrialisation, to the extent that it must have contributed significantly to the Great Divergence (Williamson, 2008, pp. 357-358). This is not the place to solve this debate, but Williamson's thesis does not seem to fit Chile's experience. Indeed, copper smelting (i.e. an industrial activity, albeit unsophisticated) became important after the 1830s, when reverberatory furnaces and other techniques were widely introduced in the country. Overall, the national smelting industry was consolidated by the middle of the century. During 1844–49, bars accounted for 60% of the Chilean copper production. Around this time Chile's smelting capacity was second only to that of Britain (Valenzuela, 1992, p. 509).

The sole improvement in the terms of trade between the Southern Cone and Britain suggests, ceteris paribus, that the volume of Southern Cone's per capita imports of British manufactures should have increased during this period. Furthermore, Prados de la Escosura collected evidence of the Southern Cone's per capita exports growth during the first half of the nineteenth century. In addition, Prados de la Escosura concluded that Chilean per capita GDP increased importantly, in particular after 1830, and ‘available economic indicators suggest fast growth in the Buenos Aires region … [which was] translated into an improvement in Argentina's per capita income’ too (Prados de la Escosura, 2009, p. 299). Based on all these conclusions you would expect an important increase in the Southern Cone's national consumption, including the consumption of British manufactures. However, economic historians have said nothing about the Southern Cone's per capita imports of manufactures during the first half of the nineteenth century. This is not surprising: Latin American imports have for long remained an unexplored topic.20

Yet, my new evidence shows that British exports to the Southern Cone grew at very high rates, especially if volumes are considered. As a consequence of this, the population of the Southern Cone managed significantly to increase the per capita consumption of textiles (Table 3), at a time when clothing was a staple item of Latin American household budgets and the main manufacture imported by the region. In per capita terms, during the 1840s, the River Plate provinces and Chile consumed seven times more yards of British cottons and linens than in the late 1810s and nearly four times more yards of British wool manufactures. Indeed, up to the late 1850s there was a massive expansion of the per capita consumption of British textiles (Fig. 5).

No stagnated economy behaves this way, and this positive consumer behaviour does not belong to inhabitants of a region showing an ‘abysmal’ economic performance, as many previously believed.21 On the contrary, this increase in the consumption of British textiles is in line with the idea of a growing per capita GDP in the region, already highlighted by Prados de la Escosura and others with him. Finally, if imports from Britain grew so did the Southern Cone's exports to Britain (or elsewhere) which paid for these imports, though this needs to be proven too. As far as Chile is concerned, after independence exports of silver increased significantly, especially from the 1830s. During the 1820s Chile was (legally) exporting some £200,000–£250,000 annually to the world in gold and silver (much of which went to Britain), but by the mid-nineteenth century this figure had increased to over £0.5m per annum (an amount excluding contraband and legal re-exports) (Llorca-Jaña, 2012, Chapter 6). Regarding Britain in particular, by the mid-1840s Chile was already sending over £0.45m in gold and silver per annum. Likewise, Chilean copper production and exports were also on the increase from the early nineteenth century until the 1870s.

Fig. 6 shows this development until 1859: Chilean copper exports (in volume) had increased roughly nine fold between independence and 1859, and much of the copper ended up in Britain. Indeed, during the 1830–1850s, Chile and Cuba were the main suppliers of copper for the British market, as shown in Table 4. During the 1850s in particular Chile was well ahead of all other copper suppliers for the British market. These products (i.e. copper and silver) were, in turn, the main pillars upon which the Chilean economy rested during the first half of the century: Chile had been favoured in the commodity lottery raffle (at least for a while).

