University of Massachusetts Amherst ScholarWorks@UMass Amherst Doctoral Dissertations 1896 - February 2014 1-1-1973 Politics and petroleum development in Argentina, 1916-1930. James E. Buchanan University of Massachusetts Amherst Follow this and additional works at: https://scholarworks.umass.edu/dissertations_1 Recommended Citation Buchanan, James E., "Politics and petroleum development in Argentina, 1916-1930." (1973). Doctoral Dissertations 1896 - February 2014. 1327. https://scholarworks.umass.edu/dissertations_1/1327 This Open Access Dissertation is brought to you for free and open access by ScholarWorks@UMass Amherst. It has been accepted for inclusion in Doctoral Dissertations 1896 - February 2014 by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact [email protected]. POLITICS AND PETROLEUM DEVELOPMENT IN ARGENTINA, 1916-19 30 A Dissertation Presented by James E. Buchanan Submitted to the Graduate School of the University of Massachusetts in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY May 1973 Major Subject History 11 V (c) James E. Buchanan 1973 All Rights Reserved POLITICS AND PETROLEUM DEVELOPMENT IN ARGENTINA, 1916-1930 A Dissertation By James E. Buchanan Approved as to style and content by: Plots -<<\\(X (?g^A Robert A. Potash. Chairman of Committee Robert H. McNeal, Head of Department Lewis U. Hanke, Member Robert A. Hart, Member George B. Summons y Member May (Month) iv ACKNOWLEDGEMENTS While any deficiencies this study displays are fully my responsibility, credit for whatever merit it contains must be shared with those whose aid was crucial to its preparation. I am especially grateful to Prof. Robert A. Potash who gave more of himself and his time than any student might legitimately expect. At every stage in the development of this manuscript, he offered patient and constructive criticism which always bore the impress of his deep and insightful understanding of the Argentine experience. While it is difficult and perhaps even unfair to select only a few of the many Argentines who graciously aided me while I was a guest in their country, I would like to specifically thank Dr. A. J. Pe'rez Amuchastegui who con- siderably smoothed the path of a researcher's first ex- perience in Argentina; Sra. Ines Nebelung de Molo of the Instituto Argentino de Petroleo for her help and friend- ship; Sr. Gregorio Beschinsky for granting me access to his valuable personal library; and Sr. Wuifredo Brunet for aiding me in more ways than might be recounted here. Committee I am also indebted to the Doherty Fellowship for the generous financial support which made my work in Argentina possible. she has Finally, and most importantly, for the way patiently and understanding ly sacrificed so much to permit the completion of this study, my most sincere thanks to my wife, Sue. vi ABSTRACT Politics and Petroleum Development in Argentina, 1916-1930 (May 1973) James E. Buchanan, B. A., SUC at Potsdam, New York M. A. , University of Massachusetts Directed by: Dr. Robert A. Potash During the Radical Period (1916-1930), Argentina's first experiment with middle class democracy failed to provide channels for meaningful political participation on the part of the nation's lower and middle classes. Symp- tomatic of this larger failure was the inability of Argentina's political leaders and parties to provide the country with a much needed oil law prior to 1930. Subsequent to the 1907 discovery of a commercially exploitable oil deposit in Comodoro Rivadavia (Territory of Chubut) , the nation's leaders faced a problem born of the fact that the 1886 Mining Code's provisions made no allowance for the peculiarities of the petroleum industry. New legislation was needed to decide whether ownership of the deposits would remain with the provinces or be trans- ferred to the national government, to dictate precisely who would exploit the oil (the state, private interests, or some combination of the two) , and, in the case of pri- vate exploitation, to prescribe the exact conditions for concessions. vii Between 1907 and 1930, two general positions developed on this issue. That of the oil nationalists was based on the assumptions (1) that Argentina possessed vast oil re- serves which were the key to industrialization, economic independence and national defense, and (2) that the "world oil trusts" were intent upon controlling Argentina's oil for their own purposes, even if it meant disrupting the nation* s internal peace to do so. The nationalists, there- fore, supported the extension of federal control over oil deposits, state exploitation through Yacimientos Petro- liferos Fiscales (YPF) , and closely-controlled, small-scale private operations and/or mixed companies involving state and private capital. By 1927, the most ardent nationalists were demanding an integrated and exclusive state monopoly over domestic oil development. The opposing view, held by domestic conservatives and prospective foreign and national oil investors, was based on the assumption that Argentina might have important petro- leum resources, and