| By Bill Bonner Monday, May 25, 2020 – Week 11 of the Quarantine SAN MARTIN, ARGENTINA – We are still in Argentina. Still cut off from the rest of the world (the airports are closed). We are making the best of it by learning as much as we can from a failed economy. As you will see… not everything failed… What follows is a brief history of one of the most successful investments of all time. It was daring… bold… difficult, but ultimately, very profitable… creating one of South America’s biggest fortunes… and nourishing the political career of the man who might have kept Argentina from going broke. We’re talking about “Tabacal” – an enormous sugar cane operation in Northwest Argentina. | Recommended Link | Dyson: “My No. 1 Investment for the next Five Years… I’m All In” I’d kick myself if I didn’t share my latest investment – one I bet nearly 100% of my family’s life savings on. I’ve gone “all in” like this twice before. Once at the start of the century, during which I found the decade’s best-performing investment, according to the Telegraph. And then again in 2011, when I invested in Bitcoin, right before it climbed 302,000%. | | | - | New Industry We only bring it up because it is a dazzling story. And it tells us something about the world as it was in the early 20th century… and the world as it is 100 years later. Then, a group of Argentine businessmen and investors could create an immense new industry, drawing on thousands of people… millions of dollars’ worth of real capital (real money, earned – and saved – by real people)… and all of the latest technology in agriculture, mechanical engineering, hydraulic engineering, botany, chemistry, and many other disciplines. They could create what would today be billions and billions of dollars’ worth of new wealth. Again, this was real wealth – sugar – not just new apps, or phony gains from a stock market juiced up by the Federal Reserve’s phony money. Unlikely Project The story begins in 1916. It was then that Robustiano Patrón Costas got off the train in Orán, Argentina, and became convinced that the area was suitable for a modern sugar mill. It seemed very unlikely at the time. The surrounding countryside was a wilderness, with very few people and none of the support infrastructure that a large plant would need. No towns. No skilled laborers. No roads. No electricity. Nevertheless, he got together a group of investors and began a breathtaking project… which, today, seems almost impossible. In an era of disease, this "new cure" could be one of the most powerful medical technologies of our time. They had to clear thousands of acres, with much of the work done with shovels and pickaxes. An extensive irrigation system had to be built, with a river partially diverted into canals, gates, dikes, and hundreds of miles of ditches. The land had to be plowed and planted… experimenting with different strains of sugar cane from all over the world. Pests and plant diseases had to be identified and defeated. A railroad had to be built to transport the sugar cane to the mill – eventually furnished with 16 engines and 1,500 freight wagons. | Recommended Link | Is this man the next Head of U.S. Space Force? Here are the facts: He's a graduate from Purdue University's famed "School of Astronauts"… He was recently spotted at the Pentagon… He's attended meetings in highly secured chambers beneath Capitol Hill... He spent time on NASA's Ames campus... And he's a massive supporter of President Trump's impact on the stock market — the tech market in particular. Is there something going on here? Could this man be the next head of the U.S. Space Force? It's hard to tell… But he sure seems like the kind of guy Trump would want to head the U.S. Space Force. | | | -- | New Town And that was just the beginning. In cutting season, 8,000 laborers were needed. Where would they live? What would they eat? And what about the thousands of permanent employees? Where would their children go to school? Where would they pray? Where would they eat? And what if they were sick? Patrón Costas and his associates had to build a whole town. Houses – clean, neat, modern, laid out on tree-lined streets – churches, schools (for 1,200 students), bakeries, sawmills, two barber shops (one for men, the other for women), woodshops, metal shops… a theater, tennis courts, polo fields… and a hospital, where they could not only provide nursing care, but use the latest medical technology – such as X-rays – and perform surgery, too. A dairy provided milk. A farm provided fruit and vegetables. The bakery processed 80 sacks of flour, at 150 pounds each, every day. And the mill itself was similarly immense, powered by its own electric plant. In 1945, it produced 51 million kilos of sugar and 4 million liters of alcohol. By the 1980s, it was the largest sugar mill in the world. Amazing 17-Second Video Reveals Key to Tech Fortune… The investors got rich. And workers prospered, too. The mill brought in thousands of local people with no skills and no money – many of them from the indigenous tribes of the area – and turned them into carpenters, cooks, machinists, bakers, drivers, and even chemical engineers. Robustiano Patrón Costas gained such a reputation that he ran for president of Argentina in the 1940s. Alas, the appeal of risk-taking, hard work, and real growth was already waning. People like capitalism on the way up; they prefer socialism on the way down. Patrón Costas lost to the socialist Juan Perón. The country has been sliding ever since. How to Succeed Today The remarkable thing is that, even with 100 more years of technology… and an abundance of