Likewise, with regard to Argentina, exports of hides, jerked beef and tallow also increased after the 1810s to such an extent that it is estimated that Argentina's total exports of produce to the world grew at the staggering rate of 4–5% per annum for the period 1810–1850 (Salvatore & Newland, 2003, pp. 21-22; Bulmer Thomas, 2003, pp. 35-36). For hides in particular (the star River Plate product during the period dealt with in this paper), a recent work has shown that adding together Buenos Aires and Montevideo, hides exported from the River Plate to the world amounted to about 1 million units during 1817–1841 and to over two million during 1842–1860.22 For the British market in particular, data on import volumes shows that the River Plate was the main supplier of untanned hides to Britain during our period of study and that Britain was taking increasing volumes of this product (Fig. 7). Indeed, soon after independence, River Plate hides found a ready market in Britain in sufficient volumes to pay for most British imports. In the words of Parish, the first British consul in the area: ‘Buenos Ayres possesses in her hides, a vast and increasing means of returns for all the commodities the population of these provinces are likely to want from Europe’.23

Overall, the significant Southern Cone's increase in consumption of British textiles is certainly in line with Prados de la Escosura's findings that the Southern Cone's per capita exports grew and that the ratio exports/GDP increased for both Chile and Argentina between 1830 and 1850 (Prados de la Escosura, 2009, p. 294). That is, globalization does not seem to have been harmful to the Southern Cone: rather the opposite, at least as far as both its consumption of British manufactures and its export performance are concerned.

Not only was the population of the new republics able to buy more clothing with less of their own produce, but the republics’ foreign trade also benefited from having access to a new marine insurance market introduced by British and other European merchants. The role of the insurance industry in promoting Latin American imports and exports during the first half of the nineteenth century has been radically underestimated by the historiography, despite recent advances in our knowledge of this subject (Llorca-Jaña, 2010, 2011c). This is not surprising; after all international insurance history is an emerging field (Pearson, 2010, pp. 21-23).

What is clear, though, is that in the 1810s, when independence was gained, there was no national marine insurance market in the Southern Cone. The marine insurances behind most of the Southern Cone's imports and exports were affected in Britain, even for trades that never touched on British ports.24 Without the London insurance market the risks associated with foreign trade in the Southern Cone would have been much higher and undoubtedly the volume of trade would have been much lower. That is, the arrival of British (and other foreign) merchants in the Southern Cone, and with them their insurance facilities, could have only further promoted the region's foreign trade. The Southern Cone's new access to the well-developed London insurance markets is a clear consequence of the increasing worldwide interconnectedness developing after the 1810s, and its impact cannot be described as anything but positive for the new republics’ external trades. It was only in 1853, for example, that the first national insurance company was set up in Chile, and even that company resorted to the crucial support of British merchants for its creation. Likewise, in Argentina, the first national company after independence was launched as late as 1860.25

The new republics also gained important benefits from the massive improvements in transport and communications introduced by the British. The unimportant merchant fleets of the new republics could not possibly have coped with the increasing volumes of trade that followed after independence. It was thanks to the British and other countries’ merchant fleets that the bulk of the Southern Cone's exports left the region and imports arrived. In turn, these foreign merchant fleets introduced several improvements during early nineteenth-century globalization. For example, the British introduced iron into shipbuilding, which became very important from the 1840s onwards in promoting the Southern Cone's foreign trade.

Iron made hulls stronger which, for the vessels facing Cape Horn and the pampero winds off the River Plate, was extremely important for the protection of the merchandise being freighted. Iron was better than wood for resisting strain, tension and compression. Iron vessels had no equal in resisting bad weather and the regular action of waves. Because of this, iron vessels sprung fewer leaks and, therefore, fewer ‘particular averages’.26 They were also safer, more durable, cheaper to build and cheaper to repair. More importantly, iron allowed the building of bigger ships, and it is well known that larger vessels were cheaper to crew27 and, better still, also faster. All in all, sailing times were reduced by up to 50% between the 1810s and the late 1850s for trade between Chile and the United Kingdom (Llorca-Jaña, 2012, Chapter 7). Finally, the British also introduced better packing so as to protect their exports to distant markets such as the Southern Cone, which combined with more secure vessels lowered the costs of marine insurance (Fig. 8) by reducing the risks associated with exporting to Chile or the River Plate.28 This, again, was beneficial to the new republics since the cost of importing British manufactures further declined, as did the costs of exporting.