that it was necessary to allow large private firms to work under liberal conditions in order to reveal whether the alleged oil wealth was myth or reality. That no compromise was reached between these two positions can, in large part, be attributed to the Radical Party which held national political control from 1916 to 1930, and particularly to the Yrigoyenist wing. The Vlll Yrigoyenists consistently pursued an oil policy designed to elicit electoral support, rather than one aimed at producing the necessary national legislation. The most blatant manifestation of this tendency occurred in 1927- 1928 during and after the only major oil debate before 1930. Instead of seeking a compromise solution which would have conciliated all parties and still protected the nation's interests, the Yrigoyenists stood unalterably for an exaggerated nationalist policy. They and the Indepen- dent Socialists pushed through the Chamber of Deputies a bill calling for federalization of oil deposits and a complete state oil monopoly. While the proposal had no chance of gaining Senate approval, the Yrigoyenists and the Independent Socialists used their nationalist stance effectively in the 1928 national elections. Under this legal cloud, the oil industry developed slowly. The private sector adopted a "wait and see" attitude while at times devoting considerable energy and resources to speculation in exploration rights. The state enterprise, YPF, made some remarkable advances under the guidance of the energetic and talented nationalist, General Enrique Mcsconi (1922-1930) , but it too was hindered by the absence of a clearly defined national oil policy. As a consequence, not even the combined efforts of the public and private sectors were sufficient to keep pace with the nation's expanding demand for oil and oil products. X INTRODUCTION Passage of the Saenz Pena electoral reform law in 1912 ana Hipolito Yrigoyen's election as President four years later were events hailed by Argentines and foreigners alike as giant strides toward harmonizing theory and prac- tice in the nation's political system. Fourteen years later, however, Yrigoyen was the victim of a military coup, an act whose repercussions for Argentina's political evolu- tion were to prove far more influential than those of the Saenz Pena law. Broken and defeated, the mysterious caudillo bore. with him to Martin Garcia Island the extrava- gant hopes entertained by many of his coreligionists in 1916. Argentina's experiment with Western-style middle class democracy failed to provide a political environment conducive to solving or even confronting effectively the nation's social and economic problems. experiment The urgent need for understanding why the post- failed becomes apparent after glancing at Argentina's years, only two 1930 political record. In forty-three full six-year elected presidents have managed to complete a civilians and three term, while six Chief Executives (three by military coups. military) have been ushered out of office xi Amidst this chaotic political setting, Argentina has been unable to mobilize her human and natural resources to bat- tle chronic social and economic problems. Although the origins of the country's political difficulties do not lie exclusively in the Radical Period (1916-1930) , it is log- ical to expect that a firm understanding of those years will facilitate our understanding of Argentina's contempo- rary maladies. Despite the need for research, the Radical years have remained somewhat in the shadows while historians have pre ferred to shed light on 19th century and post-19 43 Argen- tina. As a result, our knowledge of the 1916-19 30 era rests heavily on the work of "official" historians and polemicists. A trend toward filling this information gap can be discerned in some recent monographs which deal with several aspects of the Radical Period, including Robert A. Potash's The Army and Politics in Argentina , 1928-1945 (Stanford: Stanford Univ. Press, 1969), Samuel L. Baily's (New Bruns- Labor , Nationalism , and Politics in Argentina wick: Rutgers Univ. Press, 1967), Peter Smith's Politics and Beef in Argentina (New York: Columbia Univ. Press, Radicalism (Iowa City: 1969) , and Peter Snow's Argentine Iowa Univ. Press, 1965). While none of thses studies treats exclusively with the Radical Period, Potash, Smith, Baily, and Snow have all contributed to an understanding o Xll those years by providing new information and fresh in- terpretations based on scholarly investigations. It is only from many more studies of this type that a meaningful synthesis of the Radical Period will emerge. Among the topics deserving detailed study, petroleum must be accorded high priority. Since 1907 when oil was discovered in Comodoro Rivadavia, it has been an explosive ingredient in the Argentine political formula. From the viewpoint of the national politicians, the problem has been one of agreeing on a philosophy for oil development and then mapping out the specific conditions under which exploration and exploitation must be conducted.