capital… it would be almost impossible to build Tabacal today. It took 17 years of struggle for the project to prove itself. Who would risk his money for such a long-term payout today? Nobody. Instead, the ambitious young man of 2020 becomes a hedge fund manager… or develops a new app and plans to go to IPO within 36 months. A young man with a project as big and bold as Tabacal would be almost doomed to failure. The “indigenous peoples” would stop him. The “environmentalists” would stop him. The tax men, the labor unions, the banks, the lobbyists, the politicians, the bureaucrats, and the “community” – all would prevent him from ever putting a stake in the ground. And if, by some miracle, he were able to overcome such powerful opposition, he would be regulated and controlled… his margins would evaporate in the heat of inflation… and his profits would be taxed away… He would quickly realize that in order to survive, he’d have to become a crony. He would say he was combating climate change with “green” technology… that he was putting women and minorities on his board… that he was creating a safe environment for his employees… And then, instead of making money by providing sugar at a competitive price in a free market, he’d ask the government for low-cost loans, tariff protection, and emergency subsidies. | Recommended Link | An Urgent Briefing Dan Denning here, Bill Bonner's longtime colleague. This is the most dangerous – and potentially profitable – market that could come around in our lifetime. Bill and I teamed up with some of the brightest investment minds who appear to have predicted exactly what's happening right now… …and who are showing their readers how to make (or preserve) money, instead of losing it in the midst of what could be the worst crisis of our lifetime. To hear from these experts, and find out what you can do to profit, click here to read Bill's urgent briefing. | | | - | Update Today, Tabacal is owned by Seaboard, a private American company. The magnificent town built by Robustiano Patrón Costas is said to be a “dirty, derelict slum.” But on its website, Seaboard wisely advertises that its operations are “sustainable agriculture,” and that it “absorbs 10 times more CO2 than it emits.” And what happened to the Patrón Costas family? We asked the fourth generation for an update… “The project was so successful that the next three generations lived off of the wealth. They had big houses in Buenos Aires and apartments in Paris. They had servants… and most of them didn’t work at all. “The big problems came in the late 1980s. Then, we had inflation of 20,000%. It was almost impossible to keep up. Or to plan ahead. Wages… the cost of fuel… transportation… everything went up. “Then, the Raúl Alfonsín government imposed price controls… on sugar, of course. “That, and weak management – there is no guarantee that every generation is going to be as dynamic as the first – caused everything to fall apart. “By the late 1980s, all we could do was sell out. We got enough to pay our debts. That was about it.” Sic transit gloria capitalista. Regards, Bill Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com. FEATURED READS Anyone Can Use This Dow-to-Gold Investment Strategy
Bill’s colleague Tom Dyson has hit the road again, this time exploring post-COVID-19 America with his fiancée, Kate, and their three kids. You can follow their adventures – and his timely financial insights – in his weekly e-letters, Postcards From the Fringe… MAILBAG One Dear Reader reflects on last week’s Diary, “The Writing Is on the Wall for the U.S. Dollar”… Bill, I’ve followed you for years for your insights into the U.S. financial markets and instruction for personal wealth building. I don’t entirely agree with your political perspectives, but I do admire your sincerity. In your final paragraph of, “The Writing Is on the Wall for the U.S. Dollar,” you state that perhaps Anthony Fauci will be the hero in the “War Against COVID-19.” Wow, certainly you jest! In your patently sarcastic manner, I believe you know better, but there may be some readers who actually believe it! Led like lambs to slaughter. – Bruce R. Meanwhile, another Dear Reader wants to shout Bill’s wisdom from the rooftops… Please send your articles to the Congress, Senate, and every state capitol. You are spot on. The demand to quarantine everyone to save a few may be the ruin of our society. One should not expect that it will never happen again… rather expect that it will. Those making these decisions and who have the authority to enforce the decisions are least impacted by them. Their salaries are guaranteed by their abilities to tax as needed, and their access to healthcare and other necessities will not be compromised. To hear governors such as New York City’s Andrew Cuomo say, “If one life is saved, it is all worth the sacrifice” is insanely ludicrous… especially when the life he refers to is old and in the waning years already. This situation is beyond frustrating. Your articles are eloquent arguments for a more sane response to this virus. Please keep writing. We will keep sharing your words of wisdom. – James H. Are Americans being “led like lambs to the slaughter,” as Bruce believes? Are political pandemic responses like Cuomo’s “ludicrous,” as James says? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… Imminent FDA Approval Could Send This Tiny Biotech Soaring As the ultimate gatekeeper in the drug approval process, the FDA has the power to drive share prices through the roof. Here are just a few recent examples we've identified: -
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