Likewise, as far as foreign trade is concerned, intelligence from the Southern Cone was conveyed in European means of transport. In turn, Europeans (mainly British) introduced several innovations in this area. The reduction in sailing times commented on above was not only due to bigger vessels, but also to advances in cartography, a better knowledge of winds, and a better use of oceanic currents. More importantly, European mail-packets connecting Europe with the Southern Cone were responsible for the establishment of a more efficient means of channelling information, people and express freights. This was all part of a major world postal development led by the British. Before the late 1830s, communications between the United Kingdom and the Southern Cone relied on letters carried by merchant sailing vessels, very often following indirect routes of communication. As a consequence, delivery times varied from 80 to 180 days; a postal embarrassment by later standards. If a Briton at Valparaiso wanted to send a letter to Liverpool, he was forced to rely on the services of merchant vessels. Steam mail packets changed all this.

Particularly important for our markets was the chartering of the Royal Mail Steam Packet Company (RMSPC) and the Pacific Steam Navigation Company (PSNC) in 1839 and 1840, respectively. The RMSPC first offered its services in 1842, covering the routes from the United Kingdom to the Caribbean ports, while the PSNC operated in the south Pacific. In 1846, the RMSPC extended its services to Panama, connecting at that point with the PSNC. At this moment, Chile became entirely ‘steam connected’ with the United Kingdom. Yet, the River Plate still depended on two sailing packets, one for the route United Kingdom–Rio de Janeiro and the other connecting Rio with the River Plate. So bad was communication under this system that letters sent from the River Plate to England waited on average for over 10 days in Rio before being despatched to Falmouth. In 1851, the RMSPC extended its services to the River Plate and, therefore, Britain and Buenos Aires became directly steam connected.

Furthermore, in 1855, when the railway across the Panama isthmus was completed, communications between Chile and the United Kingdom became even more rapid. Following these developments, postal delivery times were greatly reduced. For communications between Britain and the River Plate, during the 1810s and 1820s, as many as 80–120 days were usually taken to deliver a letter. In the 1830s, the average passage was 75–85 days, though direct-sailing vessels could undertake it in 65–75 days. With the extension of the RMSPC in the early 1850s, Britain was just 35–40 days away from the River Plate. For Chile, during the 1810s–1830s, the sailing passage usually took 120–180 days. The links between the PSNC and the RMSPC reduced postal times between England and Valparaiso to 75–80 days from the mid-1840s. The Panama railway cut the time by two weeks, so that delivery times between Liverpool and Valparaiso fell to around 60 days. Thereafter, postal deliveries were completed in just 45 days in the mid-1860s and in as little as 40 days by the early 1870s. That is, before telegraphic connections were introduced, speedier communications reduced postal delivery times by about two-thirds between the 1810s and the 1850s, which, including a return journey, meant a saving of over five months in total. This also had many other positive implications. For example, the transmission of bills of exchange and bills of lading could now be sent for arrival before the goods themselves. Needless to say, these were also advances introduced by foreigners as part of this increasing worldwide interconnectedness taking place after the Napoleonic Wars, and they did promote foreign trade in the Southern Cone.

Linked to communications are intercontinental transport costs. Yet, as important as shipping freight rates were during the first half of the century, it is unfortunate that there is not a single piece of scholarship dealing with the development of ocean freight rates in respect of Britain and emergent markets after the Napoleonic Wars before the mid-nineteenth century.29 There is general agreement that ‘the decline in international transport costs after midcentury was enormous’ (O’Rourke & Williamson, 1999, p. 35), and that this contributed significantly to a greater integration of Latin America into world markets (Williamson, 1999, p. 106; 2006b, pp. 10-11). But what happened before 1850 with British exports to the Southern Cone?

Unfortunately I could not find continuous data on freight rates between Britain and the Southern Cone from 1815 to 1850. However, within general works dealing with freight rates, Davis states that there was, from the early 1820s, ‘a brief phase of rapid decline, down to the end of the 1840s’, estimated at 55%.30 In another work, it is estimated that freight rates between Antwerp and Rio de Janeiro (a shorter distance than United Kingdom-Southern Cone) fell substantially between the late 1810s and the late 1820s (around 25%) and, thereafter, a greater reduction occurred, so that rates charged in 1842 were 50% lower than in c. 1819 (Schöller, 1951, pp. 522 and 540), all of which agrees with Davis's work and has been accepted by many.31

Following Davis and Schöller, I have collected some freight data for general cargoes from diverse sources. Starting during the late 1810s, freight rates charged to one of the first British houses operating in Buenos Aires from Great Britain to the River Plate were as high as £6–£9 per ton (Reber, 1978, p. 29). I could not find information for the 1820s, while, for the mid-1830s, rates charged varied from £3 to £4.5 per ton for cargoes sent from Liverpool to Valparaiso.32 For the 1840s, freight rates do not seem to have varied much as the few transactions I found ranged from £3.75 to £4.25 per ton.33 For the 1850s and early 1860s, rates charged varied from £3.5 to £4.5 per ton.34 Although this is not conclusive evidence, these data suggest that ocean freight rates for general cargoes from the United Kingdom to the Southern Cone declined significantly during the 1820s and early 1830s, as Davis and Schöller have suggested more generally, which further promoted trade between the Southern Cone and Europe during early nineteenth-century globalization. This was certainly beneficial to both Europe and Latin America. Indeed, the British consul in Valparaiso in 1852 once reported that ‘the distance from Europe is not now that formidable obstacle which formerly presented itself to the exportation of produce from Chile to that great mart; freights are now low’.35

British merchants who established themselves in the Southern Cone after independence brought with them their insurance connections, shipping facilities and channels of communications, which were undoubtedly positive contributions to the region's economies. They also brought with them capital, which was often essential for the local production of goods intended for export. Equally important, many of the foreign merchant houses that opened offices in the new republics after the demise of the Spanish empire brought with them a vast global network of contacts. These international networks promoted the growth of multilateral trade involving the Southern Cone, Britain and third parties, and of trade between the Southern Cone and two or more quarters of the world beyond Britain, and therefore the region's overall exports in better terms.

Thus, for example, many ‘new’ and important trades developed from Chile and the River Plate, and ‘old’ trades increased their importance. In both cases, British merchants’ global trading contacts and facilities (e.g. credit and insurances) could only have benefited the new republics’ foreign trade (exports in particular). The London merchant Huth & Co. is a case in point. In 1809, the founder of this house (trained in Hamburg and Corunna), emigrated from Spain to London. He established himself as a general commission merchant, trading mainly with northern Spain. In the 1820–1830s the business expanded and branch houses were opened in Chile, Peru and Liverpool, while agencies were opened in other British locations, as well as in Mexico, Buenos Aires, Germany and France. Building on this structure, by 1850 Huth had acquired the impressive capital of £0.5m and had dealings with about 2000 correspondents all over the world (Table 5), establishing an impressive global network of trade, insurance and lending.

As far as the Southern Cone is concerned, it is well known that Huth, like many other British merchants, advanced capital to local producers of copper or hides, thus making an essential contribution to the export economy of the region. But thanks to Huth's branch in Chile, apart from cultivating local production and bilateral trades between Chile and Britain, interesting new trading networks were built connecting Chile and Britain with the USA, Asia and Europe. For instance, Chilean copper was sent not only to Britain to pay for British manufactures brought by Huth to Valparaiso, but also to the USA in exchange for textiles or to pay indirectly for British manufactures. Likewise, Chinese tea and silks were directly exchanged for Chilean silver and copper thanks to Huth's contacts in Asia, while Chilean wheat and flour were sent to Australia in payment for British manufactures involving complex multilateral trades.36

In a similar vein, Huth also promoted important intra-regional trades within the Americas connecting the Southern Cone. For example, Brazilian sugar was regularly sent to Huth's house in Chile,37 and Cuban tobacco to Valparaiso thanks to Huth's connections in Rio and Havana. Finally, it is worth noting that most of these operations involving Chilean imports and exports to and from places other than Britain were made possible thanks to Huth's extension of credit from London or Valparaiso to merchants in Asia, continental Europe or the USA. Likewise, these trade operations were very often insured by Huth in London even if these trades never touched on a British port, so that they made an important contribution to Chilean foreign trade.

In addition Adolphe Roux deserves a separate paragraph. In the early 1830s, Huth formalised a partnership with Roux of Paris,38 in order to supply the West Coast establishments with cottons, silks and other products directly from France or via Liverpool.39 In exchange, Roux received advances for part of these shipments. Roux was also an enthusiastic consumer of Chilean copper and silver, which were sent to him as remittances.40 But Roux was not the only merchant in continental Europe trading with Huth's houses in the Pacific. For example, Mayer & Fils (St Gall)41 also traded with Huth houses in the West Coast, as did Detmering from Bordeaux.

Another interesting connection which developed from the Pacific was with Rothschild. The Rothschilds were the sole buyers of Almadén's quicksilver from 1835, which gave them a powerful position within Latin American silver producing countries. Indeed, the Almadén mercury mines (Spain) were the main sources of the metal in the world at this time (Platt, 2012; Ferguson, 1999, pp. 358-362). Lacking agents in both Peru and Chile, which were important silver-producing countries, the Rothschilds decided to sell their quicksilver there through a house they could trust. The chosen one was Huth. From at least 1838, Huth was in charge of selling Rothschild's mercury in the West Coast.42 Remittances to Rothschild were in the form of silver bars or silver specie.43 Thus, Huth provided an essential service to Chilean silver producers, who did not have the means or connections to import directly from the Rothschilds.

Not having a branch in the River Plate did not stop Huth from doing business in that area. Indeed, the branches of the USA house of Zimmerman-Frazier at Montevideo and Buenos Aires were closely involved with Huth. Among many branches of trade, Zimmerman-Frazier provided hides for London, but also for Huth's friends in the USA and continental Europe.44 For example, Zimmerman-Frazier shipped hides to Bremen and drew against Huth.45 For this sort of operation, Huth was happy to make liberal advances.46 In the same vein, Huth promoted Zimmerman's shipments of jerked beef to Havana.47 Huth also provided these merchants with marine insurance services for divers trade operations,48 as he did with so many others in the region. Likewise, Zimmerman-Frazier imported textiles from Huth's friends in Britain and Germany.49 Beyond the sphere of trade, Huth was also a financial agent of Zimmerman-Frazier in London. Huth regularly received many bills of exchange drawn on numerous London merchants on Zimmerman's credit, for which Huth would negotiate acceptance. Zimmerman-Frazier also drew against Huth to clear its accounts with many other British merchants.

Other important correspondents in the River Plate were Hutz; Zevallos; Alfaro; and Sanchez. For example, Sanchez enjoyed an open credit with Huth that allowed him to ship hides to Madrid, thus further promoting Buenos Aires’ exports. Later on, Sanchez also started sending wool consignments to London, once Argentina started its production of wool for the international markets. Another company enjoying Huth's credit was Mohr & Ludovici. In this case, credit was opened in order to ship hides to Cologne.50 Both the credit made available by Huth to merchants in the River Plate and Huth's international networks of contacts were the pillars upon which many foreign traders in Buenos Aires and Montevideo relied in order to engage in international trade, thus showing the benefits of increasing worldwide interconnections during this period for the whole of the Southern Cone.